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PHAIR v. FDIC

October 24, 1947

PHAIR et al.
v.
FEDERAL DEPOSIT INS. CORPORATION



The opinion of the court was delivered by: SMITH

This is a civil action under the Banking Act of 1935 as amended, 12 U.S.C.A. § 264. The complaint consists of five counts in each of which the plaintiffs therein named assert a claim for money allegedly due them under the Act on certain insured deposits. The defendant in its answer denies liability, and alleges by way of affirmative defense full payment of the money due.

Findings of Fact.

 I. The decedent, William F. Melosh, died testate on October 18, 1937, survived by his widow Louise W. Melosh and his three children, Rudolph C. Melosh, Margaret M. Rusch, and Elizabeth M. Phair (identified in the will as Elsie M. Phair). The decedent by his last will and testament, admitted to probate on November 1, 1937, appointed the said Louise W. Melosh and Henry J. Melosh executrix and executor of his estate, (hereinafter identified as executors) and trustees of his residuary estate for the uses and purposes therein set forth.

 II. The pertinent provisions of the will follow:

 'Second: I give, devise and bequeath an equal undivided one fourth part of the remainder of my estate, whether real, personal or mixed, wheresoever situate and of whatsoever the same may consist, unto my wife, Louise W. Melosh, to her, her heirs and assigns forever.'

 'Third: I give, devise and bequeath all the rest, residue and remainder of my estate, to my executrix, executor and trustees hereinafter named for the uses and purposes hereinafter expressed;

 '(a) To divide said estate into three equal parts, one of which they shall hold as trustees for my daughter, Elsie M. Phair: another as trustees for my son, Rudolph C. Melosh, and the other as trustees for my daughter, Margaret W. Rusch. The income arising from each of such trust funds, shall be paid to the cestuique trusts at least semi-annually.'

 'Until the said legacy has been paid and the trusts created as herein provided, I direct my executor and executrix to pay to my wife, a sum not to exceed one hundred dollars a month, the payment of which shall be charged first against her one-fourth share of the income of my estate, and if that be insufficient to pay the same, then the balance shall be charged as an advance upon her legacy.

 'Fourth: I nominate, constitute and appoint my wife, Louise W. Melosh executrix and trustee, and my brother Henry J. Melosh, executor and trustee of this my Will, and I order that they shall make distribution under the First and Second Items of this my Will, and create three separate trust funds as soon as legally possible after my decease.'

 III. Thereafter, on November 8, 1937, the said executors, since deceased, opened two accounts with the New Jersey Title Guarantee and Trust Company (hereinafter identified as the Bank), a member of the Federal Reserve System and an insured bank within the meaning of the Banking Act of 1935, as amended, 12 U.S.C.A. § 264. At the request of the executors one account was designated 'Estate of William F. Melosh -- Capital Account' and the other 'Estate of William F. Melosh.' The signature cards, prepared by a representative of the Bank, were signed by each of the executors as 'Executor,' and not as 'Trustee.'

 IV. It appears from the evidence that during the period of their administration the executors segregated the funds of the general estate; the funds which they regarded as corpus, as distinguished from income, were deposited in the account designated 'Estate of William F. Melosh -- Capital Account,' and the funds which they regarded as income were deposited in the account designated 'Estate of William F. Melosh.' This segregation of funds was nothing more than an accounting practice adopted by the executors and did not change the character of the deposits.

 V. The Bank was closed by the action of its Board of Directors on February 14, 1939, and the Commissioner of Banking and Insurance, pursuant to the laws of the State of New Jersey, took possession of its property and business and proceeded to liquidate its affairs.

 VI. There was then on deposit with the Bank in each of the accounts a sum in excess of $ 5000; in the account designated 'Estate of William F. Melosh -- Capital Account' the sum of $ 7,141.14, and in the account designated 'Estate of William F. Melosh' the sum of $ 7,214.54.

 VII. The executors filed with the Bank two separate proofs of claims, one based upon the account designated 'Estate of William F. Melosh -- Capital Account,' and the other based upon the account designated 'Estate of William F. Melosh,' in each of which they asserted a claim to the full amount on deposit. The executors filed with the Bank two additional proofs of claims based upon the same accounts in each of which they asserted a claim as ...


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