CARROLL v. Erwin Lampe, Cross-Defendant and Respondent. (1976)

In a second amended complaint, plaintiff Ann McNaghten (Booth) Carroll, as Administratrix-With-Will-Annexed of the Estate of Florence Edna Letts McNaghten, Deceased,¹ brought suit against defendant Security Pacific National Bank. A supplemental and third amended complaint² alleged, in five causes of action, negligence, money had and received (common count), and breach of contract. Defendant bank cross-complained against Erwin Lampe and Ruth Lampe.

Trial was by the court sitting without a jury. Judgment in the sum of $311,336.85, exclusive of interest, was rendered in favor of plaintiffs. The defendant bank has appealed.³

Florence McNaghten died in 1966. For some years prior to her death certified public accountant Erwin Lampe had been active in the management of her financial affairs. Lampe had been authorized to write checks on bank accounts maintained by decedent at various branches of defendant bank, including its Wilshire-Bedford branch; he did so, routinely. Lampe became known to employees of defendant bank through his association with Mrs. McNaghten.

After Mrs. McNaghten died, Lampe was named in her will as co-executor of her estate, along with decedent's daughter, Ann Carroll. Lampe and Carroll met in August, 1966, and agreed that it was necessary to immediately open an estate commercial account, a checking account, in order to pay some pressing estate obligations. The co-executors agreed that Lampe would actually open the account, and would maintain the record of the account. Nothing was said at this August meeting—or any other—about whether checks could be drawn upon the account with one or two signatures, but Lampe did tell Carroll to be sure and let him know if she wrote any checks on the account, so that a proper record could be kept.

In late August, 1966, Lampe went to the Wilshire-Bedford branch of defendant bank to open the account. He provided bank officer Massa with a certified copy of the letters testamentary, which showed that Lampe and Carroll were co-executors of the McNaghten estate. The bank officer ascertained that co-executor Carroll was decedent's daughter, and asked for her address. Lampe gave the officer Carroll's address. There was no discussion between Lampe and the bank officer of whether the account would be set up to require the signatures of both executors before withdrawals could be made. Lampe neither asked any questions of Massa about this nor did Massa, the bank officer, refer to the subject. Lampe testified at the trial that he assumed that the account was being opened in a manner which would permit withdrawals on one signature alone. Lampe indicated to the bank officer that he needed temporary checks, and signed a signature card provided by defendant bank. On the card was the statement: ‘The account shall be governed by applicable banking laws, customs, and Clearing House regulations and by the Rules printed in the Bank Book, and shall be subject to the service charge schedule of the Bank.’

During this initial meeting with Massa, the bank officer, Lampe also prepared a second signature card for Mrs. Carroll. He testified at the trial that she had advised him a short time later that she had received this card in the mail from the bank, had signed it and returned it to defendant bank. Both signature cards were introduced at the trial as plaintiffs' exhibits. Nothing on these cards indicated that any particular number of signatures was required on checks drawn on the account.

Plaintiffs produced evidence at the trial showing that defendant bank had an operations manual for its internal use, which set forth procedures approved by management concerning bank operations. In the section of the manual dealing with the opening of accounts, there was a specific provision that where there were co-executors named in a will, the estate account should be set up to require the signatures of both executors on any checks drawn on the estate account. It was also established at the trial that, after a new account was opened, it would be reviewed by a supervising bank officer to see that the correct procedure had been followed. An account requiring more than one signature was ‘flagged’ for defendant's operating personnel by means of a stamp placed on the signature cards indicating the number of signatures required for withdrawals. In the instant case, the Lampe-Carroll signature cards, while stapled together and initialed by a reviewing officer, did not contain the stamp that indicated a requirement that two signatures were needed for withdrawals.

