136 A. 789 | Pa. | 1927
Argued January 17, 1927. The Gearhart Knitting Machine Company is a Pennsylvania corporation, engaged in the manufacture of machines for making hosiery which it sells with yarn to be used in connection therewith, and has its principal place of business in Clearfield. Its banking was carried on with the County National Bank, where obligations were discounted and deposits kept. On July 20, 1925, notes to the amount of $100,000, partly in renewal of earlier ones, had been accepted, all of which became due in the *474 following November. It had on the date mentioned $7,195.97 on deposit, and two days later added $837.33. From this total a small outstanding check was paid, making the amount due, on July 22d, $7,962.60. The proper disposition of this sum gives rise to the present controversy.
On July 20th, an officer of the corporation advised the bank that the company was in financial difficulties and insolvent, with the result that bankruptcy proceedings had become inevitable. Thereafter the bank appropriated all of the deposits on hand to the partial payment of the unmatured notes. Thirty days later, receivers for the corporation were appointed by the United States District Court. These officers made demand for the amount of the deposits, already appropriated by the bank to the unmatured obligations, but payment was refused. Leave was given to bring suit, and this action of assumpsit followed. The learned court below held the bank to be without authority to take over the balance due the company as attempted, and entered judgment for want of a sufficient affidavit of defense. The defendant has appealed.
The single legal proposition raised is the right of the bank to set off the deposits held by it against the unmatured obligations, before the appointment of receivers, upon learning of the insolvency of the knitting company. Under the bankrupt law, the federal decisions, and the authorities of a majority of states, the right to apply a deposit as a set-off to a claim against the debtor not presently payable is permissible, evidently on the theory that insolvency renders all debts due. A substantial minority of the jurisdictions hold to the contrary, and Pennsylvania is of the latter class. The decisions showing the respective attitudes toward the disputed question will be found collected in 43 A.L.R. 1325, and no necessity exists for referring to them specifically in this opinion. *475
In our State a party whose debt is not due has no equitable or implied right to set off a claim immediately payable to the insolvent: Dougherty v. Central National Bank,
Though it is admitted that the rule stated controls where actual adverse proceedings have been taken before the appropriation, yet it is insisted that in this case the set-off was claimed, prior to the appointment of receivers, upon acquiring actual knowledge of insolvency, at a time when no rights of others had been legally asserted. "A bank has no lien on money standing to the credit of one of its depositors for the amount of a note of such depositor discounted by the bank, but which has not matured": Manufacturers National Bank v. Jones, 2 Pennyp. 377. Certainly there could be no appropriation of the deposit if the debtor remained solvent, nor will his subsequent financial distress change this rule: Gerseta Corporation v. Equitable Trust Co.,
The judgment is affirmed.