Bradley v. Chesebrough

• Citation: 111 Iowa 126,82 N.W. 472
• Parties: BRADLEY v. CHESEBROUGH ET AL.
• Decision Date: 14 April 1900
• Court: United States State Supreme Court of Iowa

111 Iowa 126

82 N.W. 472

BRADLEY

v.CHESEBROUGH ET AL.

Supreme Court of Iowa.

April 14, 1900.

Appeal from district court, Muscatine county; W. T. Brannan, Judge.

Suit in equity to impress a trust on certain funds in the hands of the defendants, as assignees of a banking partnership known as A. A. Ball & Co., and for judgment for the amount of plaintiff's claim. The trial court denied the relief asked, and plaintiff appeals. Affirmed.Remley, Ney & Remley, for appellant.

Jayne & Hoffman and Carskaddan & Burk, for appellees.

DEEMER, J.

From an opinion filed by the learned trial judge we extract the following statement of facts, that we find sustained by the record: “John C. Hormel, the decedent, it appears, died intestate on or about the 19th day of April, 1892. He was at the time of his death a resident of Johnson county, Iowa, and A. A. Ball, of the firm of A. A. Ball & Co., bankers at West Liberty, and the active business manager of said firm, was, by the last will of said testator, appointed executor. He accepted the trust, and duly qualified as such executor. The fund which it appears came into his hands, as such executor, was deposited by the executor in the bank of the said A. A. Ball & Co., and amounted up to the 1st of February, 1893, to the sum of $3,286.76. The defendants claim that at that date the money thus deposited had been paid out in the ordinary course of business by the bank. The balance remaining in the bank to the credit of the estate, according to its books, on the 19th of September, 1896, amounted to the sum of $3,286.76. At the last date it appears that the said firm of A. A. Ball & Co. and its individual members made a general assignment for the benefit of creditors. On the 7th of April, 1897, some months after the assignment, Mr. Ball was by the court removed from his office as executor of said estate, and the plaintiff appointed administrator with the will annexed. On the 26th day of the same month the plaintiff, as administrator aforesaid, instituted the present proceeding, claiming that, with interest at 6 per cent., there was due the sum of $4,221.89 at the time the petition was filed. He alleges that Ball, as executor of said estate, deposited the same sums received by him on account of said estate with the banking firm of A. A. Ball & Co., to the credit of said J. C. Hormel estate, who used the moneys as received in the banking business as their own money, subject only to be drawn from said A. A. Ball & Co. on proper order of court; that the money so received said Ball, as executor, deposited with the said banking firm, increased, bettered, and improved said estate therewith, and turned over all of said estate so bettered and improved thereby, under their deed of general assignment for the benefit of creditors, to the said Chesebrough and Giesler, who hold the same in their hands under said assignment. The plaintiff further alleges that said A. A. Ball & Co. had actual knowledge of the fact that the money deposited to the credit of the John C. Hormel estate was trust money in the hands of Ball, as executor, and formed a trust fund in the hands of A. A. Ball & Co., and that with this knowledge Ball & Co. wrongfully converted to their own use money which it was their duty to preserve. The defendants, in answer to the claim of the plaintiff, in substance say that no part of the money thus deposited came into their hands under the deed of assignment, and that none of it exists in any other form in the assets that they received as assignees. There is no dispute as to the fact that the money belonging to the Hormel estate was by A. A. Ball, the executor of said estate, deposited in the bank of A. A. Ball & Co., and by it wrongfully used in the course of its business. The real question, then, is this: Was the said fund or some part of it preserved in some form by the said insolvent banking firm at the date of the assignment? The cash in the bank at that date, that appears to have come into the hands of the assignees, was but a few cents less than $450. There was a very large amount of notes, but these notes represented loans that were improvidently made, and at the date of the assignment were some of them worthless, and others of but little value. The notes on hand, good and bad, and which were delivered to the assignees, amounted in all to the sum of $245,801. At the time the case was submitted to the court the gross collections on notes was $87,572, and set-offs allowed against them was $7,407.92, leaving as the net amount received by the assignees the sum of $80,093.48.”

In addition thereto, it may be stated that after the receipt of the money, and down to May. 1893, there was a steady increase in the assets of the bank. About the last-named date the historic panic of 1893 came on, and the assets of the bank gradually and surely decreased, until the bank was forced to make an assignment for the benefit of its creditors. It also appears that at the time the deposit was made which plaintiff seeks to recover there was due from the bank to depositors $296,077.77. When the assignment was made, this amount had been reduced to $180,610.25. After the beginning of the year 1893, the bank made no new loans, except from money borrowed from other banks. One of the assignees, who was also one of the employés and a bookkeeper of the bank, testified that none of the assets acquired by the bank after June 1, 1893, came into the hands of the assignees, save such as were procured with money borrowed as above stated. This same witness also testified that the bank received notes, after the date of the deposit and before the assignment, to the amount of nearly $108,000, that were uncollectible, and he also testified that during the same time the bank allowed overdrafts to the amount of $10,593 that cannot be collected. During this same period the bank was paying interest on time certificates at the rate of 5 per cent. The amount of these certificates was something like $148,000. It was also paying the ordinary current running expenses. The same witness to whom we have referred further testified that he was unable to tell, either from memory or from the books of the bank, where the money belonging to the Hormel estate was invested; that it was so mixed with other funds that he was unable to tell where it is, or what debt was paid with it; and that “it may have been invested in notes that we have in our hands as assignees, or it may have been paid out in cash in the general manner of carrying out the business.” The claims filed against the assignees amounted to nearly $240,000. Some of the items to which we have referred are gathered from statements made by the witness hitherto mentioned, who was a bookkeeper in the bank, made up from the books of the bank. The books from which they were taken were produced at the trial, but were not offered in evidence, as we understand it. If they were offered, they are not included in the abstracts, and have not been sent to this court.

Plaintiff objects to the statements on various grounds, but we think they were properly admitted in evidence, and should be considered on this appeal. State v. Cadwell, 79 Iowa, 432, 44 N. W. 700;Casey v. Banking Co., 98 Iowa, 107, 67 N. W. 98;Von Sachs v. Kretz, 72 N. Y. 548. The books were present in court, and plaintiff had ample time and opportunity to examine them, and to cross-examine the witness. The witness stated that the lists he presented were correct, and were taken from the books of the bank. He was an officer of the court, and had charge of the books, and was asked to make statements therefrom, and to state the condition of the assets. Such evidence was certainly competent. At the time the bank received the money belonging to the estate, it had cash on hand and with other banks amounting to about $36,000, and it had in bills receivable about $320,000. Its total liabilities at that time were about $319,000, not including its liability to the individual partners. During the time between July 1 and September 1, 1893, the deposit account was reduced more than $30,000. At the time of the assignment the books showed that the bank had in cash and with other banks about...