Myers v. Matusek

• Decision Date: 28 December 1929
• Citation: 98 Fla. 1126,125 So. 360
• Parties: MYERS et al. v. MATUSEK.
• Court: Florida Supreme Court

125 So. 360

98 Fla. 1126

MYERS et al. v. MATUSEK.

Florida Supreme Court, Division A.

December 28, 1929

Suit by Ernestine Matusek against Orel J. Myers, as receiver of the Palm Beach Bank & Trust Company, and another. From an order adjudging that plaintiff's claim constituted a preferred claim against the receiver and that remainder of claim should be allowed as that of a common creditor, defendants appeal. Affirmed in part, and reversed and remanded in part.

Syllabus by the Court

SYLLABUS

Depositor in trust department of money to be secured by securities, but which was commingled with bank's assets, held entitled to preference against funds in receiver's hands. Where a person deposits money in the trust department of a bank subject to call with interest at 7 per cent., upon the understanding that such deposit shall be secured by the setting aside of securities, and the same is entered upon the books as a 'trust deposit, for investment purposes,' but, without putting any securities behind such deposit, the fund is transferred to the commercial department of the bank and commingled with its general cash assets and subsequently deposited by it with some of its other funds in a correspondent bank, upon the closing of the trustee bank the claim of the trust depositor should be allowed as a preferred claim against the commingled funds coming into the hands of the receiver, such deposit having been made as a special deposit for a particular purpose, which the bank, upon commingling the fund without putting up the security, held as a constructive trustee.

Where trustee commingles trust funds with own, presumption is that trustee first dissipated own funds; lowest balance after trustee commingles trust money with own funds may be impressed with trust. When a trustee commingles trust funds with his own, and dissipates a portion of the commingled fund, he will be presumed to have dissipated his own funds first, and the remainder of the commingled fund, to the extent of the lowest balance remaining at any time subsequent to the commingling, will be presumed to contain the trust fund, and may be impressed with the trust.

Burden is on cestui que trust seeking preference to trace trust funds into hands of trustee's receiver. Upon insolvency of a trustee and the placing of his assets in the hands of a receiver, the burden is upon the cestui que trust, in order to obtain a preference over general creditors, to trace the trust fund in its original or transmuted form into the assets, or some portion of them, coming into the receiver's hands.

Cestui que trust must look to particular fund, consisting of trustee bank's deposit in correspondent, into which trust fund was traced, not to trustee's general assets. When a bank which has received a trust fund which it has deposited together with other funds in a correspondent bank, and subsequently by withdrawals has depleted such deposit below the amount of the trust fund, and shortly thereafter goes into the hands of a receiver, the balance of cash assets on hand in the bank's own vaults and on deposit made by it in other correspondent banks will not be impressed with the trust, but the cestui que trust must look to the particular fund, the deposit in the particular correspondent bank into which the trust fund was traced and with which it was commingled, for the impressment, and reclamation in whole or in part, of such trust fund.

Where trustee bank reduces deposit with correspondent below amount of trust fund therein, trustee's subsequent deposits will be presumed to have been made with trustee's funds to restore trust fund. When a trustee bank deposits a trust fund together with other funds to its credit in a correspondent bank and by drawing upon the commingled fund reduces the deposit below the amount of the trust fund, but the next day by additional deposits more than makes good the deficiency and the deposit account is from that time until the bank is taken over by the receiver maintained in an amount greater than the trust fund, the subsequent deposits restoring the trust fund will be presumed, in the absence of evidence to the contrary, to have been made by the trustee bank with its own funds for the purpose of making restoration of the trust fund and holding the same intact, as its duty required; thus entitling the cestui que trust to an impressment of the trust upon the funds contained in such deposit, which came into the possession of the receiver, to the full amount of the original trust fund.

Appeal from Circuit Court, Palm Beach County; C E. Chillingworth, judge.

COUNSEL

Blackwell, Donnell & Moore, of West Palm Beach, for appellants.

Ritter & Rankin, of West Palm Beach, for appellee.

OPINION

BROWN J.

