Stahl v. First Pennsylvania Banking & Trust Co.

Appellant, First Stahl, General, Pennsylvania Banking Company. and Trust Argued November 28, 1962. Before C. J., Bell, Eagen JJ. Musmanno, Jones, Cohen, O’Brien, Spe- him John P. Walsh, Francis T. with Anderson, Cohen and M. General, Jack cial Assistant Attorney Samuel Joseph Savits, Deputy Attorneys General, H. Attor- and David B. Special Counsel, Stahl, Blashey, appellant. for ney General, him Remich E. with Sprogell, Saul, Ewing,

Harry appellee. & for Saul, Price Philip Dechert,

Theodore Voorhees, Price, Rule 65. for amicus under curiae, & Rhoads, Hamil- J. H. Ernest Carter, B. Scott, Pepper, ton Rule 65. curiae, amicus under Scheets,

Opinion 1963: Mr. Chief Justice June Bell, Common- David General of the Stahl, Attorney from a of Court appealed final Order wealth, Philadelphia No. which Common County, Pleas pe- his objections and dismissed sustained preliminary (2) and an tition discovery accounting (1) upon appellee an order First (hereinafter Trust sometimes Company Banking cer- as it Pennsylvania) directing referred to pay into State without treasury tain escheat. monies the. filed by was petition Attorney General This the Act of P. May 16, L. pursuant seq. P.S. et That Act provides amended, §431 petition the proper General Attorney inter bank alia, on, person, for. an order other cor pay directing Commonwealth poration thereon) money property (together interest with any which is other Under under Act. escheatable subject any property Act is made treasury Com order is into the appropriated by its used for and is it and monwealth purposes. temporary appropriation, not own This is a permanent rightful an actual and since escheat, money person legally i.e. entitled to such owner, (or legal representatives thereof), fu at some can, property ture recover such Common date, ownership right wealth Alpern he his thereto: establishes Exchange v. Girard Trust Corn Bank, 87. sought pos- In this General money property pos- (a) allegedly session in the Pennsylvania, (b) allegedly session of and escheatable under the Act of June P. L. amended, 878, seq. provides §241 27 P.S. et That Act for escheat property period. of certain for the of various when, years, rightful fixed numbers of where- owner or his rightful abouts or when unknown, has such owner property sought not claimed to be escheated.. prayed his General that Pennsylvania pay treasury into the State es- without |4,693,797.26 cheat a total sum of and an order discovery accounting allegedly and an of other escheat- property Pensylvania years able from for to and from the Bank of North America and Trust Company (hereinafter America) referred to as North to 1929.

Pennsylvania incorporated, was sub nomine Penn- Insurance, sylvania Company on Lives and Grant- ing Special by Assémbly Act of Annuities, of March Special and its charter by .was amended, also Act Assembly, February on 26, 1836. merged many times with numerous other and banks companies, trust banks and all of mergers which mergers these One of institution. surviving was and Under North America on June 1929. was with took over mergers Pennsylvania after each these insti- merging assets and assumed the liabilities tutions. from 1900 that Pennsylvania

Petitioner alleges de- and 1929, America and North between 1900 or departments in their commercial respective posited in other so- own banks, in accounts their names (a) belonging called uninvested those funds, viz., individ- receiverships trusts, estates, guardianships, fiduciary ual the banks acted as accounts which possession placed those in the banks’ (b) agent, corporate the bank acted as corporations which by (for for the of the interest payment trustee or agent) due. not the bondholders by bonds but claimed deposits not contend appellant While does he does contend the interest unlawful, were deposits, use these earned profits were out paid over above the interest which was owners (a) belongs rightful thereof, banks, or should been (b) the banks should have have in the absence of such (c) therefor surcharged entitled payments surcharges the Commonwealth is all these amounts. escheat trustee recognized general It is a well rule that a use not trust own fiduciary may his property to and he does he is liable a cestui trust que benefit him from use for made of trust profits by property. to exception general this rule is However, recognized which under banks in the case the decisional and Pennsylvania permitted law of are statutory deposit to deposits as demand funds well in trust the commer department of their bank savings or in cial or another they while be liable for and they bank, interest, the owner of such liable to are not funds profits bank: Moore’s by thereon Estate (No. made 3),

125 Sec. 991; 60 A. Scott on Vol. Trusts, 170.18, page 1249. See to the same Dick’s Es effect, Pa. tate, 2; (No. Reid v. Reid 2), Jones 85; Estate, A. 2d 408; Superior 88; Ct. Estate, Kaufmann’s A.8 2d 472. 93-94,

