Love, Supt. of Banks v. Lewis

The main question in this case is: Can a debtor of an insolvent bank offset his debt with his deposit therein, under our State Banking Law? We answer in the affirmative.

The Bank of Centreville, operating under the State Guaranty Deposit Law, became insolvent and was taken over by the state banking department, which proceeded to liquidate it under the banking laws of the state. Appellee, H.L. Lewis, owed the bank eight hundred dollars, as evidenced by his note, and he also owed about one thousand dollars as an overdraft, according to the books of the bank. Suit was filed by appellant, J.S. Love, representing the state banking department, against appellee, Lewis, on the note for eight hundred dollars and the overdraft for one thousand fifty-five dollars and ninety-four cents. Lewis claimed, and established the fact, as found by the chancellor, that he had a deposit of six hundred twenty-one dollars and forty-two cents in the bank at the time it became insolvent, and he contended that the amount of eight hundred dollars which he owed the bank on the note should be offset by the amount of deposit due him when the bank failed. He also proved to the satisfaction of the chancellor that he was not indebted to the bank in any sum on account of the alleged overdraft.

The appeal presents the question of whether an indebtedness to a bank may be offset by a deposit therein at the time it becomes insolvent. We have decided, after due consideration, that a debtor may offset his debt to the bank with the deposit due him by the bank at the time it becomes insolvent. Eyrich v.Capital State Bank, 67 Miss. 60, 6 So. 615; Citizens' Bank v.Kretschmar, 91 Miss. 608, 44 So. 930. This is an old rule, and we find nothing in the banking laws of our state which expressly or impliedly prescribes to the contrary. It may be that the legislature will at some future time amend the banking laws so as to provide one complete scheme which will allow no chance for discrimination between depositors or debtors of insolvent banks, but at the present time we think the law is that, when a bank fails, the deposit therein of a debtor to the bank immediately offsets the debt, that is, one cancels the other, as of that time.

On the other proposition, as to whether the amount of the overdraft claimed by the bank can be shown to be a false charge against the depositor, we think it is competent for a person to show that he is not indebted to the bank on any demand made against him, as in other cases.

The chancellor decided this case upon the theory set out above, and we think he was correct. The decree is affirmed.

Affirmed.