*1 316 Lees, Receiver, vs. Industrial T.

William Company.

Trust 8, 1941. DECEMBER 8, 1942. ON REARGUMENT JANUARY Moss, Condon, Flynn, J., Capotosto, Baker and JJ. C. Present: being J. at issue on merits, This was cer- Baker, tified determination superior this court provisions under the laws chapter 645, 4,§ agreed having an statement been filed that court parties. assumpsit

The case is an action of brought by the plain- an as receiver of tiff, corporation, insolvent recover from *2 alleges are of he assets funds certain defendant the corporation. said agreed in said state- facts following appear material

The Inc. Mills, The Worsted Carroll February 1933 13, On ment. its indorsed good for consideration and delivered executed $11,500. of in This defendant the sum note to the promissory 15 of May the same terms, matured according to its on the of m., petition 3, p. at 2 o’clock year. April 1933, On the Mills, Inc. plaintiff The Worsted of Carroll a creditor temporary receiver superior the appointed was had' on de- corporation date said On that corporation. in defendant bank. checking account the a posit $6862.96 temporary appointed after been Forthwith, plaintiff the the amount of applied the defendant aforesaid, as receiver note, and before when, said checking account such 3, plaintiff the asked April on said banking the close of hours checking for balance account the defendant said no balance such ac- plaintiff that there informed was checking account The of said was application count. above on before the actually made the books of the defendant close banking day. hours on that on was Thereafter, 1933, plaintiff appointed per- April 18, Mills, and, by receiver of Inc. manent The Carroll Worsted May a entered on that date 20 superior court, decree in- fixed for day filing last claims said 21, the defendant filed corporation. April solvent On 1933 with amount of the plaintiff its claim based for to, note hereinbefore referred less a credit such formerly checking in The Inc. ac- Mills, Carroll Worsted leaving count, interest, and less rebate of a balance small on claim of which claim was allowed $4593, said plaintiff as When the said note matured it was receiver. and protested. present dishonored The action was instituted May 20, 1933. receiver, from seeking

The to recover interest, principal $6862.96 defendant the sum of with said being checking the amount of the account The Car- sum said April Inc. on Mills, roll Worsted receiver of appointed temporary 3, plaintiff when contends that general, that corporation. de- appearing and circumstances herein the right 3, thereafter, April apply fendant had no checking payment account the here- the sum said Carroll Mills, note of The Worsted Inc. inbefore-mentioned May maturing $11,500, defendant, however, maintains under the statute relating to setoff it has this state to have the checking applied against of said account amount the note *3 which been its for question. present This statute has form many years 1938, chap. § is now G. L. 2. It reads fol- any lows : “If a demand defendant shall have on the any may for one which liquidated, sum or be ascertained by founded on a calculation, judgment, and which is or on account, any an or on contract whether express or implied, and or seal, whether with without and which existed at the time of the commencement of the action and then belonged right, defendant his own and for which he might maintain suit in his own he name, may set off the same any any action founded on demand which could itself be set off.” of support position its points out that at

the time the present case was started in question the note The Carroll Mills', Worsted Inc., held said bank, had ma- and, tured therefore, that the latter was entitled, under the provisions statute, said note the claim plaintiff’s for the amount the insolvent corporation’s checking account.

The above section was considered in Nightin- gale Chafee, v. 11 R. I. 609. That was a in equity bill brought by an assignee for assignor instructions. The had indorsed certain notes of a partnership which had later failed. It also appeared that a bank had on deposit a substantial sum be- longing to the assignor, which sum the bank claimed it could lawfully retain in setoff part payment of two notes of the not were These notes assignor. indorsed partnership fell due within but made, assignment when the due sued the assignee had never The thereafter. three months brought the bill merely apparently but deposit, for the had after notes time considerable some for instructions affirmatively shown apparently In' fact, matured. the deposit on the bank for any made demand he had in question. if court held that appearing, above circumstances deposit, for the sue thereafter assignee should off statute, set language

could, plain held that The court also assignee's claim. *4 under the statute. right of suit, of the affected the setoff Woonsocket, 22 R. I. Bank Ellis v. First National of assignees to recover brought by assumpsit an action of assignor’s name standing the a bank deposit certain the notes of The latter held certain the defendant bank. the plain- attempted which it had assignor having notes, of the court held that two tiffs’ claim. The assignment when the benefit already matured bank, be set off made, properly could creditors was note, matured, which had not then could but that the third allowed to off; plaintiffs and the were recover not be so set equal bank an amount to the face of from the defendant third note with interest. brought after though the action was said last-men-

