Court Opinion

ID: 4722224
Source: CourtListenerOpinion
Date Created: 2021-08-12 02:37:22.752738+00
Date Added: 2024-06-11T08:07:41.102931
License: Public Domain

Tolman, J.
(dissenting) — I concur in that part of the opinion which holds the deposits to be general and not special, but I dissent from that part which holds that the bank was not so hopelessly insolvent as to permit the depositors to recover. The majority opinion says:
“The bank was not hopelessly and irretrievably insolvent because on this day there was a reasonable hope and expectation on the part of the officers that the consolidation plan above mentioned would be consummated, and that the business of the bank would be continued and its fortunes retrieved.”
Not only so, but the president of the bank was called as a witness and explained the then conditions. Prom his testimony it clearly appears that the bank had, to meet insistent and growing demands, realized on its assets as far as possible, that it could not. continue to *525meet its obligations in the ordinary course of the banking business, and that it was morally certain that, if the consolidation plan was not. put into immediate effect, the bank would have to close. Hence, under our rule, the bank was hopelessly and irretrievably insolvent, and by its officers known to be so. The simple fact that there is hope or expectation of obtaining new capital, or consolidating with other banks so as to make a new and solvent institution, is very different from a hope and belief that the bank is not, in fact, then insolvent because its present assets may prove to be sufficient, or that, in and of itself, it may better its condition so as to become solvent. The expectation or hope of forming a new and solvent bank does not and cannot change the fact of hopeless insolvency then actually existing, and should not be permitted to change the rights of the depositor, who relies upon the open door of the bank as a representation of its solvency. Any other rule will open the door to such fraud as ought not to be countenanced.
The authorities relied upon by the majority upon this branch of the case all clearly recognize the distinction I am here attempting to make. In Brennan v. Tillinghast, 201 Fed. 609, the bank, while insolvent at the time of receiving the deposit, was held to be in such a condition that its officers had reason to believe that by continuing in business it might retrieve its fortunes. No such fact here exists. To the same effect is Steele v. Commissioner of Banks, 240 Mass. 394, 134 N. E. 401, and in Quin v. Earle, 95 Fed. 728, it clearly appeared that there was reasonable hope of realizing on assets of the bank. No such hope here existed. As already pointed out, the bank officers had no hope of realizing from the assets of the bank, or that the bank would ever, in and of itself, recover a sound! *526financial standing and be able to continue its business. Tbe only hope of its officers was in the organization of a new and solvent.corporation which would assume the liabilities of the bank. In my judgment, this ought not to suspend the salutary rule to the effect that, where deposits are received when the bank is hopelessly insolvent, to the knowledge of its officers, that is such a fraud as will entitle an unsuspecting depositor to- rescind and recover back the money, or give him a preferential claim, or create a trust ex maleficio in his favor.
I therefore dissent.