From the time the account was opened in August, 1966, until October, 1970, Lampe wrote checks on the account—checks which bore only his signature. Mrs. Carroll wrote no checks. With the checks written by him, Lampe paid proper charges against the estate, including attorney fees to estate attorneys Latham & Watkins, and William M. Bullis. But in addition to payment of proper estate charges, Lampe gave $34,000 of estate funds, without authorization, to the decedent's son, Malcolm McNaghten. Most importantly, however, he diverted approximately $250,000 of the estate funds to his own use by investing in a mining venture which failed. During this period, Mrs. Carroll moved to Palm Springs, California, where she lived until her death in 1973. She did not participate in the management of the estate checking account, nor did she ever ask for an accounting or question Lampe's handling of the estate funds. She did, however, along with Lampe and the estate attorneys, sign two estate accountings filed with the probate court during the 1966–1970 period.

The defalcations were not discovered because Lampe provided false information for the accountings, showing more cash in the estate accounts than was actually there.⁴ No independent investigation of his figures was made by anyone. In October, 1970, Lampe confessed his theft of estate funds to Latham & Watkins, and this suit was filed against defendant bank immediately thereafter.

At the trial, plaintiffs sought to impose liability on defendant bank for the thefts by co-executor Lampe on the two theories of negligence and breach of contract. Plaintiffs claimed that the bank had been negligent in opening the estate account to permit Lampe to withdraw funds on one signature alone. It was also claimed that the one-signature withdrawal permitted by the bank constituted a breach of the contract of deposit as set forth on the signature cards.

Plaintiffs introduced evidence consisting of the testimony of several employees of large banks located in Los Angeles to the effect that it was customary, at their respective banks, to require two signatures for withdrawals on this type of account. Mark Wasko, defendant bank's reviewing officer, testified that he could not explain why the two-signature stamp had not been placed upon the McNaghten estate signature cards; he also testified that it had been his understanding while employed by defendant that he was obligated at all times to follow the procedures set forth in defendant's manual. The bank offered the testimony of a vice-president, Lorne Currer, that, while the manual did set forth standard operating procedure as a guideline, discretion was retained by bank officers in the method of opening accounts.

The trial court found, in Finding No. 15, that ‘at all times relevant herein, from and including the opening to the closing of the McNAGHTEN ESTATE checking account, the BANK had a duty to require, and should have required, the signatures of both co-executors, to wit: the signatures of both ANN McNAGHTEN CARROLL and ERWIN LAMPE on each and every check and withdrawal request drawn upon said McNAGHTEN ESTATE checking account. There are no facts herein which would justify the BANK in making or claiming an exception to said duty.’

The ‘duty’ mentioned in Finding No. 15 was further described in Finding No. 16, as that ‘created pursuant to the terms and conditions of a written contract as well as the terms and conditions of an implied contract. Said duty also existed as a matter of common law by evidence of the banking industry custom and practice and also by evidence of the BANK's own internal written procedures as set forth in their Operations Manual and also by the BANK's own internal actual customs and procedures.’ In Finding No. 16a, the trial court stated that ‘the aforementioned duty of the BANK, . . . is also established by a written contract consisting of the checking account signature cards and documents referred to therein.’

The trial court's Finding No. 16b was to the effect that the duty of the bank, as set forth in Finding No. 15, was owed to ‘ERWIN LAMPE as co-executor of the McNAGHTEN ESTATE, ANN McNAGHTEN CARROLL as co-executrix of the McNAGHTEN ESTATE, the McNAGHTEN ESTATE and ultimately to the beneficiaries of the McNAGHTEN ESTATE including the present plaintiffs.’

In Finding No. 17, the trial court determined that each payment made by the defendant bank on the single signature of Erwin Lampe ‘constituted separate and independent breaches of the aforementioned contractual duty owed by the BANK and each of which constituted separate and independent acts of negligence by the BANK . . ..’

The trial court concluded that plaintiffs had been damaged by defendant bank's breach of duty. Numerous findings, special findings and conclusions of law were made in support of the judgment, and will be referred to as they become pertinent to our discussion.

