This is an interpleader action by Farmers Bank of the State of Delaware to determine which of two claimants is entitled to a savings deposit: Mildred Howard or the Executor of the Estate of Sadie Cooper Rust, deceased.
The account was in the name of Mrs. Rust, only. On July 8, 1967 she directed the Bank to add to the account the name of Mildred Howard but specifically instructed that Mrs. Howard not be told of this until after her own death. The Bank followed that instruction. Mrs. Rust died on February 22, 1968, this action was brought thereafter.
Mrs. Howard originally contended that Mrs. Rust made a gift to her of a joint interest in the account, but that argument was not persuasive. Farmers Bank of the State of Delaware v. Howard, Del.Ch., 258 A.2d 299 (1969). The Supreme Court affirmed. 268 A.2d 870 (1970), but remanded the case to permit Mrs. Howard, on a special showing, to argue that she was a third party beneficiary of the contract between Mrs. Rust and the Bank. In order to do justice between the parties, this Court permitted briefing on that theory and this is the decision thereon.
(1) A contract made for the benefit of a third party is enforceable in Delaware and the third party may sue to enforce a promise made for his benefit, even though he is a stranger to both the contract
(2) A donee beneficiary is such a third party and he may sue to enforce a contract made for his benefit, even though he did not assent to the contract nor have knowledge of its existence. Restatement, Contracts § 135(a); 4 Corbin on Contracts § 783.
(3) The right of such a donee beneficiary to enforce a contract depends on its terms, and these are determined by the intent of the parties as expressed in the words they used. 17A C.J.S., supra, § 519(4) h (b).
(4) Mrs. Howard contends that she was a donee beneficiary of a contract between Mrs. Rust and the Bank. Specifically, she says that Mrs. Rust had moneys on deposit, she directed the Bank to pay the balance thereof to Mrs. Howard after her death, the Bank accepted the instruction. She says that the Court is obliged to give effect to Mrs. Rust's intent which was to benefit Mrs. Howard after her own death.
(5) The record here consists of the signature card signed by Mrs. Rust, the note she wrote, the account record and the letter sent by Mr. Richardson (the substance of which appears in the Appendix).
(6) It might be argued that this record shows an intent by Mrs. Rust to benefit Mrs. Howard and that she did so by utilizing one of three legal concepts:
Order on notice.
On July 8, 1967 Mrs. Rust gave a writing to the Bank stating as follows:
Under date of July 11, 1967 Mrs. Rust signed a signature card reading in part as follows:
On July 12, 1967 a Vice President of the Bank wrote to Mrs. Rust saying in part as follows: