Court Opinion

ID: 6998847
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:38:20.027212+00
Date Added: 2024-06-11T16:09:51.689500
License: Public Domain

Mr. Justice Worthington delivered the opinion oe the Court. When appellant deposited her check for $2,487.67 on Friday, December 11, the legal effect was to transfer that amount in the Bank of Edwardsville to J. A. Prickett & Son. They gave her in exchange for the check $37.67 in money, and credit on their books for the balance, $2,450. On Saturday, December 12, they used the check, in other words collected it with other checks in dealing with the Bank of Edwardsville, receiving in return checks drawn against their bank and a balance in money. This money was mixed with other money of the bank and its identity lost. Appellant in her petition sets up that the money paid on the check “went into the hands of Harris E. Prickett who was then in control of said bank of J. A. Prickett & Son, and had the management thereof.” The evidence confirms this statement. The check was not a special deposit. Counsel for appellant states in his brief: “The law still is that the banker is merely a borrower from his depositor.” In American Exchange Bank v. Mining Company, 165 Ill. 114, the court says: “The ordinary relation between bankers and depositors is that of debtor and creditor and has nothing of the nature of a trust in it.” . When appellant deposited her check and received $37.67 in money and a pass book with $2,450 credited tó her, in legal effect, she loaned that amount to J. A. Prickett & Son, to be paid on call. If the check had remained uncollected, and had passed into the hands of their assignees, a different question would have been presented, but it did not. It was «ollected partly in money and partly used in paying checks against the Prickett Bank. In the clearance on Saturday, December 12, it was presented at the Bank of Edwardsville “with other checks.” The difference between the sum of this check and the “other checks” then presented, and the checks held by the Bank of Edwardsville against J. A. Prickett & Son represents the balance in cash that Gillespie received and turned over to Prickett & Son. The proceeds of the check were thus merged and mixed with the funds of Prickett & Son on Saturday before the assignment was made on the succeeding Monday. Counsel for appellant in his argument says: “Before it (the law of June 4, 1879) was passed, an insolvent banker lawfully might receive deposits. Whatever his moral obligations might have been, he was under no more legal obligation to refrain from receiving deposits than any insolvent was to abstain from borrowing money when he knew that he could not pay it to the lender when due. * * * But under this act", when the condition of insolvency exists, the law imposes the same obligation upon the banker that it imposes upon all trustees and fiduciaries. Appellant’s position there is that as. the act of June 4, 1879, makes it a crime for a bank to receive deposits when insolvent, that it follows that all deposits so received are fraudulently received, and that therefore no title to the deposits so received passes to the bank or its assignee; and that this being so, such deposits are trust funds and should so be held and made preferred claims, although mixed with other moneys of the bank.” Such is clearly not a result of this statute. If it was, the effect would be to make two classes of depositors, one class before insolvency and one after, and to apply the deposits of the first class in payment of the deposits of the second. The act referred to has not changed the legal rights or equities of depositors. It has not made fraudulent what was not fraudulent before. Actual fraud only exists when there is knowledge and intent, but knowledge and intent are not essential elements in the offense defined by this statute. Knowledge of insolvency does not have to be averred in the indictment for receiving deposits when insolvent. Murphy v. People, 19 Ill. App. 125. It does not therefore have to be proved nor is it receiving deposits within thirty days before insolvency that constitutes the offense. The offense is complete within the terms of the statute whenever deposits are received by an insolvent bank. The thirty days limit is a rule of evidence made by the legislature declaring what is prima facie evidence of an intent to defraud. The law is stringent and was passed for the protection of all depositors, and not for the benefit of any particular class. It makes bankers liable to prosecution for receiving deposits when insolvent, whether they know of their insolvency or not. If they do not know of their insolvency, there can be no intentional fraud, for intentional fraud can only exist when there is guilty knowledge. But the liability to punishment is the same in either case. It follows, then, that the rights and relations of depositors are not changed because 'this statute makes it criminal to receive deposits when insolvent. The date at which Priekett & Son became insolvent does not appear from the evidence, nor is it claimed that the equity of appellant is superior to the equity of any other depositor after insolvency. Cases are cited by appellant where moneys collected upon claims left within banks for collection were held not to pass to the assignee and were allowed as preferred claims. Such cases are not analogous. The bank held them for collection only. The relation of borrower and lender did not exist. They were not a part of the assets of this bank, and would not as such pass to the assignee. “When a customer makes a deposit in a bank, in the ordinary course of business, of a draft or check received or credited as money and indorsed by the customer to the bank Tor deposit,’ to be placed to his credit, the title to the draft or check vests in the bank.” American Exchange Bank v. Mining Co., 165 Ill. 113; American Trust and Savings Bank v. Manufacturing Co., 150 Ill. 336. “When a general deposit is made before formal insolvency, there can be no recovery in preference to other creditors; but when the deposit has been kept separate and not fully received before insolvency, the depositor may claim it.” American Exchange Bank v. Mining Co., cited supra; Morse on Banking, Secs. 589, 629-631. If appellant is correct even in claiming that, owing to the insolvency of the bank, the deposit should be considered a trust fund, it could not be so treated and made a preferred claim, as the evidence shows it is incapable of identification. Trust funds, wrongly converted, may be pursued when the property into which they were converted can be identified, but not when this fails, which is the case when converted into money and mixed with other money. Union National Bank of Chicago v. Goetz, 138 Ill. 127; Mutual Accident Association v. Jacobs, 141 Ill. 268; Bayor v. Am. Trust and Savings Bank, 157 Ill. 68. The check in this case having been deposited as a general deposit, and having been collected by J. A. Prickett & Son before their assignment, and its proceeds merged with their other assets so that they can not be followed and identified, appellant’s petition under the well settled law of this State must be denied. Judgment affirmed.