176 A. 52 | Pa. Super. Ct. | 1934
Lead Opinion
KELLER, J., filed a dissenting opinion.
Argued October 10, 1934. This appeal is from an order of the court below overruling appellant's exceptions to the account of the Secretary of Banking, disallowing appellant's claim to be preferred in the distribution of the assets of the Manayunk Trust Company, an insolvent institution.
There was an agreed stipulation of facts, which, briefly stated, are as follows:
On October 5, 1931, Elizabeth T. Reicheldifer, through her agent, the Manayunk Trust Company, sold and assigned a mortgage she held to Abbie P. Alexander, for $1,524.50. Abbie P. Alexander transferred $1,000 from her savings fund account on October 6, 1931, and $524.50 from her checking account on October 7, 1931, in the Manayunk Trust Company, both of which sums were placed in the Miscellaneous Account on the latter date, for the express purpose of setting this sum aside for the appellant. On the same date a check was drawn by the trust company on the *456 miscellaneous account, in favor of Elizabeth T. Reicheldifer, for $1,524.50. This check was in due course presented to, but not paid by, the trust company, owing to the closing of its doors for business on Tuesday, October 13, 1931, Monday being a bank holiday. There was deposited in the Miscellaneous Account at all times from the date of the payment of the $1,524 to the time of the closing of the trust company more than sufficient to pay Elizabeth T. Reicheldifer the amount due her. The day the trust company closed there was $3,444 in the account.
The learned court below held that the appellant was not entitled to a preference as there was no specific money identified as belonging to her.
A trust company has authority by statute to receive and handle trust funds of others and to do a general banking business. But this was not such a transaction that ordinarily comes within the scope of a trust company's general business. The trust company was the appellant's agent for the sole purpose of transferring a mortgage, collecting the consideration, and paying it to the appellant. The meager record before us does not disclose any express authority given by the appellant to deposit the money in the trust company; nor can it be reasonably inferred that it was ever intended by the appellant that this money was to be commingled with any of the assets of the trust company. It was her property and the trust company, as her agent, should have delivered it to her instead of depositing it in its failing institution. It does not appear that she was at any time a depositor of the trust company. The relation was that of principal and agent and not that of debtor and creditor. This case, therefore, does not come within the decision in Fisher v. North Penn Bank,
In the case of Webb v. Newhall,
The trust company never had any title to this money, it was not part of its assets, and there is no good reason in law or in equity why the appellant's property should be applied to pay the trust company's depositors.
In Cameron v. Carnegie Trust Co.,
Although the facts stipulated in the case at bar do not aver the insolvency of the trust company on October 7th, it is quite significant that its doors were closed on Saturday, the 10th, and never opened again for business.
In Mehler's Appeal,
In the case of Montagu et al. v. Pacific Bank et al. (Cal.), 81 F. 602, 604, money was deposited in one bank to the account of another, with directions to the latter to pay the amount to a third bank. The court, in the course of its opinion, said: "It is clear from this evidence that the bank had received, through its agent in New York, prior to its suspension, the deposit in question for transmittal to the Puget Sound National Bank, and that it was a special deposit, made for a specific purpose, and in the nature of a bailment." The bank to whose credit this money was deposited suspended before making payment as directed. The *461 court held that the deposit was in the nature of a bailment, that the plaintiff had never parted with title to the money, and, consequently, it was entitled to recover in full as against general creditors.
In Peak v. Ellicott (Kan.),
In Titlow v. Sundquist (Wash.), 234 F. 613, Sundquist brought a suit against the receiver of the bank to recover moneys alleged to have been deposited under an express agreement between the parties that the bank would pay it to one Smith in satisfaction of a note executed to her for $1,200. Before the matter was consummated, the bank failed. The court held that the money left by Sundquist with the bank was deposited for a specific purpose, and under an express *462 agreement the bank was to execute this purpose, that the bank held the money in trust. The result was that it did not pass to the general creditors of the insolvent bank, and on the failure of the bank to execute the trust, the owner of the money was entitled to recover.
In the case at bar, the money was not deposited in the general funds of the bank, but, as stated, in a "Miscellaneous Account." The money received by the trust company was readily traced to this particular account. There was no trouble in identifying or locating it, and there was sufficient money in that special account to pay the appellant. "The rule is that, if the identity of the fund or property can be traced, it would be subject to the rights of the cestui que trust in its new form. No mere change of its state or form can divest it of the trust so long as it can be thus identified, but, whenever the means of identification fail, as where the property or money is mixed with a general mass or fund of the same description, the right to pursue it fails": Com. v. Tradesmen's Trust Co.,
We have not overlooked, in Cameron v. Carnegie Trust Co., supra (
The appellant's right can not be prejudiced by the contention of the appellee that this matter was simply a bookkeeping transaction. In the case of People v. City Bank of Rochester,
After a careful consideration of this record and the able arguments of counsel, we are of the opinion that the appellant is entitled to a preference.
