misdelivering; that is, crediting the funds to the wrong account.
The defendant contends that the wire transfer of the funds
disbursed by SFS did not establish a bailment.
In a depositor-bank relation, there is a well established
distinction between a general and a special deposit. In a general
deposit situation, the bank merely becomes the debtor of the
depositor to the extent of the deposit, and the title to the
money passes to the bank. People ex rel. Russell v. Farmers State
& Savings Bank of Grant Park, 338 Ill. 134, 170 N.E. 236 (1930).
The deposit is a general one even when it is evidenced by a
certificate of deposit. Mutual Acc. Ass'n of the Northwest v.
Jacobs, 141 Ill. 261, 31 N.E. 414 (1892). A special deposit,
however, is the delivery of either money or chattel to a bank
under a special agreement or under circumstances sufficient to
create a trust. Baiar v. O'Connell, 284 Ill. App. 331,
1 N.E.2d 805 (1936), aff'd, 365 Ill. 208, 6 N.E.2d 140 (1936). A special
deposit is for a specific purpose, or for safekeeping, and the
depositor is entitled to the identical thing or money deposited.
This special deposit creates a bailment instead of a
debtor-creditor relation, with the depositor's right to demand
return of the exact chattel or specific money deposited. Mid-City
National Bank of Chicago v. Mar Building Corporation,
33 Ill. App.3d 1083, 339 N.E.2d 497, 503 (1975).
In the case at bar, ANB received the wire transfer for deposit
to an account, not for any special circumstance, safekeeping or
subsequent return to the depositor intact. The wire transfer
contemplated a credit to an account and not a safekeeping
arrangement. No distinctive feature of a "special deposit" or
"bailment" was present here. Thus, ANB's motion to dismiss Count
V of the complaint must be granted.
Count VI in SFS' complaint alleges that ANB's failure to
transfer the funds to the account of John Bushman, Trustee, or
failure to return them to NEMB, constituted actionable
conversion. ANB correctly denies the applicability of the
conversion claim to this fact situation. One of the legal
elements of a conversion, is not present here. The traditional
action of trover does not operate on chattels generally, but
specifically on property capable of identification as being the
actual property or thing wrongfully taken and converted. Kerwin
v. Balhatchett, 147 Ill. App. 561, 566 (1909). The question
remains whether the wire transfer involved specific property.
In In re Oxford Marketing, United States v. Kallen, 444 F. Supp. 399
(N.D.Ill. 1978), the court stated that a bank deposit is a
chose in action or debt. It is an intangible right and not
specific property owned by the depositor or the successor
trustee. The court then cited Kerwin v. Balhatchett, 147 Ill. App. 561
(1909); Siegal v. Trac-Ler Karenola Radio & Television Corp.,
333 Ill. App. 158, 76 N.E.2d 802 (1948) (abstract opinion); and
Janes v. First Federal Savings and Loan Ass'n, 11 Ill. App.3d 631,
297 N.E.2d 255 (1973), aff'd in part, rev'd in part on other
grounds, 57 Ill.2d 398, 312 N.E.2d 605 (1974). In the latter
case, the court held that Illinois follows the common law rule
which does not recognize an action for conversion of intangible
rights. Thus, the wire transfer, like a bank deposit, can be
considered intangible property. And since it is intangible, an
action for conversion cannot be sustained. Furthermore, Burge v.
Englwood, 213 Ill. App. 357, 363 (1919) stands for the principle
that conversion cannot be maintained if the loss resulted from
active or passive negligence or breach of contract. See Janes v.
First Federal Savings and Loan Ass'n, 11 App.3d 631 at 260,
297 N.E.2d 255. Thus, the motion to dismiss Count VI is granted.
Count VII alleges that ANB entered into a contract with NEMB to
deliver funds to the account of John Bushman, Trustee, in
connection with redemption of Mr. Bushman's Templeton shares. SFS
alleges it is a third party beneficiary and has the right to sue
ANB for breach of that contract via the improper delivery for the
funds. ANB counters that nothing in the complaint supports the
legal conclusion that SFS was or could have been a third-party
beneficiary in this situation.
The general rule regarding a third party's right to sue for
breach of a contract between two other parties was announced in
Carson Pirie Scott & Co. v. Parrett, 346 Ill. 252, 178 N.E. 498
(1931). There, the Illinois Supreme Court stated that if a
contract is made for the direct benefit of a third person not a
party to the contract, that third person may sue for a breach
thereof. The test to be applied is whether the benefit to the
third person is direct to him or is only an incidental benefit.
If the benefit is direct, then he may sue; if incidental, then
there is no right of recovery. This test is to be determined
within the language of the contract. Id. at 257-258,
178 N.E. 498. Accord, People ex rel. Resnik v. Curtis & Davis, Architects
& Planners, Inc., 78 Ill.2d 381, 36 Ill.Dec. 338, 400 N.E.2d 918
(1980). Furthermore, it is not necessary for the third party who
is benefitted by the contract to be named therein if he is
otherwise sufficiently described or designated. Candlewick Lake
Utilities Co. v. Quinones, 82 Ill. App.3d 98, 37 Ill.Dec. 479,
402 N.E.2d 369 (1980); Gothberg v. Nemerovski, 58 Ill. App.2d 372,
208 N.E.2d 12 (1965). The question whether the benefit to a third
party is direct or incidental depends on the intent of the
parties, and must be determined case-by-case. Midwest Concrete
Products Co. v. LaSalle National Bank, 94 Ill. App.3d 394, 49
Ill.Dec. 968, 418 N.E.2d 988, 990 (1981); Kravitz v. Lake County,
62 Ill. App.3d 101, 19 Ill.Dec. 611, 379 N.E.2d 126, 128 (1978).
Under the alleged facts, SFS has adequately pleaded its status
as third-party beneficiary. The direct or substantial benefit to
SFS is the interest in properly transferring the funds so as to
avoid any loss by its customer or SFS itself. Also, SFS did not
need to be named within the contract since it is evident that SFS
falls within the group designated to benefit from the contract;
i.e., Templeton, SFS, and John Bushman, Trustee. Thus, the motion
to dismiss Count VII is denied.
SFS' Count IX alleges that ANB acted as though a depositor
account in the name of John Bushman, Trustee, actually existed.
This purportedly occurred because ANB failed to inquire or give
notice to NEMB or SFS of the discrepancy between the name and
account number. SFS' reliance on ANB's silence or inaction
fostered a belief that an account for John Bushman, Trustee,
actually existed, and thus prevented SFS from acting to avoid the
loss of the funds. Thus, SFS alleges that ANB is estopped to deny
the existence of a deposit contract between ANB and John Bushman.
Plaintiff further alleges that by virtue of having reimbursed
Bushman and Templeton through its reissuance of the redeemed
shares, it has succeeded to their interests and can sue on the
deposit contract. The problem with these allegations is that
there is no contract between ANB and Bushman. It is undisputed
that Bushman did not have an account at ANB and in fact had no
relationship with ANB. Rather, Bushman was the beneficiary of a
contract for deposit based on the wire transfer between ANB and
NEMB. Thus, the contract which SFS seeks to estop ANB from
denying does not exist and Count IX should be dismissed.
Accordingly, and for these reasons, the motion to dismiss is
granted as to Counts IV, V and IX and denied as to the other
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