Even bank, by matured, note had reason certain tioned to take ad- permitted in the appearing facts that the cashier It was shown vantage of the setoff statute. corpo- of the the treasurer bank was also said notes. assignment and indorser making ration with the connection manipulations Certain issuing passbook of a new including the assignor’s deposit, after place assign- took assignees, plaintiffs equivocal position cashier ment. In view held that conflicting interests, the court his conduct of his assignees’ rights. At prejudice not be allowed to should following the court lan- opinion 575 of its uses page them guage: leading “The action of the cashier as- (the signees) believe, maturity until after the of the third note, deposit that said had been transferred to their names, for it prevented suing their when it had no lien for the amount of that whereby the or the creditors of the assignees, they estate represented, suffered ... If the themselves, loss. directors on Febru- ary 10, 1899, (the assignment) date of the had refused to transfer the deposit so far as the unmatured note was con- cerned, the bank could have been compelled pay said tanto, deposit, pro by a brought against suit it in the name of the American Worsted . . . Company .” The term “lien” is qbviously above, used as it frequently used in cases in other states, meaning general equitable right of set- off.

After a careful consideration of the now facts before us, we are of the opinion that, although they may not present as extreme a situation as those the Ellis case, nevertheless they more nearly resemble the facts of that than they case do the Nightingale case. the case at bar it appeals that a short time after appointment his as tempo- rary receiver asked the defendant for the bal- *5 ance of the checking account of The Carroll Worsted Mills, Inc. and was informed it there was no in balance the said account. At that time the note had not matured. Nor bank, had the for its own protection, included in said

CO <N T-n maturity m event any its which accelerated terms note or.receivership It clear insolvency maker. applied to such account defendant, seeking responsibility, entirely without on own note waiting rights any adjudication court an fact, in parties and, not interest, could the various any right upon relying statute, under the setoff then not equitable upon of set- an asserted rather but temporary appointment re- of a mere based off ceiver. plaintiff appear asked that when

Further, does revealed account the latter for the balance relating fully pertinent plaintiff to the bank’s all position account. in connection with such action and exact judgment, reasonably to be inferred that In our it is only temporary plaintiff, at- receiver, had his who was then taking at that time from immediate action tention diverted respect In the meantime to said account. the date maturity drawing Apparently near. of the note was on April regard 21, 1933 the bank’s action to the account was made known to the for the time when first corporation the former’sclaim was filed.

Thereafter, it is fair to assume that the who only days appointed permanent three before had been re investigate ceiver, had to the situation and had to obtain superior authority from the the defendant. sue We plaintiff brought find that the the instant case within a rea concerning sonable time after all the facts the bank’s action premises in the had cometo his attention. The bank’s state plaintiff April ment to the 1933, when he demanded of it the amount of the balance in the account of The Car roll Worsted Mills, Inc., was effect a refusal to do what’ clearly this court the Ellis case indicated, as hereinafter duty out, set would have been the of the bank under the cir plaintiff- cumstances. Such statement to the tended to mis of:any corporate him lead toas the then existence account to which he would be entitled, and for which he could sue

322 of the delay the commencement tended to receiver; and possession. account to reduce said case to instant ought not to be therefore, per- opinion, our advantage and to the own delay to its mitted to use when such creditors and of the detriment of other by the action and state- brought about bank’s delay was reasonably rely. could There- ment, upon which the appearing and circumstances fore, peculiar that the defendant not en- herein, opinion we are of action, to this to invoke the titled, by way pro- of defense and to off thereunder visions this statute set note recovery claim for of the amount plaintiff’s checking account. that, apart statute, defendant also contends from the general equitable had a right to set off the before its- note maturity against checking account of the maker of said of the insolvency. because has latter’s It been held the status of claims such an insolvent corpora tion is to be determined as of the date of the commence ment of the proceedings relating to its dissolution and the appointment of a receiver. See In re United Mutual Fire Co., 22 Ins. R. I. 108; Jablouski v. Co., Simons Land R. 46 I. 277. In the instant case the note in question did not mature May until 15, 1933, and hence clearly an immature obligation when proceedings such were started on April 3,

Such a equitable right of setoff as the defendant urging is now is apparently recognized in a majority of the jurisdictions which have passed upon the question. How- ever, courts last resort a substantial number of states take the contrary view and refuse to any allow general equit- able of setoff when the note had not matured at the time of the assignment, when receivership proceedings were brought, or, any at rate, at the time of the appointment of a receiver. See A. 43 L. R. 1330.

