Waesche, Trustee v. Thurmont Bank

Johnson, J., delivered the opinion of the Court. The correctness of the lower court’s action in sustaining a demurrer filed by appellee to appellant’s declara ³⁸⁴ tion is the sole question, presented by this appeal. The judgment appealed from was entered against appellant, plaintiff below, after he had declined to file an amended declaration. Appellant, as trustee under an assignment made, in pursuance of an order passed by the Orphans’ Court of Frederick County, by the executor of Leonard R. Waesche, late of that county, deceased, brought the suit to recover from appellee the balance of .certain funds received by it from Leonard R. Waesche during his lifetime and placed to his credit under an agreement between him and the bank, which entitled the depositor to receive certain interest thereon semi-annually, and gave him the privilege of withdrawing any part of the funds after first giving thirty days’ written notice.

The declaration contains five counts, the first of which is for money had and received by the defendant for the plaintiff’s use, while it is alleged in the second count that the bank was indebted unto Leonard R. Waesche for money loaned by him during his lifetime, which claim the executor of his estate, pursuant to an order of the Orphans’ Court of Frederick County, had assigned in writing to the plaintiff. By the third count it is alleged that the defendant was indebted unto Leonard R. Waesche, since deceased, for money deposited by him with it during his lifetime in a certain interest account under a written contract, which account Waesche’s executor, pursuant to the Orphans’ Court order, had assigned to the plaintiff. The fourth count is as follows: “And for that Clinton F. Waesche, executor of the estate of Leonard R. Waesche, deceased, according to the books of the defendant, had on deposit with the defendant in interest account No. 2336 trust funds amounting to $34,253.98, which the defendant promised to pay to said executor in full under the sixth paragraph of the ‘Revised Plan of Reorganization of The Thurmont Bank, Thurmont, Maryland,’ dated November 13, 1934, and approved by the Bank Commissioner of the State of ³⁸⁵ Maryland on November 15, 1934. The balance of said trust funds remaining on deposit with the defendant in interest account No. 2336 on and after February 13, 1935, to-wit, the sum of $17,120.98, the said executor assigned and conveyed to the plaintiff, pursuant to an order of the Orphans’ Court of Frederick County, Maryland, true copies of the petition and order of the Orphans’ Court of Frederick County, assignment and of the aforesaid Revised Plan of Reorganization are attached hereto and prayed to be taken as a part hereof.” The allegations of the fifth count are in detail and begin with the date of the opening of the interest account by Leonard R. Waesche, under which it is stated that interest was payable to him thereunder, the dates when the same was credited to the account, and that on February 13th, 1934, Waesche departed this life testate, up to which time he was a member of defendant’s board of directors; that on April 14th, 1934, his executor opened an account with defendant by depositing a certain sum of money, in which account he subsequently made numerous deposits and withdrawals down to the time of bringing the suit; that since the date last mentioned to this time defendant’s books have shown that the account in question was “a trust deposit” payable to the executor upon thirty days’ written notice; that as such executor on January 8th, 1935, he withdrew from said account $12,000, and on February 13th, 1935, he withdrew the further sum of $5,133.03; that there remains on deposit in the account as of February 13th, 1935, the sum of $17,120.98, from which no withdrawals have been made.

Reference is also made to the order of the Orphans’ Court in pursuance of which an assignment of the funds in the account was made to the plaintiff, and that on June 12th, 1936, the plaintiff served a written notice on defendant that within thirty days he intended to withdraw the balance remaining in the account, but the defendant has refused to pay the same. With the declaration plaintiff filed as a part thereof four documents, designated as schedules A, B, C, and D. ³⁸⁶ Schedule A is the petition filed by the executor in the Orphans’ Court of Frederick County for authority to assign the balance in the account to the plaintiff as trustee and an order of that court authorizing the same. Schedule B is the assignment to the plaintiff executed by the executor in pursuance of the Orphans’ Court order, while schedule C contains the contract between the bank and the depositor under which it received the funds in question. Schedule D, dated November 13th, 1934, and two days later approved by the bank commissioner, is a revised plan of reorganization of the Thurmont Bank, Thurmont, Maryland, which is referred to in the fourth count of the plaintiff’s declaration.

