(209 P.)

protectory privilege was added to these. If the | Co., 161 Mass. 212, 36 N. E. 797, 23 L. R. À. investments in the savings department should 313, and note. not suffice to pay the savings department depositor in full, the unpaid balance of his deposit was placed on a parity with all other deposits, and entitled, on distribution, to share ratably in the order prescribed by § 3482."

A statute of Michigan (Comp. Laws 1897, § 6118) provides, in substance, that any bank combining the business of a savings bank and a commercial bank shall keep separate books of each kind of business, and that all investments of the savings department shall be kept entirely separate and apart from the other business of the bank, and that "the investments made with the funds deposited by savings depositors shall be held solely for the payment of the depositors of said funds."

share with the commercial creditors."
The statute of Iowa (Code, § 1877) pro-

vides that

In the case of Re Assignment of Hamilton, supra, involving an insolvent bank, for which a receiver had been appointed, Mr. Justice Moore, speaking for the court, said:

"The rule appears to be well settled that an equitable interest in an insolvent debtor's estate is vested in a receiver by his appointment, and that he takes the assets of the debtor as a trust fund for the equal benefit of all the creditors of the estate. The receiver can acquire no greater interest than the debtor had in the estate, and hence choses in action pass to the receiver subject to the equitable right of set-off existing at the time of his appointment."

Plaintiff Upham claims that insolvent savThe court in the case of Peters v. Union ings banks are excepted from the rules estabTrust Co., supra, held that investments made lished by the foregoing authorities for the alof funds deposited with the savings depart-lowance of offsets against insolvent estates. ment should be held solely for the benefit of Osborn v. Byrne, 43 Conn. 155, 21 Am. Rep. 641; Lippitt v. Thames Loan & Trust Co., su- . the depositors of savings funds, "and that, as to the excess of savings deposits over and pra; Stockton v. Mechanics' Bank, 32 N. J. above these securities, the depositors should Eq. 163; Bachrach v. Allen (Mass.) 131 N. E. 857. In all of these cases the savings bank was conducted by the depositors upon the mutual plan or by a corporation acting as their agent or trustee. In each instance the depositors all had a common interest in the invested savings funds, and each was entitled to his proportionate share of the profits. In the case of the defunct bank, the affairs of which defendant is administering, the relation of debtor and creditor existed between the savings depositors and the bank. Savings depositors had no interest in the profits of the bank, and were not liable for its losses, and the rules relating to the set-off of mutual demands upon insolvency apply. Williams v. Johnson, 50 Mont. 7, 144 Pac. 768, Ann. Cas. 1916D, 595.

Upon the insolvency of a bank, the auditor may by proper proceedings procure the appointment of a "receiver for such bank, and its affairs shall be wound up under the direction of the court, and the assets thereof ratably distributed among the creditors thereof, giving preference in payment to depositors."

In the case of State v. Savings Bank, supra, the court affrmed the decision of the district court, "that under the statute the depositors in the insolvent bank are preferred creditors, who, after payment of costs and expenses, are entitled to be first paid in full from the assets in the hands of the receiver, [4] Plaintiff Upham further contends that exclusive of the sum or amount realized from the recognition by this court of the trust fund the statutory assessment upon the stock-doctrine as to the assets of an insolvent corholders, and that the proceeds of such assess-poration that has ceased to do business, and ment be ratably distributed to all creditors, including depositors."

[3] The right of defendant to allow a depositor to set off his deposit against his indebtedness to the bank is supported by the great weight of authority. 3 R. C. L. 647; 14 R. C. L. 655; 14a C. J. 1034; 1 Michie, Banks & Banking, 634, 635; 1 Morse on Banks and Banking (3d Ed.) 553; Re Assignment of Hamilton, 26 Or. 579, 38 Pac. 1088; Scott v. Armstrong, 146 U. S. 499, 13 Sup. Ct. 148, 36 L. Ed. 1059; Yardley v. Clothier, 51 Fed. 506, 2 C. C. A. 349, 17 L. R. A. 462; Van Wagoner v. Paterson Gaslight Co., 23 N. J. Law, 283; State v. Brobston, 94 Ga. 95, 21 S. E. 146, 47 Am. St. Rep. 138; Citizens' Bank v. Kretschmar, 91 Miss. 608, 44 South. 930; Williams v. Johnson, 50 Mont. 7, 144 Pac. 768, Ann. Cas. 1916D, 595, and note; Williams v. Burgess, 74 W. Va. 623, 82 S. E. 507, Ann. Cas. 1917C, 1185, and note; Merrill v. Cape Ann Granite