It is not necessary for us to discuss the relative merits divergent these or views statutes the legal prin case in the because this rest they ciples *7 Woonsocket, took supra, Bank National First of Ellis v. setoff, as right equitable general no such that the view in connection with here bank by the defendant claimed is and under facts existed depositor, note of its the unmatured at After case bar. those analogous to circumstances in the Ellis case the defendant out pointing sought re- to be against the account right off, to set which had ma- depositor insolvent covered, two notes following made the assignment, the court tured prior depositor’s to the third page opinion, at 574 of its reference, different think, however, note: the case was as to “We duty cashier, due. It plain note not then was have the bank, as it would been of the directors of to have deposit allowed the transfer so far as said not note ,due 10th, before February 1899, concerned, for the bank then had no claim for lien on for that pleaded could have that note as a .” set-off... above-quoted See also the language of the court from page 575 of the Ellis case, supra.

That has been generally case accepted here and elsewhere standing for the viz., view contended by the plaintiff, the defendant bank not entitled, is under the circum- stances of this a equitable right its note, unmatured at the time of the bringing of re- ceivership proceedings, against the maker’s account bank. Such view apparently has not been previously ques- tioned any reported case this and we state, see no rea- changing son for it now. Because of long we standing, are of the opinion that any change should be by legislative judicial rather than action.

The defendant has called to our attention several cases right which the of setoff of unmatured claims has been considered and allowed where the estate in- deceased solvent is involved. Those cases are clearly distinguishable from the instant case. A specific section of our statutes has long provided for the acceleration of unmatured Claims 1938, chap. General laws of a decedent. the estate are cov- bankruptcy specifically Also, setoffs

578, § the case of Clarke v. Further, act. bankruptcy ered defendant, since Hawkins, 5 R. I. is not helpful principles general equitable allowed setoff'there therefore, that under find, claim. We on a matured defend- case the of the instant the facts and circumstances to- set off the insolvent general equitable right no ant has the account which the maker’s unmatured note seeking to recover. plaintiff, receiver, argues that the allow- Finally, ing $4593, claim for has admitted the latter’s bank’s *8 such allowance as an deposit; operated adjudication of the claim between the and that the parties; plaintiff estopped recovering is from this action the de- posit dispute. our opinion, defendant takes noth- ing by argument. this The amount of the defendant’s claim and filed, as allowed the plaintiff, was, facts, under the the least amount which the corporation admittedly owed dispute. could not The allowance was filed the plain- tiff as qualified receiver such a form give as to notice to the defendant that he seeking all protect rights his as receiver. No true estoppel, its proper sense, should operate against plaintiff. There is no evidence that the defendant took any action to its detriment, relying on any statements or conduct plaintiff. In our judgment, considering the herein, the issue between parties adjudicated was not by the plaintiff’s qualified allowance of the defendant’s claim.

Our decision for $6862.96 sum of with legal interest thereon from April 3, 1933. papers with our decision certified thereon,

are ordered sent back to the superior court for entry of final judgment, on the decision.

Per Curiam. Following the opinion in this case, the de- fendant, by leave -of court, filed a motion for reargument. n no finds court motion, of said consideration Upon rendered in which the change opinion reason parties. presented upon the case its decision denied. is. reargument for motion Defendant’s Wheeler, Everett Wil- Allen, Tillinghast & Hinckley, Watson, plaintiff. Paisner, M. Jr., Edward kins, Isadore Moulton, for defendant. Huddy & al. vs. et E. Bertha Streeter.

Carla Ortman 12, 1941. DECEMBER Condon, Flynn, Moss, Capotosto, J., JJ. : Baker & C. Peesent *9 J. This is a bill equity brought the su-. Capotosto, perior court for the construction of certain portions of the will of Jeannette W. M. Smith. The cause was certified to notes by the is determined under bur statute right of setoff action, at the commencement of the claims state to the set- was entitled assignee that the bank instructed however, conclusion, The court which it claimed. off growing out considerations might there be out that pointed might parties interested between of the relations that no considerations setoff, but such affect the court’s attention. brought been it was held before the court where Later a case was commencement existing before the considerations, material