Hurlburt v. Palmer

• Decision Date: 06 February 1894
• Docket Number: 4832
• Citation: 57 N.W. 1019,39 Neb. 158
• Parties: GEORGE L. HURLBURT ET AL. v. CLINTON R. PALMER, ET AL
• Court: Nebraska Supreme Court

57 N.W. 1019

39 Neb. 158

GEORGE L. HURLBURT ET AL. v. CLINTON R. PALMER, ET AL

No. 4832

Supreme Court of Nebraska

February 6, 1894

ERROR from the district court of Douglas county. Tried below before HOPEWELL, J.

REVERSED.

R. S Norval and E. M. Bartlett, for plaintiffs in error:

Where a person is taken or inveigled by force, fraud, or other means into the jurisdiction of the court for the purpose of getting service upon him, the service is bad and the court will acquire no jurisdiction. (In re Robinson, 29 Neb 135; Wyckoff v. Packard, 20 Abb. N. Cas. [N. Y.] 420; Compton v. Wilder, 40 O. St., 130; Van Horn v. Great Western Mfg. Co., 37 Kan. 523.)

An objection to the jurisdiction of the court over a defendant will not be waived, although such defendant answer to the jurisdiction as well as to the merits, when the practice permits a defense to the merits to be united with the plea to the jurisdiction. (Cobbey v. Wright, 29 Neb. 274; Christian v. Williams, 35 Mo. App., 297; Allen v. Miller, 11 O. St., 374.)

Unless the court acquires jurisdiction by reason of the subject-matter being situate within the county where the action is brought, the action must be commenced in the county in which the defendants or some one of them reside, or may be served with a summons. (Cobbey v. Wright, 29 Neb. 274; Dunn v. Haines, 17 Neb. 560.)

The plaintiffs below failing to take any judgment against the defendant Virgin, who only was served in Douglas county, and he having been taken into that county by force, fraud, and connivance for the purpose of serving the summons on him there, the court could have no jurisdiction over the plaintiffs in error. (Cobbey v. Wright, 23 Neb. 250; Dunn v. Hazlett, 4 O. St., 436; Allen v. Miller, 11 O. St., 374.)

Charles Offutt and Colman & Colman, contra:

A defendant may appear specially to object to the jurisdiction of the court, either over his own person or the subject-matter of the suit, without waiving his right to be heard on the question on appeal or error. But if by motion, or any other form of application to the court, he seeks to bring its powers into action, except on the question of jurisdiction, he will be deemed to have appeared generally. Such an application concedes a cause over which the court has jurisdiction to act. (Porter v. Chicago & N. W. R. Co., 1 Neb. 15; Cropsey v. Wiggenhorn, 3 Neb. 116; Crowell v. Galloway, 3 Neb. 220; Aultman v. Steinan, 8 Neb. 111; Kane v. Union P. R. Co., 5 Neb. 106; Hilton v. Bachman, 24 Neb. 505; Shawang v. Love, 15 Neb. 142.)

Every dollar which Virgin obtained from Palmer, Richman & Co., which was not invested in stock and which was by him diverted to his personal use, was fraudulently obtained and fraudulently used, so far at least as Virgin was concerned. It is elementary that a person obtaining property by fraud acquires no title to it, but it is held by him, and by all persons claiming under him, with notice, in trust for the original owner. So long as the property can be identified in its original, or in a substituted form, it belongs to the original owner, if he elects to claim it; and if it passes into the hands of an innocent purchaser for value, the title of the defrauded owner, at his option, at once attaches to the avails, so long as their identity is preserved, no matter how many transmutations of form the property has passed through. So long as the trust property can be traced and followed into other property into which it has been converted, that remains subject to the trust. The product or substitute has the nature of the original imparted to it. The depositing of trust money in a bank, although it creates the relation of debtor and creditor between the bank and the depositor, does not change its character, nor relieve the deposit from the trust. It is not the identity of the form, but the substantial identity of the fund itself; which is the important thing. (Taylor v. Plumer, 3 Maule & S. [Eng.], 562; Pennell v. Deffell, 4 De Gex, M. & G. [Eng.], 372; Frith v. Cartland, 2 Hem. & Mill. [Eng.], 417; Knatchbull v. Hallett, 13 Ch. Div. [Eng.], 696; Overseers of Poor v. Bank of Virginia, 2 Gratt. [Va.], 544; Van Alen v. American Nat. Bank, 52 N.Y. 1; People v. City Bank of Rochester, 96 N.Y. 32; Cragie v. Hadley, 99 N.Y. 131; Whitley v. Foy, 6 Jones Eq. [N. Car.], 34; Farmers & Mechanics Nat. Bank v. King, 57 Pa. St., 202; Peak v. Ellicott, 30 Kan. 156; National Bank v. Connecticut Mutual Life Ins. Co., 104 U.S. 54; McLeod v. Evans, 28 N.W. [Wis.], 173; Third Nat. Bank of St. Paul v. Stillwater Gas Co., 30 N.W. [Minn.], 440; Amer v. Hightower, 70 Cal. 440; Sleeper v. Davis, 64 N. H., 59.)

