Court Opinion

ID: 3990785
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:50:47.554092+00
Date Added: 2024-06-11T07:44:23.847153
License: Public Domain

I can not agree that it was the intent of the legislature to provide that a set-off acquired or effected within four months prior to the application for appointment of a receiver or other liquidating officer should be allowed. No other creditor of an insolvent corporation is in a position similar to that of a bank with respect to possible set-offs or counterclaim. The ordinary creditor (as argued by counsel for respondent) of an insolvent corporation who acquires a set-off must take some affirmative action by ordering merchandise or purchasing a claim against the insolvent from some third party. In such cases the receiver of the insolvent corporation is in a position to establish that the set-off was acquired with a view to its use as a set-off if such is the case. It would be impossible to ever show that a bank acquired a deposit, which is its set-off, with a view to such use as a set-off. In the ordinary case whether the insolvent does or does not make a deposit is dependent entirely upon the will of the insolvent. No affirmative action is taken by the bank such as placing an order or dealing with a third party in acquiring its deposits.
I adopt the following convincing argument of counsel for respondent:
"If this statute is given a literal interpretation independently of the chapter of which it forms a part, it simply means that banks will not be liable for the return of preferences where their debts are paid out of checking accounts maintained with them. No other creditor of an insolvent corporation will be in such a favored position. Certainly the legislature did not intend such a result by their enactment. *Page 447 
"The purpose of the trust fund doctrine is to let creditors share equally and ratably such assets as an insolvent corporation has. In enacting the trust fund doctrine into statute for a period of four months prior to the application for a receiver or liquidating officer, the legislature most certainly did not intend to adopt a statute which would permit banks to obtain payment of their indebtedness to the exclusion of other creditors. Such an interpretation of the statute under consideration is unnecessary. The legislature obviously intended that set-offs acquired or effected within four months before the application for a receiver or liquidating officer should not be allowed but should be allowed prior to four months unless received with knowledge of insolvency and with a view to use as set-offs."
The judgment should be affirmed.