Pope v. First of America
Annotate this Case
No. 4 97 0846
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 1998
EILEEN POPE, as Custodian for ) Appeal from the Circuit Court
Richard A. Boudreau under the ) of the 21st Judicial Circuit
Illinois Uniform Transfers to ) Kankakee County, Illinois
Minors Act, )
)
Plaintiff-Appellant, )
)
v. ) No. 90 LM 703
)
FIRST OF AMERICA, N.A., )
)
Defendant-Third-Party )
Plaintiff-Appellee, )
)
v. )
)
RICHARD A. BOUDREAU and )
EILEEN POPE, )
) Honorable
Third-Party Defendant- ) Fred S. Carr, Jr.
Appellants. ) Judge, Presiding.
)
_________________________________________________________________
JUSTICE LYTTON delivered the opinion of the court:
_________________________________________________________________
The Plaintiff Eileen Pope filed a complaint against the
defendant bank, First of America, N.A., after it refused to allow
her to withdraw funds she had deposited into an account opened for
her son Richard A. Boudreau (Ricky) under the Illinois Uniform
Transfers to Minors Act (Act) (760 ILCS 20/1 et seq. (West 1996)).
The bank filed a motion for summary judgment, which the trial court
granted. Pope appeals. We affirm.
FACTS
Pope opened the account on January 25, 1990. She was the
custodian of the account, and Ricky was the minor beneficiary. Two
days after the account was opened, Ricky went to the bank, showed
his driver's license and erroneously obtained the number of an
account owned by an unrelated man named Richard A. Boudreau and his
wife. Using this account number, Ricky made nine withdrawals
between January 17 and March 2, totaling $7,950, from Richard's
account. After discovering the unauthorized withdrawals, the bank
notified Pope and Ricky and requested the return of the funds.
Restitution was never made.
On April 10, 1990, Pope tried to withdraw the $7,000 she had
deposited into the trust account plus the accrued interest. The
bank refused to turn over the money because it had been used to
partially set off Ricky's unauthorized withdrawals.
On September 13, 1990, Pope filed a complaint against the
bank, alleging that it had converted the trust account funds by
refusing to allow her to withdraw the money. In its answer, the
bank asserted the affirmative defense of setoff due to Ricky's
conversion of $7,950. The bank also filed a third-party claim
against Ricky and his mother, claiming they had failed to repay the
funds Ricky had converted from the other bank account. The bank
subsequently filed a motion for summary judgment on Pope's amended
complaint and on count I of its third-party complaint against
Ricky. Pope then filed a motion for judgment on the pleadings and
the bank's affirmative defense of setoff.
On August 20, 1997, the trial court granted the bank's motion
for summary judgment on Pope's complaint and on count I of its
third-party complaint. Pope filed a timely notice of appeal from
the portion of the judgment granting summary judgment in favor of
the bank on her amended complaint. No appeal was taken regarding
count I of the bank's third-party complaint.
DISCUSSION
I.
A.
Pope first contends that the bank cannot use the setoff
provision of the trust account to offset Ricky's withdrawals
because she alone signed the deposit agreement and was the only
person with the authority to make withdrawals. Thus, the setoff
provision would apply only to her debts, not to Ricky's.
A ruling on a motion for summary judgment is reviewed de novo.
Murneigh v. Gainer, 177 Ill. 2d 287, 298, 685 N.E.2d 1357, 1362
(1997). A grant of summary judgment is proper when there is no
genuine issue of material fact and the case may be resolved as a
matter of law. People ex rel. Toynton v. Commonwealth Edison Co.,
285 Ill. App. 3d 357, 360, 674 N.E.2d 809, 811 (1996).
In this case, the trust account deposit agreement states:
"Set-Off. By signing this form you each agree that we may at
any time (without prior notice, except as prohibited by law)
set-off the funds in this account against any debt owed to us
now or in the future, by any of you having the right of
withdrawal, subject to any limit on the right of withdrawal
from this account by such person or legal entity."
