Court Opinion

ID: 3318452
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:36:00.564808+00
Date Added: 2024-06-11T13:57:17.408915
License: Public Domain

The Foley Steamship  Travel Agency applied to the Superior Court for an order directing the temporary receiver to return to it the sum of $635 deposited by it with the Trust Company on December 31st, 1931, after the close of regular banking hours.
The following facts are stipulated: The hour for closing the commercial department of the Trust Company under the rules of the Hartford Clearing House Association was 3 p. m., but it was its custom to receive funds for deposit and to pay out cash between the hours of 3 and 4 p. m., the funds so received not being credited to the customer's deposit account until the next business day. Cash received by the Trust Company was entered by its tellers on cash "proof sheets" with the name of the customer making the deposit opposite the amount of the deposit. Each day at 3 p. m. the tellers checked their proof sheets with the cash in their cash drawers, and started new proof sheets for the cash received after 3 p. m. of that day and prior to 3 p. m. of the following business day. The cash received after 3 p. m. was placed in the cash drawer without separation from the cash that was in the drawer at 3 p. m., and cash was paid out from the drawer upon customers' checks after 3 p. m. The cash drawer with the cash therein at 4 p. m. was removed to the Trust Company's vault, and at the opening of business on the next business day was returned to the teller's desk. The Foley Agency, knowing of the practice of the Trust Company to receive deposits after 3 p. m. to be credited on the depositor's account on the next business day, deposited $635 in cash with the customary deposit slip between the hours of three and *Page 31 
four on the afternoon of December 31st, 1931, which was credited to its account on January 2d 1932, and was not shown on the monthly statement of the Trust Company for the month of December. We are asked: "Should the amount of $635 delivered to the defendant corporation as aforesaid be treated as a general deposit or be repaid by the receiver?"
The Foley Agency claims that this deposit was in the nature of a special deposit, title to which did not pass to the Trust Company, and that it is therefore entitled to be paid the full amount of its deposit from the funds in the hands of the receiver. It does not appear from the facts stipulated that, when this deposit was made, the Trust Company was hopelessly insolvent to the knowledge of its officers, and there is no claim, such as might be made under those circumstances, that the receipt of the deposit was a fraud upon the depositor. The sole question is whether, upon the facts stipulated, the Trust Company became the debtor of the Foley Agency for the amount of its deposit, or held it as bailee or agent.
Deposits in a commercial bank ordinarily create the relation of debtor and creditor between the bank and the depositor. The money becomes the property of the bank, and if repaid it is done with the bank's funds and not those of the depositor. Alexiou v. Bridgeport-Peoples'Savings Bank, 110 Conn. 397, 399,148 A. 374. "The title passes to the bank unless there is fraud, or the deposit is kept separate, with intent that the title shall not pass." 2 Morse, Banks  Banking (6th Ed.) § 629. A bank deposit is presumed to be a general deposit, creating this relationship of debtor and creditor, in the absence of an agreement to the contrary. 3 Rawle C. L. 517. Where it appears that the mutual intention and understanding of the parties was that title to the fund deposited should not pass to the *Page 32 
bank, the relationship established is not that of debtor and creditor, and the deposit in that case is spoken of as a special deposit, being held by the bank in accordance with the terms of the special agreement or understanding as to its disposition. In an early case in this State a special deposit was defined as follows: "A special deposit of money in a bank, I understand to be, where moneys (as bills in packages, or specie in boxes, for example), are entrusted to a bank, not to be used, but to be kept safely, and specifically returned."Catlin v. Savings Bank of New Haven, 7 Conn. 487,494. Such a deposit of specie or other funds for safekeeping and return creates the relationship between the depositor and the bank of bailor and bailee. Where money is left with a bank with the understanding and agreement that it is to be devoted to some particular purpose, such as to be paid over to some third person on presentation of certain papers, it constitutes a special deposit, and is held by the bank as agent of the depositor. See Turkington v. First National Bank,97 Conn. 303, 116 A. 610, and cases collected in annotation to Fogg v. Tyler, 39 L.R.A. (N.S.) 847 (109 Me. 109, 82 A. 1008). The distinctive feature of a special deposit is that the identical money is to be kept apart from the general funds of the bank so that it can be returned to the depositor or used for the specific purpose for which it was deposited. The intention of the parties controls, and in the absence of facts from which it can be found that the parties intended that the fund was deposited for safekeeping and return, or to be devoted to a specific purpose then agreed upon, it will be held to be a general deposit. 3 Rawle C. L. 516, 517.
