Montana Attorney General Opinion 15-245

Opinion No. 245 Banks and Banking-Special Deposits -Trusts. HELD: Money deposited hy and in the name of C. )1. St. P. & P. Railroad Co. in I;arabie Bros. Bank for the pur- pose of paying employees cheCks, upon a II facts disclosed, is not necessarily a special deposit which entitles the railroad company to claim the balance of the accoun t as a trust fund in the bank now closed. .Tune 20, 1933. Heplying to your request for an opin- ion. I wish to advise that I have checked the authorities ~-ou cited. Of these cases. the case of In He Warrpn';;; Bank. 244 N. ,Yo 594. seems to be morc nearly in point. In that case the court went considerably be.,·ond the ordinar~' cases where n special deposit arises from a deposit for 11 special purpose. The facts in that case nre somewhat different. It will he noted that instead of the Hailroad Company keeping n running account in the bank. the hank returned the checks which were paid each pay-da~', together with the balancc of the deposit not used. thus clOSing the transaction. The court said on page 59: "The transaction involved in the cashing of each pay roll was thus c)o;;;ed in every insta nce before the next pay roll became clue." Apparently the court considered this fact of con;;;ider- able imPt:ll'tance. In the case of tUI'll- bie Brothers Bank, I am ad,-ised that this was not done and that the Rnil- road Company kept a running balancc of n bout $5,000. The Circuit Court of Appeals, in Xorthern Sugar Corporation '1'. Thomp- son, 13 Fed. (2d) 82!l, refused to hold that a deposit made for the purpose of paying "beet pay roll" checks was a ~pecial deposit. The facts of that case are somewha t similar to those in our ease, in the following particulars: 1. The depo;;;it was made in the name of the company making the deposit. 2. The company did not addse the bank as to what specific g;rowers or lahorers were to be paid. 3. The bank was not re- quired to ascertain that the persons presenting ("hecks were in fact beet growers or laborers. 4. From the time of -the first deposit in the beet pay roll account to the close of the bank there was continuously an amount to the crellit of the company in that account. 5. There was no special agreement be- tween the Sugar Corporation and the hank that the funds deposited to cO\-er pay roll checks should be held by the bank as a special fund separate and apa rt from other general funds of the bank or that the)' should be treated b~­ the bank in any way different from n general deposit. All of these facts the court considered and commented upon in arriving nt its decision. The court made this statement: "If it was understood and agreed between the sugar corporation and the bank that the deposits were to he for OPINIOXS OF THE ATTORNEY GENEHAL 171 a specific purpose, and that the hank was to act as the agent of the suga l' corpomtion in disbursing such depos- its, then the title to the funds depos- ited would not have passed from the sngar corporation to the bank, and the bank would not have become the debt- or of the sugar corporation to the ex- tent of the funds deposited, and the sugar corporation would not have been .entitled to have the funds (Ieposited placed to its credit; that the sugar corporation did 1I0t intend the rela- tion' between it and and the bank to he tha t of principal and agent but ra ther the cOII\'entional relationship of creditor and debtor, which grow,~ out of a general deposit, is indicated by the requests of the sugar corpora, tion that the bank pla~e the (leposits to the credit of the sugar corporation." The deposit in the Larabie Brothers hank was made in the namp of the Chi- ('ago, Milwaukee, St. Paul and Pacific Ha i I roa d Company (see letter of Vice- President. Sparrow dated .Tanuary 13, 1!)28). His instructions were to "honor all treasurer's checks, voucher checks. paymaster's checks, and all other drafts issued by the Chicago, Milwaukee, St. Paul and Paeific Railroad Company when signed on behalf of the Chicago. ~liIwaukee. St. Paul and Pacific Rail- road Company as per signatures on file with you." According to the liquidating agent, ihe bank was authorized "to pay any and all checks issned hy the ~filwau­ kee." There seems to have hpcn no agreement nor understanding so far as the bank was concerned that this account was to be treated different ft'om that of a general deposit. It is true that text writers and courts have said that a ~pecial deposit exist;; when money is given to II bank for a specific Imrpose. (5 ~litchie Banks and Banking, Sec. 332; 3 R. C. IJ. (Bank) Rec. 146. 148: 7 C. J. 631, Sec. 3ift: }'ogg v. Tyler,l09 :\le. 10!); 30 Ann Cas. WI3E p. 41, and note 45; Morton ". Woolery (N. D.) 189 N. W. 232; 24 A. L. It. 1107 and note 1111; Hudspeth v. Union Trust & Sav. Bank, 196 Ia. 706; 1!)5 No W. 378; 31 A. L. R. 466, note 472; Note 39 L. R. A. (n. s.) S'ee also cases cited in In He 'Varren's Bank (supra); Northern Sugar Cor p. y. 'I'hompson (supl'll).) The fncts in these cases cited in support of this IH'OPO- ;;ition are generally quite different. heing generally in the nature of money deposited to pay a deht. to pay a par- ticular person, to pay a contractor, to pa~' the purchase price of property. to pay a note or draft, etc., find generally according to instructions goh'en to the bank. In view of the NOI·thern Sugar Cor- poration case, supra. and the fact tha t the precise question has not heen ruled upon by our Supreme Court, it cannot be Sitid that the law in such cases as the one we ha ,'e under considera tion. is well settled. It is my opinion that the facts would have to be particularly strong before our Supreme Court would follow the 'Visconsin case. Thel·efore. and pending further investigation of the facts, I do not feel tha t I can at this time positively advise the Superin- tendent of Bunks that tlH' account of the Milwaukee should be considered a I) referred cIa im; nor do I helieve tha t he will wish to make suc'h a decision in view of the conflicting intereRts of the other depositors in the hank.