Plaintiffs offered a potpourri of legal theories at the trial as alternative—or conjunctive—bases for determining the existence of a ‘duty’ on the part of defendant bank to the co-executors, its depositors, and to certain third parties, the heirs of the McNaghten estate. Plaintiffs asserted that the duty owed had been created by (1) common law negligence principles, (2) statutory law found in Probate Code section 570, (3) written contract, (4) implied contract, and (5) partially written and partially implied contract. The proliferation of theories can, however, be reduced to the assertion that defendant bank's negligent performance occurred while contracting with the co-executors concerning the deposit. It is an established principle, of course, that the same conduct may under certain circumstances, constitute both negligence and a breach of contract. (See, e. g., Heyer v. Flaig (1969) 70 Cal.2d 223, 74 Cal.Rptr. 225, 449 P.2d 161; Lucas v. Hamm (1961) 56 Cal.2d 583, 15 Cal.Rptr. 821, 364 P.2d 685; Biakanji v. Irving (1958) 49 Cal.2d 647, 320 P.2d 16.)

It is the duty of a reviewing court to affirm the trial court's judgment if there is substantial evidence in the record supporting that judgment on any theory fairly tried below. (Brewer v. Simpson (1960) 53 Cal.2d 567, 584, 2 Cal.Rptr. 609, 349 P.2d 289.) We have concluded, however, that, in the case at bench, the evidence adduced below does not support the imposition of liability on the bank, either with respect to its depositors—co-executors Lampe and Carroll—or to those plaintiffs who are heirs to the McNaghten estate, for Lampe's diversion of estate funds. Thus, we reverse the judgment.

We turn first to the theory offered by plaintiffs that defendant bank owed a duty to them pursuant to common law principles of negligence. ‘Actionable negligence involves a legal duty to use due care, a breach of such legal duty, and the breach as the proximate or legal cause of the resulting injury. [Citation.] The duty of care [is] always related to ‘some circumstance of time, place and person’ [citation].' (United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d 586, 594, 83 Cal.Rptr. 418, 422, 463 P.2d 770, 774.) The determination that such a legal duty exists is primarily a question of law to be considered on a case-by-case basis. It has been described as ‘the court's ‘expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection.’' (Weirum v. RKO General, Inc. (1975) 15 Cal.3d 40, 46, 123 Cal.Rptr. 468, 471, 539 P.2d 36, 39.) Those considerations include ‘the guidance of history, our continually refined concepts of morals and justice, the convenience of the rule, and social judgment as to where the loss should fall.’ (Weirum, supra, 15 Cal.3d 40, at p. 46, 539 P.2d 36, at p. 39.)

One major consideration in establishing the element of duty is the foreseeability of the risk. Although duty is a question of law, foreseeability of the risk is a question for the jury. (Dillon v. Legg (1968) 68 Cal.2d 728, 69 Cal.Rptr. 72, 441 P.2d 912.) Other major considerations include ‘the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost, and prevalence of insurance for the risk involved. [Citations.]’ (Rowland v. Christian (1968) 69 Cal.2d 108, 113, 70 Cal.Rptr. 97, 100, 443 P.2d 561, 564.)

It must be recognized that the duty one owes to conduct oneself with due care is distinct from the duty that one may owe to control the conduct of another. Although at common law, one owed no duty to control the conduct of another, ‘the courts have carved out an exception to this rule in cases in which the defendant stands in some special relationship to either the person whose conduct needs to be controlled or in a relationship to the foreseeable victim of that conduct [citation].’ (Tarasoff v. Regents of the University of California (1976) 17 Cal.3d 425, 435, 131 Cal.Rptr. 14, 23, 551 P.2d 334, 343.)