the provisions of the statute purporting to give to savings depositors an "exclusive prior lien" upon the savings assets and to all depositors a "first and prior lien" upon the assets of the corporation, prevent the operation in this state of the rules governing offsets. Here all of the assets of the corporation are within the control of the circuit court, and are being administered as a trust fund for the benefit of the creditors, exclusive of stockholders; no suggestion is made of diverted or concealed assets that should be covered into the fund. The trust fund doctrine alluded to has no application in such a case. Its principal office is to preserve the assets of a corporation as a fund for the payment of the corporate debts, when such assets or some part thereof have been wrongfully diverted by the officers and agents of the corporation.

[5] The statute does not create a lien in fa

106

209 PACIFIC REPORTER

vor of depositors in the sense that it gives | taking such proceedings as are necessary to a vested right or interest in such assets, but enable that court to determine a claim to an rather provides rules of distribution and pri- allowance of costs and counsel fees out of ority among creditors respecting the assets of the fund. insolvent banks. Sixpenny Savings Bank v. "When a fund is brought into court through Stuyvesant Bank, 22 Fed. Cas. 264, No. 12, the service of an attorney, or where his serv919. The rules governing set-off apply to pre-ices have added to or preserved or increased ferred creditors as well as those not prefer- the amount being administered, the court of red. In re Excelsior Mfg. Co. Assignment, primary jurisdiction may properly allow a reasonable compensation for his services to be 164 Mo. 316, 329, 64 S. W. 133. Ford v. Gilbert, 44 Or. paid from the fund." 259, 262, 75 Pac. 138, 139.

[6] That a depositor cannot sue the defendant or the defunct bank, both being under the supervision of the court, and obtain a several judgment upon his claim (section 74, Or. L.), is urged by plaintiff Upham as a further reason why the rules of set-off do not apply

a

to the defunct bank. There is no merit in
the contention. Where the claim of such a
depositor is allowed by defendant, with the
approval of the court, such allowance is
equivalent to judgment. Rockwell v. Port-
land Savings Bank, 31 Or. 431, 50 Pac. 566;
Baker v. Williams Banking Co., 42 Or. 213,
70 Pac. 711. Action upon a rejected claim
is authorized by statute. Section 6223, Or.
L. In any event, a depositor who possesses
a valid claim against an insolvent bank,
which claim has been rejected, has the right
to commence an action for the recovery of
judgment upon his claim, subject to the for-
mality of obtaining an order from the court
permitting him to institute the action.
[7] Plaintiff Steelhammer prosecutes
cross-appeal because of the failure of the cir-
cuit court to award plaintiff a reasonable
counsel fee for instituting and prosecuting
her suit. Plaintiff alleged in her complaint
that there were over 7,500 savings depositors
of the bank, representing a total of more
than $1,000,000 in savings deposits; that it
was impossible for all savings depositors to
join in the suit, but that the decree to be ob-
tained therein would inure to their special
benefit, and such depositors would receive the
full amount of their respective claims, where
as if the defendant carried out his declared
intention to confine the claims of savings de
positors to savings assets until the commercial
depositors were paid in full from the other
assets of the bank, savings depositors would
receive not to exceed 75 per cent. of their re-
Plaintiff prayed for the
spective claims.
sum of $5,000 as costs, disbursements, and
counsel fees, to be allowed out of the assets
of the savings department of the bank. Be-
fore the court was authorized to allow the
counsel fees prayed for, it was necessary for
plaintiff to introduce some evidence to es-
tablish the extent of the advantage, if any,
accruing to savings depositors as the result
of the services rendered, together with evi-
dence of the reasonable value of such serv-
ices. The record does not show that any such
evidence was introduced or any offer made to
introduce the same. This court, however,
has power, in a proper case, to remand the
cause to the circuit court for the purpose of

The court denied the claim for counsel fees, and observed:

"They (the attorneys) did not recover a fund for the common benefit of the creditors, or add to the assets now being administered by the court."

