16 Ohio App. 240 | Ohio Ct. App. | 1922
This is an action in error to reverse the judgment of the court of common pleas of Mahoning county, in an action wherein the defendant in error was plaintiff and the plaintiff in
Some time prior to the 23d day of December, 1919, James A. Stewart, of Poland, Mahoning county, entered into an agreement with Sears, Roebuck & Company, of Chicago, for the purchase of certain building material. In pursuance of that agreement, on the 23d day of December, Mr. Stewart drew his check on The Struthers Savings & Banking Company for $1,201.87, being the purchase price of this building material, and deposited the money represented by this cheek in that bank, for the purpose of paying for this building material. At his request, Bruce R. Campbell, the treasurer of the banking company, issued to him the following letter of deposit:
“Letter op Deposit.
“December 23, 1919.
“Post Office, Struthers, State of Ohio.
“Seabs, Roebuck & Company, Chicago, III.
“Gentlemen: — James A. Stewart has deposited with us the sum of $1,201.87 subject to your order, same to be paid to you upon delivery of the building material ordered of you, with the understanding that the goods must conform with your specifications and meet with depositor’s approval. The material is to be inspected immediately upon its receipt, and, if satisfactory, accepted by the depositor, who will then notify us to send you the money.
“Very truly,
“Struthers Savings & Banking Company,
“Bnwe R. Cmipbell, Treas. ’ ’
On the 3d of April, 1920, this banking company’s bank was closed by order of the superintendent of banks, Ira R. Pontius, for the reason that it was hopelessly insolvent, and, afterwards, about the 10th of that month, a receiver was appointed to wind up the affairs of the bank. Some time after the receiver was appointed Stewart notified him to forward $1,201.87 to Sears, Roebuck & Company, at Chicago, in pursuance of the letter of December 23d. This was not done by the receiver. After-wards the receiver found in the files of the bank a certificate of deposit, which is defendant’s exhibit 1. The following is a copy:
“THE STRUTHERS SAVINGS & BANKING COMPANY. 56-1170.
“Cebtificate of Deposit
“Not subject to check.
“Struthers, Ohio, December 23, 1919.
No. 4555.
“James A. Stewart- has deposited in this bank S. S. & B. Co. $1,201 and 87(^-(1201.87) Dollars payable to the order of Sears, Roebuck & Co.— on the return of this certificate properly endorsed.
“Bruce R. Campbell,
“ Treasurer.
“Account transferred to liability statement for dividend participation.
“L. G. T atm an, Deputy.
“May 12, 1920.”
Proof of claim was made by Sears, Roebuck & Company and forwarded to the receiver of the Struthers Banking Company, and afterwards a further claim was forwarded asking that this claim be allowed and paid as a preferred claim out of the assets of the banking company. The claim was allowed by the state banking authorities as a general claim against the assets of the bank, but was refused as a preferred claim.
Prom the time Stewart made the deposit in the bank until the closing of the bank on the third of April, 1920, there was, continuously, in the bank, cash in excess of the amount of this deposit.
The only controversy between the parties in this action is whether the claim of plaintiff below shall be preferred over that of the general creditors.
The only contract or arrangement that Stewart, or Sears, Roebuck & Company, had in regard to this money with the banking company is embodied in what is denominated a letter of deposit, a copy of which is above set out. Neither Stewart nor Sears, Roebuck & Company is bound by the certificate of deposit heretofore referred to. The issuing of this certificate was wholly unknown to either of them and was a mere matter of bookkeeping adopted by the bank for its own convenience.
“All deposits made with bankers may be divided into two classes, namely, those in which the bank
The first class of deposits is frequently divided again into special deposits and specific deposits or deposits for a specific purpose.
The supreme court of Iowa in the case of Officer, Admr., v. Officer, 120 Ia., 389, 94 N. W. Rep., 947, defines these deposits as follows:
“A special deposit is created where the money is left for safekeeping and return of the identical thing to the depositor. And a specific deposit exists when money or property is given to a bank for some specific and particular purpose, as a note for collection, money to pay a particular note, or property for some specific purpose. People v. Bank, 96 N. Y., 33; Brahm v. Adkins, 77 Ill., 263; Peak v. Ellicott, 30 Kan., 156 (1 Pac. Rep., 499, 46 Am. Rep., 90); German Bank v. Foreman, 138 Pa., 474 (21 Atl., 20, 21 Am. St. Rep., 908).”
This definition is recognized in 1 Morse on Banks and Banking (5 ed.), Sections 183 and 185, and also in 7 Corpus Juris, 630.
The money in dispute was deposited with the banking company for the specific purpose of paying for the building material which Sears, Boebuck & Company had contracted to sell and deliver to James A. Stewart at Struthers or Poland.
In Shopert v. Indiana National Bank, 41 Ind. App., 474, 83 N. E. Rep., 515, a depositor deposited money in a bank under an agreement that the bank should pay it to a third person, provided a machine he had sold to the depositor complied with the warranty after 10 days’ trial. At the time the deposit was made the depositor drew out his balance on deposit, and placed it with the special fund, receiving a certificate of deposit expressing the terms of deposit. In that case the supreme court of Indiana held the deposit was a specific sum for a specific purpose, the payee determinable after the lapse of a specific time and the happening of a specific contingency.
