Opinion
No. 25553
Decided February 26, 1936.
Banks and banking — Relationship of debtor and creditor continues, and bank not trustee, when — Depositor's account closed when bank accepted forged check — Bank refused to pay depositor conceded balance shortly before liquidation proceedings instituted — Depositor's claim not preferred.
The refusal of a bank to pay its depositor a conceded balance due him, because such depositor's balance account was fully closed by the bank's acceptance of a forged check, does not terminate the relationship of debtor and creditor between the bank and its depositor; nor does such transaction convert the bank into a trustee for the depositor or entitle him to have his claim given priority over the claims of general creditors of an insolvent bank.
ERROR to the Court of Appeals of Lucas county.
On or about July 27, 1928, Lucy Reinhart Tobin, as executrix of the estate of Florian Reinhart, deceased, had a commercial or checking account in the Security Bank. On August 27, 1928, after various withdrawals, there remained on the books of the bank a credit in favor of the executrix in the sum of $1,367.11. Between the latter date and June 14, 1931, no withdrawals were made on said account. On June 14, 1931, the executrix presented a check at the bank for withdrawal or payment of said sum of $1,367.11, but payment was refused by the bank on the ground that the account had been closed on December 11, 1930. It later developed the account was closed by presentation by some unknown person of a forged check for $1,367.11, thus balancing the executrix's account. On June 17, 1931, the Superintendent of Banks took over the property and assets of the Security Bank for liquidation. In her petition, the executrix prayed that the Security Bank be impressed with a trust for the payment of $1,367.11 with interest, and that the Superintendent of Banks be required to pay such sum as a preferred claim out of the bank assets. The trial court found that the executrix was entitled to have her claim allowed as a valid general claim, but denied her preference over general creditors. On appeal, the Court of Appeals decreed and ordered that the Superintendent of Banks allow the executrix's claim as a preferred claim on the cash in the vaults of the bank at the time of the closure or the bank or prorated with similar preferred claims against the cash assets of the bank. This court allowed certification.
Mr. John W. Bricker, attorney general, Messrs. Brown Sanger and Mr. Sholto M. Douglas, for plaintiff in error.
Messrs. Streicher Krueger, for defendant in error.
The trial court allowed the claim of the executrix as a valid general claim, but denied its preference over general creditors. The appellate court decreed that the claim be allowed as a preferred claim. Conceding that there was a divergence of judicial authority upon the legal question involved, the Court of Appeals rested its decision upon decisions of the Missouri courts, and notably upon the case of Johnson v. Farmers Bank of Clarksdale, 223 Mo. App., 513, 11 S.W.2d 1090.
The Ohio appellate court held that when the bank, on June 14, 1931, denied withdrawal of the executrix's balance, concededly due, the relation of debtor and creditor terminated eo instanti, the bank then becoming a trustee for the amount due. Because it was impossible for the executrix to procure a judgment in the short time intervening between June 14, 1931, and June 17, 1931, the Court of Appeals applied the maxim that equity regards as done that which should have been done, and based its decree accordingly. We fail to see how that equitable principle applies here. The relation of debtor and creditor continued to subsist. While the voluntary relation of debtor and creditor depositor may have terminated as between the bank and its depositor, nevertheless a new relation of debtor and creditor arose and continued to subsist as a claim or chose in action against the bank; but, even so, the procurement of a judgment thereon would not have impressed the bank funds with either lien or trust unless later followed by legal process and sequestration. The transaction involved was not a special deposit, nor was there a sequestration of any specific or identifiable res in the bank assets which would give one general creditor priority over other general creditors. Richards v. Fulton, 75 F.2d 853. Under the conceded facts, the executrix at all times was a creditor of the bank and, like other creditors, was entitled to participate in the distribution of its assets. By her insistence here, she endeavors to obtain priority over other general creditors who had no part in the bank's wrongdoings and who would suffer financially were she decreed priority.
While circumstances might arise where the court should apply to the bank or its officers the principle that "equity will presume the parties to have done what under the contract and in good conscience they should have done" ( Klaustermeyer v. Cleveland Trust Co., Assignee, 89 Ohio St. 142, 105 N.E. 278, cited in the opinion of the Court of Appeals in the instant case), that principle, in good conscience, should not be applied to an insolvent bank's general creditors, who are the real owners of the bank assets and innocent of wrong. As to the executrix, the bank stands "just as it does to its other creditors, their [her] debtor, not their [her] trustee." Fagan v. Whidden, 57 F.2d 631.
We do not have the usual question of ordinary trust relationship. There was no specific trust agreement; no special deposit; no segregation of any specific res to which a trust could attach. We are in accord with the views of the trial court that no trust was created or preference acquired by the executrix and that the Superintendent of Banks should be ordered to allow her claim, as a valid general claim only.
The judgment of the Court of Appeals is reversed, and, proceeding to render the judgment that court should have rendered, a decree will be entered as above indicated.
Judgment reversed.
WEYGANDT, C.J., STEPHENSON, WILLIAMS, MATTHIAS, DAY and ZIMMERMAN, JJ., concur.