J.G. Kuehnle Co. v. Fulton, Supt.

This action is in this court on appeal from a judgment and decree of the court of common pleas rendered on a motion for judgment on the pleadings filed by the plaintiff. This court is now to consider this motion de novo and determine whether it should or should not be granted.

The following undisputed facts are disclosed by the pleadings: On June 16, 1931, the defendant superintendent of banks assumed charge of the assets and property of the Security-Home Trust Company for liquidation. In certain proceedings pending in the court of common pleas of Lucas county, the litigants therein entered into a written stipulation on July 9, 1930, whereby it was provided in part that the purchase price of the property involved in that litigation should be deposited in the Security-Home Trust Company, that the rights of the litigants should be transferred to said fund, and that said the Security-Home Trust Company should act as escrow agent thereof. On said July 9, 1930, the Security-Home Trust Company accepted in writing its appointment as such agent upon the terms and conditions contained in the stipulation, and for its services as such depositary was to receive reasonable compensation. Pursuant thereto and simultaneously therewith there was deposited with the trust department of such trust company $12,000, the amount of the fund so to be deposited, the same being received by said trust company as escrow agent under its appointment, and to be held in its trust department for the purposes specified in the stipulation. From the time of the deposit of said fund of $12,000 to and including the date of the taking possession of the property of the bank by the defendant, an amount in cash, in excess of the sum of $12,000, remained continuously in said bank. On October 27, 1931, the parties to the litigation in the action pending in the court of common pleas agreed as to the distribution of said fund; written notice thereof being served upon defendant on October 30, 1931. The defendant has failed and refused to pay to plaintiff its portion of said fund, and plaintiff has filed its claim for preference with the defendant, by whom it was rejected.

The stipulation, in accordance with the terms and conditions of which the $12,000 was deposited with the bank, recites "that said funds should bear interest at the rate of 4% per annum, payable semi-annually, in the event said fund should remain with The Security-Home Trust Company for sixty days or longer."

The question then for consideration and determination is whether the $12,000 so deposited with the trust department of the Security-Home Trust Company should be allowed by the defendant as a preferred claim. If so, the motion for judgment on the pleadings should be granted; otherwise overruled.

The facts show that the funds deposited remained on deposit in the bank for a period much longer than sixty days before defendant assumed charge thereof for liquidation, and that, having so continued on deposit, the trust company, by the very terms of the stipulation under which the deposit was made, was expressly given the right to use it as any other moneys generally deposited in the bank might be used, and for the privilege thus expressly given the moneys so on deposit bore "interest at the rate of 4% per annum, payable semi-annually." As said in McDonald, Admr., v. Fulton, Supt. ofBanks, 125 Ohio St. 511, 182 N.E. 504: "It is to be observed that deposit in an interest-bearing account is directed, which of course contemplates use of the fund by the bank."

This statement of the Supreme Court relates to a statutory direction, but it is none the less applicable to a contractual direction whereby the parties themselves determine the character of the deposit and convert what otherwise would have been a trust relation into that of debtor and creditor.

Our conclusion, therefore, is that the motion of plaintiff for judgment on the pleadings should be and is overruled.

Motion for judgment on pleadings overruled.

RICHARDS and WILLIAMS, JJ., concur.