[8] In order to authorize an allowance for counsel fees and costs out of a fund, the services rendered must have been necessary. 15 C. J. 105; 7 R. C. L. 786.

In 15 C. J. 105, it is stated:

"Nevertheless to authorize the allowance the services rendered must have been necessary; also all the parties must have a common interest in the property or fund involved, and the costs incurred must have been for the profit of all having such interest."

To sustain the claim made for the allowance of counsel fees and costs from the fund in the hands of defendant, plaintiff cites numerous cases, among them the following: Trustees v. Greenough, 105 U. S. 527, 26 L. Ed. 1157; Central R. R. Co. v. Pettus, 113 U. S. 122, 5 Sup. Ct. 387, 28 L. Ed. 915; Harrison v. Perea, 168 U. S. 311, 18 Sup. Ct. 129, 42 L. Ed. 478.

In all of the cases cited by plaintiff, the party seeking an allowance of counsel fees and costs had at his own expense either recovered and brought in the court a fund or property that otherwise would have been lost to the creditors, or had instituted and prosecuted proper proceedings to save a trust fund already in court from destruction, and to restore it to the purposes of the trust, none of which conditions are present in the

instant case.

[9] When the suit was commenced, the defendant had not declared any dividend or distributed or paid to creditors any of the funds of the defunct bank; defendant had merely declared that he intended to distribute the funds in a certain way. The court had given no decision and had expressed no opinion conThe statute requires cerning the matter. that

The superintendent of banks shall proceed to liquidate the affairs of an insolvent bank court in and for the judicial district in and for under the order and direction of the circuit which the office of such bank was located, and that he "may, out of the funds remaining in his hands after the payment of expenses, declare one or more dividends, and after the ex

(209 P.)

piration of one year from the first publication of Control of the State of Oregon, in its findof notice to creditors, he may declare a final dividend-such dividends to be paid to such persons and in such amounts and upon such notice as may be directed by the circuit court. Section 6223, Or. L.

ings and adjudication" of rights of various claimants of the waters of Powder river, and also a pro rata interest of 250 inches of water allowed to a named irrigation company, under its appropriation through such ditch, in the discretion of the water master, to cover seepage and transit loss, held indefinite and uncertain, and must be read in connection with the findings and adjudication of the Water Board when construing it.

The court had not made, and had not been requested to make, any order concerning the dividends to be declared, distributed, and paid to depositors from the assets in the hands of the defendant. It is not to be as- 3. sumed that the court, either upon its own motion or upon the suggestion of defendant, would have authorized a distribution of the assets contrary to the requirements of the statute. The court promptly ordered distribution of the assets in accordance with plaintiff's contention, when application was made to it.

No controversy taking the form of litigation existed between savings depositors and other depositors of the bank. Plaintiff might have filed a petition in the suit brought by the defendant upon taking possession of the bank, and thereby readily and in a summary manner secured an order upon the defendant, directing him to distribute the assets as plaintiff claimed they should be distributed and as the statute requires. Wilde v. Ore. Trust & Savings Bank, 59 Or. 551, 553, 117 Pac. 807; Hafer v. Medford C. L. R. Co., 60 Or. 354, 358, 117 Pac. 1122, 119 Pac. 337.

Waters and water courses 156(6)-Deed construed not to require delivery of one-half inch of water regardless of quantity in ditch or available and of capital stock held by different stockholders.

