Gordon v. Hamilton Savings & Loan Ass'n
217 A.2d 843
Pa. Super. Ct.
1966
Check Treatment

Opinion by

Wright, J.,

Wе are here concerned with an action in assumpsit instituted on February 4, 1965, by Thomas G. Gordon, *233administrator d.b.n.c.t.a. of tbe estate of Herman James, dеceased, to recover tbe sum of $6,120.00, tbe amount of a savings account in tbe Hamilton Savings and Loan Association in the name of Herman James at the time of his death on June 17, 1961. The pleadings consist of a complaint, an answer with new matter, and a reply. Each party filed a motion for judgment on the pleadings. On June 21, 1965, the court below granted plaintiff’s motion. On July 1, 1965, judgment was entered accordingly in total amount, including interest, of $7,602.06. This apрeal by the defendant followed.

The facts are not in dispute. On June 23, 1961, decedent’s son, Herman H. James, Jr., was duly appointed and qualified as administrаtor c.t.a. of his father’s estate. On June 26, 1961, Herman H. James, Jr., appeared at appellant’s banking office, presented a short certificate evidencing his appointment, and signed a withdrawal slip. Appellant drew a check payable ‍‌‌​​‌‌​‌‌​‌‌‌‌​​‌‌‌‌​‌​​​​‌​​‌‌‌​‌​​​​‌‌‌​​‌‌‌​​‍to the order of Herman H. James, Jr. This сheck did not indicate that Herman H. James, Jr., was a fiduciary. The money was misappropriated. Herman H. James, Jr., was removed as fiduciary, surchаrged by the Orphans’ Court of Philadelphia County, and replaced by Thomas G. Gordon. Appellant refused to comply with Gordon’s demand for payment, and suit followed.

Appellant’s first and principal contention is thus stated in its brief: “Under the provisions of the Uniform Fiduciaries Act,- where a bank in good fаith pays money to a fiduciary entitled to receive such money, it is not to be held responsible for the proper application thеreof”. Section 2 of the statute in question, Act of May 31, 1923, P. L. 468, Section 2, 20 P.S. 3331, reads as follows: “A person who, in good faith,' pays or transfers to a fiduciary аny money or other property, which the fiduciary as such is authorized to receive, is not responsible for the proper applicаtion thereof by the fi*234duciary; and any ..right or title acquired from the fiduciary in -.consideration of such payment -or .transfer is not, invalid in consequence of a misapplication by the fiduciary”. The term “good faith” is defined in Section 1 of .the statute, .20 -P.S. 3311, as -follows: “A thing is. done ‘in good faith’, withini. the meaning. of, this act, when it is in fact, done-honestly, whether it be done, negligently, or not”.

In Davis v. Pennsylvania Co., 337 Pa. 456, 12 A. 2d 66, it was. held that, since ‘-‘bad” is the antonym of “good”,, a thing is done in bad .faith within the meaning of the stаtute only when it is done dishonestly and, not merely negligently. The. court below, in holding that appellant was “pot entitled to the shelter of the. Act”, did not: tаke the position that appellant had act-, ed in bad faith. Nor does Gordon’s brief assert that there was bad faith on appellant’s -pаrt. ■ His argument is, based on the proposition that a debtor-creditor relationship existed between appellant and Herman James, which wаs not altered' by death,, and. that there ‍‌‌​​‌‌​‌‌​‌‌‌‌​​‌‌‌‌​‌​​​​‌​​‌‌‌​‌​​​​‌‌‌​​‌‌‌​​‍was a contract to pay the savings account only to the creditor or-to his-estate. Overlooked entirely is the fact that-Herman H. James, Jr., at. the time he-withdrew the savings account, was cloaked-with the authority of a personal reprеsentative under the Fiduciaries Act, and that he exhibited a valid-short certificate-showing his appointment. It is clear that payment would.not have been made to him without presentation of .the short .certificate., It is also clear that the -misappropriation of funds by him was not brought about or facilitated in. any way by action of the appellant. ...

