Opinion
11-02-1936
SILZER v. NEW BRUNSWICK TRUST CO.
Leonard J. Emmerglick, of Newark, for complainant. Hicks, Kuhlthau & Thompson, of New Brunswick, for defendant.
Suit by George S. Silzer, as trustee, against the New Brunswick Trust Company.
Bill dismissed for lack of equity.
Affirmed in 192 A. 510.
Leonard J. Emmerglick, of Newark, for complainant. Hicks, Kuhlthau & Thompson, of New Brunswick, for defendant.
BIGELOW, Vice Chancellor.
The bill will be struck for lack of equity.
Complainant, in 1932, deposited with defendant $69,279 pursuant to a sealed contract, whereby he agreed not to withdraw the deposit or any part thereof until such time as the combined capital and surplus of the defendant, as shown by its regular books of account "in accordance with its usual accounting practices and approved by the Commissioner of Banking and Insurance of the State of New Jersey, shall aggregate not less than $600,000 with all securities owned, appraised and taken at their then market value." It was further agreed that the claim of complainant against defendant on account of the deposit "shall be subordinated to the claim of all other creditors." Complainant prays repayment of the money.
Two theories are advanced in support of the bill. First, that the deposit has become payable pursuant to the terms of the contract but that recovery cannot be had at law since the books of account of the trust company are not kept in such manner as to disclose capital and surplus in excess of $600,000. The parties, by their contract, evidently assumed that the accounts would continue to be kept in the ordinary manner showing assets at cost and liabilities, including capital stock at par, surplus, and perhaps undivided profits. With these figures as a base, the parties contemplated that market values for securities owned should be substituted for book values, and the difference added to, or substracted from, surplus, and that, if it should then appear, that capital and surplus as adjusted, and perhaps undivided profits, aggregated not less than $600,000, complainant might withdraw hisdeposit. The bill cannot be sustained on the theory that the deposit is withdrawable pursuant to the agreement because it nowhere alleges that capital and surplus calculated in this, or any other, manner, equal at least $600,000. The bill does state that financial statements issued by defendant show certain figures, but such pleading of the evidence cannot take the place of an allegation of the fact.
Defendant's statement of condition on December 31, 1935, sets up under liabilities a "preferred stock retirement fund" of $249,805. Complainant contends that this item is, in fact, surplus within the meaning of the contract and that he would be precluded in a court of law from proving that it was surplus and hence should have relief in equity. The interpretation of contracts and the rules of evidence relating thereto are the same at law and in equity. I know of no rule of law that would hamper complainant in proving at law that the so called retirement fund is surplus.
Of course, there might be circumstances which, on the contract theory, would give complainant a standing in equity. For instance, if defendant were keeping down its capital and surplus by distributing its assets among its stockholders, perhaps equity would enjoin such distribution until complainant were paid. I do not know.
The other theory of complainant is this: That defendant holds the said deposit of $69,279 as trustee and that complainant is sole beneficiary of the trust; that the purpose of the trust has been accomplished or frustrated and the trust should now be terminated and the fund paid to the beneficiary. It does not seem to me at the moment to be material that the trust has failed or been accomplished. If complainant is the only person beneficially interested, he can terminate it at will and require that legal title be given him. Complainant relies on Maurello v. Broadway Bank & Trust Co., 114 N.J.Law, 167, 176 A. 391, and Deal v. Asbury Park, etc., Bank, 118 N.J.Eq. 297, 178 A. 790. These cases hold that money, deposited and dedicated to a particular purpose or requirement of the depositor is entitled to preferential payment in case of insolvency and is a special or trust deposit. The deposit now in question was made "for the purpose of increasing the cash condition of the bank." This did not result in a trust relationship arising between the parties. The case is not within the two decisions cited. The parties are debtor and creditor.
In event the bill is amended, I suggest this inquiry: Complainant sues as a trustee. Are not the beneficiaries of his trust necessary parties?