Cato v. Mixon , 165 Ga. 245 ( 1927 )

Hines, J.

(After stating the foregoing facts.)

When a bank becomes insolvent, and is taken over by the State banking department for liquidation of its affairs, “Debts due by the bank as executor, administrator, guardian, trustee, or other fiduciary of like character,” are to be paid third -in order, that is, after (1) “debts due the State of Georgia,” and (2) “debts due any county, district, or municipality, including taxes,” have been paid. Acts 1925, p. 129. Construction of the language, “other fiduciary of like character,” is invoked and discussed by counsel for the parties in their briefs. The maxim noscitur a sociis is applicable in construing this principle of the above act. The “other fiduciary” must be one like in character to an executor, administrator, guardian, or trustee. lie must be entrusted with funds of an estate or of a minor, or of a cestui que trust, for the use of creditors, heirs, legatees, minors, or cestuis que trust, and by reason of the control and management of such funds become indebted to creditors, heirs, or legatees, or minors, or cestuis que trust. In such circumstances one becomes a fiduciary of like character with an administrator, executor, guardian, or trustee. It must be further noted that the debts which are preferred are those due by the bank “as executor, administrator, guardian, trustee, or other fiduciary of like character,” and not those due by the bank to an executor, administrator, guardian, trustee, or other fiduciary of like character. In this case the certificate of deposit represents the debt of the bank in its individual capacity to the trustee of the plaintiff, and not the debt of the bank as trustee to the plaintiff. A certificate of deposit creates the relation of debtor and creditor between the bank and the depositor. 3 R. C. L. 570, § 198. The usual certificate of deposit is in legal effect a promissory note. Carey v. McDougald, 7 Ga. 84; Lynch v. Goldsmith, 64 Ga. 42; Lamar, Taylor & Riley Co. v. First National Bank, 127 Ga. 448 (56 S. E. 486); 3 R. C. L. 573, § 202. By the great weight of authority a certificate of deposit in the ordinary form is in substance and legal effect a promissory note. 7 C. J. 647 [§ 336]) 3. When money is placed in a bank on general deposit, the title to the money immediately passes to the bank; the credit of the bank is substituted for the money; and the relation of debtor and creditor is created between the bank and the depositor. Ricks v. Broyles, 78 Ga. 610, 614 (3 S. E. 772, 6 Am. St. R. 280); Schofield Manufacturing Co. v. Cochran, 119 Ga. 901 (47 S. E. 208); McGregor v. Battle, 128 Ga. 577 (58 S. E. 28, 13 L. R. A. (N. S.) 185). There is no trust relation between a bank and a general depositor. 7 C. J. 641 [§ 326] H. Under the contract creating the trust, and under the certificate of deposit, the bank does not occupy a fiduciary relation toward the beneficiary of the trust; and unless something appears to the contrary under aliunde allegations in the petition, the plaintiff is not entitled to have his claim paid as a preferred one, under the above provision of the act of 1925.

Do these facts alleged in the amendment to the petition create a fiduciary relation between the bank and the plaintiff ? The mere deposit of the funds in the bank by the trustee does not make the bank a fiduciary. The view more generally adopted by the courts is, that deposits made by trustees, executors, administrators, assignees, auditors, public officers, and other persons serving as fiduciaries, are considered simply as general deposits; and if the bank in which they are placed fails to pay them, the beneficiaries have no peculiar claim or preference over other creditors. Williams v. Bennett, 158 Ga. 488, 495-6 (123 S. E. 683). The facts stated in this amendment do not create a fiduciary relation between the bank and the plaintiff. The fact that the creator of the trust had confidence in the cashier of the bank and consulted and advised with him as to the method of creating the trust, and accepted the advice and suggestions of the cashier as to certain terms of the agreement under which the trust was created, and the delivery of the trust agreement and certificate of deposit by the grandfather to this officer of the bank, who in turn delivered them to the trustee, did not make the bank a fiduciary to handle these funds for the plaintiff. That the trustee never in fact handled the trust fund which was deposited in the bank by the grandfather and a certificate taken therefor payable to the order of the trustee under the terms of the trust agreement, that the bank had actual notice that the fund was turned over to the trustee for a designated and specific purpose, that it was a fund belonging to the minor plaintiff, and that it was not subject to check but merely swelled the assets of the bank, did not make the bank a fiduciary of like character with a trustee. Taking the facts pleaded most strongly against the pleader, the grandfather deposited the fund in the bank, or already had it deposited in the bank. He took a time certificate therefor, payable to the order of his grandson as trustee for the minor plaintiff, who was likewise his grandson. He did not, for some undisclosed reason, deliver this certificate directly to the trustee, but turned it and the trust agreement over to the cashier, who delivered them to the trustee. The fund was not subject to check by the trustee, because the time certificate had been given for it; and the fund could be withdrawn from the bank only by surrender of the time certificate, after it became due and payable. When the time certificate was taken for these funds, they actually swelled the cash assets of the bank. 'There is nothing in the facts which creates the relation of a fiduciary between the bank and the plaintiff or his trustee. The bank was not to receive and handle this fund for the use and benefit of the plaintiff. It received the fund and was to pay interest thereon. The bank was not to hold this fund in specie and deliver it to the trustee of the plaintiff. So we are of the opinion that there was nothing in the facts recited, in the absence of fraud, which takes this case out of the general rule that the relation between a general depositor of a bank and the bank is that of debtor and creditor, or creates a fiduciary relation between these parties. It can not be successfully contended that these facts create an express trust under which the bank was to handle this fund for the plaintiff. This is so for the good and sufficient reason that an express trust “must be created or declared in writing.” Civil Code (1910), § 3733; Jenkins v. Lane, 154 Ga. 454 (3-a) (115 S. E. 126). These facts do not create an implied trust and make the bank liable as an implied trustee. Neither the legal title to the certificate of deposit nor to the money to be paid thereon was in the bank. The bank did not acquire title to the money deposited by any fraud, nor does the transaction fall within any other category from which an implied trust arises. Civil Code (1910), § 3739. '

It is true a trust may arise ex maleficio. In such a case the malefactor holds as implied trustee for the party defrauded, and an implied trust arises in favor of the party defrauded. Jenkins v. Lane, supra. The existence of any fraud on the part of the cashier in thiá transaction is expressly disclaimed. Petitioner alleges that neither he nor his grandfather contends that there was any bad faith on the part of the cashier in the part he took in bringing about the creation of this trust. The allegation that the cashier assured the grandfather at the time of this transaction that 'the bank was solvent does not show any fraud upon the part of the cashier, it- not being alleged that the bank was insolvent at that time. On the contrary it is alleged that the bank became insolvent in July, 1926, six months after this" trust was created, and after the certificate of deposit was issued. There is nothing in the facts which can be held to overcome the statement in the petition that the plaintiff does not contend that there was any bad faith upon the part of the cashier in the role which he played in this matter. This bank was expressly authorized to accept this deposit from this trustee. Acts 1919, pp. 135, 208; 8 Park’s Code Supp. 1922, §§ 2280(oo), 2280(pp). It had full power to issue the certificate of deposit. The transaction being legal, and the cashier of the bank not being charged with any fraud, we can not hold that any implied trust arose in favor of the plaintiff, upon the theory that a fraud was perpetrated upon him by the bank in securing this deposit. This being so, we are not called upon to decide whether an obligation against a bank, arising from a trust created ex maleficio, would be entitled to priority of payment under the provision of the act of 1925 with which we have been dealing.

So we are of the opinion that the trial judge did not err in sustaining the demurrer to the petition.

Judgment affirmed.

All the Justices concur.