The interposition of equity is not necessary to a protection of all rights where a trust fund has been perverted. The cestui que trust can follow it at law so far as it can be traced. (United States v. State Bank, 96 U.S. 35; May v. Le Claire, 11 Wall. [U. S.], 217; Taylor v. Plumer, 3 Maule & S. [Eng.], 562; Newmark, Deposits, sec. 24; Union Stock Yards Co. v. Gillespie, 137 U.S. 411.)

OPINION

The facts are stated in the opinion.

RYAN, C.

During all the time within which the transactions referred to in this case took place, the firm of Palmer, Richman & Co. was engaged in the live stock commission business in South Omaha. At the same time, George L. Hurlburt, George Liggett, and Clifford G. Hurlburt were doing business at Utica, Nebraska under the name and style of the Merchants Bank. Alexander C. Virgin was also a resident of the town last named. The first named firm sued the aforesaid banking partners and Alexander C. Virgin, in the district court of Douglas county, Nebraska, for the sum of $ 2,000, with interest from the 1st day of December, 1888, and costs. Upon a verdict found in favor of Palmer, Richman & Co., judgment was rendered for its amount, being for the sum of $ 2,023.43. The Hurlburts and Liggett bring the case into this court for review upon petition in error. The petition in the district court, after stating the facts above set forth as to the membership of the above firm, their occupation and location, stated the plaintiffs' cause of action in the following language:

"3. That about the middle of the month of October, 1888, these plaintiffs arranged with the defendant Alexander C. Virgin that these plaintiffs would furnish the said Virgin money with which to pay for cattle and hogs which the said Virgin might thereafter buy, on condition that the said Virgin should consign the same to these plaintiffs at South Omaha for sale on the market, and that these plaintiffs would make sale of the stock so consigned to them and apply the proceeds of such sales, less the commission of these plaintiffs, to the payment of the money and interest thereon so as aforesaid advanced to the said Virgin. And the said Virgin, in consideration thereof, did agree to proceed at once to make purchase of the said stock, and that after he had purchased the same he would draw upon these plaintiffs at sight for the amount of the cost thereof, through the defendant the Merchants Bank aforesaid. These plaintiffs then saying, and it being distinctly understood between them and the said Virgin, that the said Virgin was not to make any drafts upon these plaintiffs for such advances until after he had purchased the stock for shipment to the plaintiffs as aforesaid, and that the said drafts should in no case exceed the amount which the said Virgin had actually contracted to pay for the stock actually purchased by him and arranged for their shipment to these plaintiffs.

"4. Plaintiffs say that the defendant Virgin immediately thereafter acquainted the defendant the Merchants Bank with the nature of the said agreement with these plaintiffs, and that before any payments were made by these plaintiffs on account of said agreement to the defendant Virgin, the defendant the Merchants Bank fully knew and understood the exact nature and extent of the agreement with regard to the advances so to be made by these plaintiffs, and the exact nature and condition of said agreement.

"5. That at that time, that is to say, during the month of October, 1888, the said Virgin was indebted to his co-defendant, the Merchants Bank of Utica, in a large sum of money, the exact amount of which is unknown to these plaintiffs, but the same was more than $ 2,000, and the said Virgin was then, as these plaintiffs are now informed insolvent and largely involved, all of which was well known to his co-defendant, the Merchants Bank of Utica; that said Merchants Bank of Utica unlawfully and fraudulently designing to cheat and defraud these plaintiffs out of their money, and fraudulently designing and intending to secure the indebtedness which the said Virgin then owed to the Merchants Bank, by obtaining payment thereof from these plaintiffs, did unlawfully and fraudulently agree and arrange with the said Virgin that said Virgin should draw on these plaintiffs for large sums of money, to-wit, on November 16, 1888, for $ 1,800, and on November 20, 1888, for $ 1,000, and that the same should be applied on the indebtedness said Virgin then owed the Merchants Bank as aforesaid, in fraud of the rights of these plaintiffs.

"6. And the plaintiffs say that upon or about the dates aforesaid the defendant Virgin, in pursuance of the arrangements with the defendant the Merchants Bank, as hereinbefore stated, did draw upon these plaintiffs for the said sum of $ 1,800 and $ 1,000 through the defendant the Merchants Bank, and the said drafts were, as soon as presented to these plaintiffs, viz on or about November 19 [39 Neb. 164] and 24, respectively, paid by these plaintiffs in full, and the proceeds thereof remitted to and received by the defendant the Merchants Bank; that at the time the said drafts were...