Vosburgh's Estate

84 Pa. Super. 10, 1924 Pa. Super. LEXIS 203

• Court: Superior Court of Pennsylvania
• Decided: April 29, 1924
• Docket: Appeal, 93
• Status: Published

Opinions

Opinion by

Linn, J.,

William W. Vosburgh died insolvent, domiciled in Pennsylvania. At the audit of his executors’ account, the Bank of Kingwood doing business in West Virginia, filed a claim, presented for decision by the orphans’ court in the following stipulation of facts:

“Decedent died June 30, 1921. After decedent’s death, to-wit, July 15, 1921, the Bank of Kingwood, W. Va., at the request of the executors of this estate, issued a statement showing balance on deposit in the Bank of King-wood on that date in the account of W. W. Vosburgh of f 6,613.11. A proper order was drawn on the 16th day of July, 1922 [?] for the balance shown to be due to this estate and the check was returned marked ‘not sufficient funds.’ At the time of the return of this check the ex ecutors were advised that said bank had charged against the balance shown in this account the note of John E. Strubee in the sum of $2,000 and protest fees of $1.65. and the note of the Wilson Construction Company in the sum of $500 and protest fees of $2.20, a total of $2,508.85. Said notes were due and payable on July 17th and July 20, 1921, respectively. On both of these notes the decedent was the endorser and they were discounted by him prior to his death. The total amount admitted to be due to this claimant without the deduction made by the claimant is the sum of $10,850.09.

“Under these facts is the claimant permitted to deduct by way of set-off said sums as hereinabove set forth, to-wit : the sum of $2,503.85 from the total amount of his admitted claim, to-wit, the sum of $10,850.09, and file a claim based upon the balance due, to-wit the sum of $8,346.24, or must said claimant file a claim for $10,-850.09 and be charged with the amounts deducted by it as an advance on said claimant’s distributive share in this estate?”

The court held that if the bank retained the sum of $2,503.85 credited on notes maturing after Vosburgh’s death, it would in that sum receive a preference, and that it could not share with other creditors of decedent without surrendering the preference, but that if the preference was surrendered, by crediting it on the dividend payable at the rate shared by the other creditors, appellant should receive, in addition to that amount, the sum of $49.72.

The argument covered a wider range than is applicable to the facts stipulated. The briefs agree that Vosburgh’s contract with the bank was a West Virginia contract, enforceable according to the law of that state. By that law, counsel for the bank contends the bank had the right, notwithstanding decedent’s insolvency, to credit Ms deposit with his debts maturing later. Counsel for the executors concede that to be the law of West Virginia but nevertheless insist that, before the bank can obtain anything more on the debt in Pennsylvania, the bank must put itself in the same position in which other general creditors were at the date of the death; that contention of course, results in the conclusion reached below.

The statement of facts is silent about the law of West Virginia; to the extent the law of that state was relevant, the fact should appear, but even accepting as supplementary to the agreed facts so much of the law of West Virginia as the briefs agree upon, and assuming, as appellant contends, and appellee concedes, that the law of West Virginia permits such credits to be made, the bank’s contention is still left without an essential fact, and that is, whether such preferred creditor may make an additional claim on the estate of an insolvent in West Virginia, without first placing himself in the same position with other creditors as they stood at the date of the death, by surrendering the preference. In some states, for the purpose of securing equality among creditors, the law requires such surrender as a condition of receiving additional dividends: Partridge, Appellant, 96 Maine 52, in re Kahn, 55 Minn. 509, are illustrations, and we assume, there are others; sec. 57 g of the bankruptcy act is also familiar. As the divergent views of the parties depend on the law of West Virginia, without something in the record to advise us what the controlling fact is, we cannot accept a contention based on its existence. Accordingly the question of the conflict of laws, presented in the briefs, is not before us.

But the distribution of the estate of a decedent is governed by the law of his domicil and not by the law of a state in which his notes may have been discounted. It has always been the law of Pennsylvania, as was stated in Blum Bros. v. Bank, 248 Pa. 148, 157,”...... that, if the decedent was insolvent when his estate passed into the hands of the law, a debt owing by him at the time of his death, but not then due, cannot be set off' against a debt then actually due to him, and it has been particularly held that, when the decedent was the endorsee [endorser] on notes, discounted for his benefit at a bank, which did not grow due till after his death, the bank was not entitled to retain a deposit of money, standing on its books to his credit at the time of his death, as a set-off against his liability on the notes; see Farmers’ & Mechanics’ Bk. App., 48 Pa. 57; Bosler v. Exchange Bank, 4 Pa. 32; Kensington Nat. Bk. v. Shoemaker, 11 W. N. C. 215.”

Without surrendering its preference, appellant may not share; by crediting the preference, it is entitled to the distribution awarded.

The order appealed from is affirmed, costs to be paid by appellant.