With these principles in mind, we consider the question of what duty a bank owes, at common law, to its depositors and other persons. It has long been the rule that the relationship between a depositor and a bank is not fiduciary in nature, but is merely that of creditor and debtor. (Union Tool Co. v. Farmers etc. Nat. Bk. (1923) 192 Cal. 40, 53, 218 P. 424.)

The primary duty owed by a bank to its depositor-creditor, whether the depositor is a fiduciary for another or not, is to pay out the depositor's funds only in accordance with the depositor's directions. In Blackmon v. Hale (1970) 1 Cal.3d 548, 556, 83 Cal.Rptr. 194, 198, 463 P.2d 418, 422, this rule of law was explained in the following terms: ‘If a deposit is made in a bank to the credit of a person as trustee, the bank is charged with notice that the funds are received in a fiduciary capacity. [Citations.] The bank is not liable for the misappropriation of trust funds by the trustee, however, unless the bank has knowledge, actual or constructive, of such misappropriation. [Citations.] . . . The bank is authorized to honor withdrawals from an account on the signatures authorized by the signature card, which serves as a contract between the depositor and the bank for the handling of the account. So long as the checks drawn on the account are signed in conformity with the signature card, and absent any knowledge of a misappropriation, the bank is free from liability for honoring a check drawn in breach of trust. [Citations.]’ (Emphasis added.) A similar expression of the limitation placed on a bank's responsibility to its depositors and the depositor's beneficiary is found in La Vista Cemetery Assn. v. American Sav. & Loan Assn. (1970) 12 Cal.App.3d 365, 369, 90 Cal.Rptr. 722, 724: ‘Commercial banks have no duty to police their fiduciary accounts . . ..’

Thus, while it is entirely foreseeable that some bank-depositor fiduciaries will violate their trust, thereby satisfying one major consideration involved in the determination of ‘duty,’ the courts have adhered to the long standing policy of nonduty with respect to a bank's relationship with its depositors who are fiduciaries and have declined to expand the liability of banks for violations of trust by their depositor-fiduciaries of which the banks have no knowledge until after the fact. That a bank's duty is limited to performance according to the depository contract is reflected throughout the Financial Code.

Thus, section 852 of the Financial Code provides that joint holders of a bank account may withdraw funds separately from the account unless the joint depositors have informed the bank by written notice of an alternative arrangement. Section 952 of the Financial Code sets forth specific notice requirements of adverse claims to a deposit before the bank may be held liable for honoring a withdrawal check by the depositor. And section 953 of the Financial Code is significant in providing: ‘When the depositor of a commercial or savings account has authorized any person to make withdrawals from the account, the bank, in the absence of written notice otherwise, may assume that any check, receipt, or order of withdrawal drawn by such person in the authorized form or manner, including checks drawn to his personal order and withdrawal orders payable to him personally, was drawn for a purpose authorized by the depositor and within the scope of the authority conferred upon such person.’ (Emphasis added.)

In the instant case, it is clear that, once the account was established, defendant bank, without knowledge of any misappropriation, duly paid out the estate funds according to Lampe's order. The withdrawals by Lampe were not inconsistent with the signature cards as they appeared in the bank's records. Any duty, therefore, must, if at all, relate to the alleged negligence of the bank in opening the account in the manner it did. It is to be noted that the Blackmon holding is not entirely dispositive in this regard, because it did not concern allegedly negligent opening of a trust account. Review of the decisional law concerning the basic duty owed by a bank to its depositors and third persons, as well as of the Financial Code sections previously mentioned, leads us to the conclusion that a bank is not required to formulate the manner in which withdrawals may be made from an account opened by two or more depositors, whether such depositors are fiduciaries or not.

We hold that the responsibility for informing the bank of the proposed functioning of the account properly lies with the proposed depositors. The statutory law (as set forth in the Financial Code) ordinarily requires written notice to the bank if more than one signature is to be required concerning withdrawals. It is the depositors who ordinarily determine withdrawal terms. In the instant case, the defendant bank was not notified either in writing or orally by Lampe or Carroll, the co-executor depositors, that two-signature withdrawals were to be required.

