Prudential Trust Co.'s Assignment , 223 Pa. 409 ( 1909 )

Opinion by

Mr. Justice Elicin,

The question to be determined on this appeal is whether the depositors are entitled to preference over other general creditors in the distribution of the fund in the hands of the assignee of the insolvent trust company. It may be stated as a general principle that in the absence of legislation preferring certain creditors, no such preference exists. The legislature has passed many acts making a preference in the distribution of estates among creditors, this on the ground of public policy, or to protect the natural and superior equities of parties, but the burden is always on him who asserts a preference to point to the authority which gives it. In the present case the learned counsel for appellees attempt to meet this burden under the provisions of the' acts of 1844, 1850 and 1876, all of which relate either to banks of issue or to those of discount and deposit. Trust companies created under the provisions of the general corporation Act of April 29, 1874, P. L. 73, and deriving their privileges and powers from the act of 1889 and other supplementary statutes, are neither banks of issue, nor of discount and deposit, within the meaning of the law, and therefore the acts relied on as giving a preference to bank depositors, are not authority for the proposition that the same preference must be given to depositors in a title and trust company incorporated for a different purpose and being denied by the express language of the statute the right to engage in the business of banking. Nor is this a- new interpretation of the statutes or understanding of the law relating to this question. Fox’s Appeal, 93 Pa. 406, decided in 1880, held that the act of 1850 and other statutes regulating distribution of the estates of insolvent banks and establishing an order of preference to creditors, did not embrace savings institutions, or banks, so called, which did not enjoy banking, privileges. What was said by this court in that case is decisive of the question raised here in so far as the acts of 1844, 1850 and 1876 have any application. We do not agree with the proposition advanced in behalf of appellees to the effect that a depositor in making a deposit in a bank, does not thereby establish the relation of debtor and creditor, but rather chooses the bank as the custodian of his money for the time being. This is not the law. Money deposited in a bank ceases to be the money of the depositor and becomes the money of the banking institution in which deposited. It is the business of a bank to receive money on deposit and use it as its own, being accountable as debtor to the depositor for the money so deposited which may be subject to check or draft or payment upon notice or demand as the parties may ■ agree. All of our cases recognize the relation of a bank to its depositors to be one of debtor and creditor: Bank of Northern Liberties v. Jones, 42 Pa. 536; Commercial Nat. Bank v. Henninger, 105 Pa. 496; Reiff v. Mack, 160 Pa. 265.

One more question remains to be considered, that is, does the act of 1907, which establishes an order of preference in the distribution of the assets of an insolvent trust company among creditors, apply? The auditor before whom the case was heard and the learned court below in passing on the exceptions filed held that it did, and the errors assigned here relate chiefly to this question. The assignment for the benefit of creditors in the present case was made June 22, 1904, while the act of assembly in question was not approved until May 8, 1907, almost three years later. There is nothing in the language of the statute to indicate an intention to give it a retroactive effect, even if it were within the power of the legislature to do so. It is contended, however, that the statute applies in express terms “in case of any distribution of the money, funds, property or other assets whatsoever of any trust company,” and that whilst the assignment was made several years prior to the passage of the act, it still must be held to apply because the distribution of the assets was made after its enactment. In other words, that the act only affects the remedy and not the legal rights of the parties. We do not so understand the rule of law as applied to the facts of the case at bar. The rights of creditors of an assigned estate are fixed as of the date of the assignment. By the deed of assignment the equitable ownership of the assigned property passes to the creditors. Each creditor owns such a proportional part of the whole as the debt due him bears to the aggregate of the indebtedness. The extent of the interest of a creditor is fixed by the deed of trust which also fixes the time to which the several claims must be referred for adjustment and not the date of the decree of distribution. The creditor having thus a fixed and vested interest as of the date of the assignment, it cannot be reduced to his prejudice by subsequent legislation, or otherwise, without interfering with a vested legal right. This is the doctrine of Miller’s Appeal, 35 Pa. 481; Patten’s Appeal, 45 Pa. 151; Dean’s Appeal, 98 Pa. 101; Lea’s Appeal, 164 Pa. 405; Potter v. Gilbert, 177 Pa. 159. At the date of the assignment the appellant here had the right to participate in the fund for distribution along with the depositors and other creditors in such proportion as his claim bore to the aggregate of all the claims. If, however, the act of 1907 applies the depositors take the whole fund and appellant gets nothing. It is folly to say that appellant had a vested right to participate, in the distribution at the time of the assignment in 1904 and now he has not because of the preference established by the act of 1907 and still hold that this act only affects the remedy and not the legal rights of the parties. Nor do we think Ilgenfritz v. Ilgenfritz, 5 Watts, 158, and numerous other cases cited in behalf of appellees involving the change in the law of distribution of decedents' estates are authority for a different rule. In those cases the law was changed before the death of the decedent, and it was held that creditors had no vested right to any particular method of distribution prior to the death, which is the only event that can be considered as vesting any specific right or interest in creditors entitled to participate in the distribution of the estate of an insolvent decedent. We cannot agree that a law which denies appellant a right to participate as it existed in 1904 and gives to depositors a right of preference which did not' then exist only affects the procedure or remedy and not the legal rights of the parties. It is clear, therefore, appellant is entitled to share in the distribution with the depositors and other creditors without reference to the preference established by the act of 1907.

Decree reversed and record remitted to the court below in order that distribution may be made in accordance with the views herein expressed, costs to be paid out of the assigned estate.