Funds in an account opened under the Act are "custodial
property [that] is indefeasibly vested" in the minor beneficiary,
and all transfers are "irrevocable." 760 ILCS 20/12(b) (West
1996). Thus, the money in the trust account belonged to Ricky, not
to Pope. As custodian of the funds, Pope controlled them and could
"hold money so given in an account in the financial institution to
which it was paid or delivered by the transferor." 760 ILCS
20/13(a), (b) (West 1996).
In signing the trust account agreement, Pope acted on Ricky's
behalf and agreed to permit the bank to set off funds from this
account for his debts. The Act does not preclude this type of
activity by a custodian. Indeed, the power to take the steps
necessary to open a trust account at a bank is implicit in a
custodian's statutory duties to "(1) take control of custodial
property; (2) register or record title to custodial property if
appropriate; and (3) collect, hold, manage, invest, and reinvest
custodial property." 760 ILCS 20/13(a) (West 1996). The custodian
is also specifically permitted to hold the property in a separate
bank account. 760 ILCS 20/13(b) (West 1996). The bank was
entitled to use the funds in the account as a setoff against
Ricky's unauthorized withdrawals.
B.
Pope next argues that the section of the Act concerning
liability to third parties should not be applied here because the
public policy of this state supports protecting the financial
future of minors. She claims that to allow setoffs would undermine
this protection.
Section 18 of the Act states:
"Liability to Third Persons. (a) A claim based on ***
(iii) a tort committed during the custodianship, may be
asserted against the custodial property by proceeding against
the custodian in the custodial capacity, whether or not the
custodian or the minor is personally liable therefor." 760
ILCS 20/18 (West 1996).
The language of the statute thus subjects the trust property
to tort claims arising during the custodianship. The legislature
has chosen to limit the protection available to minors under the
Act, and this court may not second-guess its judgment. Kerouac v.
Kerouac, 99 Ill. App. 3d 254, 261, 425 N.E.2d 543, 548 (1981).
Pursuant to the Act, the bank was entitled to assert its claim
against the custodian for Ricky's tortious conduct. 760 ILCS
20/19(a)(iii) (West 1996). The bank's actions were within the
statutory limitations enacted by the legislature.
II.
Pope argues that the bank has no common law right to a setoff
because there is no mutuality between the parties. A similar
argument was rejected by the supreme court in Fisher v. State Bank
of Annawan, 163 Ill. 2d 177, 181, 643 N.E.2d 811, 813 (1994). The
Fisher court concluded that mutuality was irrelevant where there
was a contractual basis for the setoff. In this case, the deposit
agreement is an enforceable contract between the parties; thus, the
doctrine of mutuality has no application.
III.
Finally, Pope contends that the bank was required to turn over
the funds in the trust account because they were a special deposit.
The distinction between a special deposit and a general
deposit is well established. A special deposit is a bailment made
for safekeeping, and the depositor is entitled to the return of the
identical thing deposited. Mid-City National Bank v. Mar Building
Corp., 33 Ill. App. 3d 1083, 1089, 339 N.E.2d 497, 502-03 (1975).
When a general deposit is made, the bank becomes a debtor of the
depositor and has no obligation to set aside the deposited funds.
See Mid-City, 33 Ill. App. 3d at 1089, 339 N.E.2d at 502. A bank
account is presumed to be a general deposit unless there is an
agreement to the contrary. Bieze v. Coca, 54 Ill. App. 3d 7, 16,
369 N.E.2d 106, 112 (1977). The mere fact that a deposit was made
by a fiduciary or includes trust funds does not make it a special
deposit, even if the bank knows of these facts. Bieze, 54 Ill.
App. 3d at 16, 369 N.E.2d at 112.
Here, there is no evidence that the money in the trust account
was a special deposit. The parties did not have an agreement that
the original deposit would be returned on request or that the
transaction created a bailment. The trial court correctly decided
that Pope was not entitled to withdraw the funds.
CONCLUSION
Because we affirm the trial court's order on other grounds, we
need not reach the other issues raised by the parties on appeal.
The judgment of the circuit court of Kankakee County is
affirmed.
Affirmed.
