Thomas v. Potter Title & Trust Co.
Decision Date | 13 July 1932 |
Docket Number | No. 6988.,6988. |
Parties | THOMAS v. POTTER TITLE & TRUST CO. |
Court | U.S. District Court — Western District of Pennsylvania |
Reed, Smith, Shaw & McClay, of Pittsburgh, Pa., for plaintiff.
Howard Zacharias, of Pittsburgh, Pa., for defendant.
The Bank of Pittsburgh, National Association, is a corporation existing under the national banking laws (12 USCA § 21 et seq.). It closed its doors September 21, 1931. The plaintiff was duly appointed receiver thereof. The Potter Title & Trust Company, defendant, is a corporation of the state of Pennsylvania. Under its charter it transacts a banking business and acts as trustee. On the date that the Bank of Pittsburgh, N. A., closed, it had on deposit in the Potter Title & Trust Company $135,787.39 of its own funds in its own name. On the same date the Potter Title & Trust Company had on deposit in the Bank of Pittsburgh, N. A., $46,887.49 in an account designated "Potter Title and Trust Company Trust Account," which deposit represented funds of various estates of which the Potter Title & Trust Company was trustee. Since the Bank of Pittsburgh, N. A., closed, plaintiff has withdrawn from its deposit in the Potter Title & Trust Company $88,890, leaving a balance of $46,897.39. Plaintiff demanded of defendant the balance aforesaid, which defendant refused to pay on the ground that defendant had a right to set off against this amount the deposit defendant had in the Bank of Pittsburgh, N. A. Plaintiff then brought this action in assumpsit to recover the balance aforesaid. The parties waived a jury trial and agreed upon a statement of facts and further that, if the court found that defendant did not have the right to set-off, judgment should be entered in favor of plaintiff in the sum of $46,897.39, with interest from September 21, 1931, and, if defendant was entitled to the set-off claimed, that judgment should be entered in favor of defendant.
Is defendant entitled to the set-off claimed? What laws shall govern in the determination of this question, the laws of Pennsylvania or the laws of the United States? Rev. St. § 721 (28 U. S. C. § 725 28 USCA § 725) provides: "The laws of the several States, except where the Constitution, treaties, or statutes of the United States otherwise require or provide, shall be regarded as rules of decision in trials at common law, in the courts of the United States, in cases where they apply."
In Swift v. Tyson, 16 Pet. 1, 19, 10 L. Ed. 865, a leading case, the Supreme Court, in construing the above act, said:
In Gray v. Rollo, 85 U. S. (18 Wall.) 629, 632, 21 L. Ed. 927, the Supreme Court said:
In Pennsylvania, a bank cannot set off a deposit against an unmatured note. Kurtz et al. v. County National Bank of Clearfield, 288 Pa. 472, 136 A. 789, 51 A. L. R. 1475. Such set-offs are allowed in the United States courts. Storing v. First National Bank of Minneapolis, 28 F.(2d) 587, 589 (C. C. A. 8); North Chicago Rolling-Mill Co. v. St. Louis Ore & Steel Co., 152 U. S. 596, 615, 616, 14 S. Ct. 710, 38 L. Ed. 565; Schuler v. Israel, 120 U. S. 506, 510, 7 S. Ct. 648, 30 L. Ed. 707; Harter Bank v. Inglis, 6 F.(2d) 841, 843 (C. C. A. 6); Topas v. John MacGregor Grant, Inc., 18 F.(2d) 724, 725, 52 A. L. R. 807 (C. C. A. 2); Maryland Casualty Co. v. Board of Education, 20 F.(2d) 799, 801 (C. C. A. 3).
These rulings impliedly recognize that the United States courts exercise an independent judgment on matters of set-off and do not follow the decisions of the state courts.
If the determination of this question involves an interpretation of the national banking laws, which it seemingly does, then the United States law controls. In McCandless v. Dyar (D. C.) 34 F.(2d) 989, 991, defendant was indebted to a national bank. He set up as a defense thereto a claim in the nature of a set-off for money paid by him as a guarantor of the bank. The court said:
See 12 U. S. C. §§ 91, 193, 194 (12 USCA §§ 91, 193, 194).
In the United States courts there must be mutuality of right before a set-off can be asserted. In Scammon v. Kimball, 92 U. S. 362, 367, 23 L. Ed. 483, the Supreme Court stated:
See Gray v. Rollo, 85 U. S. (18 Wall.) 629, 632, 21 L. Ed. 927; Young v. Black, 7 Cranch, 565, 566, 568, 3 L. Ed. 440; Tucker v. Oxley, 5 Cranch,...
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