The amendments allowed by the court do not affect the issues presented by the original pleadings as the court understood them. The amendments were allowed so that parties might not be prejudiced upon appeal by averments which they felt might cause misunderstanding. The court, however, in deciding the case, took the averments of paragraph 24 of the bill and corresponding paragraph of the answer to mean that the mingling of the specific funds in controversy was admitted to have taken place without the specific or express consent or approval of the plaintiff, but the court was of the opinion that the original agreement contemplated the use by the trust company in its general business of all funds deposited and of necessity authorized their commingling with its other general funds.
Upon the reargument the plaintiff strongly insisted that the court accepted as a basis for its decision numerous averments in the answer which were no more than conclusions of law or "averments of defendants' interpretation of the exhibits and of the oral contract." This calls for a brief re-examination of the issues, keeping in mind the elementary proposition that upon hearing of bill and answer "the whole answer is to be taken as true; or in other words, the truth of all the well pleaded averments of the answer, whether responsive to the allegations of the bill or in avoidance thereof is admitted, the cause in effect being submitted to the court on the contention that plaintiff is entitled to the decree prayed for in his bill upon the admissions and notwithstanding the denials of the answer." 21 C.J. 560.
Now the agreement upon which the plaintiff bases its right, according to the bill, was an oral agreement subsequently orally modified in one or two particulars. It is averred that certain letters passed between the parties and these letters may be considered as evidence bearing upon the intention of the parties in the oral agreement. But there is no averment that the letters were intended as an integration of the agreement, and it is obvious that they were not. For the terms of the oral agreement the court must look to the answer, and only such allegations of the bill with regard to the terms as are not denied or modified by the allegations of the answer may be added thereto. Of course, the court understands that this does not extend to matters of opinion or inference or conclusions of law contained in the answer. But we are dealing with an oral agreement as to which it is not expected that the precise words will be set forth. So that, when the answer says that the parties agreed orally to certain things, unless it clearly appears that these averments are conclusions of law or mere inferences, they must be taken at their face value, namely, as statements that, as matters of fact, the parties used the words substantially in accordance with the averment of the answer. If an answer states that "the defendant orally agreed to pay $1,000 for an automobile," that is not stating a legal conclusion or inference, but is stating a fact.
Now the really vital part of the oral agreement is stated in paragraph 8, subsection (c), of the bill, and the answer to that is as follows: "* * * General Baking Company, the complainant, agreed to open a 'deposit account' in the Franklin Trust Company, wherein all moneys (including checks, cash and drafts) received by the three Philadelphia plants of the complainant were to be deposited, said deposits to be credited to the complainant, advices of each deposit to be forwarded to the offices of the General Baking Company in New York, and on Monday of each week the balance in the deposit account (as augmented by the funds received under the terms and conditions hereinafter set forth) to be forwarded by the Franklin Trust Company to the General Baking Company in New York or its depository." It is true that this same paragraph of the answer refers to the letters passing between the parties ("the exhibits to the amended bill of complaint as amended"), but there is no averment or suggestion that these letters constituted the agreement. On the contrary, the statement is that the agreement was oral and the letters are clearly referred to me as evidentiary of the intention of the parties.
The general rule is too well settled to admit of question that, in the absence of any special agreement providing for a trust or agency, a deposit in a bank to be credited to the depositor creates the relationship of a debtor and creditor. It is agreed of course that this was not an ordinary deposit, but that it was made under a special agreement of some kind. Whether it was the purpose of this special agreement to create a trust relationship or whether it was merely to provide certain incidents as to transmission of balances, receipts of deposits, making up pay rolls, etc., for the convenience of the parties, was the matter at issue. The court did not exclude the letters from its consideration, but carefully considered all their terms, as though they had been incorporated into the oral agreement or as though the agreement had been partly oral and partly written. The court is still of the opinion that the evidence before it fails to show any intention to deny to the trust company the right to use the funds deposited with it in what was called the deposit account.
The plaintiff has made the point as to the sum of $40,642.67 deposited with the trust company on Saturday, October 3, that, regardless of any general arrangement, a trust arises because (a) the trust company was obligated to deliver this amount in cash to the plaintiff's depository in New York on Monday, October 5, and failed to do so. This argument, however, only goes to the general intention of the parties. If I thought that the letters relied upon by the plaintiff of September 9 and 11, 1925, meant that the trust company was bound to deliver to the plaintiff's depository in New York the identical currency, bills, and coin received by it, I would have to revise my view as to the major intention of the parties in the whole transaction. This, however, was certainly never intended. Nor do I think that there was any intention that currency in specie was to be physically transported from the trust company's New York correspondent to the plaintiff's New York depository. The letters of September 9 and 25 refer to "cash funds" and "current funds." All that the plaintiff is insisting upon is that banking arrangements be made so that the amount of money reaching the trust company's New York correspondent on Monday be in its depository available to be drawn upon by the afternoon of the same day. The plaintiff objected to the use of cashier's checks on the trust company's New York correspondent because they had to be cleared and consequently could not be drawn upon on the same day. Any arrangement which would make the credit balance available on Monday was satisfactory to the plaintiff. I find nothing in this correspondence inconsistent with the intention that the deposit while in the trust company's hands should be used for its general banking purposes.
There are also cases of course which hold that, in the absence of any trust agreement, the receipt by a bank of deposits at a time when it knows it is insolvent will create a trust ex maleficio. Ellerbe v. Studebaker Corporation (C.C.A.) 21 F.2d 993. The trouble with this position is that there is nothing in the bill and answer from which the court can find that the trust company was insolvent on October 3, or at any time prior to the closing of its doors on October 5.
Nor can a trust be implied from the failure of the trust company to pay the amount of deposits which it had on hand to the plaintiff's New York depository on Monday, October 5. If the original agreement did not contemplate or create a trust, the fact that it has been broken will not accomplish that result. Otherwise any general depositor could turn his general deposit into a trust merely be presenting a check and having payment refused. If the relationship was that of debtor and creditor, the fact that the debtor failed to pay in accordance with the terms of the agreement does not constitute it a trustee.
The court has carefully considered all the arguments presented in the plaintiff's comprehensive and well-considered brief, but adheres to the views expressed in the original opinion and reaffirms the order for the dismissal of the bill.
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