Lake Worth Inlet Dist. v. First Am. Bank & Trust Co.

• Decision Date: 13 February 1929
• Citation: 120 So. 316,97 Fla. 174
• Parties: LAKE WORTH INLET DIST. v. FIRST AMERICAN BANK & TRUST CO. et al.
• Court: Florida Supreme Court

120 So. 316

97 Fla. 174

LAKE WORTH INLET DIST. v. FIRST AMERICAN BANK & TRUST CO. et al.

Florida Supreme Court, Division A.

February 13, 1929

Suit by the Lake Worth Inlet District against the First American Bank & Trust Company, as receiver of the Farmers' Bank & Trust Company, and others. From a decree sustaining a demurrer to the bill, plaintiff appeals.

Affirmed.

See also, 117 So. 900.

Syllabus by the Court

SYLLABUS

Public corporation cannot be preferred over general creditors of insolvent bank, in absence of express statutory authority. A public corporation which is a current depositor in a bank cannot, in absence of express statutory authority, be made a preferred creditor and enjoy priority of payment over general creditors from assets of bank when it becomes insolvent and passes into hands of receiver.

Appeal from Circuit Court, Palm Beach County; Elwyn Thomas, judge.

COUNSEL

Chillingworth & Simon, of West Palm Beach, for appellant.

Wideman & Wideman, of West Palm Beach, for appellees.

OPINION

TERRELL C.J.

In March, 1927, the Farmers' Bank & Trust Company of West Palm Beach, Fla., became insolvent and was taken in charge by the state banking department. At the time of this occurrence appellant, a public corporation, was doing business with the Farmers' Bank & Trust Company and had on deposit with it a large sum of money. This suit is brought for the purpose of having the appellant decreed to be a preferred creditor of the insolvent bank by virtue of its (appellant) being a public corporation. A demurrer to the bill was sustained, and appeal was taken from that order.

The sole question presented here for our consideration is whether or not a public corporation which is a current depositor in a bank can be made a preferred creditor and enjoy priority of payment from the assets of said bank when it becomes insolvent and passes into the hands of a receiver.

Appellant grounds its claim for relief on the prerogative right of the crown under the common law to be preferred in the payment of its debts over general creditors of an insolvent.

In this country the decisions are divided on this question, but the weight of authority seems to be that neither the state as such, nor any of its agencies, can be preferred in the payment of its simple contract debts over general creditors of an insolvent, in the absence of express statutory authority therefor. Potter v. Fidelity & Deposit Co. of Md., 101 Miss. 823, 58 So. 713; North Carolina Corporation Commission v. Citizens' Bank & Trust Co., 193 N.C. 513, 137 S.E. 587, 51 A. L. R. 1350; Board of Chosen Freeholders of Middlesex County v. State Bank, 29 N. J. Eq. 268; State v. Harris, 18 S C. Law (2 Bailey) 598; Central Trust Co. of N.Y. v. Third Avenue Ry. Co. (C. C. A.) 186 F. 291; Zimmerman, Commissioner of Banking, v. Chelsea Savings Bank, 161 Mich. 704, 125 N.W. 424, 127 N.W. 351; State v. First State Bank, 22 N.M. 661, 167 P. 3, L. R. A. 1918A, 394; AEtna Casualty & Surety Co. v. Moore, 107 Wash. 99, 181 P. 40; State v. Bank of Md., 6 Gill & J. (Md.) 205, 26 Am. Dec. 561; State v. Foster, 5 Wyo. 199, 38 P. 926, 29 L. R. A. 226, 63 Am. St. Rep. 47; Board of Chosen Freeholders of Middlesex Co. v. State Bank at New Brunswick, 30 N....