168 S.E. 520 | N.C. | 1933
Civil action to establish preference, or priority of plaintiff's claim to funds in the hands of the liquidating agent of insolvent bank.
The case was heard by the court without the intervention of a jury, upon facts agreed or found without objection:
1. The Central Bank and Trust Company of Asheville, N.C. chartered under the banking laws of the State, was placed in the hands of the defendant as liquidating agent, because of insolvency, on 19 November, 1930.
2. Prior thereto and at various times from 18 May, 1930, to 18 November, 1930, the plaintiff had deposited with, or delivered to the Central Bank and Trust Company as trustee, under a trust agreement in writing and duly registered, sums aggregating $2,931.25 for the establishment of a fund to pay the interest and principal installments, as they should become due, upon certain first mortgage notes held by third persons and in the hands of the trustee for collection.
3. These deposits were carried as a trust account in the trust department of the bank, and had not been applied to the specific purposes for which said account was held at the time of the bank's closing.
4. All moneys received under the terms of the trust agreement were deposited by the trust department of the Central Bank and Trust Company in its general account carried with the commercial department of the same bank. This general account of the trust department with the commercial department — made up of many funds received from various parties — was the only account carried by the trust department at the time of the closing of the Central Bank and Trust Company and was at that time overdrawn by approximately $21,000.
Upon the foregoing pertinent facts, it was adjudged "that the claim of the plaintiff be, and the same is hereby, allowed as a preferred claim against the assets of the Central Bank and Trust Company, and when *339 final settlement is made by said defendant the said claim shall be allowed priority in payment over the claims of the common creditors and shall either be paid in full, as a preferred claim, or in the event of an insufficient amount, to pay all of the preferred claims, then it shall share pro rata with the other preferred claims against the said Central Bank and Trust Company."
Defendant appeals, assigning error.
The case is controlled by the decision in Parker v. Trust Co.,
It is the position of the plaintiff that the method of handling the account in question was a matter of internal bookkeeping, or of self-dealing, and is without material significance in the case (Glidden v. Gutelius,
The defendant, on the other hand, says that the rightfulness of the deposit made by the trust department with the commercial department, whether legal or other, in the absence of statutory authorization, is not challenged; that it does appear by so depositing said funds they were thereby segregated or earmarked as belonging to a separate account; that this account was overdrawn to the extent of $21,000 at the time of the bank's closing; that instead of augmenting the funds in the hands of the liquidating agent, they were apparently diminished to the extent of the overdraft; that to entitle a claimant to preferential payment from the assets of an insolvent bank in the hands of a liquidating agent, it must appear the funds demanded were in the bank's possession as agent, bailee, or trustee; that such funds reached the hands of the liquidating agent in some form; that the assets brought under his control were larger by this amount than they otherwise would have been (Tinsley v. Amos, 135 So. (Fla.), 397); and that plaintiff has failed to make out such a case.McDonald v. Fulton,
In the liquidation of insolvent banks, the general depositors are entitled to no preference, and must share pro rata with the general creditors. Corp. Com. v. Trust Co.,
There are also certain statutory preferences (C. S., 218(c); Morecock v.Hood, Comr.,
The argument of the defendant proceeds upon the premise that the trust and commercial departments of the Central Bank and Trust Company were two separate and distinct entities, whereas in truth and in fact they were but component parts of a single unit. The fact that the trust department account was overdrawn at the time of the bank's closing proves no more than that the Central Bank and Trust Company misused or misapplied plaintiff's funds for its own purposes. It had various *341 other moneys all mingled in the same till, with those deposited by plaintiff, and the overdraft in the trust department account was but a bookkeeping arrangement so far as the bank's creditors are concerned. A corporate fiduciary will not be permitted to escape the responsibilities arising from such status by the simple expedient of self-dealing. Note, 31 Mich. L. Rev., 532.
The plaintiff has shown that she deposited with the Central Bank and Trust Company certain funds for a specific purpose, which the bank received in trust, mingled them with other funds, and became insolvent before discharging the trust, with a portion of the commingled fund still on hand when the defendant, as liquidating agent, took charge of its affairs. Plaintiff's funds were not only mingled with others in the general account of the trust department, but this account was likewise commingled with the general funds of the bank. It appears, therefore, that the general coffers of the bank were enriched to the extent of plaintiff's deposits, and the assets coming into the hands of the defendant were accordingly increased or made larger. This entitles the plaintiff to a preference. Peters v. Bain,
The decisions in Corp. Com. v. Bank,
The precise question here presented is new in this jurisdiction, but the ruling appealed from is supported in tendency, at least, by a number of decisions, and will be upheld.
Affirmed.