The opinion of the court was delivered by: AVIS
The plaintiff Margaretha Steuber, on December 19, 1921, entered into an agreement with Atlantic City National Bank (hereinafter called bank), the first paragraph thereof reading as follows: "The said party of the first part agrees to place with the said party of the second part the sum of Fifteen Thousand Dollars ($15,000) cash and the said party of the second part hereby agrees to hold said sum of Fifteen Thousand Dollars and pay out an amount yearly equal to four per cent. (4%) thereon in the following manner."
The further provisions of the agreement, in brief, were that the bank should pay her an amount equal to 2 per cent. of the principal on hand of said sum of $15,000 on the 1st day of July, 1922, and a like amount on the 1st days of January and July in each year thereafter during her life time; that after her death the same amount of 2 per cent. of the principal on hand to be paid on the same dates to her daughter Elizabeth Heinle during her life; that after the death of said Elizabeth Heinle, or, in case she predeceased the said Margaretha Steuber, then after the latter's death, the same amount to be paid the children of Elizabeth Heinle, living at the time of her death, in equal shares, until the youngest of said children reached the age of 21 years, and at such time to divide the principal sum among said children in equal shares; the issue of such children to receive parent's share in case of decease of parent before distribution. The agreement further provided that, if all children of Elizabeth Heinle, or their issue, were deceased at time for distribution, the principal sum to be paid Charles J. Heinle, her husband, or, if he be dead, to August Steuber, and, if he be dead, to St. Christopher's Hospital for Children, Philadelphia, Pa.
The money deposited in accordance with this agreement was obtained by a check of Margaretha Steuber for $15,043.41, dated December 7, 1921, drawn on the Ninth Title & Trust Company of Philadelphia, and, according to the stipulation as to facts, was collected by the bank on December 13, 1921, and deposited in an account known as the sundry deposit account. On January 11, 1922, the full amount was transferred to a new checking account in the commercial department of the bank in the name of Margaretha Steuber, and the $43.41 was paid to her by draft dated January 12, 1922, leaving the net amount of $15,000 in the account. On this amount interest was paid to the depositor at the rate of 4 per cent. per annum up to January 1, 1933.
Another agreement was made on December 31, 1928, between the same parties, which, for the purposes of this action, may be considered a duplicate of the original agreement, although the beneficiaries, after the death of Margaretha Steuber, are named in a somewhat different order. The amount involved under this agreement was $10,000, and was deposited in a general checking account on January 11, 1929, in the name of Margaretha Steuber. At the time of the execution of the agreement, the money was on deposit in the bank to the credit of said Margaretha Steuber in a time account, and the effect of the bank's action was to transfer the credit from one account to another.
The money received by the bank was not segregated or separately invested, but became a part of the general funds of the bank.
On January 30, 1933, the bank was declared insolvent, closed, taken over by the Comptroller of the Currency, and a receiver appointed.
The bill of complaint, filed in behalf of Margaretha Steuber and all the parties named as beneficiaries in the agreements, prays that the agreements may be construed and decreed to be trust agreements; that the bank be removed as trustee and a new trustee appointed; that the receiver turn over the fund to a new trustee, and for such other relief as may be equitable and just.
To succeed on their complaint, the plaintiffs must show: (1) That there was a trust; (2) that the assets coming into the hands of the receiver were augmented by the moneys deposited; and (3) that the particular funds are traced into the possession of the receiver.
It is apparent that neither of the parties deemed it necessary or desirable that the agreements should definitely declare the moneys as being deposited in trust. The first provides for the payment of interest "of the principal on hand of said sum of Fifteen Thousand Dollars." The same language is also in the agreement relating to the $10,000.
The question as to whether a trust was created by the instruments in suit is somewhat difficult of determination. Trusts, usually, are dependent upon the possession and use of the property or money involved for the benefit of the cestui que trust, and the segregation of the property or funds for that purpose. In the instant case the money was turned over to the bank, upon an agreement to pay a fixed rate of interest, without any suggestion of trust, except the provisions of the agreement as to the payment of interest and distribution of principal.
It seems quite clear that no trust was created in the sense claimed by plaintiffs. The bank treated the funds as a deposit, which was not prohibited by any of the terms of the agreements. No provision of the agreements indicates that the funds were to be separately kept or separately invested.
The executor instituted a suit to secure a construction of the will, and it was decreed that the fund should be deposited in the aforesaid bank at interest and that the interest be paid as provided in the will. The bank paid the interest as directed, and subsequently became insolvent. The bill in that case was filed to have the receiver of the bank charged with a trust as to the deposit so made. The District Court held that it was a trust. The Circuit Court of Appeals reversed the decision and determined that no trust was created. An examination of the text of that decision, and the cases therein cited, is convincing that the ...