Capital Nat. Bank v. Coldwater Nat. Bank

• Decision Date: 02 December 1896
• Citation: 49 Neb. 786,69 N.W. 115
• Parties: CAPITAL NAT. BANK ET AL. v. COLDWATER NAT. BANK ET AL.
• Court: Nebraska Supreme Court

49 Neb. 786

69 N.W. 115

CAPITAL NAT. BANK ET AL.

v.COLDWATER NAT. BANK ET AL.

Supreme Court of Nebraska.

Dec. 2, 1896.

Syllabus by the Court.

1. A fund which comes into possession of a bank, with respect to which the bank has but a single duty to perform, and that is to deliver it to the party thereto entitled, is a trust fund, and is therefore incapable of being commingled with the general assets of such bank subsequently transferred to its receiver.

2. Under the circumstances above indicated, the receiver of the bank is merely substituted as trustee, and its funds in his hands should be devoted to discharging such trust before distribution thereof is made to the general creditors of the bank.

3. Under the provisions of chapter 44, Comp. St., the cestui que trust is entitled to 7 per cent. interest per annum on the trust fund above considered.

Error to district court, Lancaster county; Strode, Judge.

Action by the Coldwater National Bank and others against Kent K. Hayden and the Capital National Bank of Lincoln, Neb. Judgment for plaintiffs. Defendants bring error. Affirmed.

Cobb & Harvey and G. M. Lambertson, for plaintiffs in error.

Pound & Burr, Darnall & Kirkpatrick, and Chas. O. Whedon, for defendants in error.

RYAN, C.

There were submitted with this case on the oral argument four others which involved the same question. These were Bank v. Magoon, Capital Nat. Bank v. First Nat. Bank of Cadiz, Hayden v. Fruit Co., and Hayden v. Woodenware Co., 69 N. W. 1151. All five of the cases had been determined adversely to the receiver of the Capital National Bank in the district court of Lancaster county, and were in this court presented upon as many records. It is not necessary to state the facts involved in each, for the sole question presented is fully illustrated by the facts of this particular case. The Coldwater National Bank, in October, 1892, was doing a banking business at Coldwater, Mich. At that time the Capital National Bank was engaged in a like business in Lincoln, Neb. On the 22d of said month the Hemingford Bank and Job Hathaway executed their promissory note to the Capital National Bank for the sum of $4,000, due in 90 days from its date. On the same day this note was indorsed, without recourse, by the payee, Charles W. Mosher, its president, and R. C. Outcalt, its cashier, and sold to the Coldwater National Bank. The Hemingford Bank had with the Capital National Bank a sufficient current account to cover all the payments which it attempted to make as hereinafter described, and was not aware that the aforesaid note had been sold. On December 7, 1892, the cashier of the Hemingford Bank sent his check on the Hemingford Bank to the Capital National Bank, with instructions that the same should be indorsed on the said note. This note was received by the Capital National Bank from the Coldwater National Bank for collection on January 10, 1893, and on the 20th of said month, having received $2,500, the balance due thereon, the Capital National Bank returned said note, duly canceled, to the Hemingford Bank. The Capital National Bank ceased to do business on January 21, 1893, and on the next day was taken possession of by a national bank examiner, by whom its assets were soon afterwards turned over to a receiver of said bank, duly appointed by a federal authority. It was insolvent when the examiner went into possession, and had never remitted the above $4,000, or any part of it, to the Coldwater National Bank. This action was brought in equity for a judgment requiring full payment of the above $4,000, with interest, out of the funds of the Capital National Bank in the hands of the receiver. On the trial it was shown that, when the Capital National Bank was taken possession of by the receiver, it had on hand $11,000 in cash. The district court, by its judgment, required the receiver to pay in full the said sum of $4,000, with interest, as prayed, on the theory that this amount was a trust fund, which, as such, had come into the hands of the receiver.

