HARTFORD NAT. BANK AND TRUST CO. v. WESTCHESTER FED. SAV. & LOAN ASS'N

• Decision Date: 18 October 1976
• Docket Number: No. 74 Civ. 3900.,74 Civ. 3900.
• Citation: HARTFORD NAT. BANK AND TRUST CO. v. WESTCHESTER FED. SAV. & LOAN ASS'N, 422 F. Supp. 203 (S.D. N.Y. 1976)
• Parties: HARTFORD NATIONAL BANK AND TRUST COMPANY, Plaintiff, v. WESTCHESTER FEDERAL SAVINGS & LOAN ASSOCIATION, Defendant.
• Court: U.S. District Court — Southern District of New York

422 F. Supp. 203

HARTFORD NATIONAL BANK AND TRUST COMPANY, Plaintiff, v. WESTCHESTER FEDERAL SAVINGS & LOAN ASSOCIATION, Defendant.

No. 74 Civ. 3900.

United States District Court, S. D. New York.

October 18, 1976.

William M. Ivler, Stamford, Conn., for plaintiff.

Victor N. Pacor, Pacor & Del Vecchio, New Rochelle, N. Y., for defendant.

KEVIN THOMAS DUFFY, District Judge.

This is a diversity action between Hartford National Bank and Trust Co. and Westchester Federal Savings & Loan Association over a sum on deposit at the Westchester Bank which was allegedly pledged to the Hartford Bank by a depositor. A trial has been held and this opinion constitutes my findings of fact and conclusions of law.

Herbert Stoll, the general partner is a limited partnership known as Hyde Park Company which owned an apartment building in Stamford, Connecticut, approached the Hartford Bank seeking a $35,000 loan. William C. Stevens, a vice-president of Hartford, asked Stoll about possible security for the loan. Stoll indicated that he had an account at the Westchester Bank and exhibited a passbook with the name "Hyde Park Company C/O Herbert Stoll." The bank agreed to lend Stoll the money and required delivery of the passbook, an undated withdrawal slip for the balance, and an executed pledge.

Thereafter, Stevens wrote to Westchester Federal requesting that it complete a form acknowledging receipt of notice of pledge of the account. Westchester Federal through its counsel, John J. Phelan, returned the executed notice of pledge with the following note, "I am returning herewith the receipt of the Notice of Pledge of the above savings account consisting of security rents under leases." Sometime after receipt of the letter, Hartford advanced the money to Stoll. No further inquiries concerning the nature of the account were made by Hartford.

Stoll defaulted on the loan, whereupon Stevens presented the passbook and withdrawal slip to Westchester Federal to obtain receipt of the funds on deposit. Westchester Federal refused to turn over any money from the account.

It is Westchester Federal's position that the funds on deposit are held by Stoll as a fiduciary and that since Hartford National was aware of that fact no valid assignment could occur.

There is no dispute that the monies in issue are in fact fiduciary funds. Westchester Federal has introduced the signature card which is labeled "Fiduciary Account Hyde Park Company (Rent Security Account)." Westchester's ledger...