Opinion
No. 31469.
December 3, 1934.
1. BANKS AND BANKING.
Chancery court's order, directing executrix to place money, held by her in trust for minor legatees, on time deposit in bank, which subsequently failed, and prohibiting it from permitting withdrawal thereof without court order, did not make bank coexecutor and trustee for minors, who were not entitled to preference over bank's general creditors (Code 1930, section 3828).
2. BANKS AND BANKING.
Relation between bank and depositor is simply one of debtor and creditor, in absence of contrary agreement, and deposit is not ordinarily trust fund.
3. BANKS AND BANKING.
Ordinarily, bank deposit is loan to bank and funds deposited become its property.
APPEAL from the Chancery Court of Hinds County.
Howie Howie and May, Sanders, McLaurin Byrd, all of Jackson, for appellant.
Under and by virtue of the terms and provisions of the final order in the estate of Louis Lasunsky, and furnishing of a copy of the same to the Merchants Bank Trust Company, together with the notation pasted on the ledger sheet of said bank, the funds of both of these minors should be classed as a preferred claim, and the same should be paid in full out of any assets of said bank.
Fogg v. Hebdon, 32 So. 285, 80 Miss. 750; Miss. Cent. Co. v. Conner, 114 Miss. 63, 75 So. 57; Sawyer v. Conner, 114 Miss. 363, 75 So. 131; Love v. Bank of Collins, 137 So. 791, 161 Miss. 671; Cochrane v. Florida East Coast Ry. Co., 145 So. 217; Everglade Cypress Co. v. Tunnicliffe, 148 So. 192.
When a bank takes a deposit with instructions from the depositor that the deposit is for specific purpose and no other, it partakes of the nature of specific or special deposit, and the relation between the bank and the depositor with reference thereto is that of principal and agent, and title to the deposit remains in the depositor.
Tunnicliffe v. Sears, 148 So. 197; Arnall v. Commercial Bank of Wellsville, 45 S.W.2d 909; Grossman v. Taylor, 46 S.W.2d 13; Smith v. Fuller, 99 N.E. 214.
If moneys are entrusted to a bank to be held intact, or are left with the bank for a specific purpose under circumstances that negative an intent that title to the money passes to the bank, the bank is a trustee or an agent as the case may be. In such event, equity will impress a trust on the monies, and will decree that they be returned to the owner.
Kershaw v. Kimble, 65 F.2d 553; In re Kruger's Estate, 249 N YS. 772; In re Holden, 264 N.Y.S. 244.
The facts in the case at bar show that the trustee did not occupy the relation of debtor and creditor with the Merchants Bank Trust Company, and the bank was not permitted to honor any checks written by her on the two accounts unless express authority was given thereto by the chancery court of Hinds county, Mississippi. This restriction upon the depositor and the special notation on the books of the Merchants Bank Trust Company, constituted the relationship of principal and agent, and under the decisions of the various courts, title to this money did not pass to the bank.
The bank was made a trustee by the decree of the court, and acquiesced, thereby becoming a joint trustee of the funds with Mrs. Lasunsky — not in the place of Mrs. Lasunsky, but jointly with her.
If we are correct in our analysis of the effect of the court's decree, the bank held the money in question as trustee, and if so held the claim of the appellant was entitled to be decreed to be a preference. Flowers, Brown Hester, of Jackson, for appellee.
Ordinarily a bank deposit is a loan to bank, and funds so deposited become property of bank.
Moreland v. Peoples Bank of Waynesboro, 114 Miss. 203, 74 So. 828, L.R.A. 1917F 263; Rice v. Webb, 141 Miss. 66, 105 So. 854.
If the agreement between the parties is that the identical coin or currency shall be laid aside and returned, then it is a special deposit. But if the agreement is that the money shall be returned, not in the specific coin or currency deposited, but in an equal sum, it is a general deposit.
M.C. Railroad Co. v. Conner, 114 Miss. 63; Warren v. Nix, 97 Ark. 374, 135 S.W. 896.
The court will observe that the Sawyer case turned on the proposition that under the facts surrounding the making of the deposit, title to the funds did not pass to the bank.
It is clearly the law that all deposits are prima facie general deposits to be used by the bank.
3 R.C.L. 517; Railroad Co. v. Conner, 114 Miss. 72; 3 R.C.L. p. 518, sec. 147; Warren v. Nix, 97 Ark. 374, 135 S.W. 896.
The petition in the present case does not aver that the deposit was special or that the identical money was to be returned.
