Appeal of Baer , 127 Pa. 360 ( 1889 )

Opinion;

Mr. Justice Green :

The certificate of deposit in this case is of the same form as the one in Frankenfield’s App., 11 W. N. 373, and it was undoubtedly evidence of a loan for twelve months at four per cent- interest, of the amount deposited. Upon tbe considerations mentioned in tbe opinion in that case, the administrator, D. M. Harman, who made tbe loan, must suffer tbe loss resulting from tbe insolvency of Henderson, unless there is something in tbe present ease to take it out of the operation of the decision in Frankenfield’s Appeal.^* The only matter set up to work this result is a parol contemporaneous agreement made by the counsel of Harman with Henderson, the banker, that the money might be drawn out at any time within the year on the return of the certificate, but in that event without interest. As such a contract is entirely contrary to the written agreement, it is incompetent to change the latter by means of the parol testimony, except upon proof of its omission from the written contract by fraud, accident, or mistake. An examination of the testimony of Mr. Eshleman disproves the possibility of any such theory. He simply says that such a verbal agreement was made at the time of the deposit. He does not say that he was induced to make the deposit and accept the certificate, upon the faith of any promise that the money might be drawn out at any time within the year, nor that there was any kind of fraud, accident, or mistake in the transaction. It is unnecessary to cite the numerous authorities that unless these elements are present, the written contract must stand as it is, unaffected by the parol proof. The question of good faith on the part of the administrator and his counsel in making the deposit does not arise, because it cannot change the result. No one can doubt that so far as they were concerned the highest integrity and utmost good faith characterized the transaction. It is simply an instance of misplaced confidence, unfortunate in its consequences, but which must nevertheless be disposed of according to the plain legal rules which govern all similar cases.

The decree of the Orphans’ Court is reversed and record remitted, with instructions to restate the account in accordance with the foregoing opinion, the costs of this appeal to be paid by the appellee.

* The opinion in Frankenfield’s Appeal, filed April 3, 1882, so far as relating to the question raised in the above ease, was as follows:

Green, J.: In this case the appellant, who was the committee of a lunatic, having trust funds in his hands, made a deposit of $2,000 thereof in the Franklin Savings Bank of Allentown, Pa., and took a certificate therefor in the following form:

Certificate Franklin Savings Bank,

of Deposit. Allentown, Pa., [Stamp.]

November 11th, 1876.

S. A. Frankenfield, Committee of Samuel Frankenlield, Hits deposited in this Bank Two Thousand Dollars, payable to his order, three months after date, with interest at the rate of six per cent per annum, on return of this certificate.

Thirty days’ notice to be given of the intention to withdraw this deposit.

$2,000.

J. E. Zimmerman, D. H. Miet.hr,

Cashier. Per J. E. Z., President.

The deposit was made in the name of the committee as such; it was done by the advice of counsel, and at the time of the transaction the bank was in good ropnte. So far, therefore, as those considerations affect the question of the appellant’s liability for the loss of the money by reason of the insolvency of the bank, it must; be conceded at once that no liability would arise. There was no bad faith ou the part of the appellant, and although the bank was really insolvent when the deposit was made, that fact was not known in the community. The question at issue is thus reduced to the narrowest limits. If this had been an ordinary deposit, subject to the check of the depositor from the day it was made, it is very probable the appellant would not have been liable. But it was not such a deposit. In practical effect, it was a loan to the bank for a fixed period and payable with interest. During that period it was entirely beyond the control of the depositor. lie could make no legal demand for the money until at least three months had expired, and not even then unless he had given thirty days’ notice of his intention to withdraw the fund. In no essential feature does this transaction differ from an ordinary loan. It is true, the borrower is a bank and not an individual. But that circumstance is of no moment in determining the character of the transaction. It is a loan still, just as it would have been had the depositary been a citizen or a firm of the greatest wealth, or a manufacturing or business corporation of large capital and resources.- In these latter cases, the security would apparently have been greater, for the capital of this bank was actually very small. The distinguishing feature of the case is, that even if the money be regarded as deposited in the technical.sense, it was also loaned, and henee was subject to the qualities and incidents of a loan superadded to those which belonged to it as a deposit.

Nor does the brevity of the time affect the question. There could be no difference in principle between a deposit payable in three months and one payable in twelve or twenty-four .months, when the question relates only to its character as a loan. This being so, the law regulating investments by committees of lunatics becomes applicable to the case and controls it. The act of June 13, 1836, § 25, P. L. 597, expressly directs that such investments must be made under the direction of the Court of Common Pleas, and only exempts the committee from liability for loss when lie pursues this course and in good faith. In Hemphill’s App., 18 Pa. 303, it was formally and definitely settled that a trustee can only protect himself from risk when he invests the trust fund in real or governmental securities or makes the investment in pursuance of an order by the court. On page 306, Brack, C. J., says: “It has never been doubted anywhere that a loss which accrues of a trust fund invested on personal security, must be borne by the trustee.” These considerations determine that the auditor and court below were right in holding the appellant liable for the loss of the sum of one thousand dollars, deposited with the Franklin Savings Bank.