Gordon, Secretary of Banking v. Union Trust Co.
| Decision Date | 30 June 1932 |
| Docket Number | 23 |
| Citation | 308 Pa. 493,162 A. 293 |
| Parties | Gordon, Secretary of Banking, v. Union Trust Co., Appellant |
| Court | Pennsylvania Supreme Court |
Argued May 26, 1932
Appeal, No. 23, May T., 1932, by defendant, from judgment of C.P. Dauphin Co., Jan. T., 1932, No. 146, for plaintiff on case-stated, in suit of William D. Gordon, secretary of banking of the Commonwealth of Pennsylvania, in possession of the business and property of the Commercial Trust Company, v Union Trust Company. Affirmed.
Case-stated in assumpsit to determine ownership of a trust fund on deposit. Before WICKERSHAM, J.
The opinion of the Supreme Court states the facts.
Judgment for plaintiff on case-stated. Defendant appealed.
Error assigned was judgment, quoting it.
Judgment affirmed.
Arthur H. Hull, of Snyder, Miller, Hull & Hull, for appellant. -- Mutuality of demand both as regards the quality of the right and identity of parties exists and therefore the right to set-off exists: Stuart v. Com., 8 Watts 74.
The accounts were in the respective names of the banks, and the deposits were general trust funds, and neither bank could have rightly refused to honor a check, drawn on it by the depositing bank on the ground that the deposit belonged to any particular estate or individual, because the accounts had not been opened and were not carried in any such specific or particular manner: Hugg v. Brown, 6 Wharton, 468; Murray v. Williamson, 3 Binn 135; Wolf v. Beales, 6 S. & R. 244; Bank v. Mason, 95 Pa. 113; Bank v. Alexander, 120 Pa. 476; Patterson v. Bank, 130 Pa. 419.
Mark T. Milnor, special counsel, Shippen Lewis, Special Deputy Attorney General, and William A. Schnader, Attorney General, for appellee, were not heard.
Before FRAZER, C.J., SIMPSON, KEPHART, SCHAFFER, MAXEY, DREW and LINN, JJ.
The Commercial Trust Company deposited $6,429.50 with the Union Trust Company, the account being styled "Commercial Trust Company Trust Funds." The Union Trust Company had $6,808.45 on deposit with the Commercial Trust Company, this account being styled "Union Trust Company Trust Funds." It is conceded that both deposits represented trust funds of the respective institutions, and, as such, were the property of various cestuis que trust or beneficiaries of each bank.
Union Trust Company was and still is a solvent going concern. Commercial passed into the hands of the secretary of banking because of impairment of capital. The secretary drew on Union for the trust funds of Commercial which it held. Payment of his draft was refused since Union claimed a set-off against it because of the trust fund deposit it had in Commercial. The court below refused to permit the set-off for the reason that it did not appear that there was mutuality of demand both as regards the quality of the right and the identity of the parties.
The statutes [*] and orders of the banking department have resulted in a general practice among trust companies of depositing trust funds exactly as was done in this case. The beneficial owners of Commercial's trust account are A, B, and C; their money is in the Union bank. The beneficial owners of Union's trust account are X, Y, and Z, and their money is in the Commercial bank. Strike the trust companies out of the picture, as they are only trustees holding legal title, and the matter is reduced to its simplest form. What is then asked in the set-off is that the money of A, B, and C, be used in part to pay the debts to X, Y, and Z. This we held in Hunter v. Henning, 259 Pa. 347, could not be done. Appellant attempts to limit that decision to its facts inasmuch as the trust accounts were there plainly earmarked, but as we said in Trestrail v. Johnson, 298 Pa. 388, "Generally speaking, in all cases where the ownership of the fund itself has been in dispute, and not the right to administer it, the court has been particular to do nothing which would disturb in the slightest the fund reaching its destined lawful end, without unnecessary risks that might come if a more liberal policy was adopted, it being conceded the fund was a trust or one that can be called such."
The question here then is one of ownership, not one of determining the status of a deposit between the bank and the depositor. The underlying equitable principle set forth in ...
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