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1956 Supreme(Cal) 154
HIGH COURT OF CALCUTTA
G. K. Mitter
JAMES FINLAY AND CO. LTD. - Appellant
Versus
JOHN DEMETRIUS - Respondent
Suit 1758 Of 1954
Decided On : SEPTEMBER 04, 1956
AJIT SEN GUPTA, D.K.SEN, P.MONDAL, S.Chatterji
A joint account can be revoked by either account holder at any time, and the revocation takes effect immediately. Upon revocation of a joint account, the funds in the account become the property of the account holder who revokes the account.
Headnote:
INTERPLEADER - JOINT ACCOUNT - REVOCATION - OWNERSHIP OF FUNDS - INTERPRETATION OF LETTER - LEGAL EFFECT OF CLOSING JOINT ACCOUNT - TRANSFER OF FUNDS TO NEW ACCOUNT - RIGHTS OF FORMER WIFE.
Fact of the Case:
James Finlay and Co. Ltd. filed an interpleader suit to determine the rightful owner of a sum of money left with them by the deceased K. I. M. Fegan. The defendants were Fegan's divorced wife and the executor of his will. In 1942, Fegan had converted his private account with James Finlay and Co. Ltd. into a joint account with his wife, payable to either or survivor. In 1952, Fegan wrote to the company requesting them to close the joint account and send him a cheque for the balance. The company complied and issued a cheque for Rs. 18,725-10-3, but Fegan died before he could cash it. The company then transferred the funds to a new account in Fegan's name.
Finding of the Court:
The court held that the money belonged to the estate of the deceased Fegan and that his former wife had no right or interest in it. The court found that the letter written by Fegan in 1952, requesting the closure of the joint account, effectively revoked the joint account and transferred the ownership of the funds to Fegan alone. The subsequent transfer of funds to a new account by James Finlay and Co. Ltd. did not alter the legal position.
Issues: 1. Whether the money belonged to the estate of the deceased Fegan or to his former wife. 2. Whether the letter written by Fegan in 1952, requesting the closure of the joint account, effectively revoked the joint account.
Ratio Decidendi: The court relied on the following legal principles in reaching its decision: 1. A joint account is a contract between the bank and the account holders, and the rights and liabilities of the parties are governed by the terms of the contract. 2. A joint account can be revoked by either account holder at any time, and the revocation takes effect immediately. 3. Upon revocation of a joint account, the funds in the account become the property of the account holder who revokes the account. 4. The transfer of funds from a joint account to a new account does not alter the ownership of the funds, unless there is a clear intention to do so.
Final Decision: The court decreed in favor of the defendant No. 1 St. John Demetrius for the sum of Rs. 18,725-10-3 less the costs, charges, and expenses of James Finlay and Co. Ltd. The defendants were ordered to pay and bear their own costs.
( 1 ) THIS is one of the rare cases in which there is no dispute as to the facts. The only dispute is as to who is entitled to a sum of money left with James Finlay and Co. Ltd. , who claim no Interest in it themselves and have filed this interpleader suit. The defendants herein are the divorced wife of the deceased K. I. M. Fegan and the executor to the will of the said deceased.
( 2 ) THE facts taken mostly from the brief of documents and correspondence marked by common consent as Ex. A are as follows: The deceased Fegan used to be an employee of James Finlay and Co. Ltd. in' one of their tea companies. After having served a long period with them he retired from that service, went over to England where he stayed for a few months and on coming back to India joined another tea company by the name of Tukvar Tea Co. , Ltd. under the management of William-son Magor and Co. Up to the year 1942 the deceased Fegan had an account with James Finlay and Co. Ltd. which was styled a private account. James Finlay and Co. Ltd. are not Bankers and therefore their position vis-a-vis Fegan, the deceased, was that of a debtor and creditor pure and simple. On 3-10-1942 Fegan wrote the following letter to James Finlay and Co. Ltd. :"i shall be obliged if as from date of receipt of this letter you will please note that my private account with you should be converted into a joint account in the name of myself and my wife Mrs. Violet Marian Fegan payable to either or survivor. The account will be operated upon by either of us and in the event of the death of either of us you will be entitled to make payment to the survivor of all moneys standing at the credit of the account. Specimen signature of my wife is given below". This is signed by K. I. M. Fegan. in one corner of the letter the specimen signature of the wife V. M. Fegan appears. On 12-8-1951 Fegan addressed a letter to James Finlay and Co. Ltd. admitting that the statement of account as on 31-12-50 showing a credit of Rs. 18,215-11-2 was correct. Divorce proceedings were had in England between Fegan and his wife as a result whereof the husband was required to pay 360 per annum to the wife. "this fact appears from an affidavit affirmed by Fegan on 2-1-5952 which was probably meant to be used in the divorce proceedings in England for the purpose of reducing the amount of the maintenance payable to the wife in view of altered circumst-ances. It also appears from this affidavit that after the decree nisi had been made absolute on 28-12-1950 Mrs. Fegan married one Arthur Welleslev Parsons on 28-1-1951 and was living, to the knowledge of the deponent Fegan, in South Africa with her second husband.
( 3 ) ON 3-1-1952 the deceased addressed a letter to James Finlay and Co. Ltd. In the following words: will you be good enough to close my account and send me a cheque for the balance at my credit?''
( 4 ) ON 11-1-1952 James Finlay and Co. Ltd. wrote back to the deceased saying:"as requested we have closed your account and enclose a cheque for Rs. 18,725-10-3 representing the balance available at your credit as per statement, attached. For audit purposes, we shall be obliged if you will sign and return to us the attached certificate certifying the correctness of your account. "
( 5 ) THE statement of account annexed to this letter shows that Fegan and his wife had an account with James Finlay and Co. Ltd. which was payable to either or survivor. This account is shown as squared up on 11-1-1952 by the following entry "to amount remitted to you as per your letter of 3-1-52. Rs. 18,725-10-3". At or about this time Fegan was taken mortally ill and had to be removed from Darjeeling to Calcutta. On 18-1-1952 Messrs. James Finlay and Co. Ltd. wrote to the Manager of the National. Bank of India Limited advising them to stop payment of the cheque for Rs. 18,725-10-3 in favour of K. I. M. Fegan on the ground of serious illness of the payee. James Finlay and Co. Ltd. wanted the Bank to notify t
