Keyes v. Paducah & IR Co.
Decision Date | 09 November 1932 |
Docket Number | No. 5995.,5995. |
Parties | KEYES v. PADUCAH & I. R. CO. |
Court | U.S. Court of Appeals — Sixth Circuit |
G. W. Norton, Jr., of Louisville, Ky. (Charles W. Milner and Humphrey, Crawford & Middleton, all of Louisville, Ky., on the brief), for appellant.
J. C. Doolan, of Louisville, Ky. (Trabue, Doolan, Helm & Helm, of Louisville, Ky., and Fitzgerald Hall, of Nashville, Tenn., on the brief), for appellee.
Before HICKS, HICKENLOOPER, and SIMONS, Circuit Judges.
Appellee brought suit in the court below against the sheriff of McCracken county, and others, seeking to enjoin the collection of certain taxes. A temporary injunction was sought and granted. Instead of requiring the plaintiff to execute bond as a condition precedent to the issue of the temporary injunction, the order contained the following provision: "This injunction is conditioned upon deposit by plaintiff in the National Bank of Kentucky of Eight Thousand Dollars, to abide the event of this cause, and it appearing to the court that this has been done, said sum so deposited shall be at all times subject to the order of this court."
In compliance with the order, appellee deposited with the National Bank of Kentucky a draft for $8,000 and a copy of the order of the court. The bank executed its receipt, which, after reciting the entry of the order by the court, concludes:
Subsequently, on June 15, 1929, the bank, by its assistant cashier, advised plaintiff's counsel of the payment of the draft in a letter as follows:
On November 16, 1930, the National Bank of Kentucky was closed by order of its board of directors, and on the following day the Comptroller of the Currency of the United States appointed appellant as receiver, who duly qualified and took charge of all of the bank's assets. In February, 1931, the court entered its final decree in the tax suit, making permanent the preliminary injunction therein, and granting the relief prayed for by the plaintiff. Thereupon the appellee demanded that the receiver turn over to it the full sum of $8,000 as a special deposit, and, upon the refusal of the receiver to comply with the demand, filed a motion in the tax suit and obtained a rule requiring the receiver to show cause why he should not be compelled to do so. Following a hearing thereon, the District Court entered its final order and decree requiring the receiver to pay to the appellee the full sum of $8,000, and from such order and decree the receiver appeals.
The first question to be decided is whether the fund deposited with the bank is a trust fund, either because it is a special as distinguished from a general deposit, or because it must be construed as a trust by reason of its being a deposit for a specific purpose. If a trust fund, the depositor is entitled to preferential payment as against general creditors, providing the deposit augmented the bank's funds coming into the hands of the receiver, and providing the money can be traced into his possession. The doctrines of augmentation and tracing are, however, to be considered only if the trust relationship exists; otherwise they are unimportant.
We are concerned first with the distinction between special and general deposits. "All deposits made with bankers may be divided into two classes, namely, those in which the bank becomes bailee of the depositor, the title to the thing deposited remaining with the latter; and that other kind of deposit of money peculiar to banking business, in which the depositor, for his own convenience, parts with the title to his money, and loans it to the banker, and the latter, in consideration of the loan of the money, and the right to use it for his own profit, agrees to refund the same amount, or any part thereof, on demand." Commercial Nat. Bank of Pennsylvania v. Armstrong, 148 U. S. 50, 13 S. Ct. 533, 535, 37 L. Ed. 363, quoting with approval from Marine Bank v. Fulton Bank, 2 Wall. 252, 17 L. Ed. 785. A special deposit consists in the placing of specific kinds of money or property in the possession of the bank, with an obligation of the bank to return the identical thing deposited; the depositor retaining title. Parker State Bank v. Pennington (C. C. A.) 9 F.(2d) 966; Scammon v. Kimball, Assignee, 92 U. S. 362, 23 L. Ed. 483; Morse on Banking, §§ 183, 190, 205; Magee on Banking, pp. 276, 282; Michie on Banks and Banking, pp. 1286, 1297; Pitts v. Pease, 39 F.(2d) 14 (C. C. A. 5). On the other hand, a deposit is general where a sum of money is left with the bank for safe-keeping, subject to order, and payable, not in the specific money deposited, but in an equal sum, whether it bears interest or not. Morse, §§ 183 and 185. As was said by the Supreme Court in Bank of Republic v. Millard, 10 Wall. 152, 155, 19 L. Ed. 897: Cf. Burton v. United States, 196 U. S. 283, 25 S. Ct. 243, 49 L. Ed. 482.
Whether a deposit in a bank is general or special depends upon the mutual understanding and intention of the parties at the time such deposit is made, and a deposit made in the ordinary course of business is presumed to be general, and the burden of proof is upon the depositor to overcome such presumption by proving that the deposit was...
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