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RODI BOAT CO. v. PROVIDENT TRADESMENS BANK & TRUST

January 8, 1964

RODI BOAT COMPANY
v.
PROVIDENT TRADESMENS BANK & TRUST COMPANY



The opinion of the court was delivered by: KIRKPATRICK

It is no longer open to question that in Pennsylvania a bank has no right to set off identifiable funds of a third party in a depositor's account against a debt due it by the depositor. This is true even though the bank has no notice of any third party's interest in the debtor's account. Middle Atlantic Credit Corp. v. First Pennsylvania Banking and Trust Company, 199 Pa.Super. 456, 185 A.2d 818.

The evidence before the Court on this motion for summary judgment shows that:

 At all times from October 23, 1961, to and including November 8, 1961, William Stuempfig was indebted to the defendant Bank in an amount of $ 56,250 -- an amount which did not vary during that period.

 On October 24, 1961, Stuempfig received some $ 60,000. from the sale of a Chris Craft boat which he had purchased from the plaintiff about a year earlier. When be bought the boat, he made a down payment and executed a 'retail installment contract,' agreeing to pay the plaintiff the balance, $ 52,028.24, in 36 monthly payments. As of October 23, 1961, $ 36,132.67 was still owing to the plaintiff. The contract provided that the boat should remain the personal property of the seller or its assigns until the balance was paid in full.

 Stuempfig's sale of the boat was without permission from the plaintiff or from the discount company which had financed the transaction, and neither company has assented to nor ratified it.

 From the proceeds of the sale Stuempfig deposited $ 29,500.00 on October 24 and $ 29,682.00 on November 1 in an account in the defendant Bank carried by him under the name of 'W. Stuempfig and Co. Management Account.' W. Stuempfig and Co. was simply a fictitious name under which William Stuempfig carried on his real estate management business.

 On November 9, 1961, the Bank set off the sum of $ 43,313.04 in the Management Account identifiable as part of the proceeds of the boat against obligations of Stuempfig and W. Stuempfig and Co. held by it.

 In this suit the plaintiff asks judgment against the Bank for $ 36,132.67, being the amount due it from Stuempfig on the boat.

 The facts recited above are uncontroverted and are all the facts material to the decision of this motion.

 The record contains a great deal of evidentiary matter which may have some value as furnishing a background for the transactions involved but which does not affect the issue before the Court. The following conclusions as to its immateriality are set out in order to deal with a number of contentions advanced by counsel.

 Specifically, it is immaterial:

 (1) That Stuempfig had another account with the Bank, carried in his individual name, and that it and the Stuempfig and Co. Management Account were used indiscriminately by him for general business and personal purposes.

 (2) It is uncontroverted, but also immaterial, that the Bank, before it exercised its claimed right of set-off, was aware that the monies deposited by Stuempfig on October 24 and November 1 were the proceeds of the sale of the boat and that the boat was subject to a conditional sales contract.

 (3) That neither Stuempfig nor the Bank intended to establish any trust in favor of the plaintiff in the deposits ...


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