Kelly v. Commissioner of Banks

• Citation: 239 Mass. 298
• Court: United States State Supreme Judicial Court of Massachusetts
• Decision Date: 30 June 1921
• Parties: MARY W. KELLY, executrix, v. COMMISSIONER OF BANKS & another.

239 Mass. 298

MARY W. KELLY, executrix, v. COMMISSIONER OF BANKS & another.

Supreme Judicial Court of Massachusetts, Suffolk.

June 30, 1921

May 24, 1921.

Present: RUGG, C.

J., DE COURCY PIERCE, CARROLL, & JENNEY, JJ.

Set-off. Trust Company.

A promissory note payable to the order of a trust company, which was given for a loan of funds from the savings department of the trust company and is held as an asset of that department, under G.L.c. 172,

Sections 61 and 62 upon the property of the bank being taken possession of by the commissioner of banks under G.L.c. 167, Section 72 cannot be extinguished by a set-off of a deposit made by the maker of the note in the commercial department of the trust company; and it is immaterial that the maker of the note did not have actual knowledge that the loan made to him was from the funds of the savings department.

BILL IN EQUITY filed in the Supreme Judicial Court on April 6, 1921, by the executrix of a depositor in the commercial department of the Prudential Trust Company in Boston against the commissioner of banks for the Commonwealth and the Prudential Trust Company, the plaintiff alleging that the commissioner of banks was in possession of the property and business of the trust company and was proceeding to wind up its business, and praying that a demand note made by the plaintiff's testator payable to the order of the trust company be ordered set off against a deposit made by the testator in the commercial department of the trust company, and that a savings bank book, issued by another bank and given to the defendant trust company as collateral security for the payment of the note, be returned to the plaintiff.

The answer filed by the defendant alleged that the note was given for a loan of funds from the savings department of the trust company; that the note and security for the payment thereof were in the possession of the defendant as assets of the savings department and that the defendant had no right to accept in payment or discharge of the note a set-off of the indebtedness of the commercial department of the trust company to the plaintiff's testator.

The suit came on to be heard before Braley, J., upon the pleadings and a "Case Stated," material portions of which are described in the opinion. The single justice was of opinion that the set-off claimed should not be allowed, but at the request of the plaintiff reported the suit upon the pleadings and the facts in the "Case Stated" for determination by the full court.

The case was submitted on briefs.

H. Williams, Jr., & C.

E. Fay, for the plaintiff.

J. E. Hannigan, for the commissioner.

PIERCE, J. On September 10, 1920, the defendant Joseph C. Allen commissioner of banks for the Commonwealth of Massachusetts acting under the authority of St. 1910, c. 399, now G.L.c. 167, Section 22, took possession of the property and business of the Prudential Trust Company, a banking corporation organized under the laws of the Commonwealth of Massachusetts and having its usual place of business in Boston within the county of Suffolk. On the day above mentioned the testator of the plaintiff, Thaddeus T. Kelly, had on deposit in the commercial department of the trust company $2,380.46, subject to his check. The trust company had a savings department in which deposits were made subject to St. 1908, c. 520, now G.L.c. 172, Section 60-72. On August 5, 1920, the savings department loaned the said Thaddeus T. Kelly from its savings deposits $900, the record not disclosing whether the plaintiff testator knew from which department the loan was made, and Kelly gave the trust company his promissory demand note for that amount with interest, and as collateral therefor a "Pass book No. 59228" issued by the Union Institution for Savings...