Parties' voluntary acts held to evidence such a meaning that deed cannot be construed as granting the full or maximum quantity of one-half inch per acre to be delivered, regardless of the quantity flowing in the ditch or quantity available or of the number of shares held by the different stockholders. 4. Waters and water courses

156(6)—Deed

to irrigated land held to provide for diverting of maximum quantity when the ditches should have been perfected, and not to require grantor to furnish water from his private ditches.

A deed to land including water rights construed with the findings of the State Water company's rights were inchoate, held to grant Board referred to disclosing that the irrigation a right to divert from the named ditch a maximum quantity of 80 inches when said system shall have been perfected and said ditch repaired and improved, and does not mean that such quantity is to be furnished by grantor from his private ditches.

It does not appear that expensive litigation was necessary to secure a correct order of distribution, and of course nothing was added to the funds and assets which were being administered under the direction of the court. We do not think this case comes within the rule established by the cited cases. The decree of the circuit court in each of Gustav Anderson, Judge. the cases is affirmed.

In Banc.

Appeal from Circuit Court, Baker County;

Suit by Mary C. Harvey and another against Floyd J. Campbell and another.

BURNETT, C. J., took no part in the con- From a decree dismissing the suit without sideration or decision of this case.

HARVEY et al. v. CAMPBELL et al. (Supreme Court of Oregon. June 27, 1922.) 1. Deeds 93-Intention of parties plainly expressed will control construction.

In construing a deed, the intention of the parties is to be pursued, if possible (Or. L. 716), and, if the expressed meaning is plain on the face of the deed, it will control.

2. Waters and water courses 156(2)-Deed to water right "as defined and measured by State Water Board" to be construed in connection with findings and adjudication of

Water Board.

A deed conveying land and also 80 inches of water measured under 6-inch pressure of a named water right, "as such water right is defined and measured by the State Water Board

costs, plaintiffs appeal. Decree affirmed, without costs to any party in either court.

This is a suit brought by Mary C. Harvey and S. S. Wheeler against Floyd J. Campbell and a corporation known as the Sparta Irrigation Company. The controversy relates to the use of water for irrigation. tween the parties in the construction placed The dispute results from a difference beupon a deed executed and delivered by Floyd J. Campbell to Mary C. Harvey. A ditch known as the Sparta ditch carried water from the west fork of Eagle creek, a tribu30 miles to some arid lands aggregating tary of Powder river, for a distance of about about 1,500 acres and owned by five or six different persons. On July 30, 1917, Robert N. Warnock owned approximately 760 acres of this body of 1,500 acres of arid land. The land held by Warnock was conveyed according to legal subdivisions, and, if the subdivisions included the exact acreage of a

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

perfect subdivision, then Warnock owned ex-ries; also a pro rata interest in 250 inches of actly 760 acres. At any rate on July 30, water allowed to the Sparta Irrigation [Com1917, Warnock conveyed to Floyd J. Camp-pany] under its appropriation through said bell all the land owned by him, and "also ditch in the discretion of the water master to that certain water right to the amount of cover seepage and loss of water in trans3761⁄2 miner's inches of water, measured un-it from the point of origin to the point of deder 6-inch pressure, taken out of what is livery." known as the Sparta ditch in Baker county, Or., as such water right is measured and defined by the State Water Board of the State of Oregon on the 17th day of November, 1915, in its findings of fact and adjudication of the rights of the various claimants to the waters of Powder river, and also a pro rata share of not to exceed 250 miner's inches of water allowed in said decree in the discretion of the water master for and on account of seepage, all in the county of Baker and state of Oregon."

In this deed Campbell covenants that he is the owner in fee simple of the premises, and that they are free from all incumbrances, except a mortgage executed by the Sparta Irrigation Company to the Grand Rapids Trust Company on October 3, 1914, and a supplemental mortgage "between the same parties, of date October 3, 1916," which mortgages the grantee "assumes and agrees to pay her pro rata share thereof, hereby fixed and agreed to be the sum of $2,400, with interest."