BRESLIN AND HOLDRIDGE, JJ., concur.
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 1998
EILEEN POPE, as Custodian for ) Appeal from the Circuit Court
Richard A. Boudreau under the ) of the 21st Judicial Circuit
Illinois Uniform Transfers to ) Kankakee County, Illinois
Minors Act, )
)
Plaintiff-Appellant, )
)
v. ) No. 90 LM 703
)
FIRST OF AMERICA, N.A., )
)
Defendant-Third-Party )
Plaintiff-Appellee, )
)
v. )
)
RICHARD A. BOUDREAU and )
EILEEN POPE, )
) Honorable
Third-Party Defendant- ) Fred S. Carr, Jr.
Appellants. ) Judge, Presiding.
)
_________________________________________________________________
JUSTICE LYTTON delivered the opinion of the court:
_________________________________________________________________
The Plaintiff Eileen Pope filed a complaint against the
defendant bank, First of America, N.A., after it refused to allow
her to withdraw funds she had deposited into an account opened for
her son Richard A. Boudreau (Ricky) under the Illinois Uniform
Transfers to Minors Act (Act) (760 ILCS 20/1 et seq. (West 1996)).
The bank filed a motion for summary judgment, which the trial court
granted. Pope appeals. We affirm.
FACTS
Pope opened the account on January 25, 1990. She was the
custodian of the account, and Ricky was the minor beneficiary. Two
days after the account was opened, Ricky went to the bank, showed
his driver's license and erroneously obtained the number of an
account owned by an unrelated man named Richard A. Boudreau and his
wife. Using this account number, Ricky made nine withdrawals
between January 17 and March 2, totaling $7,950, from Richard's
account. After discovering the unauthorized withdrawals, the bank
notified Pope and Ricky and requested the return of the funds.
Restitution was never made.
On April 10, 1990, Pope tried to withdraw the $7,000 she had
deposited into the trust account plus the accrued interest. The
bank refused to turn over the money because it had been used to
partially set off Ricky's unauthorized withdrawals.
On September 13, 1990, Pope filed a complaint against the
bank, alleging that it had converted the trust account funds by
refusing to allow her to withdraw the money. In its answer, the
bank asserted the affirmative defense of setoff due to Ricky's
conversion of $7,950. The bank also filed a third-party claim
against Ricky and his mother, claiming they had failed to repay the
funds Ricky had converted from the other bank account. The bank
subsequently filed a motion for summary judgment on Pope's amended
complaint and on count I of its third-party complaint against
Ricky. Pope then filed a motion for judgment on the pleadings and
the bank's affirmative defense of setoff.
On August 20, 1997, the trial court granted the bank's motion
for summary judgment on Pope's complaint and on count I of its
third-party complaint. Pope filed a timely notice of appeal from
the portion of the judgment granting summary judgment in favor of
the bank on her amended complaint. No appeal was taken regarding
count I of the bank's third-party complaint.
DISCUSSION
I.
A.
Pope first contends that the bank cannot use the setoff
provision of the trust account to offset Ricky's withdrawals
because she alone signed the deposit agreement and was the only
person with the authority to make withdrawals. Thus, the setoff
provision would apply only to her debts, not to Ricky's.
A ruling on a motion for summary judgment is reviewed de novo.
Murneigh v. Gainer, 177 Ill. 2d 287, 298, 685 N.E.2d 1357, 1362
(1997). A grant of summary judgment is proper when there is no
genuine issue of material fact and the case may be resolved as a
matter of law. People ex rel. Toynton v. Commonwealth Edison Co.,
285 Ill. App. 3d 357, 360, 674 N.E.2d 809, 811 (1996).
In this case, the trust account deposit agreement states:
"Set-Off. By signing this form you each agree that we may at
any time (without prior notice, except as prohibited by law)
set-off the funds in this account against any debt owed to us
now or in the future, by any of you having the right of
withdrawal, subject to any limit on the right of withdrawal
from this account by such person or legal entity."
