Peakes v. International Trust Co.

' LOWELL, District Judge.

The question to be decided in this case is whether, after a petition in bankruptcy has been filed, a banker may apply to the payment of time notes not yet due the amount of deposit standing to the credit of the bankrupt maker of the notes. If the answer to this question be in the affirmative, it will not be necessary to consider the effect of the transaction of earlier date by which'a demand note was substituted for the time notes.

The Supreme Court of the United States has held, in Studley v. Boylston Bank, 229 U. S. 523, 33 S. Ct. 806, 57 L. Ed. 1313, that a bank may apply the amount of deposits with it on an overdue note, of the bankrupt. In this opinion it is expressly stated that the bank need not wait until sued by the trustee in bankruptcy and then claim a set-off, but may apply the deposits to the debt due by the bankrupt to if. Apparently it has not yet been decided by the Supreme Court of the United States that a bank may do this when the notes have not matured. The law, however, as laid down by the lower courts, under the present Bankruptcy Act (Comp. St. §§ 9585-9656), as weE as under the act of 1867 (14 Stat. 517), is to the effect that a bank may set off the deposits of a bankrupt depositor against his notes whieh are not yet due. Lowell, Bankruptcy, § 258; 2 CoEier, Bankruptcy (13th Ed.) p. 1611; Remington, Bankruptcy (3d Ed.) § 1455 ; 2 Black, Bankruptcy (3d Ed.) § 550.

Following the decision in the Studley Case, I hold that a bank may apply the deposits to the payment of the depositor’s notes which have not yet matured.

Decree for the respondent.