England v. Hughes

• Decision Date: 15 December 1919
• Docket Number: 114,54
• Citation: 217 S.W. 13,141 Ark. 235
• Parties: ENGLAND v. HUGHES
• Court: Arkansas Supreme Court

217 S.W. 13

141 Ark. 235

ENGLAND v. HUGHES

No. 114, 54

Supreme Court of Arkansas

December 15, 1919

Appeal from Pulaski Circuit Court, Third Division; G. W. Hendricks Judge; reversed.

STATEMENT OF FACTS.

On May 26, 1919, W. B. Hughes, as trustee, and others brought this suit against Lloyd England, as receiver of the State National Bank of Little Rock, Arkansas, for the sums respectively set opposite their names.

The plaintiffs allege in their complaint tat the State National Bank of Little Rock, Arkansas, was a corporation organized under the laws of the United States and engaged in the banking business. It suspended business on the 19th day of June, 1914, and was declared insolvent by the Comptroller of the United States Treasury, and placed in the hands of a receiver in February, 1915.

In the answer it is alleged that the State National Bank of Little Rock, Arkansas, closed its doors and ceased to do business on June 19, 1914; that at the time the bank closed its doors it began liquidation as an insolvent bank in the manner required by the national bank act, and that notice of such fact was published in the public press; that a receiver was duly appointed for the bank on the 17th day of February, 1915 that immediately following the date of his appointment the receiver, under order of the Comptroller of the Currency published a notice requiring all depositors and other creditors of the bank to file their claims with him as receiver within ninety days and stating that any claim not filed within the period designated would be disallowed and barred; that the plaintiffs had on general deposit in the bank at the time it ceased to do business the amounts sued for in this case; that they never presented their claims to the receiver for allowance. Therefore, it is claimed that the plaintiffs are barred of relief by the statute of limitations, and defendant especially pleads in bar of plaintiffs' action the three years' statute of limitation.

A demurrer to the answer was sustained, and, the defendant having refused to plead further, judgment was rendered in favor of each of the plaintiffs for the amount respectively sued for by him. The defendant has appealed.

Judgment reversed. Motion for rehearing denied.

Charles T. Coleman, for appellant.

1. By a general deposit with a bank the relation of debtor and creditor is established. The title to the money passes to the bank, and it agrees to pay it on demand during banking hours etc. 111 U.S. 127; 161 Id. 288; 192 Id. 145; 130 F. 780; 15 Id. 675; 92 Cal. 14; 16 L. R. A. (N. S.) 593; 100 N.Y. 50; 196 U.S. 301; 98 Ark. 294; 46 Id. 537; 48 Id. 267; 69 Id. 43; 104 Id. 294; 126 Id. 266; 124 Id. 531.

2. The action is barred by the three-year statute of limitation. Kirby & Castle's Digest, § 5992. The contract was not in writing; the law implies a promise to pay on demand, and the statute does not begin to run until demand and refusal to pay. A suspension of payment by a bank or discontinuance of business dispenses with necessity of demand. 25 Cyc. 1098; Morse on Banks (3 Ed.) 548; 130 F. 780. To the same effect are 10 Gill. & J. 422; 9 Id. 439; 8 Id. 449; 12 Blatchf. 480; 65 N.H. 670; 23 A. 529; 152 Penn. 65: 3 Elliott on Cont., sec. 2660; Michie on Banks, etc., pp. 1321-23. The demurrer admits that plaintiffs knew of the suspension of the bank, the appointment of receiver, the order of the comptroller requiring all creditors to file their claims, etc., but they did not file their claims but stood supinely by with full knowledge of all the facts until the period of limitation expired, and they are barred.

3. The action is not within the provision in section 6009, Kirby & Castle's Digest. It is not based on the pass book but is founded on the implied promise to pay between the bank and depositor. 46 Ark. 537; 69 Id. 43; 104 Id. 550; 124 Id. 531; 126 Id. 266; 98 Id. 294; 53 Mich. 163; 36 P. 1066; 3 R. C. L. 531, par. 160. The pass book is not a written contract, but prima facie evidence only that the bank has received on deposit the amount stated and the date, etc. 53 Kan. 480; 133 Mass. 16; 53 Mich. 163; 36 Minn.193. It is not even an account stated. 126 Ark. 266. Its real status is a receipt. Our statute excepts "evidences of debt issued by a bank," and pass books are not issued as evidences of debt. What is meant by "evidences of debt issued by the bank" is shown by the history of our law. Rev. Stat. 1838, chap. 91, and sec. 18; 4 Ark. 175; 13 Id. 563; Rev. Stat., chap. 109. The rule ejusdem generis requires that the general words only include the kind or class as those specifically enumerated. 104 Ark. 263; 95 Id. 114; 73 Id. 602; 101 Id. 593; 61 Id. 494. The use of the deposit slip is well understood as a mere receipt and is not assignable. 134 N.Y. 368, 32 N.E. 38. As to meaning of "issue or put in circulation," see 17 Barb. 309-341. Provisos are construed strictly and take no case out of the enacting clause not falling clearly within its terms. 15 Pet. 165; 46 Ark. 306-310; Black on Int. of Laws, p. 275.

