Osborn v. Byrne

Suppose that A should loan to B a thousand dollars. We will suppose A to be an experienced stock broker, and that B knowing this fact, and desiring to avail himself of his skill, deposits with him $1,000, to be invested for his benefit. For a time B receives large returns from M’s investments; but at length a reverse comes, and nearly all the money deposited with M is lost. In a suit then brought by M against B for the money loaned, could B set off the $1,000 deposited with M? No one would claim that he could. But do these depositors, with the exception perhaps of Margaret Byrne, stand in any better condition than B in the case *159supposed ? It was said by this court in the case of Coite v. Society for Savings, 32 Conn., 173, that “savings societies are in fact large incorporated agencies for. receiving and loaning the money of their depositors.” A like view of the subject was taken in the case of Bunnell v. The Collinsville Savigs Bank, 38 Conn., 203. It was there said:—“The assets of savings banks consist of loans of money made by them for the benefit of their depositors from whom the money was derived. * * A depositor knows when he deposits his money with such an institution, that he is placing it at hazard. * * If the money deposited is lost, the depositor loses it through the instrumentality of his agent, and he has no cause to complain.” The bank, in that case had met with a loss of twenty-four per. cent of all its deposits. The plaintiff, who was a depositor, and to whom had been paid the amount of his deposit, less his proportion of the loss, sought to recover the balance. The court held that he had been paid all that he was entitled to receive. The principle of that case seems to us to meet all the questions at bar, with the exception of that pertaining to Margaret Byrne, which we will soon consider. With this exception no arrangement was made in any of the cases that the sums deposited should be received by the bank in part payment.of the sums loaned to the same parties. The deposits and the loans are wholly independent of each other, so much so that it does not appear that the one was made in consequence of the other. Under these circumstances, if the bank was merely an agent, in fact, for the loaning of money deposited with it, as the cases cited clearly show, then it follows conclusively that the parties -in this case are in the condition of B in the case supposed,' and the set-offs cannot be made. The debts they owe the institution in form, belong in fact to all the depositors, but neither the depositors nor the institution owe them any thing more on their deposits than their just proportion of the value of the assets that the institution owns. The difference in amount has been lost—has been lost by these parties through the instrumentality of their agent, and they have no right to require that the loss shall fall on the other *160depositors, who have already suffered in the same way and to the same extent. The depositors in savings banks bear the same relation to each other and to the assets of the bank that stockholders in other monetary institutions do to each other and to the property of the bank. Disastrous investments affect each in the same way; and in case of insolvency ail that a party who owns deposits in the one case or stock m the other can claim, is his just proportion of what remains at the final winding up of the institutions.

We think the set-offs cannot be made in any of the cases, unless one should be allowed in that of Margaret Byrne. It appears in her case that she made a deposit in the bank, not for the ordinary purposes of a deposit, but for the purpose, and with the intention, of applying the same in payment of her indebtedness to the bank to that amount. If the officers of the bank knew for what purpose the deposit was made, although the amount has never been in fact applied in cancellation of so much of her indebtedness to the bank, we think she should be allowed to set off the amount. We refer her case to the Superior Court for a further hearing in regard to the facts, which are not sufficiently found upon this point. If upon such hearing the facts shall be found as we have supposed them, then we advise that the set-off be allowed.

In each of the other cases we advise the Superior Court to refuse the set-off.

In this opinion the other judges concurred.