It is conceded by the plaintiffs in error that the relief granted by the district court was in conformity with the views expressed more or less directly by this court in Wilson v. Coburn, 25 Neb. 530, 53 N. W. 466;Association v. Morris, 36 Neb. 31, 53 N. W. 1037;Griffin v. Chase, 36 Neb. 328, 54 N. W. 572; and State v. State Bank of Wahoo, 42 Neb. 896, 61 N. W. 252. But it is urged that a re-examination of the principles involved should satisfy us that these cases proceeded upon an erroneous view of the law as now settled. A very careful examination has been made of all cases cited, in respect to the pivotal question, which has already been sufficiently indicated as having been acted upon by the district courts. Of those cited by the defendants in error the following are more or less directly in point, to wit: Peak v. Ellicott, 30 Kan. 156, 1 Pac. 499;Myers v. Board, 51 Kan. 87, 32 Pac. 658;Van Alen v. Bank, 52 N. Y. 1;People v. City Bank of Rochester, 96 N. Y. 32;Baker v. Bank, 100 N. Y. 31;Cragie v. Hadley, 99 N. Y. 131;Bank v. Peters, 123 N. Y. 278, 25 N. E. 319;Bank v. Davis, 142 N. Y. 590, 37 N. E. 646; Bank v. King, 57 Pa. St. 202; Harrison v. Smith, 83 Mo. 210;Stoller v. Coates, 88 Mo. 514;Third Nat. Bank of St. Paul v. Stillwater Gas Co., 36 Minn. 75, 30 N. W. 440;Plow Co. v. Lamp, 80 Iowa, 722, 45 N. W. 1049;Independent Dist. v. King, 80 Iowa, 497, 45 N. W. 908;Nurse v. Satterlee, 81 Iowa, 491, 46 N. W. 1102;Bank v. Weems, 69 Tex. 489, 6 S. W. 802;Smith v. Combs, 49 N. J. Eq. 420, 24 Atl. 9;Jones v. Kilbreth, 49 Ohio St. 401, 31 N. E. 346;Bank v. Hummel, 14 Colo. 259, 23 Pac. 986;In re Johnson (Mich.) 61 N. W. 352;Howard v. Walker (Tenn. Sup.) 21 S. W. 897;San Diego Co. v. California Nat. Bank, 52 Fed. 59;Massey v. Fisher, 62 Fed. 958;Bank v. Armstrong, 36 Fed. 59;Foster v. Rincker (Wyo.) 35 Pac. 470;Central Nat. Bank v. Connecticut Mut. Life Ins. Co., 104 U. S. 54; Railroad Co. v. Johnston, 133 U. S. 566, 10 Sup. Ct. 390;Peters v. Bain, 133 U. S. 670, 10 Sup. Ct. 354; Knatchbull v. Hallett, 13 Ch. Div. 696.

In the cases cited in this controversy there are two classes, one of which proceeds upon the theory that a lien may be enforced against the specific deposit, so long as it can be actually identified, or should be held segregated by implication of law, on account of a fraudulent concealment by the officers of the bank of its insolvent condition when receiving a very recent deposit, whereby the depositor was induced to make such deposit. The other treats the deposit as, in its essence, a trust fund, incapable, in its very nature, of being commingled with other funds. In argument, it was insisted, on behalf of the plaintiffs in error, that, in any event, there must be an identification of the fund proposed to be charged, as being composed, in part at least, of the very money which had come into the hands of the receiver. In support of this contention there were cited Wasson v. Hawkins, 59 Fed. 233;Boone Co. Nat. Bank v. Latimer, 67 Fed. 27;Lake Erie & W. R. Co. v. Indianapolis Nat. Bank, 65 Fed. 690;Elevator Co. v. Clark (N. D.) 53 N. W. 175;Oil Co. v. Hawkins, 20 C. C. A. 468, 74 Fed. 395; and Spokane Co. v. Clark, 61 Fed. 538. These adjudications insisted upon a specific identification to entitle to equitable relief, but they are of little value in this case, because they belong in the first of the two classes above indicated. They furnish no light as to the principles applicable to the second class, and it is with that class that we are at present concerned.

As illustrative of the confusion into which it is easy to fall in this matter, we refer to Bank v. Dowd, 38 Fed. 172, cited by the plaintiffs in error. In this case it was sought to impress upon funds in the receiver's hands a trust, because, as such, they had been deposited in the bank; the relation of debtor and creditor...