Blythe v. Kujawa
| Citation | 175 Minn. 88,220 N.W. 168 |
| Decision Date | 29 June 1928 |
| Docket Number | No. 26774.,26774. |
| Parties | BLYTHE v. KUJAWA et al. |
| Court | Supreme Court of Minnesota (US) |
Appeal from District Court, Steele County; Fred W. Senn, Judge.
Action by John H. Blythe against Jan Kujawa, also known as John Kujawa, H. E. Skinner, as receiver of the National Farmers' Bank of Owatonna, and others. Findings for plaintiff. From an order denying his motion for a new trial, defendant last named appeals. Affirmed.
Meighen, Knudson & Sturtz, of Albert Lea, for appellant.
Nelson & Nelson, of Owatonna, for respondent.
E. W. Richter, of Owatonna, and Edgerton, Dohs & Edgerton, of St. Paul, for defendants Kujawa.
Appeal by defendant H. E. Skinner, as receiver of the National Farmers' Bank of Owatonna, from an order denying his motion for a new trial.
Plaintiff purchased a farm from the defendants Kujawa. To close the sale on March 1, 1926, he was to pay them $4,500 and give a note and mortgage for the balance of the purchase price, upon approval of the title by his attorney and receipt of a warranty deed of the farm. It was agreed that the $4,500 and the note and mortgage be left in escrow in the National Farmers' Bank until title was perfected and approved and deed given. The $4,500 and the note and mortgage were then to be delivered by the bank to the Kujawas. Plaintiff, a nonresident, sent his brother, F. M. Blythe, to the bank with the note and mortgage and a check for $4,500 on a Buffalo, N. Y., bank, payable to the order of the brother. He informed the bank of the land transaction and escrow agreement. An officer of the bank directed him to deposit the check in the bank, which was done. The banker then made out a check for the amount on the National Farmers' Bank, payable to John Kujawa, and directed F. M. Blythe to sign it, which he did. The note and mortgage and this check to Kujawa were then placed in an envelope by the banker and indorsed on the outside: The envelope was then kept by the bank. The check on the Buffalo bank was accepted and credited in the National Farmers' Bank to the account of the brother, F. M. Blythe. The bank credited its assets with the amount of the check. F. M. Blythe never drew out any of the $4,500 so deposited. The bank failed September 8, 1926, and its assets passed into the hands of defendant Skinner, as its receiver, before the title to the land was perfected. The bank, at all times after it received said check, and up to the time the receiver took charge thereof, had and kept in its vaults not less than $13,600 in cash, and this amount, together with all other assets of the bank, came into the hands of the receiver. The title to the farm was perfected and warranty deed tendered to the receiver of the bank. He refused to receive the deed or recognize the escrow. The defendants Kujawa refused to deliver the deed to plaintiff until paid the $4,500. The court found that the $4,500 was a trust fund and special deposit held by the bank. It held, by its amended conclusions of law, that plaintiff was entitled to the deed if within 30 days he paid to the Kujawas the $4,500, with interest from January 7, 1927, the date on which the title was approved, and delivered to Kujawa the note and mortgage. It then further held that plaintiff was the owner and entitled to the $4,500 trust fund, and that the receiver was bound to pay same to plaintiff as a preferred claim.
1. We find no difficulty in holding that the evidence sustains the finding of the trial court that the $4,500 deposit was a trust fund, held in trust and escrow by the bank for the specific purpose of paying the same over to the Kujawas when title to the land was approved and deed delivered by them. In so holding we have not overlooked the evidence that the check given by plaintiff was payable to the order of his brother, F. M. Blythe; that, by direction of the bank's officer, F. M. Blythe deposited the check in the bank; that the bank did not place the item in a separate account, but credited it to his regular checking account; that F. M. Blythe deposited and checked out moneys from this account, maintaining, however, at all times thereafter a balance of not less than $4,500; that monthly statements of his account were delivered to him showing that this item was so credited to him; that F. M. Blythe testified, in part, that he told the officer of the bank that his brother had instructed him "to take the $4,500, or the check, and either have it cashed or put it in escrow in the way that it should be put in." If that were all the evidence, it would not establish a trust. But the officer of the bank was informed of the land transaction and of the escrow agreement, that the check or money and the papers were to be left in escrow for the purpose of paying for the land when the title was approved and deed given. He accepted, for the bank, the arrangement so made. In order to carry out the escrow agreement, he directed that the check from plaintiff be deposited as stated, and made out and directed F. M. Blythe to sign the check to Kujawa, which was then placed in the envelope with the papers. The indorsement, made by the bank officer on the envelope in which the papers were kept, was that, when the deed was given and title approved, the bank was to deliver $4,500 to Kujawa. It is contended that the $4,500 credit in his checking account was under the sole control of F. M. Blythe and subject to be checked out by him at any time. We are unable to so hold. The bank had full information as to the specific use to be made of this fund or credit; it had agreed to the escrow and consented to act thereunder; it had agreed to deliver $4,500 to Kujawa when the proper time came, and, as authority so to do, it had taken and held Blythe's check for that amount upon his account or funds in the bank. In that situation it was the duty and legal right of the bank not to honor or pay any checks on Blythe's account which would reduce his funds in the bank below $4,500. It was in no different position than if it had certified his check to Kujawa and charged it against his account, which it could have done at any time. That such was the understanding of both Blythe and the bank fairly appears, for he did not attempt to reduce the fund, but, when he needed additional money, borrowed from the bank instead.
2. Appellant states that the burden of proof rested upon plaintiff to show that the claimed trust fund reached the receiver's hands, and that the assets coming into his hands were actually augmented thereby. He contends that plaintiff failed to so show.
The burden of proof in that regard apparently goes no further than to require plaintiff to show that the fund actually came into the hands of the bank. The question was considered in Stein v. Kemp, 132 Minn. 44, 155 N. W. 1052. There was no evidence as to what amount of money or property passed to the receiver. The court held that, when plaintiff traced the fund into the hands of the bank, it was presumed to remain there, and it was then up to defendant to show otherwise. Hudspeth v. Union T. & S. Bank, 196 Iowa, 706, 195 N. W. 378, 31 A. L. R. 466,...
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