The he that Attorney General states in his money does not and cannot know aver the amount involved in nor supply can he any single transaction, partic- the names of trust any party any involved to ular pertinent transaction nor the dates relating such nor cred- any alleged names transaction, itors, avers funds which nevertheless that (as escheatable from countless amount transactions above this mentioned) He $4,693,797.26. deduces amount the total by amount interest deducting bank each by uninvested funds from the total bank’s on such earnings deposits ap- period covering proximately and difference years claims payable was to each and rightful consequently owner was recoverable in- under Banks earn proceeding. or profits terest by using so-called uninvested funds in loans to bank customers and so- by investing these called uninvested funds in have securities. banks always profits claimed that these or so-called excess interest to them and belonged they have never been appellate held any be Pennsylvania escheatable. Nevertheless, the Attorney General, repeat, they contends that were escheatable for and period consequently could re- present covered action. The General petitioned further therefore prayed a discovery an accounting as to all in- these numerable transactions an order Penn- directing into the State pay sylvania treasury this escheatable additional property escheatable funds accounting discovery may disclose, plus in- and penalties. terest petition of the Court below determined action cause of not state a

the General did it. and for reason dismissed this light of considering appellant’s the appellee’s apply, preliminary objections, did as rule that the well established below, objections (or thereof) pleadings admit in the nature pleaded, clearly well and as all facts which are true pleader’s law: but not the conclusions or averments Bogash v. Ross 677; Pa. 176 A. 2d Elkins, 437, Metropolitan 74; 2d 169 A. Ins. Co., Life Corp. Electric Dumont Television Radio v. Franklin Cor 585; A. 2d Erie v. Oil Co., Gulf poration, Korr, Silver v. 351; 2d 552. con

A facts and recitation the above mentioned very nothing it tentions makes expensive clear that this is harassing expedition fishing for onerous and mythical expert government a school of fish fish which (who examining De ermen have for been banks partment Banking 1895) unable since have been extremely discover. burdensome Moreover, paid costly expedition by is not to be the fishermen (nor by even stockholders trans various alleged years ago) actions and escheats occurred ; present It is to be owners of lake. very expedi fishing difficult believe that is obviously tion is so unreasonable, unrealistic, oppressive unjust, could ever have been intended though Legislature, language even Act supra, pro property to escheatable and the discovery very broad. vision corporation is not While a entitled to de same against protection gree of unlawful searches and seiz corpo individual, is an law is clear ures as that a subjected to an ration cannot unreasonable investi v. Morton gation States Salt : United Co., U.S. 632, Oklahoma Press Co. v. 652; Publishing Walling, The U.S. v. 116 U.S. 186, 208; United 616. Boyd States, Pa. authorities are to the same effect. shall inspection R.C.P. 4011 provides: “No or discovery an be permitted (b) which ... unreasonable causes or noyance, embarrassment, oppression expense, deponent or or any person ... would party; (e) require making an unreasonable investigation deponent by the or any party witness.” v. 2d 2 A. Annenberg Pa. Roberts, face the Court 612, subpoenas said: “The on their show that they seiz contemplate unreasonable search and ure. They principle violate the we announced in American Car & Co. v. Water Alexandria Foundry 221 Pa. Co., where held duces subpoena that a 529, tecum could not mass issued properly be in a bring of books and papers order be a there might search them to . .” through evidence. gather In American Car & Co. Water Foundry v. Alexandria “ C the Court said o., : uni (page 535) ‘The courts decline to formly grant an application production and inspection where merely is of a purpose fishing as where it examination, is made to discover or not whether there is evidence contained in docu ments which will be useful to the applicant, purpose determining whether he ac cause aor or in tion, anticipation defense, of a defense, ” curiosity.’ Cf. also gratify Einhorn v. Philadel phia Electric Company, A. 630, 2d 569. for reasons

However, which will hereinafter dis- it is not now necessary to cussed, decide whether these are recoverable funds under Act 1919 or es- Act under the cheatable and if 1915, so, whether the intended such broad Legislature discovery as is claimed appellant. Court below found appellant guilty of laches. We believe should have been dis- this ground. missed complaint peti settled that a

