Cameron v. Allegheny County Home

Opinion by Ms. Justice Frazer, Previous to November 8, 1924, tbe Carnegie Trust Company, of Carnegie, Pa., was designated as the depository of funds belonging to tbe Allegheny County Home conducted by tbe Directors of tbe Poor of Allegheny County for that portion of tbe county not within tbe City of Pittsburgh. Tbe moneys so deposited are admitted to be public funds. Tbe directors demanded that tbe trust company furnish further security for their existing and future deposits, and informed tbe company that if such security were not furnished tbe deposit would be withdrawn. On tbe date above mentioned, and pursuant to such request, tbe board of directors of tbe trust company adopted a resolution authorizing its proper officers to deposit corporate bonds of the Carnegie Coal Company to tbe amount of $300,000 with tbe directors of tbe poor, as security, and in accordance with tbe resolution such bonds were delivered to tbe poor directors on December 29, 1924, and by them deposited for safe keeping at tbe Colonial Trust Company in a safe deposit box rented and paid for by tbe Allegheny County Poor Directors, tbe keys being kept in tbe possession of tbe directors, under an arrangement, however, whereby tbe box should be opened only in tbe presence of tbe president of tbe trust company who was to have access in this manner for the purpose of securing tbe interest coupons attached to tbe bonds as they matured. On April 27, 1925, plaintiff, tbe secretary of banking of the Commonwealth of Pennsylvania, took possession of the business and property of tbe Carnegie Trust Company under tbe State Banking Act of June 15,1923, P. L. 809. He then filed this bill to secure possession of the bonds in question on tbe theory that tbe pledge was invalid and tbe proceeds of the bonds should be administered as part of tbe assets of the trust company for tbe benefit of all its creditors. The court below dismissed tbe bill and plaintiff appealed. *329 The power of the Carnegie Trust Company to make the pledge to secure a deposit of public funds was discussed and sustained in the case of Cameron v. Christy, 286 Pa. 405. Plaintiff contends, however, that as the bonds were, in this case, actually delivered within four months of the date on which the banking commissioner took charge of the trust company, and as exclusive possession was not given the assignee, the transaction amounted to an illegal preference of creditors within the meaning of the Insolvency Act of June 4, 1901, P. L. 404, which provides that if any person or corporation shall make any pledge or transfer of property with a view to give preference to any creditor, such transfer shall inure to the benefit of all creditors of such insolvent if an assignment for the benefit of creditors be made or proceedings in insolvency be begun within four months thereafter. It may well be doubted whether the taking possession of the property of the trust company by the secretary of banking and for the avowed reason that the company w.as “in an unsafe and unsound condition to continue business” and “has neglected and refused to comply with the terms of a lawfully issued order” of the banking commissioner was a proceeding in insolvency within the meaning of the Act of 1901, inasmuch as section 2 of that act expressly provides that nothing therein contained should in any manner affect a pledge or transfer taken in good faith by a creditor without knowledge of an intent on the part of the transferer to give a preference and if, in case of personal property, exclusive possession is given at or about the same time. In this case, the court below found, and this finding is supported by the record, that there was an actual delivery of possession of the bonds in question and such possession is, in our opinion, none the less exclusive merely because of the arrangement whereby the safe deposit box should be opened only in the presence of the president of the trust company who was to be permitted, in the presence of the county officers, to detach interest *330 coupons from the bonds. Furthermore, no exception was taken to the finding that there was an actual delivery of the bonds to the directors of the poor. Neither is there evidence in the record to show that either of the parties anticipated insolvency on the part of the trust company at the time the transfer was made. The requirement of collateral to secure the deposit of public funds was a usual one in such case (Cameron v. Christy, 286 Pa. 405, 410), and, consequently, the fact that this was done does not necessarily create a suspicion that the parties contemplated the possibility of insolvency at that or any other time. The transfer of collateral being actually delivered, and there being no evidence of knowledge on the part of the county officials that the trust company was in financial difficulties, plaintiff has failed to sustain the allegations of the bill. The decree of the court below is affirmed at the costs of plaintiff.