Funds in an account opened under the Act are "custodial
property [that] is indefeasibly vested" in the minor beneficiary,
and all transfers are "irrevocable." 760 ILCS 20/12(b) (West
1996). Thus, the money in the trust account belonged to Ricky, not
to Pope. As custodian of the funds, Pope controlled them and could
"hold money so given in an account in the financial institution to
which it was paid or delivered by the transferor." 760 ILCS
20/13(a), (b) (West 1996).
In signing the trust account agreement, Pope acted on Ricky's
behalf and agreed to permit the bank to set off funds from this
account for his debts. The Act does not preclude this type of
activity by a custodian. Indeed, the power to take the steps
necessary to open a trust account at a bank is implicit in a
custodian's statutory duties to "(1) take control of custodial
property; (2) register or record title to custodial property if
appropriate; and (3) collect, hold, manage, invest, and reinvest
custodial property." 760 ILCS 20/13(a) (West 1996). The custodian
is also specifically permitted to hold the property in a separate
bank account. 760 ILCS 20/13(b) (West 1996). The bank was
entitled to use the funds in the account as a setoff against
Ricky's unauthorized withdrawals.
B.
Pope next argues that the section of the Act concerning
liability to third parties should not be applied here because the
public policy of this state supports protecting the financial
future of minors. She claims that to allow setoffs would undermine
this protection.
Section 18 of the Act states:
"Liability to Third Persons. (a) A claim based on ***
(iii) a tort committed during the custodianship, may be
asserted against the custodial property by proceeding against
the custodian in the custodial capacity, whether or not the
custodian or the minor is personally liable therefor." 760
ILCS 20/18 (West 1996).
The language of the statute thus subjects the trust property
to tort claims arising during the custodianship. The legislature
has chosen to limit the protection available to minors under the
Act, and this court may not second-guess its judgment. Kerouac v.
Kerouac, 99 Ill. App. 3d 254, 261, 425 N.E.2d 543, 548 (1981).
Pursuant to the Act, the bank was entitled to assert its claim
against the custodian for Ricky's tortious conduct. 760 ILCS
20/19(a)(iii) (West 1996). The bank's actions were within the
statutory limitations enacted by the legislature.
II.
Pope argues that the bank has no common law right to a setoff
because there is no mutuality between the parties. A similar
argument was rejected by the supreme court in Fisher v. State Bank
of Annawan, 163 Ill. 2d 177, 181, 643 N.E.2d 811, 813 (1994). The
Fisher court concluded that mutuality was irrelevant where there
was a contractual basis for the setoff. In this case, the deposit
agreement is an enforceable contract between the parties; thus, the
doctrine of mutuality has no application.
III.
Finally, Pope contends that the bank was required to turn over
the funds in the trust account because they were a special deposit.
The distinction between a special deposit and a general
deposit is well established. A special deposit is a bailment made
for safekeeping, and the depositor is entitled to the return of the
identical thing deposited. Mid-City National Bank v. Mar Building
Corp., 33 Ill. App. 3d 1083, 1089, 339 N.E.2d 497, 502-03 (1975).
When a general deposit is made, the bank becomes a debtor of the
depositor and has no obligation to set aside the deposited funds.
See Mid-City, 33 Ill. App. 3d at 1089, 339 N.E.2d at 502. A bank
account is presumed to be a general deposit unless there is an
agreement to the contrary. Bieze v. Coca, 54 Ill. App. 3d 7, 16,
369 N.E.2d 106, 112 (1977). The mere fact that a deposit was made
by a fiduciary or includes trust funds does not make it a special
deposit, even if the bank knows of these facts. Bieze, 54 Ill.
App. 3d at 16, 369 N.E.2d at 112.
Here, there is no evidence that the money in the trust account
was a special deposit. The parties did not have an agreement that
the original deposit would be returned on request or that the
transaction created a bailment. The trial court correctly decided
that Pope was not entitled to withdraw the funds.
CONCLUSION
Because we affirm the trial court's order on other grounds, we
need not reach the other issues raised by the parties on appeal.
The judgment of the circuit court of Kankakee County is
affirmed.
Affirmed.
BRESLIN AND HOLDRIDGE, JJ., concur.
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