Savings Bank of Danbury v. Loewe

Background

A creditor had obtained judgment against a debtor and used Connecticut’s attachment procedure to seize the debtor’s savings bank account held by the garnishee bank. The bank admitted the deposits but said the account had been assigned to the United Hatters of North America, who claimed dividends that accrued after the writ of attachment was served. The only dispute left for the courts was whether those later-earned dividends belonged to the attaching creditor or to the assignee.

Reasoning

The Court asked whether savings-bank dividends are like corporate dividends, which belong only when declared, or like interest on a debt, which is part of a present right. The opinion stressed that an ordinary savings bank holds funds in trust for depositors and must pay net earnings to them under statute. Because depositors have a present, vested right to those earnings, the Court treated subsequent dividends as part of the right subject to attachment. The Court relied on Connecticut statutes and related cases to conclude that the attaching creditor had the superior claim.

Real world impact

The decision means that when a creditor lawfully attaches a savings bank account, earnings that accrue afterward are generally reachable by that attachment. An assignee who takes the account after attachment cannot override the creditor’s claim to later dividends. The Court also noted practical issues about bonds to release attachments and left some procedural questions for Connecticut courts to decide.