The law well ob dismissed the Court on tion will be. the peti here in appears jections clearly laches v. District Borough School Canonsburg tion itself: Pa. 550, Township School District, North Strabane School Township 2d Neizer v. 164; Schuylkill Butler Fair 93; 121 A. 2d Rush v. Pa. District, 384 , Silver 245; Agr. Assn. Com Bowie Coal 552; v. 139 A. 2d Korr, 24; Hornsby 82 A. 2d pany Petition, 72 A. 2d Leseman-Fred 294; 364 Pa. 271, Lohmeyer, 140; 2dA. v. Pa. 58 Company Diebold, 92, erick 359 89, A. 29 2d 679. Stimson v. 346 Pa. 68, 71, Stimson, estoppel of claim of laches The essence v. Curwens prejudicial Thompson of delay: a result Esso Stand 198; Pa. A. 2d ville Water 400 Co., 380, 162 A. 692; v. Pa. 2d Com. 324, ard Oil Co. 399 159 Taylor, 179; A. 2d ex v. Pa. 157 rel. Storb 398 Schroll, 354, Trust, A. 552; Silver v. 392 Pa. 139 2d Korr, 26, Crote v. 2d Com. ex rel. 383; Margiotti Pa. 135 A. 390 261, 194 A. 661; Union Traction 327 Pa. McCrann 497, Co., 140 v. Pa. A. 552. 291 Allen, 574, 29): In Silver v. the Court said Korr, (page taken demurrer or advantage can be of by “Laches an objections plea without a requiring of Court; however, it to the notice bring swer a the laches must be clearly apparent in such case, itself: Bowie Coal Peti Company the bill A. 82 2d cases cited 102, Pa. therein. 24, tion, Bank National v. Coal 332 Pa. Lytle “In First Co., ‘ A. 2d the Court said: will 396, 350, “Equity 394, one who has slept upon aid to his rights not lend its transaction is obscured lapse the original until Kin v. parties: death ter Commonwealth years ” ’ ” . . Pa. 436, Co., Trust defense of laches Furthermore, may be asserted Commonwealth: Com. ex rel. Storb v. against A. Com. ex rel. 179; Cogh 398 Pa. 2d Schroll, 354, 365; A. 2d Beaver Falls Pa. lan Council, 164, 327, ex Com. rel. v. Union Traction Margiotti Co., A. 661; Turnpike Com. v. Bala Motor 497, Bryn 153 Pa. 25 A. 1105. Co., 47, Com.

In ex rel. Storb v. supra, Schroll, said (pages 357-358) : “We have stated recently Grote Trust, 270, 135 383: ‘Laches position arises a defendant’s or rights prejudiced so inexcusable by length time and plus attendant delay, it facts circumstances, injustice permit would be an the assertion presently of a claim him.’ against See also: Silver v. Korr, 2d 552. 30, 139 propriety determining of the application of the in doctrine laches stant situation two questions (1) must be considered: does run against laches Commonwealth?; (2) was the does, Commonwealth of laches guilty under present circumstances?

“The landmark in Pennsylvania case sub ject whether laches be imputed to the Common wealth is Commonwealth v. Bala and Turn Mawr Bryn pike Company, 25 A. quo warranto proceeding. Mr. Therein, Chief Justice Pax after the reviewing authorities, concluded: ‘Were son, complainant the private here a individual not we would hesitate to that his say laches awas bar proceed to this Is ing. the commonwealth in any better position? We think not. is It the statute of true, does limitations not run against the commonwealth. But this is not question the statute of limitations. It is a question and laches be laches, imputed to the common wealth as as well to an individual.’ (Emphasis sup plied) Commonwealth ex rel. Coghlan, District v. Beaver Falls Council, 355 Pa. 49 164, 169, A. Court said: ‘Laches may, under some be imputed to circumstances, the Commonwealth as N. Bradford . See also: .’. individuals. well Telegraph Co., Telephone Y. & Penna. 41; Bailey’s Estate, Car Borough al. v. Co. et Railways

