Tomlinson v. Gill
Rule established
Depositors are unsecured creditors in bank liquidation; they rank pari passu with other unsecured creditors
Facts
- A bank became insolvent
- Depositors claimed their money should be returned in priority over other creditors
- They argued the bank held their money in trust
Issue
- Whether depositors have priority over other creditors upon the insolvency of a bank.
Held
- The Court held that since money deposited with a banker becomes the banker's property (debtor-creditor), depositors are unsecured creditors upon insolvency. They rank pari passu with other unsecured creditors and cannot claim proprietary interest in the bank's assets.
Ratio Decidendi
Depositors are unsecured creditors in bank liquidation. The debtor-creditor characterisation means no trust exists and no tracing is possible. Depositors rank equally with other unsecured creditors.
How to use it in an exam
Use to explain the consequence of the Foley v. Hill principle in insolvency. Key line: "Depositors are unsecured creditors; no priority, no proprietary claim."
Source
Source: Ambler Reports
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.
Cited in study notes
Debtor-Creditor and Fiduciary RelationshipDepositor status in liquidation