Poole v. Newark Trust Co.
| Decision Date | 28 July 1939 |
| Court | Delaware Superior Court |
| Parties | WILLIAM POOLE, Trustee for Howard Malcolm Armstrong, sometimes known as Howard M. Armstrong, an insane person, v. NEWARK TRUST COMPANY, formerly known as Newark Trust and Safe Deposit Company, a corporation of the State of Delaware |
Superior Court for New Castle County, Assumpsit, No. 216 September Term, 1938.
Case heard by the Court without a jury.
This is an action brought by the plaintiff as Trustee for an insane person to recover from the defendant bank an amount which he claims is owing to such insane person, and growing out of the following facts:
Howard Malcolm Armstrong was originally admitted as a patient in the Delaware State Hospital for the Insane, at Farnhurst, on January 6, 1929. At various times Mr. Armstrong was paroled from the institution and returned for treatment, and also released upon ground privileges and for week ends. At one time he was transferred to an institution in Maryland.
On March 11, 1937, Mr. Armstrong opened a checking account with the defendant bank by the deposit of $ 750.00. He signed a signature card, received a pass book and check book, and the opening of the account was in no sense out of the ordinary routine.
On April 2, 1937, Elsie A. Armstrong and Dorothy Armstrong, the mother and sister, respectively, and the only heirs at law of Howard M. Armstrong, filed their petition in the Court of Chancery in and for New Castle County, praying the appointment of a Trustee for Howard M. Armstrong. The petition alleged that Armstrong was then an inmate of the Delaware State Hospital and under treatment for insanity and was incapable of caring for himself or managing his estate. Affidavits supporting the petition were filed by Dr. M. A Tarumianz, Superintendent of Delaware State Hospital, and Dr. T. H. Davies, both indicating that Armstrong was suffering from a type of insanity known as dementia praecox, and was an inmate of the Delaware State Hospital. To the petition there was also attached a list of assets belonging to Armstrong. This list was verified by the oath of the petitioners, but did not include the deposit at the defendant bank, although it is admitted that they knew of it at the time and purposely did not mention it.
From March 11, 1937, when the account was opened, to September 23, 1937, the account was reduced by checks drawn by Armstrong, from $ 750.00 to $ 407.31. On September 23, 1937, Armstrong drew his check for $ 400.00 to Benjamin L. Jacoby, of Philadelphia, which is alleged to have been in part payment of a gasoline station in Philadelphia, and this check was, in due course, paid by the defendant bank. Soon after this check was paid the Trustee heard of it and made demand on the defendant bank for its repayment, together with the balance of the account and, upon refusal, this suit resulted, it being tried by the Court without a jury.
The statute under which the Trustee was appointed is Section 3091 of Revised Code of 1935, as follows:
In addition to the claim that the defendant bank had, prior to the payment of the check, constructive notice of an adjudication of lunacy as to Armstrong, through the appointment of a Trustee on April 2, 1937, the plaintiff also claims that it had actual knowledge of the appointment growing out of the following facts:
In April, 1937, Mrs. Armstrong, mother of Howard M. Armstrong, was arranging the purchase by her of a house from a client of the defendant. Russell H. Morris, Real Estate or Trust Officer of the bank, and John Pearce Cann, Esquire, a practicing attorney who was also Vice-President and a Director of the Bank, were interested in the transfer. It seems to have been suggested that Mrs. Armstrong should obtain a portion of the purchase price from the plaintiff, as trustee for her son. The plaintiff testified that he had advised both Mr. Morris and Mr. Cann that it would be impossible for him, as Trustee, to advance money to the mother, and that the Bank thus knew of the appointment. Much of this testimony is in conflict.
The institutional record of Armstrong is not clear. Originally admitted to the State Hospital in 1929 he was intermittently a patient and paroled from time to time. On March 15, 1937, he was at the Hospital but was later given ground privileges and allowed to spend his week ends at home. He was paroled on October 2, 1937. Dr. Tarumianz, Superintendent of the State Hospital, testified that in September, 1937, Armstrong was "legally sane but psychiatrically he was not", and that there was nothing in Armstrong's manner to put a non-professional man upon his guard or to give the impression that he was a mental case.
The defendant bank while denying liability for the amount of the check paid by it ($ 400.00), admits liability for the balance of the account, and this amount, $ 7.31, has been paid by it into the Registry of this Court.
Judgment entered for the plaintiff solely for the amount admitted by the defendant to be due and paid into the Registry.
Thomas Herlihy, Jr., for plaintiff.
Alexander Jamison for defendant.
In the determination of the present matter three major questions arise:
(1) Was there such a legal adjudication of the insanity of Howard Malcolm Armstrong by the appointment of a Trustee by the Chancellor that notice will be imputed therefrom and vitiate any transaction of Armstrong's after said appointment?
(2) Was there actual notice to the bank of said appointment?
(3) The effect of the payment of the check by the bank in the absence of either imputed or actual notice of the appointment of the Trustee.
The plaintiff strongly relies upon the proposition that Howard Malcolm Armstrong was duly and legally adjudicated an insane person by the action of the Chancellor in appointing a Trustee on April 2, 1937. Using this adjudication as a basis the plaintiff draws certain legal conclusions:
(a) That adjudication of insanity in a Court of competent jurisdiction is notice to the whole world, and he who subsequently deals with such person does so at his peril;
(b) That a contract of an insane person made or negotiable instrument negotiated after adjudication of insanity is void and not voidable;
(c) That a bank which pays a check of an insane person after adjudication of insanity must refund the money paid.
The validity of these legal conclusions is dependent upon the basic fact of the legality of the alleged adjudication, and to this we must first direct our attention.
Legal historians agree that jurisdiction over insane persons at common law was in the King as "parens patriae"; that jurisdiction of the Chancellor did not exist as an original or inherent power of the Court of Chancery, but was a personal authority directly given by the King to the Chancellor by virtue of a sign-manual. The decisions as to jurisdiction in the various States of the American Union have not been so harmonious, but with these we are not concerned as we have the direct authority of the Chancellor, himself, that in Delaware the jurisdiction is purely statutory. In re Charles Harris, 7 Del. Ch. 42, at page 49, 28 A. 329, at page 331, Chancellor Wolcott said:
* * *"
To the statute then, as set out in the statement of facts, we must, therefore, now look. This statute, we find, originally consisted of two separate and distinct parts. The first Delaware statute was passed February 2, 1793 (Vol. 2, Laws of Delaware, p. 1055). Except for some slight changes in phraseology the statute of 1793 remains as the first two paragraphs of Sec. 3091 of Revised Code of 1935. These paragraphs are:
The foregoing paragraphs constituted the full and complete statutory provision covering the pertinent subject matter from 1793 to 1911. From the quoted statute it is quite apparent that the jurisdiction of the Court of Chancery is not, and never has been, of a general...
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Hill v. State
...while he is acting in the course of his employment and the matter comes within the scope of his authority. Poole v. Newark Trust Co., 1 Terry 163, 40 Del. 163, 8 A.2d 10 (1939); Wellington v. Maffi, 136 Tex. 201, 150 S.W.2d 60 (1941); Corrigan v. Bobbs-Merrill Co., 228 N.Y. 58, 126 N.E. 260......