Cady v. South Omaha National Bank
| Decision Date | 21 January 1896 |
| Docket Number | 6173 |
| Citation | 65 N.W. 906,46 Neb. 756 |
| Parties | ADDISON E. CADY, APPELLANT, v. SOUTH OMAHA NATIONAL BANK, APPELLEE |
| Court | Nebraska Supreme Court |
APPEAL from the district court of Douglas county. Heard below before IRVINE, J.
REVERSED.
John C Watson and Frank T. Ransom, for appellant, cited Gillespie v. Union Stock Yards Nat. Bank, 41 F. 231 137 U.S. 411.
Charles Offutt, contra:
The bank did all that could be required of it in reference to the drafts. Had the bank paid the drafts contrary to the orders of Fitch, it would have been liable to him.
See opinion for statement of the case.
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 Nebraska, of which the appellant was president, addressed to the appellee the following communication:
To the above, appellee replied, under date of June 21, as follows:
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 Wm. 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 25 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 27, 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 13, his account was overdrawn in various amounts, until the close of business September 25, 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 fourteen 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 twenty 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 $ 35.36. 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 27, 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 26 to October 2, inclusive, a summary thereof is here given:
Int. on Sept. overdraft
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 to the bank affect the rights of the former? (2.) Are the rights of the parties affected by the transactions between Fitch and the bank subsequent to September 26 and prior to the receipt of formal notice of the appellant's rights on the 2d day of October?
Preliminary to the first inquiry it should be remarked that the record presents no question of the authority of a factor or broker to deposit, in his own name, money, the proceeds of goods consigned for sale on account of his principal. We assume, therefore, that the act of Fitch, in depositing to his own credit the money realized from the sale of appellant's hogs, was authorized by the course of dealing between the parties named or by the recognized usage of trade,--in short, that such transaction did not in law amount to conversion by Fitch of the funds in question. It is a recognized rule in equity jurisprudence that trust funds may be followed through any number of transmutations and reclaimed by the owner so long as they can be distinguished in the hands of the trustee or his assigns.
In the leading case of Pennell v. Deffell, 4 De G., M. & G. [Eng.] 372, the controversy was between an official assignee in bankruptcy and the executors of a prior deceased assignee who had kept a bank account in which he had mingled his own funds with those of the trust, the credits being all entered in his own name. It was said: "When a trustee pays trust money into a bank to his credit, the account being a simple account with himself, not marked or distinguished in any other manner, the debt thus constituted from the bank to him is one which, as long as it remains due, belongs specifically to the trust as much and as effectually as the money so paid would have done had it specifically been placed by the trustee in a particular repository and so remained; that is to say, if the specific debt shall be claimed on behalf of the cestuis que trustent * * * as between the trustee and his executors and the general creditors after his death."
In Van Alen v. American Nat. Bank, 52 N.Y. 1, it was held that where an agent deposits in bank to his own account the money of his principal under the direction of the latter such fund is impressed with a trust in favor of the owner which is not affected by the fact that the agent at the same time deposited to the same account funds of his own. Referring to the question of notice by the bank of the plaintiff's rights, the chief justice says: ...
To continue reading
Request your trial
-
Cady v. S. Omaha Nat. Bank
...46 Neb. 75665 N.W. 906CADYv.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 ...Cady against the South Omaha National Bank. From a judgment for defendant, plaintiff appeals. Reversed. [65 N.W. 907]John C. Watson and Frank T. Ransom, for appellant.Chas. ......