Evidence adduced below with respect to the bank's specified internal procedures and the conduct of other engaged in similar undertakings, i. e., banks opening estate accounts, is of some relevance in determining the applicable standard of care—the determination of duty—(see the discussion in Prosser, Torts (4th ed.), ‘Negligence,’ pp. 166 et seq.) but does not compel the expansion of the long established rule as to a bank's duty to its depositors or others. The social policy underlying the proposed expansion advocated by plaintiffs, is not persuasive in view of the competing economic policy of encouraging rapid and expeditious flow of commercial transactions—an economic policy that has been legislatively expressed in pertinent provisions of the Financial Code and that has been supported by the decisional law represented by cases such as Union Tool Co. and Blackmon.

In our view, the debtor-creditor relationship between a bank and its depositors who are fiduciaries cannot reasonably be held to constitute a ‘special relationship’ between a bank and its fiduciary depositors or the beneficiaries of such depositors in order to bring a bank within the exception to the rule that a defendant owes no duty to control the concuct of another because of the foreseeability of harm to a victim from the conduct of the person whose conduct needs to be controlled. (See Tarasoff, supra, 17 Cal.3d 425, at p. 435, 131 Cal.Rptr. 14, 551 P.2d 334.) If the concept of a bank's duty to its depositors who are fiduciaries and to the latter's beneficiaries is to be expanded under the Tarasoff exception, in spite of the long established principles created by both decisional and statutory law, the appropriate body to expand the duty concept is either the California Legislature or the California Supreme Court.

In the case before us, plaintiffs have also relied on Probate Code section 570 in search of a legal duty owed to them by defendant bank. This section states: ‘When two or more executors or administrators have been appointed and one or more are absent from the state, or legally disqualified from serving, the act of the other or others shall be effectual for all purposes; if upon any hearing it shall appear that one or more of the executors or administrators were absent from the state or legally disqualified from serving, the court may so find in its order or judgment and such finding shall be conclusive of the authority of those acting. When there are more than two executors or administrators, the act of a majority is valid.’

The subject of co-executors has been included in the statutory law of this state since 1851. Section 570 of the Probate Code has existed in its present form since 1931. Insofar as we have been able to discover, there has been no legislative commentary setting forth any particular interpretation of the statute, nor has the decisional law undertaken this task.

Plaintiffs contend that, by its terms, Probate Code section 570 limits co-executors in independent action; that from it evolves not only the duty of co-executors to act together except for the specified situations set forth in the section, but also a duty imposed on those dealing with co-executors to require joint action by the co-executors. Plaintiffs assert, therefore, that a bank, dealing with a co-executor estate account, has the statutorily imposed duty to require withdrawals from the account to be made jointly, and has no discretion to permit one-signature withdrawals irrespective of the wishes of the co-executors.

In Special Finding No. 6, the trial court stated that ‘[t]he duty of the BANK as set forth in Finding No. 15 is imposed by Probate Code, Section 570, by implication, in addition to the other ways that it is imposed as set forth herein, in that there is no evidence herein that ANN McNAGHTEN CARROLL was absent from the state or was legally disqualified to act as co-executrix and also that there was no evidence that the BANK had reason to believe that she was absent from the state or disqualified to act as co-executrix.’ By virtue of Special Finding No. 6, the trial court interpreted Probate Code section 570 as imposing a duty on banks to require two-signature withdrawals on accounts in the name of two depositors as co-executors.

