Goldband v. Commissioner of Banks

• Decision Date: 23 May 1923
• Citation: 245 Mass. 143
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: HARRY GOLDBAND v. COMMISSIONER OF BANKS & another. JACOB ANDREWS v. SAME.

245 Mass. 143

HARRY GOLDBAND v. COMMISSIONER OF BANKS & another. JACOB ANDREWS v. SAME.

Supreme Judicial Court of Massachusetts, Suffolk.

May 23, 1923

March 14, 15, 1923.

Present: RUGG, C.

J., BRALEY, DE COURCY, CROSBY, & PIERCE, JJ.

Trust Company Savings department, In liquidation. Contract, In writing. Evidence, Extrinsic affecting writing.

A man of business experience, somewhat familiar with banking, certificates of deposit, checking accounts and savings deposits, being solicited by the the vice-president of a trust company, which maintained a savings department, made two deposits as trustee for certain persons, refused to accept certificates of deposit as evidences of the bank's obligations, and received pass books, such as ordinarily were issued by the commercial department of the bank but with the words "on thirty-one days' notice" written across the face the vice-president assuring him that these words meant that "as no checks would be drawn on the account, the bank might desire thirty-one days' notice before it repaid the money" and that interest would be paid him at the rate of four and one half per cent. Thereafter the same man made a deposit in his own name of $12,000 upon the same assurances receiving a pass book which did not bear the words "on thirty-one days' notice" or any equivalent words. The deposits all were placed in the commercial department by the bank officers. The depositor received the usual monthly statements issued by the commercial department of the trust company, with interest added monthly commonly at the savings department rate. The commissioner of banks took possession of the property and business of the trust company and the depositor by a bill in equity sought an adjudication that the deposits should be charged to the savings department. A master found that the plaintiff was justified in believing the representations made by the agent of the trust company, that the representations were such as to warrant a belief that the deposits were made in the savings department of the trust company and the further belief that the pass book was properly issued as representing a deposit in the savings department; and that there was no negligence in not making further inquiries to ascertain the department in which the deposit in truth was made. Held, that

(1) The deposit made by the plaintiff in his own name, with its additions and accretions, must be treated as a deposit in the savings department;

(2) That the deposit was in excess of the amount allowed to depositors in savings banks was not significant for the reason that no limit was placed by the statute on the amount which might be received by a trust company in its savings department from a single depositor;

(3) The plaintiff was entitled to have the amount due on this account at the time the commissioner of banks took possession established as a deposit in the savings department;

(4) The deposits, for which the plaintiff as trustee received pass books bearing the words "on thirty-one days' notice," must be treated as in the commercial department.

A certificate of deposit, issued by a trust company having a savings department, as a matter of law is not the usual evidence of a deposit in the savings department, but is in form an obligation commonly issued and recognized as an incident of commercial banking.

As a matter of law, a certificate of deposit, or a pass book of the form usually issued by the commercial department of a trust company and bearing the words "on thirty-one days' notice," indicates a deposit upon special terms and conditions agreed upon between the depositor and the trust company, is issued within the authority conferred upon trust companies by G.L.c. 172, Section 31, and, upon liquidation of the trust company by the commissioner of banks, money thus received must be treated as a general deposit and not as a deposit in a savings department maintained by the company.

Time deposits can be taken by a trust company only in its commercial department; special agreements as to time of withdrawal and interest are not permissible in the savings department, where all depositors are treated as a class and must stand on the same footing, save in respects not here material.

A certificate of deposit, and a pass book such as usually is issued for a deposit in the commercial department of a trust company but with the words "on thirty-one days' notice" written therein, which respectively were issued to a depositor by a trust company having a savings department, are contracts in writing and as a matter of substantive law they cannot be varied by parol evidence of antecedent negotiations or contemporaneous qualifications.

As a matter of substantive law, in the absence of allegations or proof of fraud on the part of the trust company, deposits made by persons who received the certificate of deposit and the pass book above described must be taken upon liquidation of the company by the commissioner of banks to have been made in the commercial and not in the savings department of the trust company, although such depositor was justified in believing representations made by an agent of the trust company, which were such as to warrant a belief that the deposits were made in the savings department of the trust company and that the certificate of deposit or book, as the case might be, was properly issued as representing a deposit in the savings department, and although there was no negligence on the part of the depositor in not making further inquiries to ascertain the department in which the deposit in truth was made.

THREE SUITS IN EQUITY, filed in the Supreme Judicial Court respectively on April 22, April 27, and May 16, 1922, and afterwards amended, against the commissioner of banks in possession of the property and business of Cosmopolitan Trust Company, each seeking to have deposits made by the plaintiffs declared to be in the savings department of the trust company, instead of in the commercial department, where the trust company had placed them.

Each suit was referred to a master. The deposits to which the first suit referred were $5,000 in the name of Harry Goldband, trustee for Hyman Goldband, $3,866.50, in his name as trustee for Anna Colpak, and, in his personal name, $12,000. On the last account, $1,100 was added afterwards and then $1,500 was withdrawn. Other material findings by the masters are described in the opinion. There were no exceptions to the masters' reports and, by order of Braley, J., the three suits were consolidated and were reserved upon the pleadings and the masters' reports for determination by the full court.

T. M. Vinson, for the plaintiff Goldband. I. Harris, for the plaintiff Goldfine.

E. Greenhood, (A.

A. Ginzberg with him,) for the plaintiff Andrews.

D. L. Smith, (H.

O. Cushman with him,) for the defendants.

RUGG, C.J. These are three suits wherein the several plaintiffs seek to have established rights as depositors in the savings instead of the commercial department of the Cosmopolitan Trust Company. Each suit has been referred to a master under a rule requiring him to find the facts, and is reserved for our determination on the pleadings and the master's report.

Since no evidence is reported, the findings of fact made by the master must be accepted as final, because on the face of the report they are not mutually inconsistent nor contradictory nor plainly wrong. Glover v. Waltham Laundry Co. 235 Mass. 330 , 334. Daniels v. Daniels, 240 Mass. 380 , 385. Jacobs v. Anderson, 244 Mass. 125 .

The facts in the Goldband case are that, after repeated requests by a vice-president of the Trust Company, for that purpose duly authorized, Goldband presented for deposit $5,000 in trust for his brother. The vice-president said that interest would be paid at the rate of four and one half per cent and offered a certificate of deposit to the plaintiff, who refused it and demanded a book. Thereupon a pass book was handed to him like those ordinarily used in the commercial department of the trust company, acknowledging the deposit, and across its first page was stamped, "On thirty-one days' notice," which was explained to mean that "as no checks would be drawn on the account, the bank might desire thirty-one days' notice before it repaid the money." A second deposit later was made by Goldband as trustee for another person, with substantially the same circumstances. A third deposit was made on February 3, 1919, in the name of Goldband alone, under similar conditions except that no words equivalent to "On thirty-one days' notice" were on this pass book. This plaintiff received the usual monthly statements issued by the commercial department of the trust company, with interest added monthly commonly at the savings department rate.

The facts in the Andrews case are that he was solicited to deposit money in the trust company, that he sought and received from the trust company a mortgage loan on property of a charitable society of which he was president, upon his promise to deposit a large sum in his own name in the savings department of the trust company and to cause the account of the Society to be kept in the commercial department of the trust company. The latter promise was kept. In respect to the former promise, the plaintiff handed his check and cash to the amount of $10,000 to the president of the trust company and received a certificate of deposit of the trust company for that amount payable to his order "upon surrender of this Certificate. ...