The authorities defining "special deposits" and differentiating special from general deposits are collated in volume 7, Words and Phrases, title "special deposits," and volume 4, second series, of same work; also 3 R.C.L., sec. 146 et seq.
Billingsley v. Pollock, 69 Miss. 762, 13 So. 828, 30 Am. St. Rep. 585.
There was no agreement with Mrs. Lasunsky that the identical money would be returned to her.
Louis Lasunsky, in his lifetime, made a will wherein he bequeathed to Norman Ingram Markow the sum of four thousand dollars, and to Renie Littenberg the sum of four thousand dollars, and made his wife, Mrs. Sophie Lasunsky, executrix of said will without bond. She qualified as such and proceeded with the execution of the will and trust confided to her, placing the funds in the Merchants' Bank Trust Company, and in addition to the bequest, certain funds belonging to her to supplement such funds. She reported to the chancery court, and the court made an order requiring the funds to be placed in said Merchants' Bank Trust Company to bear interest at not less than four per cent per annum, and directed said bank not to permit the withdrawal of said funds without the approval of the chancery court. The pertinent part of the decree thus providing is as follows: "It is further ordered that the said Mrs. Sophie Lasunsky, trustee for said minors as aforesaid, be and is hereby ordered and directed to place said money on time deposit in The Merchants Bank Trust Company, of Jackson, Mississippi, where the same will draw not less than four per cent interest, and that the said Merchants Bank Trust Company is hereby directed and ordered to hold said money on deposit until such time as it may be ordered transferred by this court, and in no case will permit said money, or any part thereof, to be drawn out without an order from this court, and the clerk of this court is hereby directed to furnish said bank a certified copy of this order for its instructions in connection with said deposits now deposited with it in the name of Mrs. Sophie Lasunsky, trustee for Norman Ingram Markow and Renie Littenberg, minors, and said bank is hereby charged with said trust fund as such under this decree and in accordance with the terms hereof."
Thereafter, Mrs. Sophie Lasunsky obtained an order to withdraw from the bank the money which she had personally placed therein for the benefit of the minors; said order reciting that the financial condition of the minors and their parents was such as to require additional support. The Merchants' Bank Trust Company was thereafter placed under the state banking department for liquidation in the chancery court, and the appellant filed a petition to have the deposit of the above-named minors, bequeathed by the will, treated as a trust fund and to be given preference over general creditors. This petition was denied by the chancery court, from which this appeal is prosecuted.
On appeal it is insisted that the court's order above recited made the Merchants' Bank Trust Company a coexecutor and trustee of the trust funds, because it withdrew from the control of Mrs. Sophie Lasunsky the trust funds given her by the will.
It is manifest, from a careful study of the decree, that the Merchants' Bank Trust Company was not a coexecutor or trustee. The idea of the court was to secure a safe investment for the minors' funds. The decree was probably made in view of the fact that no bond was required, and the court thought proper to supervise the investment of said funds. The funds were placed in the bank for the purpose of drawing interest; it being deemed by the chancery court, at that time, a secure investment. Without such an order, the executrix, Mrs. Sophie Lasunsky, could have withdrawn the funds at pleasure, and there would have been no responsibility on the bank, as it would have been entitled, under section 3828, Code 1930, to pay such funds without being chargeable with liability therefor to the trustee, Mrs. Sophie Lasunsky. The relation between a bank and a depositor, without an agreement to the contrary, is simply one of debtor and creditor, and a deposit is not, ordinarily, a trust fund. Moreland v. People's Bank, 114 Miss. 203, 74 So. 828, L.R.A. 1917F, 263. Ordinarily, a bank deposit is a loan to the bank, and the funds so deposited become the property of the bank. Rice v. Webb, 141 Miss. 66, 105 So. 854. In 3 R.C.L., p. 517, it is said that: "A deposit in a bank is presumed to be general in the absence of an agreement to the contrary. This is placed on the ground that such deposit is esteemed the most advantageous to the depositary and most consistent with the general objects, usages and course of business of banks. The law prescribes no particular formula for the contract involved in making a special deposit. Like all contracts, it grows out of the mutual intention and understanding of the parties. The purpose and terms of the deposit may be explicitly stated, or the intention of the parties may be inferred from their declarations, considered in connection with their conduct and all of the circumstances." See, also, page 518, 3 R.C.L.; Love v. Little, 167 Miss. 105, 148 So. 646.
The judgment of the court below will be affirmed.
Affirmed.