Appellee demanded the particulars of the plaintiff’s claim under each count of the declaration, and the court, after a hearing, granted its petition to the extent of requiring the plaintiff to file particulars of his claim under the first, second, third, and fourth counts thereof. The plaintiff complied by stating the date upon which the account was opened; that Waesche had received a deposit book therefor, in which was printed the agreement pertaining to the receipt of the funds, and annexed thereto a photostatic copy of the book showing all moneys and deposits received by the plaintiff, alleged further the death of the depositor, the subsequent appointment of the executor, the opening by the latter in the defendant Bank of an account in his representative capacity. Further that, after April 4th, 1934, the books of the defendant showed that the savings account originally created was an active trust deposit belonging to the executor of Leonard R. Waesche. It is further alleged that on January 1st, 1935, a certain amount was shown by the deposit book as being in the interest account, the withdrawal of $12,000 by the executor on January 8th, 1935, and the further withdrawal by him on February 13th, 1935, of $5,133.03, which withdrawals were permitted by the defendant under the revised plan of reorganization, but that the defendant wrongfully and illegally did not permit further withdrawals of the balance ³⁸⁷ of $17,120.98.

The assignment by the executor to the plaintiff is likewise referred to, and the plaintiff alleged in the bill of particulars that he sued under the first count for the balance of the deposit remaining in the interest account; that he sued under the second count for the same balance on the theory that the money in question was money loaned the defendant; that under the third count he sued for the balance of the deposit on the theory it was rightfully deposited under a valid contract between his predecessor in title and the defendant, while under the fourth count he sued for the same balance on the theory that the defendant became legally bound to pay the money in conformity with the revised plan of reorganization of the Thurmont Bank, Thurmont, Maryland. Briefly stated, the revised plan of reorganization, by its terms, formulated under the provisions of chapter 46 of the Acts of 1933, commonly known as the Emergency Banking Act, contemplates the writing down and charging off of certain assets of the old bank in accordance with appraisals, and the transfer of the same to a holding corporation, provision for the creation of which is therein made, with a capital stock of 3,500 shares to be issued to three trustees, and by them held for the benefit of holders of certain certificates of beneficial interest, upon payment of which the shares are issuable to the stockholders of record of the old bank for existing shares therein cancelled under the plan. Such certificates in the aggregate are not to exceed forty per cent, of the net amount of deposit accounts; ten per cent, of such accounts are applied to the purchase of stock in the reorganized bank and the remainder of fifty per cent, of such net deposits becomes immediately available upon adoption of the plan. Summarizing, each depositor, unless his deposit was preferred by virtue of section 71E of the Banking Act, received for the net amount of his deposit forty per cent, of certificates of beneficial interest issued by the holding corporation, ten per cent, of the deposit for new stock ³⁸⁸ in the reorganized institution, and the remaining fifty per cent, in cash.

Paragraph 6 of the plan defining preferred deposits further provided: “All deposits in the net amount of twenty ($20.00) dollars or less, and of trustees and other fiduciaries having trust funds on deposit according to the books of the bank, and deposits of the State of Maryland, Frederick County or municipal corporations, lodges, churches, cemetery associations, schools and service organizations and Christmas Saving Club deposits will be exempted from the operation of this plan and upon effective date thereof will be withdrawable in full.” It is therein further declared that such certificates of beneficial interest shall constitute a pro tanto liquidation of that portion of each account represented thereby, and to this extent the bank is relieved from liability. Upon this state of the pleadings appellant contends he is entitled to recover the balance on deposit in the interest account, because (a) the revised plan of reorganization was not applicable to such an account at the time he brought the suit, since, so far as the record discloses, appellee is a solvent institution and by the express terms of chapter 46, supra, it could not then have been in the custody, control and management of the bank commissioner of the state; (b) that the act was an emergency measure which only suspended the right of the depositor to the balance in the interest account for a period which has expired, thereby restoring his right to such balance. He further asserts (c) that appellee is liable on its contracts until it is dissolved or becomes insolvent, moreover, that he cannot be deprived of his right to the balance in the interest accounts, except by due process of law. As against these contentions, it is maintained by the appellee: (a) That the depositor having failed to except to the revised plan of reorganization and request to receive an amount equal to the liquidating value of his deposit, as provided by the act, and having accepted the benefits of the plan, he is now estopped to recover in ³⁸⁹ this case; (b) that the interest account referred to is not a trust or fiduciary account entitling it to exemption from operation of the revised plan under the terms of paragraph 6 thereof; (c) that chapter 46, supra, is,.,constitutional and does not violate the due process clause