Section. 501 of the Fiduciaries Act of April 18, 1949, P. L. 512, :20' P.S. -320.501, provides in pertinent part that a personal representative “shall have the right to and shall take possession of, maintain and' administer all the real and personal estate of the .decedent”. When Herman. H: James, Jr., was. appointed administrator *235c.t.a. of his father’s estate, the assets of that estate-beсame immediately subject to his control. What disposition he made of the savings account after he received it from appellant was a matter for which appellant was not responsible. Here pertinent is the following statement from Davis v. Pennsylvania Co., supra, 337 Pa. 456, 12 A. 2d 66: “The very purpose of the Uniform Fiduciaries Act was to facilitate banking transactions by relieving a depository, acting honestly, of the duty of inquiry as to the rights of its depositors, even though fiduсiaries, to ‍‌‌​​‌‌​‌‌​‌‌‌‌​​‌‌‌‌​‌​​​​‌​​‌‌‌​‌​​​​‌‌‌​​‌‌‌​​‍check out their accounts”. In the case at bar the record clearly discloses that appellant “in good faith” pаid the money to the duly authorized fiduciary empowered to receive the same. This is all-that the Act requires.

The cases relied on in Gordon’s brief1 are not here., applicаble. The development of our statutory law has. been directed toward placing the responsibility for assets held in a fiduciary capacity directly on the fiduciary, where it rightly belongs, and relieving those who-deal with fiduciaries from responsibility. See the Fiduciaries Act of 1949, supra, Sections 520, 547, 967, аnd 1066, 20 P.S. 320.520, 320.547, 320.967, and 320.1066; the Incompetents’ Estates Act of February 28, 1956, P. L. (1955) 1154, Section 446, 50 P.S. 3446; the -Uniform Commercial Code, Act of April 6, 1953, P. L. 3, Section 8-403, 12A P.S. 8-403. The decision of the lower court in the instant case is a step backward.

Appellant’s position is supported by All v. McComas, 162 Md. 690, 161 A. 187, in which case payment was made to an executor by three checks, one to the execm tor as such, one to him as attorney, and one to him in-, dividually. The court made no distinction as to the *236capacity in which the fiduciary acted, and held that the payor was not ‍‌‌​​‌‌​‌‌​‌‌‌‌​​‌‌‌‌​‌​​​​‌​​‌‌‌​‌​​​​‌‌‌​​‌‌‌​​‍responsible for subsequent misappropriation. To the same effect is National Casualty Co. v. Caswell & Co., 317 Ill. App. 66, 45 N.E. 2d 698, wherein a check was made payable to a trustee in his individual capacity. The wording on the check was held to be irrelevant since the money in fact went to the fiduсiary authorized to receive it. In view of the desirability of uniform interpretation in the various jurisdictions, a similar conclusion should be reached in this Cоmmonwealth.

The real gravamen of Gordon’s complaint is not the manner in which Herman H. James, Jr., obtained the money, but what he did with the money oncе he had obtained it. This is indicated in the answer to paragraph 14 of the new matter wherein it is asserted that appellant “by making payment to Herman H. James, Jr., in his individual capacity aided, abetted and made possible the misappropriation and misapplication by him”. However, the savings account was available to the administrator regardless of the name placed on the check. Even if appellant had mаde the check payable to Herman H. James, Jr., Administrator, as Gordon argues should have been done, he could have cashed it immediatеly and used the money as he wished, or he could have deposited such a check in his personal account and withdrawn it at any time. The samе result would have obtained had payment been made in cash. Consequently; absent a showing of bad faith, appellant’s failure to indicate on the check that Herman H. James, Jr., was a fiduciary is not of controlling significance.

In view of our disposition of the matter, it is unnecessary to pass upon appellant’s second contention, ‍‌‌​​‌‌​‌‌​‌‌‌‌​​‌‌‌‌​‌​​​​‌​​‌‌‌​‌​​​​‌‌‌​​‌‌‌​​‍namely, that the case was not ripe for a judgment on the pleadings in favor of Gordon.

Judgment reversed, and here entered for the appellant.

Notes

Coffin v. Fidelity-Philadelphia Trust Co., 374 Pa. 378, 97 A. 2d 857; Thomas v. First National Bank of Scranton, 376 Pa. 181, 101 A. 2d 910; Provident Trust Co. v. Interboro Bank and Trust Co., 389 Pa. 548, 133 A. 2d 515; Weiner v. The Pennsylvania Co., 160 Pa. Superior Ct. 320, 51 A. 2d 385.