Corn Exchange National Bank v. Solicitors' Loan & Trust Co.

Opinion by

Mr. Justice Dean,

The plaintiff and the defendant, one as a bank, the other as a trust company, did business in Philadelphia. The bank frequently accommodated the trust company with currency of the various denominations on request and without charge. On January 2, 1896, the trust company, by telephone, asked the bank for $2,000 in $2.00 bills, and on a favorable response sent its check for that amount on Fourth Street National Bank, where it had funds to meet it, by messenger, who returned with the bills put up in packages. On the next day, the trust company, without opening its doors, failed and made an assignment for the benefit of creditors, of which the Fourth Street National had immediate notice. The Corn Exchange Bank, the plaintiff, in the regular course of business, sent the check to the clearing house before 8:30 on the morning of the third, but the Fourth Street National, because of the assignment, refused to honor it, and the Com Exchange the same day was compelled to take it up. The $2,-000. received by the trust company remained in thé package in its possession unbroken, and was turned over to its assignee. The plaintiff then filed this bill, setting out the foregoing facts, and prayed for an order on the assignee to restore to it the unopened package. The assignees filed a demurrer, averring that no special trust relation calling for the interposition of equity was established by the foregoing facts, and, further, that plaintiff had an adequate remedy at law. The court below sustained the demurrer and dismissed the bill, from which decree we have this appeal.

From the averments of the bill, which are admitted by the demurrer, and the statements in the deed of assignment, the trust company was insolvent on January 2, when the transaction took place and it received the plaintiff’s money, and the officers of the company were aware of its condition. Keeping its doors open on that day was, whether intentional or not, a representation to the public of solvency. Whether they still hoped on that day by some means to recuperate, and avoid closing is not material; the fact of insolvency on that day remains. There is no difference in principle between this transaction and that of a depositor who leaves his money with the bank a few hours before it suspends. The acceptance of the money under such circumstances is a fraud upon the depositor, and if it has not been used or mixed with the common funds, and can be identified, he can maintain replevin for it: Furber v. Stephens, 35 Fed. Rep. 17. In Cragie v. Hadley, 99 N. Y. 131, it was held that where drafts were deposited for collection with a bank which failed the next day, the title did not pass out of the depositor, and he could recover. It will be noticed that no question of confusion of assets arises in this case; the very package delivered by plaintiff remains in possession of the assignees. It would be highly inequitable to pass over to the creditors of the insolvent trust company plaintiff’s money, because defendants acquired possession of it by a misrepresentation of solvency. Besides, plaintiff was not a customer of the trust company, and did not adopt it as a convenient place of deposit, but as a pure accommodation accepted a worthless check for the $2,000. We say worthless, because in the course of business it could not be presented until the insolvency of the drawer became known, and the fund on which it had been drawn had constructively passed to the assignee for the benefit of creditors.

The jurisdiction of equity is sustainable, because, under the facts, the package of money is impressed with a trust; the title never passed from plaintiff, because the possession was obtained by a plainly implied misrepresentation.

The decree is reversed, and it is ordered that the assignees deliver to plainfiff the package or packages of §2.00 bills, amounting to §2,000, as in plaintiff’s bill averred. Costs to be paid by appellees.