Bernhard v. Bank of America Nat. Trust & Sav. Ass’n

Facts

In June 1933, Clara Sather, an elderly woman lived with Mr. and Mrs. Charles Cook. Because if her ailing health, she authorized Mr. Cook and Dr. Joseph Zeiler to make drafts jointly against her account in the Security First National Bank of Los Angeles. In August 1933, Mr. Cook opened an account at First National Bank of San Dimas in the name of Clara Sather by Charles Cook. Afterwards, a number of checks drawn by Cook and Zeiler were drawn from Mrs. Sather’s account and deposited in the San Dimas account. In October 1933, in the presence of witness, Mrs. Sather marked an authorization directing Security First National Bank in Los Angeles to transfer the balance of her savings account ($4,155.68) to the First National Bank of San Dimas into the account in her name. Cook then withdrew that money and opened a new account in the name of himself and his wife. Mrs. Sather died in November 1933 and Cook was named executor. At the insistence of the probate court he was asked to resign. The account he filed made no mention of the money transferred by Sather to the San Dimas Bank. The Plaintiff filed objections to probate because of this. On the objections, the court ordered that Mrs. Sather had made a lifetime gift to Cook in the amount of the deposit in question. The Plaintiff was named administratrix of the estate and brought suit against the Defendant, successor to the San Dimas Bank, seeking to recover the amount because Mrs. Sather never authorized the withdrawal. The Defendant pleaded two affirmative defenses: (i) that the money on deposit was paid to Cook with Mrs. Sather’s approval and (ii) this fact was res judicata by the finding of the probate court. The Plaintiff argued that res judicata did not apply because the Defendant was not a party to the previous action nor in privity with a party to that action and because there was no mutuality of estoppel.