The history of Probate Code section 570 and its predecessors does not suggest that it was intended to impose any duty on third persons dealing with co-executors. The section is general in nature, setting forth a procedure that is to be followed in the probate court for ratification of independent acts of a co-executor under certain specified circumstances. We hold that Special Finding No. 6 of the trial court constitutes an incorrect interpretation of Probate Code section 570. It is our view that section 570 imposes a duty of joint action by co-executors only with respect to their relations with each other—at least where bank deposits are concerned. We reject the contention that banks are governed by Probate Code section 570 insofar as requiring that withdrawals be made only upon the signature of all co-executors, contrary to the instructions—express or implied—from co-executors authorizing withdrawals upon one signature only. The interpretation of Probate Code section 570 contended for by plaintiffs and made by the trial court is unreasonable and lacks support from any legislative history or intent, and from established principles of statutory construction. In view of the explicit provisions found in the Financial Code governing the relationship between banks and joint depositors, including those who are fiduciaries (see Fin.Code, §§ 852, 952, 953), and the lack of any provisions in the Probate Code creating an exception to the Financial Code provisions for joint estate deposits, no reasonable basis exists for reading into Probate Code section 570 a provision that banks must require joint executors to make deposits subject to withdrawals only upon the signatures of all co-executors or the signatures of a majority if there are more than two co-executors.

We turn next to the asserted breach of contractual duty on the part of defendant bank. The signature cards signed by Lampe and Carroll embodied the basic contract of deposit between the co-executors and the bank. (Blackmon, supra, 1 Cal.3d 548, at p. 556, 83 Cal.Rptr. 194, 463 P.2d 418.) On the signature cards was the statement: ‘The account shall be governed by applicable banking laws, customs, and Clearing House regulations and by the Rules printed in the Bank Book, and shall be subject to the service charge schedule of the Bank.’ (Emphasis added.) Plaintiffs relied upon the inclusion of the word ‘customs' to introduce extrinsic evidence that one of the ‘customs' governing the contract was the two-signature requirement for co-executor estate accounts. Such evidence was admitted, and properly so. The written contract of deposit incorporated by reference possibly numerous additional terms, some of which may have been reduced to writing and others which may have been implicit.

The term ‘customs' is generic. It is also ambiguous until related to the particular circumstances surrounding the execution of a contract. Since the contract involved here was in standardized form, drafted by defendant bank, its expression of ambiguity must be interpreted against the bank and in favor of the depositors. (Tahoe National Bank v. Phillips (1971) 4 Cal.3d 11, 20, 92 Cal.Rptr. 704, 480 P.2d 320.)

Defendant bank argues, however, that the evidence offered by plaintiffs was, as a matter of law, insufficient to establish the existence of a custom which became a part of the contract of the parties. We agree.

In order for a contractual term to be implied from custom, it must be established that the underlying custom is generally and unmistakably known. (Peiser v. Mettler (1958) 50 Cal.2d 594, 608, 328 P.2d 953.) Also, evidence of custom may only be used as an aid to contract interpretation. It may not be employed to create a contract different than that intended by the parties. (Hayward Tamkin & Co. v. Carpenteria Inv. Co. (1968) 265 Cal.App.2d 617, 623, 71 Cal.Rptr. 462; Brecher v. Gleason (1972) 27 Cal.App.3d 496, 103 Cal.Rptr. 831.) Defendant particularly relies on Brecher in making the argument that custom cannot ‘create’ a contract. But Brecher is distinguishable from the case at bench. In Brecher the parties had expressed an intent contrary to custom, whereas in the instant case there was no evidence of expression at all.

Plaintiffs offered the testimony of some employees of other banks to support their contention that a known industrywide banking custom existed that required two-signature withdrawals in the case of co-executor accounts. The testimony of employees of some other banks was to the effect that two signatures were required on such accounts in the banks where such employees worked. The employees who testified did not know what the operating procedures or practices were in other banks. This testimony does not rise to the level of constituting substantial evidence to support the trial court's finding that there existed an industry-wide banking custom to require two-signature withdrawals on all co-executor accounts.