This was an ordinary commercial deposit of funds to the general account of the depositor. It was not treated as a special deposit for it was immediately *Page 33 
commingled with the other funds of the bank in the teller's drawer. Clearly, it was the intention of the parties to create a general deposit with the resulting relationship of debtor and creditor, at least from the time that the deposit was entered upon the books of the bank. If there was a deposit at all it was a general deposit, since there was no agreement or understanding to the contrary. The contention of the Foley Agency seems to be that this money was simply left with the bank for safekeeping until the next business day, when, if the bank had opened, it would have assumed the nature of a general deposit, upon being entered upon the customer's deposit account. The claim involves the legal proposition that a bank deposit is made, and the relationship of debtor and creditor created between the bank and the depositor, not when the money is actually received, but when it is entered upon the books of the bank; that if the deposit is made after usual banking hours, and received by the bank and mingled with its other funds, but under its customary practice is not entered upon the depositor's account until the next business day, the relationship of debtor and creditor is not created until the second day, and if the bank does not then open for business is never created. This does not accord with the realities of the situation. The deposit is made when the cash is handed to the teller with the customary deposit slip, and by him placed in his drawer with other funds of the bank. The rights of the parties are then fixed, and do not depend upon when the deposit is entered upon the books of the bank or whether it is ever entered. As a matter of fact, these deposits were entered upon the teller's proof sheets at the time they were made. The fact that, as a matter of bookkeeping convenience, deposits made after three o'clock are treated as a part of the transactions of the next business day, does not *Page 34 
affect the legal relations of the parties created when the money was actually received. The mere fact that a deposit made after three o'clock was not credited upon the depositor's account until the following day would not justify an inference that the depositor did not intend to make, and the bank to receive, a deposit at the time the money was actually deposited, in the absence of other facts from which such inference could reasonably be drawn.
This precise question was passed upon in a well-considered opinion of the Circuit Court of Appeals of the Second Circuit in the case of In re Ruskay (1925)5 F.2d 143. In that case a broker deposited checks in the Old Colony Trust Company after banking hours on February 21st. They were not credited to his account until the next banking day, February 23d. A petition in bankruptcy was filed against the broker on February 22d. The ultimate question in the case was one of preference, but its decision rested upon whether the deposit made after banking hours on February 21st, but not entered on the books of the bank until the next business day, immediately created between the bank and the broker the relationship of debtor and creditor. The court held that it did, and said (pp. 148, 150): "If it [the bank] does so receive a deposit the amount so received creates the relation of creditor and debtor as effectively as though the deposit was actually received before three o'clock whether the entry actually appears on the books of the bank on the day when it was received or whether the actual entry is postponed until the next day. . . . If the deposit was actually made on February 21st, the fact that it was accepted a few minutes after banking hours does not alter the obligation the bank assumed to the depositors. That obligation is no different from what it would have been if the deposit had been made *Page 35 
a few minutes before three o'clock." See also Ex parteClutton (1850) Fonblanque's New Reports, 167;Wasson v. Lamb, 120 Ind. 514, 22 N.E. 729; 3 Rawle C. L. 531.
The Foley Agency cites Sadler v. Belcher (1843) 2 Moody  Robinson, 489, and Philadelphia v.Eckels, 98 F. 485. In the former case the bankers had, before the deposit was made, determined not to open for business the next day, and dealt with the deposit as property of the depositor, placing it in a separate place where it could not become mixed with the receipts of the day. In the latter the deposit was not mingled with other funds of the bank; the officers of the bank knew when the deposit was received that it was insolvent, and the court held that it would have been a fraud upon the depositor to accept the deposit. The amount deposited by the Foley Agency should be treated as a general deposit, and a part of the assets of the defendant in the hands of the receiver.