This appeal was taken from an order of the circuit court of Palm Beach county adjudging that the claim of the appellee constituted a preferred claim in the sum of $19,124.72, against the reciver of the Palm Beach Bank & Trust Company, and that the remainder of said claim should be allowed as that of a common creditor. The full amount of appellee's claim was $25,000, and it was contended by appellee that it should be allowed as a preferred claim in full. From this order and decree the defendant receiver took this appeal, assigning the rendition of same as error. Appellee filed a cross-assignment of error upon the ground that the order should have allowed her entire claim as a preferred claim. Appellee acquired the claim involved in this suit by a valid assignment from Dr. Frederick Bleil based upon a valuable consideration.

On May 28, 1926, Dr. Bleil wrote Mr. Carter, the trust officer of the Palm Beach Bank & Trust Company, that he had $25,000 that he would not need until the following October, and asked 'if Mr. Clayton's Mortgage Company had any guaranteed notes that would come due around that date' and which he (Bleil) could buy. On June 4, 1926, the trust officer replied, saying that Mr. Clayton stated that he did not have any notes in his mortgage company that would mature in the neighborhood of that date and for that reason he (Clayton) could not use the money; but he added: 'We have some securities in the Trust Department that will yield 7% to you. You could send the money down in the nature of a trust deposit, subject to call and to be withdrawn October 1st, we would turn over to this account securities to that amount, and pay you 7% interest on the money at the time you requested the return of said money to you, this interest to be paid from the date of the receipt of the money by us until you called it in.'

On June 9th, Dr. Bleil wrote the trust officer as follows: 'I am enclosing check for $25,000.00 to be used as a trust deposit, subject to call, on which your Trust Department will pay me 7% from the time you receive this money until I withdraw it. I believe this is in accordance with the proposition you made to me. Kindly let me know if this is correct and oblige,' etc.

Upon receipt of this money by the bank the following entry was made on the books of the bank by the trust officer: 'Trust No. 86, Frederick Bleil, deposit of $25,000.00 left with us as trust deposit for investment purposes, balance $25,000.00.' This was the only entry made on the books of the bank with reference to this transaction.

We think the chancellor was correct in concluding that this letter, just quoted, inclosing the check, and the entry on the bank's books, showed an acceptance of the proposition made in the trust officer's letter of June 4th, and that the interest-bearing deposit so made constituted a special deposit to be secured by the setting aside of sufficient securities, in the nature of collateral, to secure the deposit. It is admitted that this check for $25,000 was paid in due course, and that the Palm Beach bank received the benefit not of the actual proceeds, but of a liquid credit equal thereto, said check having been deposited by it with the Atlantic National Bank on June 12th and was placed to the credit of the Palm Beach bank on that day, and appears to have been treated by both banks as the potential equivalent of cash, which it turned out to be. But instead of setting aside any securities whatsoever to secure this special deposit, the Palm Beach bank mingled the funds thus received with its general funds, the cash assets, of the bank, in its commercial department. On June 28, 1926, fourteen days after acknowledging receipt of the check, the bank closed its doors, and it was taken over by the comptroller, who appointed Orel J. Myers as receiver, which appointment was confirmed by the court and all the assets, books, and affairs of the bank were turned over to such receiver. The bank did not list this $25,000 among its liabilities, and the trust officer testified that this money was not loaned to the bank or treated as a loan by the bank. No note or passbook, or other evidence of debt, was ever issued by the bank to Dr. Bleil.

On October 9, 1926, Dr. Bleil filed with the receiver his claim for the sum of $25,000, asking that said sum of money be returned to him or that the same be made a preferred claim against the assets of said bank. This claim was rejected by the receiver as a preferred claim but was allowed by him to remain on file in his office as a general claim against the bank. On December 15, 1926, Dr. Bleil assigned to appellee, Ernestine Matusek, for a valuable consideration, all of his right, title, and interest in and to said sum so deposited by him in the trust department of the bank.

The defendants in their answer alleged that this money was sent as a direct loan to the bank and was not entitled to be considered as a preferred claim, and that complainant had waived any right she may have had against the bank and its receiver for...