428; Pittsburgh v; Pittsburgh A. 106; 259 Pa. 333, 339, rick et al., Pa. 196, al., et Virginia Ry. & W. Pittsburgh '‘A stated: In Bradford, supra, A. 827. necessary is acquiescence of delay case stronger the state for by sought relief when equitable prevent but involved; private right a mere than when proceeding in a public applied against doctrine is ” . .’ . attorney general: success- whether present action, It is clear that not unreasonable only be ful or unsuccessful would present and its to Pennsylvania prejudicial also highly que cestui If funds—to which there were stockholders. former corporations depositors or trust trustent years during entitled creditors were bondholders were erroneously and 1933—which between 1900 sums appropriated income, as bank unlawfully in account aside the reserve been set should have in or deducted determining respective banks, in persons stock paid owning the dividends paying should and this “eseheatable” liability those years, book into account computing taken have been material important so (and were) values which of stock in mergers. shares exchange in an are not the bank stockholders today stockholders petitioner to 1933. if the Consequently, period be today’s stockholders successful, would should obligations discharge which, mulcted have reduced dividends of prior stock- would due, materially changed many mergers. holders mergers numerous In all Pennsylva in the 1900 to 1933 involved the stock period, nia was institution merging each received of stock of holders their exchange stock holdings Pennsylvania of the of then assets basis the ratio between the net Pennsyl merging the of institution the net and assets s of vania. Such stock distribution to shareholders merging any con institutions have been made without possible contingent huge sideration of the of existence a liability by Pennsylvania alleged rightful owners to (and consequently Commonwealth) over to of the attempt the $4,600,000which General is now ing mergers and Each of establish recover. such approved Department had to of be and was Banking Pennsylvania. It of the of Commonwealth h strange any seems that if were suc funds enormous contingent liability due existed, mergers have, numerous approved of been would Department Banking claim without question. ,P. Since the enactment of the Act of June Department (creating Banking), L. 217 De of partment Banking, through had its has examiners, auditing, investigating, inquisitorial unlimited and powers respect every bank in It state State. duty competent vigilant is the of the examiners Department Banking possible of the to ferret con out tingent liabilities banks and to call at them the tention of the officers and directors of such institutions Department Banking and to the officials of Pennsylvania. Department Commonwealth power report absolute every note, and value asset every liability, require ap and to correction of the praised or every carried value of each and asset liability every each and and each every claim, every might well as situation which creates or create liability contingent improperly reflects the condi tion bank, affect the safe and sound con in the interest duct of the bank of its stockholders, general public. creditors See §14 Art. I, May Banking Act of Code, P. L. 624, v. Tr. Co. Deposit Dauphin P.S. §819-14; as amended, Delaware Coun A. 2d 86; Myers, 416. A. 2d v. Campbell, Nat. Bank ty could had or appellant has It therefore clear is ap information as him much had available to as have matters.* these pellee from the face It is clear crystal To summarize: were of the appellant if the petition prayer stockholders present and its Pennsylvania granted, petitioner’s long prejudiced very greatly would be in making unjustifiable delay unexplained ap- the lower Court claims, that, found, these of laches. pellant guilty was Trust Corn Alpern Exchange Bank, Girard ap upon by 170 A. 2d is relied which on decided inapposite; solely is that case was pellant and the merits procedural (jurisdictional) grounds not decided. herein raised were any questions * only objections by appellee chal- filed not lenge petitioner’s right anything demurrer is to recover but such Among speaking were therein averred the facts also a demurrer. these: (a) now North America cannot records of That essential therefore, diligent are, despite no search and found most appeUee’s action; longer available for use every year beginning period (b) covered That since the accepted capital petition taxes the Commonwealth has stock appellee America

from and North on basis of statements liability which never included the colossal assets and liabilities establish; any thereof) appellant attempting part (or herein have, 1913, paid appellee (c) North America since That (which recoverable) profits not taxes now income Federal appropriate. now seeks Commonwealth alleged through speaking de- facts reach us these Because accept facts, they them as established we cannot murrer prejudice trial, appellee resulting at established were delay glaring. long even would be more appéllant’s contentions appellant’s have considered all of We no likewise but find merit of them. We have its appellee’s considered all of contentions, including General contention that the (see did not state a cause of action R.R. Co. 35 A. 2d but deem Escheat Case, 58), analysis unnecessary. further or discussion to paid by appellant. costs be Judgment affirmed, Benjamin B. Mr. Justice and Mr. Justice Jones Eagen result. concur the

Dissenting Opinion Mr. Cohen: Justice dicta After of to devoting nearly opinion half its states concerning the question petition of whether the of cause the then abandons action, majority of and ground its bases decision on the solely ground laches—a matter not decided court by the below only appeal. mentioned in the on passing parties this to majority’s observations innuendoes whether these are there- funds escheatable will serve fore to only litigants confuse future cause problems unnecessary issue again the I presented. must respectfully myself disassociate judicial behavior. question As I laches, disagree with the issue can majority be decided on the basis appellee’s objections. preliminary We have consistent ly held—as the majority recognizes—that can laches be raised by preliminary objections only where it clear on the ly appears petition. See, Bowie e.g., face Coal Petition, Company A. 2d 24, But (1951). allegations of prejudice upon which the majority relies—payment of past dividends based these mergers funds—do not appear mentioned the first time objection factual Since these itself. by appellant, have, are not admitted

assertions speaking majority’s demurrer” “a term, use improp consequently been defense of laches has erly raised. &Fair in Rush v. Butler as Avestated

Moreover, Agricultural Pa. 181, 186-87, Association, question “usually (1958), laches only had after the court has determined can be appraise opportunity determine the evidence and so bringing delay in reason exists for the a valid whether Consequently, assertions even if the factual suit.” prejudice given appellant

prove should to be true, explain opportunity actions. and defend its Accordingly, I dissent. Estate.

Sherwood April Mus- 1963. Before C. J., Submitted Bell, Roberts, O’Brien Eagen, Jones, Cohen, manno, JJ.

Case Details

Case Name: Stahl v. First Pennsylvania Banking & Trust Co.

Court Name: Supreme Court of Pennsylvania

Date Published: Jun 4, 1963

Citation: 191 A.2d 386

Docket Number: Appeal, 356

Court Abbreviation: Pa.