Appeal
from Superior Court, Pasquotank County, Grady, Judge.
Action
by the First & Citizens' National Bank, as guardian, in
behalf of Mattie Whitehurst and another, against the
Corporation Commission of North Carolina and A. G. Small
Liquidating Agent in dissolution of the Carolina Banking & Trust Company. Judgment for the defendants, and the plaintiff
appeals.
Affirmed.
Minor's
funds in possession of bank as general guardian when
commingled with its general funds held divested of character
as trust fund, precluding preference on insolvency.
The
following judgment was rendered by the court below:
"This
cause came on for hearing at the above time and place upon
an agreed statement of facts, signed by counsel, which is
hereto attached, and made a part of this judgment.
"1.
It appears from said statement of facts that the Carolina
Banking & Trust Company was a domestic corporation engaged
in the banking business in Elizabeth City, and that it was
authorized, under its charter, and under the laws of this
State, to act as guardian, administrator, or executor, in
the same manner as an individual might act under the laws
of this State.
"2.
That said Carolina Banking & Trust Company closed its doors
and was taken over by the Corporation Commission on August
19, 1930, at which time it was the general guardian, under
an order of the Clerk of the Superior Court of Pasquotank
County, of Mattie Whitehurst and Clarence Whitehurst; and
since that time it has been removed as guardian of said
minors and the First & Citizens National bank of Elizabeth
City has been appointed as general guardian for said
minors, and prosecutes this action in their behalf.
"3.
At the time of its failure and the taking over by the
Corporation Commission, as aforesaid, said Carolina Banking & Trust Company, in its capacity as guardian, or executor,
of various and sundry persons, had on deposit in said
Carolina Banking & Trust Company, as a banking institution,
the sum of $29,750.59; this sum being the aggregate of the
several amounts specified and set out in article 6 of the
agreed statement of facts; and of this amount the
plaintiff's wards, Mattie Whitehurst and Clarence
Whitehurst, were entitled, respectively to $737.18, and
$692.21, making a total of $1,429.39. All of said deposits,
aggregating $29,750.29, were amply protected by a solvent
bond, which had been duly executed by said Carolina Banking & Trust Company as guardian, executor, and so forth, with
approved sureties, and out of which a recovery can be had
at this time for the full amount due by the defendant,
Carolina Banking & Trust Company, former guardian of the
minor plaintiffs in this cause.
"4.
It will be observed that the Carolina Banking & Trust
Company, as guardian of the said Mattie Whitehurst and
Clarence Whitehurst, is not a party to this action; but the
same is being prosecuted solely against the successor in
title of the assets of the Carolina Banking & Trust Company
as a Banking depository of the funds hereinbefore referred
to.
"5.
It is admitted, by all parties, that at the time of the
closing of the said Carolina Banking & Trust Company, it had
on hand, in cash, more than enough money to pay off and
discharge all of said trust accounts, referred to in article
6 of the agreed statement of facts; and the plaintiff insists
that, inasmuch as these monies constituted a trust fund in
the hands of the Bank, and inasmuch as they were mingled with
other monies belonging to said bank, it is now entitled to
have a decree of this Court declaring that it is entitled to
a preference, to the extent of its claim, over and above all
other creditors of the said Carolina Banking and Trust
Company, as a banking institution.
"6.
As the Court sees it the plaintiff's contention is, in
effect, that, notwithstanding the funds in question are amply
secured by a bond, that the unsecured creditors and
depositors of said bank must yield their rights in the
premises and put themselves in the position of securities, so
that their monies may be used to pay the plaintiff's
claim, while they stand to lose what they have on deposit, or
the amount owing them by said Carolina Banking & Trust
Company, at least to the extent of such preference.
"The
Court is unable to follow the reasoning of the plaintiff.
There was no contract, according to the agreed statement of
facts, between the parties, which would set aside any
particular item of the funds in question so as to give to the
plaintiff a particular lien thereon, or a preference over the
other creditors; but according to the facts as agreed, the
plaintiffs and its predecessors in office are simply
unsecured creditors of said Carolina Banking & Trust Company,
in its character as a bank; and therefore, it stands in a
similar position to the defendants as successors in title to
the assets of said bank; and it is therefore,
"Ordered
and Adjudged that the plaintiff has no preference and that
it is simply an unsecured creditor of the defendants, and
entitled to pro-rate in the funds in hand, along with the
other unsecured creditors.
"It
appears from article 10 of the agreed statement of facts,
that at the time the Carolina Banking & Trust Company
closed its doors, it had in its possession two certain
notes, one in the sum of $4000.00, dated July 29, 1929,
payable October 27, 1929, to the order of Carolina Banking & Trust Company, and endorsed, 'Without recourse to
Carolina
Banking & Trust Company, guardian for Eddie Rhodes, Murden
Rhodes, Elvy Rhodes and Cecil Rhodes, or order, and any
surplus to the guardian account of McKinney heirs';
said note being secured by the pledge of a note for
$5000.00, which note was secured by real estate. The second
note was executed by S. G. Scott, in the principal sum of
$6000.00, dated November 6, 1928, and payable September 2,
1929, to the order of the Carolina Banking & Trust Company,
and endorsed 'Without recourse to Carolina Banking & Trust Company, guardian for Clarence Whitehurst, Mattie
Whitehurst, Fannie Tadlock, Ira Tadlock, Cora McKinney, and
others,' all of which will appear by reference to
article 10 of the agreed statement of facts.
"The
Court is of the opinion, and so adjudges, that the
plaintiff has no right, title or interest in and to the
first note above mentioned; and that as to the second note,
for $6000.00, the plaintiff's interest in said note is
only that of a tenant in common along with 14 other minors,
who are named in said article 10 of the agreed statement of
facts; and that, therefore, the plaintiff is not entitled
to said note, but that it is the duty of the defendant to
collect the same and pay out the proceeds derived therefrom
to the parties in interest, according to their respective
rights, as set out in the agreed statement of facts.
"It
is further ordered and adjudged that the costs of this
action be taxed against the plaintiff."
To the
foregoing judgment, the plaintiff excepted, assigned error,
and appealed to the Supreme Court.
CLARKSON
J.
Were
the funds in the hands of the Carolina Banking & Trust
Company, former guardian of plaintiff guardian's wards,
divested of their character as trust funds, when placed or
deposited by said bank in its own vaults, under the
circumstances of this case? We think so.
The
agreed facts show: "That, when so placed...
