Trust Company, In liquidation, Fraud of officer in placing deposit in wrong department. Contract, What constitutes, Of depositor with trust company. Estoppel.
If leading officers of a trust company which conducted a savings department in which it did not issue certificates of deposits, in receiving certain deposits in that department issued to the depositors certificates of deposits, falsely and fraudulently representing that such certificates were issued from the savings department, and the depositors received such certificates not knowing that no certificates were issued by the savings department and understanding that their deposits were placed in that department, the depositors, upon the property and business of the trust company being taken possession of by the commissioner of banks, may maintain suits in equity to compel recognition of their deposits as deposits in the savings and not in the commercial department. Following Cronan v. Commissioner of Banks, ante, 444, and Wasserman v. Cosmopolitan Trust Co. 252 Mass. 253; and distinguishing Goldband v. Commissioner of Banks, 245 Mass. 143.
CROSBY, J.
Although the respective deposits in the company of these eight plaintiffs were made on different dates, and in different amounts, they are essentially the same in all other important particulars. Each plaintiff was induced to make a deposit in the savings department by reason of the false and fraudulent representations of leading officers of the company; in each instance a certificate of deposit in the same form, except as to the time of payment and rate of interest, was delivered to the plaintiffs respectively; and although the company did not issue certificates of deposit from the savings department, as represented by Mitchell and Pinksohn, that fact was not known to the plaintiffs who, it was found, received the certificates as evidence of the fact that the money had been received by the company. In each case it has been found or agreed that the plaintiff was induced to part with his money by reason of the fraud practised upon him by one or more officers of the company. In these circumstances the plaintiffs are entitled to have their deposits classified as deposits in the savings department. Wasserman v. Cosmopolitan Trust Co. 252 Mass. 253.
The contention of the defendants, that on the authority of Goldband v. Commissioner of Banks, 245 Mass. 143, the plaintiffs by receiving the certificates of deposit are precluded from having the deposits classified as savings deposits, cannot be sustained. The facts in that case are different in important particulars from those appearing in the cases at bar. In principle these cases cannot be distinguished from that of Wasserman v. Cosmopolitan Trust Co., supra, and the cases of Cronan v. Commissioner of Banks, ante, 444, just decided by this court.
The fundamental ground upon which the plaintiffs are entitled to relief in equity is the fraud practised upon them by the officers of the company. The fact that the claims in question have been heretofore proved as commercial department deposits, and some of the plaintiffs, if not all, have received dividends thereon is not to prejudice their rights in these suits, in view of the facts found or agreed upon.
The interlocutory decrees confirming the master's reports and supplemental reports are affirmed. The interlocutory decree overruling the defendants' motion to dismiss the bill filed in the suit of Zelermyer v. Commissioner of Banks is affirmed.
In each case a final decree is to be entered directing the commissioner of banks to classify the deposit as a deposit in the savings department.
Ordered accordingly.