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GORDON v. HAMILTON SAVINGS AND LOAN ASSOCIATION (03/24/66)

decided: March 24, 1966.

GORDON
v.
HAMILTON SAVINGS AND LOAN ASSOCIATION, APPELLANT



Appeal from judgment of Court of Common Pleas No. 4 of Philadelphia County, Dec. T., 1964, No. 3939, in case of Thomas G. Gordon, administrator d.b.n.c.t.a. of estate of Herman James, deceased, v. Hamilton Savings and Loan Association.

COUNSEL

Donald W. Kramer, with him William M. Marutani, for appellant.

Robert F. Blanck, with him McWilliams, Wagoner & Troutman, for appellee.

Ervin, P. J., Wright, Watkins, Montgomery, Jacobs, and Hoffman, JJ. (Flood, J., absent). Opinion by Wright, J.

Author: Wright

[ 207 Pa. Super. Page 232]

We are here concerned with an action in assumpsit instituted on February 4, 1965, by Thomas G. Gordon,

[ 207 Pa. Super. Page 233]

    administrator d.b.n.c.t.a. of the estate of Herman James, deceased, to recover the sum of $6,120.00, the amount of a savings account in the Hamilton Savings and Loan Association in the name of Herman James at the time of his death on June 17, 1961. The pleadings consist of a complaint, an answer with new matter, and a reply. Each party filed a motion for judgment on the pleadings. On June 21, 1965, the court below granted plaintiff's motion. On July 1, 1965, judgment was entered accordingly in total amount, including interest, of $7,602.06. This appeal by the defendant followed.

The facts are not in dispute. On June 23, 1961, decedent's son, Herman H. James, Jr., was duly appointed and qualified as administrator c.t.a. of his father's estate. On June 26, 1961, Herman H. James, Jr., appeared at appellant's banking office, presented a short certificate evidencing his appointment, and signed a withdrawal slip. Appellant drew a check payable to the order of Herman H. James, Jr. This check did not indicate that Herman H. James, Jr., was a fiduciary. The money was misappropriated. Herman H. James, Jr., was removed as fiduciary, surcharged by the Orphans' Court of Philadelphia County, and replaced by Thomas G. Gordon. Appellant refused to comply with Gordon's demand for payment, and suit followed.

Appellant's first and principal contention is thus stated in its brief: "Under the provisions of the Uniform Fiduciaries Act, where a bank in good faith pays money to a fiduciary entitled to receive such money, it is not to be held responsible for the proper application thereof". Section 2 of the statute in question, Act of May 31, 1923, P. L. 468, Section 2, 20 P.S. 3331, reads as follows: "A person who, in good faith, pays or transfers to a fiduciary any money or other property, which the fiduciary as such is authorized to receive, is not responsible for the proper application thereof by the fiduciary,

[ 207 Pa. Super. Page 234]

    and any right or title acquired from the fiduciary in consideration of such payment or transfer is not invalid in consequence of a misapplication by the fiduciary". The term "good faith" is defined in Section 1 of the statute, 20 P.S. 3311, as follows: "A thing is done 'in good faith', within the meaning of this act, when it is in fact done honestly, whether it be done negligently or not".

In Davis v. Pennsylvania Co., 337 Pa. 456, 12 A.2d 66, it was held that, since "bad" is the antonym of "good", a thing is done in bad faith within the meaning of the statute only when it is done dishonestly and not merely negligently. The court below, in holding that appellant was "not entitled to the shelter of the Act", did not take the position that appellant had acted in bad faith. Nor does Gordon's brief assert that there was bad faith on appellant's part. His argument is based on the proposition that a debtor-creditor relationship existed between appellant and Herman James, which was not altered by death, and that there was a contract to pay the savings account only to the creditor or to his estate. Overlooked entirely is the fact that Herman H. James, Jr., at the time he withdrew the savings account, was cloaked with the authority of a personal representative under the Fiduciaries Act, and that he exhibited a valid short certificate showing his ...


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