State Bldg. & Sav. Ass'n v. Mechanics' Savings B. & T. Co.

• Decision Date: 29 February 1896
• Citation: 36 S.W. 967
• Court: Tennessee Supreme Court
• Parties: STATE BLDG. & SAV. ASS'N v. MECHANICS' SAVINGS BANK & TRUST CO. et al.

36 S.W. 967

STATE BLDG. & SAV. ASS'N v. MECHANICS' SAVINGS BANK & TRUST CO. et al.

Court of Chancery Appeals of Tennessee.

February 29, 1896.

Appeal from chancery court, Davidson county; Andrew Allison, Chancellor.

Bill by the State Building & Savings Association against the Mechanics' Savings Bank & Trust Company and others. From a decree for complainant, both parties appeal. Reversed.

Chambers & Zarecor and T. A. Street, for complainant. E. H. East, for defendants.

WILSON, J.

The complainant filed this bill September 26, 1893, against the defendant corporation and its assignee, to enjoin the latter from collecting certain notes from the makers thereof, to have a deposit of complainant in the defendant bank, made before its assignment, applied to the discharge of said notes, to have said notes and the collaterals hypothecated to secure them turned over to complainant, and to have the balance of its deposit preferentially paid. The bill proceeds on the theory that the deposit of complainant in the defendant bank was in the nature of a special deposit, and was impressed with a trust to secure the payment of certain notes given to the bank by certain parties for money borrowed, who were stockholders in the complainant company, and who had deposited their stocks in the complainant company to secure their notes. The bank and its assignee answered, denying the main grounds of relief stated in the bill, and asking for a dissolution of the injunction restraining the assignee from collecting the notes in question, Proof was adduced, and the chancellor heard the cause November 12, 1895. He decreed that the complainant had the right to have its deposit in the bank applied, so far as was necessary, to the payment of six notes, aggregating $760, and to the possession of said notes, and the collaterals deposited with the bank to secure them. He made the injunction perpetual against the collection of these notes from their makers. His decree says nothing in respect to the balance of the deposit of complainant in the bank. This deposit in the bank, at the time of its final suspension, amounted to $1,165.48, and so, after discharging the six notes aforesaid, there remained of the deposit of complainant the sum of $405.48. Both parties appealed, and have assigned errors.

The grievance of the complainant is that it was not made a preferred creditor as to the balance of its deposit after paying therefrom the six notes aforesaid. The error assigned by the defendants raises the question that the deposit of complainant simply made the defendant bank its debtor; that it was not a special deposit, nor was it impressed with any trust which entitled the complainant to be preferentially paid from the assets of the assigning bank. We think, under the facts appearing in the record, that the chancellor was in error in holding that the assignee should pay the six notes aforesaid out of the deposit of complainant, and turn over to it said notes and their collaterals.

The plain facts of the case are as follows: (1) That the complainant had a large deposit in the defendant bank, it being in a sense the depository of the complainant. (2) The defendant suspended for a few days, and thereafter opened, and was paying its depositors in full on their checks. (3) The complainant, while the bank was paying in full after its temporary suspension, drew out all of its deposits, except about $4,000. (4) This was April 1, 1893. At this time, it seems, there was an understanding or agreement between the bank officials and the...