In Woodhouse, Admx., v. Crandall, Receiver, 197 Ill., 104, 64 N. E. Rep., 292, a tenant made a deposit in a bank on condition that it was to be held by the bank as security to the landlord for the faithful performance of the lease. The court held:
“This deposit was for a specific purpose, for the benefit and security of a third person (Charles F. Woodhouse) and it created a trust relation in his favor. The banking firm assumed the position of a trustee, and the money deposited constituted a trust fund, which the bank was bound to keep intact for the purpose of the trust. The obligation of the bank was to preserve the sum of $1,500 as a trust fund for the person mentioned in the receipt and.to apply it to the purposes therein specified,
It was not the purpose of Stewart, in making this deposit, or the Sears, Boebuck Company, in accepting the letter of credit issued by the bank, “to become a general depositor of the bank, nor was the money placed there as a general deposit, but as a specific deposit to be applied to the payment” of the purchase price of the building material. Calhoun v. Sharkey, 120 Ark., 616, 180 S. W. Rep., 216; People v. City Bank of Rochester, 96 N. Y., 32; Montagu v. Pacific Bank, 81 Fed. Rep., 602; Moreland v. Brown, 86 Fed. Rep., 257; McLeod v. Evans, Assignee, 66 Wis., 401, 28 N. W. Rep., 173; Anderson v. Pacific Bank, 112 Cal., 598, 44 Pac. Rep., 1063; Ellicott v. Barnes, 31 Kans., 170, 1 Pac. Rep., 767, and Capital National Bank v. Colwater National Bank, 49 Neb., 786, 69 N. W. Rep., 115.
The court, in the syllabus in the last-cited case, says:
“1. A fund which comes into the possession of a bank, with respect to which the bank has but a single duty to perform, and that is to deliver it to the party thereto entitled,, is a trust fund and is therefore incapable of being commingled with the general assets of such bank subsequently transferred to its receiver.
“2. Under the circumstances above indicated the receiver of the bank is merely substituted as trustee, and its funds in his hands should be devoted to discharging such trust before distribution thereof is made to the general creditors of the bank.”
The bank received this money for a specific purpose and could not under the conditions of the let
“The suit is not to recover a specific thing, such as particular pieces of money or bills, but a certain sum of money held in trust, and it is the identity of the fund, and not the identity of the money or currency, which is to be established.” Woodhouse v. Crandall, supra, 111.
In National Bank v. Connecticut Mut. Life Ins. Co., 104 U. S., 54, the supreme court of the United States, at page 67, quotes from the opinion of vice chancellor Sir W. Page Wood, in Frith v. Cartland, as follows:
“"Vice Chancellor Sir W. Page Wood, in Frith v. Cartland (2 Hem. & M., 417, 420), said that Pennell v. Deffell rested upon and illustrated two established doctrines. One was that ‘ so long as the trust property can be traced and followed into other property into which it has been converted, that remains subject to the trust’; the second is, ‘That if a man mixes trust funds with his own, the whole will be treated as the trust property, except so far as he may be able to distinguish what is his own.’ ”
“The presumption in such a case is, that the money drawn out by the depositor is his own, even if the trust money and his own are in one account, rather than that he had disregarded his trust and violated his duty.” Woodhouse v. Crandall, supra, 113.
In National Bank v. Insurance Company, supra, at page 67, Mr. Justice Matthews quotes from Pennell v. Deffell, 4 DeG., M. & G., 372, 388, as follows:
“When a trustee pays trust money into a bank to his credit, the account being a simply account with himself, not marked or distinguished in any other manner, the debt thus constituted from the bank to him is one which, as long as it remains due, belongs specifically to the trust as much and as effectually as the money so paid would have done, had it specifically been placed by the trustee in a particular repository and so remained.”
It appears from the facts in this case that sufficient cash remained in the bank to have paid this letter of deposit, from the time it was made until the bank was closed by the state banking authorities and a receiver appointed. “The receiver took the property of the bank which came into his hands for administration subject to all the legal and equitable claims” that existed against the bank at the time it was closed. (Shopert v. Indiana National Bank, supra; Moreland v. Brown, supra; McLeod v. Evans, supra, and Ellicott v. Barnes, supra.) We
There is a further claim made by the plaintiff below that this bank was insolvent at the time this deposit was made and that the acceptance of the money as a deposit was a fraud upon Sears, Roebuck & Company, for which reason the company is entitled to a preference over the general creditors.
We have no doubt from the testimony that at the time this deposit was made this banking institution was insolvent, in the sense that it had more liabilities than it had assets. Its funds had been badly dissipated, but mere insolvency does not furnish a ground for a rescission of the contract of deposit and give such depositor preference over other depositors of an insolvent bank.
"Mere insolvency does not furnish a ground for a rescission of the transaction, but in order to prevent the title to the deposit vesting in the bank, fraud must be shown in its reception sufficient to entitle the depositor to repudiate the deposit and reclaim the same.” Orme v. Baker, 74 Ohio St., 346.
We do not think that fraud in accepting the deposit is sufficiently shown to warrant the court in holding that the plaintiff below is entitled to have his claim preferred on that ground, but we think the judgment of the court below should be affirmed pn the ground that the money was deposited for a specific purpose, and that the bank held the money received by this deposit in trust for that purpose.
Judgment affirmed.