Opinion
No. 3042.
Decided January 3, 1939.
Where an insolvent savings bank has fraudulently received for deposit a check for which final credit was not given by the bank's depositary until after the savings bank had been closed, the check is an asset in the hands of the bank at the time of its closing and is identifiable and traceable to the final credit given for it by the depositary.
In such case the question whether the bank bought the check from the depositor or received it for collection is immaterial, because in either case the legal title to the check was obtained fraudulently.
A depositor in such case who has filed with the liquidating agent of the bank a proof of his claim for the full amount without claiming a preference for that part which he was fraudulently induced to deposit has not made an election between inconsistent remedies and is not barred from establishing a preference.
Though over four years have elapsed since the closing of a savings bank, a claim for a preference in the assets is not barred by laches where it appears that the liquidating agent has sufficient funds in his hands to meet such preferred claim, and no prejudice is shown to have been caused by the delay.
BILL, to recover the unpaid part of a savings bank deposit of $2,800. The deposit was made on a Saturday when the bank was insolvent. On the Monday following, and before it was open for business, the Bank Commissioner took full charge of its affairs under court order, in conformity with procedure provided by statute for closing a savings bank.
The depositor already had a deposit of over $8,000 in the bank. The deposit in question was made by a check of which he was the payee. Its amount was $3,000, $200 being paid him in cash and a deposit slip for the $2,800 being given him.
During banking hours later in the morning of the day the deposit was made, the check with others and cash was deposited to the bank's credit in a national bank in which it carried an account. The national bank credited deposited checks "subject to final payment in cash or solvent credits" and acted only as a collecting agent in receiving checks included in a deposit. The check in question was not cleared so as to have final credit for it given until the day the savings bank was closed and after the hour it was closed.
The depositor had no reason to suspect the bank's insolvency when he deposited the check, but the bank's treasurer in general charge of its business had known of it for some time and some of its trustees had been informed by the Bank Commissioner of the probable worthlessness of a substantial part of its investments. An anticipated run on the bank was the immediate motivation of the action taken to close it.
The depositor proved a claim for his deposit, including the $2,800, and has received liquidation dividends thereon amounting to 65%. He made the proof with no knowledge of any other remedy. This suit was brought about four years later and while the bank's liquidation was still in progress.
The court (Burque, C. J.) on motion dismissed the bill pro forma, and the plaintiff excepted.
Ernest R. D'Amours and Emile Lemelin (Mr. D'Amours orally), for the plaintiff.
McLane, Davis Carleton (Mr. Perkins Bass orally), for the defendants.
That fraud was practiced on the plaintiff is not questioned. He relies upon the theory of a constructive trust, claiming that "his deposit can be identified as a part of the assets that came into the hands of the Bank Commissioner". Emerson v. Bank, 89 N.H. 339. The facts substantiate the claim. Final credit for the deposited check not being given by the bank's depositary until after the bank was closed, it was an asset in the hands of the bank at the time of closing. Hence the deposit could be identified and traced to the final credit for it.
The plaintiff has made out a case of definite identification of a particular item of property which not even purportedly was commingled with the bank's general funds before its conduct of business was enjoined. The credit given for the check by the depositary upon receiving it was conditional. Until final credit the check remained an item of the bank on hand. The depositary said in substance: "We take this check for collection; if it is collected, you will have credit for it as of the day it is taken; but until collection you have no credit for it; all bookkeeping entries are made upon this understanding; a charge against your account for its dishonor is merely to show that credit was not in fact given, since the condition for giving it was not fulfilled: the deposit slip is only a statement of its receipt for collection." This is the purport of the printed notice endorsed on the slip. The depositary, defining itself as a collecting agent, denies a purchase.
Whether the savings bank bought the check from the plaintiff or received it for collection, is not material. It had the legal title in either case, and in either case it obtained the title fraudulently. The fraud operated if its title was obtained to enable it to be a collecting agent, and it equally operated if it was a purchaser. Obtaining title either as full owner or as a trustee by fraud, it held property which the depositor might demand be restored to him upon repayment of the amount he had received. The remedy by recovery of property obtained by fraud or by receipt of its identifiable proceeds, upon return of such consideration as was received for it, is here invoked.
The payment of $200 to the depositor when the bank took the check is therefore an inconsequential circumstance. If it were material, it may be pointed out that the bank was protected from a dishonor of the check by the depositor's already outstanding account. His endorsement of the check guaranteed payment by the maker. P. L., c. 312, s. 66. When a depositor's check is acceptable for immediate credit, the distinction between selling a check with a warranty that the maker will honor it and transferring it for collection is at most a technical one which is here indecisive of equities. The depositor being solvent and having credit, his liability as an endorser makes the issue of sale or agency to collect an unserviceable test as practical matter. The situation, in any bearing here, is the same as though the plaintiff had presented two checks of which one was cashed and the other credited to his deposit account.
Whether the plaintiff's right to relief would be maintained if the proceeds of the check had been received by the bank and finally credited to its account by the depositary before the bank ceased to do business, is not considered. Identification of his deposit is established upon the special facts relating to the payment of the check which constituted the deposit, and it is not thought expedient to pass upon other claimed grounds for preference.
Soon after the bank was closed the plaintiff filed with the liquidating agent a proof of claim for the full amount due him without reference to his right for preference of the part of it he was fraudulently induced to deposit. The defendants take the position that he thereby made an election between inconsistent remedies and hence is barred from the relief now sought. This position is too void of merit to require discussion. The authority of the case of Gehlen v. Patterson, 83 N.H. 328 is decisive against it.
The defendants also assert laches on the plaintiff's part in not bringing his suit until a lapse of over four years after the closing of the bank. No argument is made that the liquidating agent has so far disposed of the bank's assets and distributed their proceeds that he has insufficient funds to meet the liability, and no facts are asserted as ground to make the grant of relief inequitable on account of the delay. The statute of limitations therefore governs. Wentworth v. Wentworth, 75 N.H. 547, 550; Barrett v. Cady, 78 N.H. 60, 65.
Decree for plaintiff.
BRANCH, J., was absent: the others concurred.