Wallace Townsend, for appellees.

1. Deposits are included in the term "evidences of debt" as used in Kirby & Castle's Digest, section 6009. 36 Mich. 494; 24 Am. Rep. 610. Pass books are evidence of debt. 16 N.E. 904-6; 24 L. R. A. 737; 117 U.S. 96-106; 126 Ark. 266-277.

2. The rule ejusdem generis does not operate against appellees. 2 Ark. 250; 102 Id. 218-19; Endlich, Int. Stat., § 409, cited in 70 Ark. 458.

3. The lex fori prevails. 155 U.S. 610-618; 27 F. 503-6. The suit is not barred by our statute. Supra. See also 27 F. 503; 44 Id. 586; 97 Id. 309-318; 98 Id. 375; 106 Id. 791. Under the provisions of our banking act and laws, the appellees are not barred. Act No. 113, Acts 1913. The statute does not run against trusts. 46 Ark. 25; 52 Id. 168; 132 Id. 402-410; 58 Id. 84-90. The Legislature can not deprive parties of an existing right by cutting off the remedy. 13 Ark. 262; 78 Id. 392-7; 65 Cal. 71; 2 P. 887. The appointment of a receiver does not work a dissolution of a bank, but it remains liable to creditors and suits. 14 Wall. 383. The receiver can have no defense the bank did not have. 34 Cyc. 191, 193; 98 Ark. 280-294. The barring of claims for non-presentation follows only where there is a final distribution of funds. 34 Cyc. 342. The act of 1838 deprives appellant of the defense of limitation, as does the act of 1913.

OPINION

HART, J., (after stating the facts.)

The circuit court sustained a demurrer to the answer of the defendant, and so the allegations of the answer must be taken as true. The answer alleges that each of the plaintiffs had on general deposit in the bank at the time it failed the sum respectively set opposite his name; that the bank was adjudged insolvent and a receiver appointed; that under an order of the Comptroller of the Currency notice was duly given requiring all depositors and other creditors of the bank to file their claims with the receiver within ninety days, and that the plaintiffs failed to do this.

By a general deposit, a bank becomes the debtor of the depositor, and bound by an implied contract to pay the same upon his demand or order. Steelman v. Atchley, 98 Ark. 294, 135 S.W. 902; Himstedt v. German Bank, 46 Ark. 537; Henry v. Conley, 48 Ark. 267, 3 S.W. 181; Carroll County Bank v. Rhodes, 69 Ark. 43, 63 S.W. 68; Covey v. Cannon, 104 Ark. 550; Citizens' Bank & Trust Co. v. Hinkle, 126 Ark. 266, 189 S.W. 679, and State National Bank v. First National Bank, 124 Ark. 531, 187 S.W. 673, and Burton v. United States, 196 U.S. 283, 49 L.Ed. 482, 25 S.Ct. 243.

When the bank failed and went into the hands of the comptroller, its business was at an end, and when the comptroller, under section 5235 of the Revised Statutes of the United States, directed the receiver to publish a notice for three consecutive months calling on all persons who might have claims against the bank to present the same and make legal proof thereof, this amounted to a waiver of the necessity for a demand by the depositor before he became entitled to sue for or claim his money. By closing its doors and ceasing to do business, the bank said in effect that it would not pay the depositors, and the law does not require a vain or fruitless thing to be done. Michie on Banks and Banking, vol. 2, p. 1323. Planters Bank v. Farmers Bank (Md.), 8 G. & J. 449; Union Bank v. Planters (Md.), 9 G. & J. 439, 31 Am. Dec. 113, and Watson v. Phoenix Bank, 49 Mass. 217, 8 Met. 217, 41 Am. Dec. 500.

It may be also stated in this connection that the appointment of a receiver will not stop the running of the statute of limitations against the claim of a creditor of an insolvent bank. Davis v. Scott, Recvr., 129 Ark. 226, 195 S.W. 383. More than three years elapsed from the time the notice to creditors was published by the receiver under orders from the Comptroller of the Currency until this suit was brought. Hence counsel for the defendant claims that the plaintiffs are barred under the first subdivision of section 5064 of Kirby's Digest which provides that all actions founded upon any contract or liability express or implied not in writing shall be commenced within three years.

On the other hand, counsel for the plaintiffs claim that section 5074 of Kirby's Digest, which provides that all actions not included in the foregoing provisions shall be commenced within five years after the cause of action shall have accrued, governs the case at bar. They base their contention on section 5081 of Kirby's Digest, which provides that none of the provisions of this act shall apply to suits brought to enforce payment on bills, notes, or evidences of debt issued by any bank or moneyed corporation. They claim that amounts due by the bank on general deposits are "evidences of debt"...