Creditor's Rights - Garnisment -Garnishment of Branch Banks

Authors

Thomas S. Erickson S.Ed., University of Michigan Law SchoolFollow

Abstract

Under traditional legal analysis, branch banks are regarded as mere agencies of the banking corporation. Service of process on their officers binds the corporate principal. With the principal thus having knowledge, ". . . that knowledge or notice communicated to the principal, which imposes a duty upon it, becomes by that circumstance, the knowledge of all its agents when acting in an official capacity." Garnishment at a branch bank would therefore seem to impose upon the bank corporation the duty of impounding funds of the principal debtor regardless of the particular branch in which they were located. If funds of the principal debtor were paid out at a branch not served which had no knowledge of the garnishment, the bank would still apparently be liable to the garnishor. Inasmuch as most branch banks keep books separate from the other branches and the central office, the latter therefore would have no way of ascertaining which of its branches carried the debtor's account. The corporation would have no means of self-protection other than notification to all branches of each garnishment upon any one branch. In view of the frequency with which bank deposits are garnished, such a situation would impose an intolerable burden on banking corporations with a number of branches. The purpose of this comment is to analyze judicial and legislative attitudes toward this problem.

Recommended Citation

Thomas S. Erickson S.Ed., Creditor's Rights - Garnisment -Garnishment of Branch Banks, 56 Mich. L. Rev. 90 (1957).
Available at: https://repository.law.umich.edu/mlr/vol56/iss1/4