BROWN v. NATIONAL CITY BANK--Citation: 2010-Ohio-5641
Owner of certificates of deposit (CDs) pledged the CD’s as collateral for loans owed to a bank by her children and their business. When the Owner died, the loan went into default and the bank siezed the CD’s pursuant to its security agreement. The estate of the Owner sued the bank alledging the bank’s failure to file a claim against the estate within the time allowed by law effectively barred the bank from claiming any interest in the CD’s which the estate claimed as an estate asset. The Court ruled that the bank acted properly in applying the CD’s to the debt without first filing a claim against the estate. As the debt was extinguished with the application of the proceeds of the CD’s, the bank had no further claim against the estate and no reason to file a formal affidavit of claim. It should be noted that the Owner was not a comaker or guarantor on the debt owed to the bank. Instead, the Owner merely pledged her CD’s as collateral. Had the Owner signed as a guarantor, the bank would have a claim against the estate if the CD’s were insufficient to payoff the loan and the surviving debtors failed to pay as agreed. In such a case RC 2117.37 allows for the filing of a contingent claim after all the contingencies have been closed.