Opinion
Decided February 25, 1935.
Banks and banking — Liquidation — Depository contract between bank and village invalid, when — Section 4295, General Code — Deposit illegally received, a trust ex maleficio.
Where a depository contract between a bank and a village is invalid because the bank never gave bond or other security as required by Section 4295, General Code, the village is entitled to a preferred claim in the bank's assets in case of insolvency, as the receiving and holding of the village money, without a proper depository bond or security, was illegal and unauthorized, and was at all times thereafter a trust ex maleficio.
APPEAL: Court of Appeals for Fulton county.
Mr. John W. Bricker, attorney general, and Mr. Davis B. Johnson, for plaintiff.
Messrs. F.S. J.M. Ham and Mr. Clyde L. Deeds, for defendant.
This cause comes to the consideration of this court on appeal by the plaintiff, the village of Metamora, which will be referred to herein as the village. The defendant was Ira J. Fulton, Superintendent of Banks, in charge of the liquidation of The Home Savings Bank of Metamora, Ohio, but on motion, S.H. Squire, the successor to Ira J. Fulton, has been substituted as official defendant. Herein, the defendant will be referred to as the bank.
Prior to January 1, 1930, the bank had been the legal depository of the village, on which date the depository contract expired. January 7, 1930, after proper notice and bidding, a new depository contract was made, but the bank never gave any bond or other security as required by Section 4295, General Code, hence the contract never became effective. The bank continued to hold the money of the village, and received more from time to time up to August 17, 1931, when the bank closed and was taken over by the State Banking Department for liquidation. At that time the balance on the village account was $8,375.85, and the total money in the vaults of the bank was $7,518.18.
The village now asks the court to order the liquidating authority to pay its account from the assets of the bank as a preferred claim. This claim is made upon the contention that the holding and receiving of the village money, without a proper depository bond or security, was illegal and unauthorized, and that its money in the bank was at all times thereafter a trust ex maleficio, wherefor the relation of debtor and creditor did not arise. This is true, and any such money traceable from the village was a trust or special deposit.
Money in the bank vault is presumed to be such special deposit, and as to it the village does have a preference over general creditors of the bank. In re Liquidation of Osborn Bank, 1 Ohio App. 141; Smith v. Fuller, 86 Ohio St. 57, 99 N.E. 214; Board of Commissioners of Crawford County v. Strawn, 157 F., 49; Reichert v. United Savings Bank, 255 Mich. 685, 239 N.W. 393.
The evidence fails to show what became of any other money of the village. Hence, it is assumed it was dissipated and ceased to be a part of the special deposit. The village will have to share its preference in the vault money with other claimants, if any, who may have liens upon that money, in accordance with the rule announced in State, ex rel. The Toledo Theatres Realty Co., v. Fulton, Supt. of Banks, 124 Ohio St. 360, 178 N.E. 585.
No part of the liquidating expenses should be charged against the village's part of the vault money, and the costs herein will be paid by the defendant.
Decree accordingly.
LLOYD and OVERMYER, JJ., concur.