It was understood that, if Mary C. Harvey purchased, Wheeler would lease the land purchased by her, and that Campbell would also rent the remainder of his land to Wheeler; and accordingly Wheeler did lease the Mary C. Harvey land and also the remainder of the land owned by Campbell, and as such lessee Wheeler had control of all the lands and of the water used thereon during the season of 1918. Wheeler continued as lessee of the Harvey land until the time of the trial, and hence his interest in the Mary C. Harvey premises is only that of a lessee. The Campbell lands were farmed by a son of Wheeler's in 1919; and during the irri

Campbell had not had any experience with irrigated land, and he made this fact known to Wheeler, who had had much experience in irrigation, with the result that an agreement was made whereby Wheeler and his wife were to move upon the land, and Wheeler was to act as overseer for a fixed monthly sum; and accordingly, on August 13, 1917, Wheeler and his wife moved upon the premises. After Wheeler and his wife had been there "a couple of weeks," Mrs. Wheeler wrote to her sisters Mary C. Harvey and Mrs. Flora Dunne, and invited them to come and visit with her and her husband; and in response to the invitation the two sisters came to visit with the Wheelers, arriving at the Camp-gating season of that year plaintiff Wheeler bell ranch in September.

Campbell had made it known to Wheeler that he wished to sell some of the land, and Campbell had told Wheeler that he would give him a commission of $5 per acre if Wheeler would assist in selling a portion of the land. Wheeler told Campbell that he had in mind certain persons as prospective purchasers, and thought that he could interest them in the land, but after some correspondence with those persons Wheeler ascertained that they were not interested. After the arrival of Mary C. Harvey and Mrs. Dunne they became interested, and Mary C. Harvey purchased a tract of 160 acres, and it is appropriate to explain also that Mrs. Dunne purchased a portion of the Campbell land. The deed from Campbell and wife to Mary C. Harvey was dated October 8, 1917, and it conveyed to the grantee 160 acres of land, described as the W. 1⁄2 of the S. E. and the E. 1⁄2 of the S. W. 4 of a specified section, and "also 80 inches of water measured under 6-inch pressure of that certain water right out of what is known as the Sparta ditch, in Baker county, Or., as such water right is defined and measured by the State Water Board of Control of the State of Oregon, in its findings and adjudication in the matter of the adjudication of the rights of various claimants to the waters of Powder river and its tributa

managed the distribution of the water available for the Campbell and Mary C. Harvey lands. But in the fall of 1919 Campbell made it known that he would not lease his land to Wheeler for another year; and accordingly Campbell rented his farm to William Long for the year 1920. In 1918 and in 1919, when Wheeler had charge of the distribution of the water available for use on the 760 acres, he was able so to control the water that he could use all of it first on the Campbell lands and then on the Harvey lands, so that there was no friction or clash of interests in the use of the water.

However, in the season of 1920 there was a clash of interests, because the Harvey land was farmed by Wheeler, and the Campbell land by Long. The Sparta ditch did not carry enough water fully to supply the wants of both the Campbell and the Harvey lands. Campbell and his agents caused the water to be divided so that each farm would re-. ceive its pro rata share of the quantity belonging to the 760 acres owned by Campbell, Mary C. Harvey, and Mrs. Dunne. Claiming that by force of the terms in her deed she was entitled, as against Campbell, to receive 80 inches of water before any water could be applied on the Campbell land, and that she was not obliged to prorate the water with Campbell, Mary C. Harvey, together with her tenant, Wheeler, commenced this suit

(209 P.)

and prayed for a decree that Mary C. Har- (ing of the deed is that Campbell conveys to vey be adjudged to be the owner of the right to divert and use from the waters of the Sparta ditch 80 inches of water measured under a 6-inch pressure at all times during the irrigating season of each year, and that defendants be restrained from interfering with the plaintiffs in their use of the full amount of 80 inches of water measured under a 6-inch pressure.

More than 80 inches of water have been coming to the 760 acres which Cambell alone once owned and of which Mary C. Harvey now owns 160 acres. We are informed by one of the printed briefs that, if the first 0 inches coming to the 760 acres are awarded to the Mary C. Harvey farm, no land ex-uation of the parties and in order that we cept the land now owned by Campbell will be affected.