Cady v. S. Omaha Nat. Bank

• Decision Date: 21 January 1896
• Parties: CADY v. SOUTH OMAHA NAT. BANK.
• Court: Nebraska Supreme Court

46 Neb. 756

65 N.W. 906

CADY

v.SOUTH OMAHA NAT. BANK.

Supreme Court of Nebraska.

Jan. 21, 1896.

Syllabus by the Court.

1. Trust funds do not lose their character as such by being deposited in bank by the trustee to his own account.

2. So long as such funds can be traced and distinguished in the hands of the trustee or his assigns, they remain subject to the trust.

3. F., a commission merchant, deposited in bank money realized from the sale of live stock consigned to him by C., his account with the bank being at the time largely overdrawn. Held, regardless of the question of notice, that the bank is accountable to C., and that it cannot apply the money so deposited in satisfaction of F.'s indebtedness.

4. In an action against a bank for money deposited by the plaintiff's agent to his own account, evidence of payment by the defendant on checks subsequently drawn by such agent in good faith, relying upon his apparent title to said fund, is inadmissible under a general denial. Such fact, to be available as a defense, must be specially pleaded.

Appeal from district court, Douglas county; Irvine, Judge.

Action by Addison E. Cady against the South Omaha National Bank. From a judgment for defendant, plaintiff appeals. Reversed.John C. Watson and Frank T. Ransom, for appellant.

Chas. Offutt, for appellee.

POST, C. J.

This is an equitable proceeding instituted by the appellant, Addison E. Cady, in the district court for Douglas county, against the appellee, the South Omaha National Bank, to enforce an accounting by the latter for the proceeds of a car load of hogs by the plaintiff consigned to William Fitch, at South Omaha, under the name and style of William Fitch & Co. The facts essential to an understanding of the questions involved are as follows: On the 20th day of June, 1888, the First National Bank of St. Paul, Neb., of which the appellant was president, addressed to the appellee the following communication: “St. Paul, Neb., June 20, 1888. H. C. Bostwick, Cash., So. Omaha--Sir: Will you give me, in confidence, what information you may have regarding financial standing and responsibility of Wm. Fitch & Co., commission firm. We are sending you a good many drafts on them, and would like to know something of them, and would consider it a special favor, if at any time you consider them at all shaky, you would notify us, and we will be glad to reciprocate at any time. Yours, truly, Geo. E. Lane, Cashier.” To the above, appellee replied, under date of June 21st, as follows: “Dear Sir: Replying to yours of 6/20, Wm. Fitch is doing a small commission business under name of Wm. Fitch & Co. We have been doing business with him a long time, and think him reliable and conservative. I think he has about $2,000 in his business, which is as much capital as larger firms use. We do not think him in any way shaky, and will inform you if we have reason to change our opinion. H. C. Bostwick, Cashier.” Fitch was, as may be inferred, at the date mentioned, engaged in the live-stock commission business at South Omaha, and in which he continued up to, and subsequent to, the transactions out of which this controversy arose. On the 24th day of September, 1888, appellant, at Dannebrog, in this state, shipped a car load of hogs to South Omaha, consigned to Fitch, in the name of William Fitch & Co. Said hogs were in due time received by the consignee named, who, on the 26th day of September, sold them to the Armour-Cudahy Packing Company for the sum of $1,021.80. In accordance with the established practice, weight tickets were issued, bearing the indorsement of the purchaser, directing payment of the amount of such purchase, which were by Fitch turned over to, and collected by, the appellee bank; the proceeds thereof being placed to the credit of the former on an open account, and which was, as will presently appear, then largely overdrawn. The plaintiff, on September 25th, drew upon Fitch & Co. for $1,000, the estimated net proceeds of the shipment above mentioned, but which draft the appellee, by whom it was presented for payment on September 27th, returned unpaid; bearing the indorsement, “Amount not correct.” It is conceded that the proceeds of the hogs sold, less necessary charges, including commission, amounted to the sum of $976.01, and for which the appellant, on the 28th day of September, drew upon Fitch & Co. The draft last mentioned was sent for collection to the appellee, and, upon presentation, payment thereof was refused. Fitch, according to the representative of the appellee bank, assigned as a reason for his refusal that the hogs in question had been purchased with money advanced by him for that purpose to one Stuart, and shipped in appellant's name in order to defraud him of the amount of his advancement, although that contention has no support whatever in the record. Fitch's account with the bank shows a general balance in his favor until about August 10, 1888. Beginning with August 13th, his account was overdrawn in various amounts until the close of business, September 25th, when his indebtedness to the bank on his open account was $976.44. During the month of August he was, according to the record, overdrawn 14 days in the average sum of $591.01; the highest amount thereof being $747.23, on the 4th, and the lowest, $355.22, on the 22d. From September 1st to 25th, inclusive of both days, he was overdrawn 20 days, in the average sum of $1,276.69; the highest being $1,757.94, on the 10th, and the lowest $585.54, on the 18th. The transactions on the 26th were the payment of two checks for $5 each, drawn by Fitch; making a total on the debit side of $986.44, and a credit for $1,021.80,--the proceeds of plaintiff's hogs,--leaving a balance in his favor at the close of business on that day of $36.36. Fitch was, it seems, within the knowledge of the appellee, in the habit of making advancements to shippers, and reimbursing himself from the proceeds of stock subsequently consigned to him, although it was aware that most, if not all, of his deposits represented the proceeds of stock sold on commission, and for which he was accountable to consignors. It is also a reasonable inference from the admitted facts that appellee was advised not later than September 27th, on which day the first-mentioned draft was presented by it, that Fitch's credit of the preceding day was the proceeds of stock sold for the appellant, and it is shown to have been fully informed of his rights in the premises on the 2d day of October following. As one of the questions presented involves an examination of Fitch's account with the bank from September 26th to October 2d, inclusive, a summary thereof is here given:

+-------------------------------------------------+
                ¦Wm. Fitch & Co. Dr.                      ¦Cr.    ¦
                +-----------------------------------------+-------¦
                ¦Sept. 26. Balance                        ¦       ¦
                +-----------------------------------------+-------¦
                ¦Sept. 27. Deposit                        ¦       ¦
                +-----------------------------------------+-------¦
                ¦                                 ¦       ¦$994 11¦
                +---------------------------------+-------+-------¦
                ¦Sept. 28. Check                  ¦$917 20¦       ¦
                +---------------------------------+-------+-------¦
                ¦Sept. 28. Check                  ¦40 00  ¦       ¦
                +---------------------------------+-------+-------¦
                ¦Sept. 28. Check                  ¦5 00   ¦       ¦
                +---------------------------------+-------+-------¦
                ¦Sept. 29. Int. on Sept. overdraft¦10 50  ¦       ¦
                +---------------------------------+-------+-------¦
                ¦Oct. 1. Check                    ¦5 00   ¦       ¦
                +---------------------------------+-------+-------¦
                ¦                                 ¦______ ¦977 70 ¦
                +-----------------------------------------+-------¦
                ¦Oct. 2. Balance                          ¦       ¦
                +-------------------------------------------------+
                

The questions suggested by the foregoing statement will be examined in the following order, viz.: (1) To what extent, if at all, did the deposit of the appellant's money, and its application in discharge of Fitch's indebtedness...