People v. Mechanics & Traders' Savings Institution

Andrews, J. The primary relation of a depositor in a savings bank, to the corporation, is that of creditor and not that of a beneficiary of a trust. The deposit when made becomes the property of the corporation. The depositor is a creditor for the amount of the deposit, which the corporation becomes liable to pay, according to the terms of the contract under which it is made. When payment is made, the claim of the depositor is extinguished^ and he has no further claim upon the funds or assets of the bank. Upon insolvency the assets and property of the corporation, as in the case of other corporations, is a trust fund for the payment of creditors, and depositors we think stand as other creditors, having no greater, but equal rights to be paid ratably out of the insolvent estate. The fact that savings banks are public agencies created by law to receive and invest the money deposited in them does not change the status of depositors, upon insolvency of the bank, from that of creditors to that of beneficiaries of a trust, so as to subject the assets of the bank to the payment in the first instance of other creditors. The statutes under which savings banks are organized contain restrictions and provisions intended to secure depositors against loss. These institutions are designed to encourage economy and frugality among persons of small *10 means. But the depositors have no voice in the management. The directors or trustees are designated in the charter or the certificate of incorporation, and constitute a self-perpetuating body. There is nothing like a private trust between the corporation or its trustees, and the depositors, in respect to the deposits. The trustees assume the management of the aggregate fund under the special provisions of the statute, and the depositors can, under the most favorable circumstances, receive but a moderate rate of interest on their deposits. The deposits are not made as a business venture, but the supposed security of the fund is the great motive put forward to induce deposits. The other creditors of the corporation have no superior equity to the depositors to payment in case of deficiency of assets. They deal with the corporation upon the footing of general creditors, and the fact that the corporate franchises are granted primarily for the management of funds of depositors, does not entitle the former to priority of payment. The statutes certainly do not contemplate that the rights of depositors shall be inferior to those of other creditors. The statutes regulating the distribution of the assets of insolvent corporations recognize the equitable principle of equality between creditors and furnish, we think, the proper rule of distribution in this case. (2 R. S. 464, § 42; id. 477, § 79.) We are therefore of the opinion that the claimant is not entitled to the preference claimed, and that the order of the General Term should be reversed and the order of the Special Term affirmed, with costs. All concur. Judgment accordingly.