Order of the court below is reversed, and the secretary of banking is ordered and directed to give the appellant's claim a preference in the distribution of the assets of the Manayunk Trust Company. Costs to be paid out of the trust company's estate. *464
Dissenting Opinion
The opinion of the court in this case goes beyond the recent decisions of the Supreme Court (Cameron v. Carnegie Trust Co.,
In Cameron v. Carnegie Trust Co., supra, the Ottumwa National Bank sent to the Carnegie Trust Company a note for collection and remittance only. The Carnegie Trust Company collected the note, received the money, and drew a draft on the Colonial Trust Company — where it had sufficient funds on deposit — and sent it to the Ottumwa National Bank. The Carnegie Trust Company failed before the draft was presented to the Colonial Trust Company. The Supreme Court held that the Ottumwa Bank was entitled to be paid in preference to the depositors of the trust company the money which the latter had received as agent for thebank, and for which it had given its draft, drawn on another banking institution. By giving its draft on the Colonial Trust Company, for the money which it had received as agent for the bank *465 and mingled with its other funds, it designated an `account', which came into the hands of the receiver, separate from its general assets, out of which the trust fund was to be paid.
In Mehler's Appeal, supra, the treasurer of the Dollar Title and Trust Company of Sharon caused the stock of the Mehlers, which had been pledged as collateral security for a loan, to be sold for the account of the Trust Company and the proceeds of the stock were deposited in the Mellon National Bank to the credit of the trust company. The treasurer then embezzled out of the general funds of the trust company the equivalent of the stock so sold. On the insolvency of the trust company the Mehlers were held to be entitled to be paid the proceeds of the sale of their stock which had been fraudulently sold by the treasurer and deposited to the credit of the trust company in the Mellon National Bank, or so much thereof as was represented by the"lowest balance" to the credit of the trust company in the Mellon Bank "after the proceeds of the conversion had been deposited therein." There, again, we have a specific fund or account, separate and distinct from the general assets of the insolvent trust company, into which the trust fund was traced.
That is not the situation here. Abbie P. Alexander had two accounts in the Manayunk Trust Company — one a savings account, the other a checking account. They represented no specific items of property, but, by statute, created her a preferred creditor as against the money, checks in course of collection, notes, loans and discounts, bonds, mortgages, real estate and other property constituting the general assets of the trust company. She bought a mortgage from the appellant, Elizabeth T. Reicheldifer for $1,524.50, giving the latter's agent, the Manayunk Trust Company, a transfer of $1,000 from the savings account and a check for *466
$524.50 on her checking account in said trust company. The trust company charged Mrs. Alexander's savings account with $1,000 and her checking account with $524.50 and credited an account which it carried on its own books as "Miscellaneous Account" with $1,524.50, drew on a check on itself against that account for $1,524.50 and sent it by mail to Mrs. Reicheldifer. She presented it to the trust company for payment, but in the meantime the Secretary of Banking had taken charge of its affairs and the check was not paid. No money, checks, securities or property of any kind were segregated and kept apart in the `Miscellaneous Account" from the general assets of the trust company, consisting of cash, checks in course of collection, notes, loans and discounts, bonds, mortgages, real estate and other property of the trust company. It was only a bookkeeping transaction on the books of the trust company — a "mere book entry" as referred to by Mr. Justice MITCHELL in Iron City Nat. Bank v. Fort Pitt Nat. Bank,
It is unfortunate that at the time this transaction occurred the law did not put the appellant on an equality with the depositors. That has been rectified by the Department of Banking Code of 1933, sec. 1011, 3d par. (Act of May 15, 1933, P.L. 565, 614); but under the law then existing she had no priority over general creditors, — and certainly none over depositors — because the transfers from the savings and checking accounts of Mrs. Alexander to the `miscellaneous ac-count' were merely book entries, and passed to the latter no specific money or property which was separate or distinct from the other assets of the trust company, but only an interest in property, which was *469 `mixed with a general mass or fund of the same description,' and was incapable of identification. It will not do to speculate what would have been the result if Mrs. Alexander had drawn out $1,524.50 in cash and paid it to the trust company. She did not do it, and we must treat the facts as they are.
Judge LAMBERTON, of the court below, in what I think is a very clear and convincing opinion, has discussed a number of other decisions, which it is not necessary for me to refer to. I think they justify the action of the court below and admit of no other ruling, if the decisions of our Supreme Court are to be followed.
I would affirm the decree.