We have previously adverted to the fact that the evidence introduced below did not establish a custom or operational procedure by defendant bank to invariably require two-signature withdrawals on co-executor accounts, as the operational procedure generally so requiring as guidelines was subject to discretionary change by officers of the bank. The testimony of Lampe established that he and his co-executor Carroll did not expect or desire a two-signature withdrawal account, and that Lampe was to handle the account. This evidence does not support the trial court's findings that there was a violation by the defendant bank of its contract with the co-executors because of the bank's internal procedures or local bank customs that generally required co-executor estate accounts to need two signatures for withdrawals. Since the co-executors Lampe and Carroll did not desire a two-signature withdrawal account, the evidence as to the failure of the bank to require two signatures for withdrawal checks cannot be construed as a violation of a term of the contract implied contrary to the intent of the co-executors and contrary to the discretion invested in the bank officers with respect to the number of signatures required for co-executor estate account withdrawals.

Even if plaintiffs' evidence had been sufficient to establish an industrywide banking custom and a custom of defendant bank to invariably require two signatures for withdrawals on co-executor accounts, a different result than that reached by us would not be mandated. It is an established principle of law ‘that custom and usage cannot change a rule of law (Rest., Contracts, § 249, p. 355). A fortiori custom and usage cannot override positive statutory law.’ (Hayward Tamkin & Co., supra, 265 Cal.App.2d 617, at p. 624, 71 Cal.Rptr. 462, at p. 466.) In Kohn v. Sacramento Electric, Gas & Ry. Co. (1914) 168 Cal. 1, 7, 141 P. 626, 629, it is stated: ‘Custom is often very important, it is true, in assisting courts to interpret statutes properly, but it never overcomes the positive provisions of statutes.’ In American Nat. Bk. v. A. G. Sommerville (1923) 191 Cal. 364, 371, 216 P. 376, it was argued that by custom the parties intended a conditional sales contract to be a negotiable instrument. The argument was rejected because of the principle that custom could not neutralize the statutory provisions precluding such contracts from being considered negotiable instruments. We construe Financial Code sections 852, 952 and 953 as authorizing banks to permit withdrawals on the order of any one joint depositor unless the joint depositors have given written instructions to the bank to require two signatures. Since, in the case at bench, the co-executors Lampe and Carroll did not desire the joint form of withdrawals, a custom which required two-signature withdrawals by them would have been contrary to the Financial Code sections referred to herein and, hence, invalid and nugatory under the Hayward Tamkin & Co., Kohn and American Nat. Bk. cases.

Other contentions of the parties, including those with respect to the applicable statute of limitations and the imposition of prejudgment interest, need not be considered here, in view of our conclusion that no breach of duty by defendant bank has been established on either tort or contractual grounds.

The judgment appealed from is reversed with directions to the trial court to enter judgment for defendant bank.

Defendant bank shall recover its costs on appeal.

FOOTNOTES

1.  Distribution of the estate took place in 1972. Ann Carroll died in 1973, prior to trial. Substituted as proper parties plaintiff were testamentary trustees of the McNaghten estate, William M. Bullis and Leroy B. Taft, Jr., as well as W. H. Booth, Jr. and Malcolm Patrick Booth, who succeeded to the interest of Ann (Booth) Carroll.

2.  The supplemental and third amended complaint was filed on January 2, 1974.

3.  Defendant was awarded $268,733.44, exclusive of interest, on the cross-complaint against cross-defendant Erwin Lampe. The cross-complaint was dismissed as to Ruth Lampe. Erwin Lampe has not appealed. Defendant appeals only the judgment rendered against it in favor of plaintiffs.

4.  Some testamentary trust accounts of the estate were maintained at another branch of defendant. Some funds were taken from these accounts as well, in relatively small amounts. The propriety of these withdrawals is not in issue here; we are concerned only with the loss sustained as the result of diversions from the commercial estate checking account maintained at the Wilshire-Bedford branch.

JEFFERSON, Associate Justice.

FILES, P. J., and JEFFERSON, J.,* concur.