84 Pa. Super. 10 | Pa. Super. Ct. | 1924
Lead Opinion
GAWTHROP and HENDERSON, JJ., dissent.
Argued April 29, 1924. William W. Vosburgh died insolvent, domiciled in Pennsylvania. At the audit of his executors' account, the Bank of Kingwood doing business in West Virginia, filed a claim, presented for decision by the orphans' court in the following stipulation of facts:
"Decedent died June 30, 1921. After decedent's death, to-wit, July 15, 1921, the Bank of Kingwood, W. Va., at the request of the executors of this estate, issued a statement showing balance on deposit in the Bank of Kingwood on that date in the account of W.W. Vosburgh of $6,613.11. A proper order was drawn on the 16th day of July, 1922 [?] for the balance shown to be due to this estate and the check was returned marked `not sufficient funds.' At the time of the return of this check the executors *12 were advised that said bank had charged against the balance shown in this account the note of John E. Strubee in the sum of $2,000 and protest fees of $1.65. and the note of the Wilson Construction Company in the sum of $500 and protest fees of $2.20, a total of $2,503.85. Said notes were due and payable on July 17th and July 20, 1921, respectively. On both of these notes the decedent was the endorser and they were discounted by him prior to his death. The total amount admitted to be due to this claimant without the deduction made by the claimant is the sum of $10,850.09.
"Under these facts is the claimant permitted to deduct by way of set-off said sums as hereinabove set forth, to-wit: the sum of $2,503.85 from the total amount of his admitted claim, to-wit, the sum of $10,850.09, and file a claim based upon the balance due, to-wit the sum of $8,346.24, or must said claimant file a claim for $10,850.09 and be charged with the amounts deducted by it as an advance on said claimant's distributive share in this estate?"
The court held that if the bank retained the sum of $2,503.85 credited on notes maturing after Vosburgh's death, it would in that sum receive a preference, and that it could not share with other creditors of decedent without surrendering the preference, but that if the preference was surrendered, by crediting it on the dividend payable at the rate shared by the other creditors, appellant should receive, in addition to that amount, the sum of $49.72.
The argument covered a wider range than is applicable to the facts stipulated. The briefs agree that Vosburgh's contract with the bank was a West Virginia contract, enforceable according to the law of that state. By that law, counsel for the bank contends the bank had the right, notwithstanding decedent's insolvency, to credit his deposit with his debts maturing later. Counsel for the executors concede that to be the law of West Virginia but nevertheless insist that, before the bank *13 can obtain anything more on the debt in Pennsylvania, the bank must put itself in the same position in which other general creditors were at the date of the death; that contention of course, results in the conclusion reached below.
The statement of facts is silent about the law of West Virginia; to the extent the law of that state was relevant, the fact should appear, but even accepting as supplementary to the agreed facts so much of the law of West Virginia as the briefs agree upon, and assuming, as appellant contends, and appellee concedes, that the law of West Virginia permits such credits to be made, the bank's contention is still left without an essential fact, and that is, whether such preferred creditor may make an additional claim on the estate of an insolvent in West Virginia, without first placing himself in the same position with other creditors as they stood at the date of the death, by surrendering the preference. In some states, for the purpose of securing equality among creditors, the law requires such surrender as a condition of receiving additional dividends: Partridge, Appellant,
But the distribution of the estate of a decedent is governed by the law of his domicil and not by the law of a state in which his notes may have been discounted. It has always been the law of Pennsylvania, as was stated in Blum Bros. v. Bank,
Without surrendering its preference, appellant may not share; by crediting the preference, it is entitled to the distribution awarded.
The order appealed from is affirmed, costs to be paid by appellant.
Dissenting Opinion
My views are so utterly at variance with those of the majority in this case that I am compelled to dissent from the judgment and state my reasons therefor. Our Supreme Court said in Forepaugh v. R.R. Co.,
The notes which are the basis of the claim in suit were made, were to be paid, and the failure to pay occurred in West Virginia. That they were West Virginia contracts is, as it must be, conceded by the appellee and the court below. It is conceded also that the appropriation, by the bank, of $2,503.85 of the deposit in the account of Vosburgh in payment of part of the indebtedness of the decedent to the bank was legal under the laws of West Virginia, as declared by its court of last resort: Ford's Administration v. Thornton,
If Vosburgh had borrowed money from a Pennsylvania bank and had given his note and deposited collateral therewith to secure payment, and the bank had sold the collateral and credited the proceeds on account of the note, it would not have to release the advantage which it had obtained by the sale of the collateral, when it presented its claim in the orphans' court for the balance of the note. Its right to appropriate the collateral would *17
be secured by its contract, notwithstanding the familiar law in this State, that when the decedent is the endorser on notes discounted for his benefit at a bank, which do not become due until after his death, the bank is not entitled to retain a deposit of money standing on its books to his credit at the time of his death as a set-off against his liability of the notes. (Farmers Mechanics App.,
The opinion of the majority states that the question of the conflict of laws is not before us because the statement of facts omits the essential fact whether the bank could make, in West Virginia, the claim it is now making "without first having placed itself in the same position with other creditors as they stood at the date of the death, by surrendering the preference." The answer to that line of reasoning is that it is quite sufficient to know that the right of the bank to credit the deposit balance of the deceased against any unaccrued liability on the notes did exist, that it was exercised, and that the debt was not fully paid. It is not contended that the laws of West Virginia can regulate the distribution of this estate in Pennsylvania. If they did the bank would be entitled to a preference for the $4,109.26 which was withdrawn from it. The law of West Virginia fixed the amount due the bank and under the law of Pennsylvania it is entitled to its distributive share on its claim. The question decided by the orphans' court and argued here is important and is fairly raised. The parties are entitled to have it decided by this court. I would reverse the judgment and remit the record with direction to increase the distributive share of the appellant in accordance with the views herein expressed.
Judge HENDERSON joins in this dissent.