Diverse citizenship and the requisite jurisdictional amount
being present, a district court has jurisdiction of a suit by a
depositor to fasten a trust on funds in an insolvent state bank
notwithstanding that the bank had been taken over by a state
official for liquidation pursuant to the state law.
Commonwealth Trust Co. v. Bradford, 297 U.
. P. 300 U. S.
85 F.2d 932, 934, reversed.
Certiorari, 299 U.S. 539, to review a judgment which reversed a
judgment of the District Court and directed dismissal of the suit
for the want of jurisdiction. See
9 F. Supp. 210, 214.
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
Acting under Pennsylvania statutes, October 5, 1931, William D.
Gordon, Secretary of Banking (respondent Herr is his successor),
closed the Franklin Trust Company, a banking institution in
Philadelphia, and took control of its business and assets.
Thereafter, in the United States District Court, Eastern
District of Pennsylvania, petitioner, a New York corporation,
Page 300 U. S. 434
presented a bill against Gordon setting up an agreement by which
it undertook to keep on deposit with the Trust Company a sum
specified, and the latter undertook, either directly or through
correspondent banks, to accept deposits of cash, checks, etc., and
to forward the proceeds therefrom to petitioner in New York. Also
that, when closed, the Trust Company had in its assets $49,590.17
received under this agreement, and its correspondent banks had on
hand deposits likewise acquired amounting to $32,403.26.
The bill prayed for a decree declaring petitioner owner of the
$32,403.26, and that a trust existed in its favor in respect of the
$49,590.17 deposit; also for general relief. The answer suggested
some qualifications of the alleged agreement, and denied that there
was no adequate remedy at law. Otherwise, the allegations of the
bill were generally admitted.
The District Court took jurisdiction of the controversy, held
petitioner was not owner of the $32,403.26, also that no ground
existed for impressing a trust upon assets because of the
$49,590.17 deposit, and dismissed the bill. 9 F. Supp. 210.
The Circuit Court of Appeals concluded the District Court had no
jurisdiction, and should have dismissed the bill without
adjudicating other questions. 85 F.2d 932. It accordingly approved
the dismissal, but directed that the cause be referred to the state
court for proper procedure there.
Although entered in September, 1936, the opinion below does not
refer to Commonwealth Trust Co. v. Bradford, 297 U.
, decided here March 30, 1936. Nothing indicates
that this opinion was brought to the Court's attention. The
doctrine there approved, we think, is decisive of the issue
concerning jurisdiction now presented.
It was error for the Circuit Court of Appeals to hold that the
District Court was without jurisdiction of the controversy. It
should have passed on issues properly presented upon the
Page 300 U. S. 435
The questioned decree must be reversed, and the matter remanded
to the Circuit Court of Appeals for further proceedings.