Clemmer v. Drovers' Nat. Bank

• Decision Date: 05 June 1895
• Citation: 41 N.E. 728,157 Ill. 206
• Parties: CLEMMER et al. v. DROVERS' NAT. BANK et al.
• Court: Illinois Supreme Court

157 Ill. 206

41 N.E. 728

CLEMMER et al.

v.DROVERS' NAT. BANK et al.¹

Supreme Court of Illinois.

June 5, 1895.²

Appeal from appellate court, First district.

Bill by G. G. Clemmer against the Drovers' National Bank, Hanna, Son & Co., John Jones, John Bower, and J. A. Felthous, J. C. Felthous, and A. A. Moore, copartners trading as Felthous Bros. & Co. There were also cross bills by John Jones, John Bower, J. A. Felthous, J. C. Felthous, and A. A. Moore. There was a decree in favor of the complainant and the cross complainants, which decree was reversed by the appellate court. 57 Ill. App. 107. Complainant and cross complainants appeal. Reversed.L. G. Kirkland and W. D. Evans, for appellants.

Geo. P. Merrick, for appellee.

Appellant Clemmer filed his bill in equity in the circuit court of Cook county against appellee and Hanna, Son & Co., making the other appellants defendants also, wherein he alleged: That June 8, 1890, he owned a car load of cattle and a car load of hogs, which on that day he shipped from Iowa to Hanna, Son & Co., commission merchants at the Union Stock Yards, Chicago, to be sold for him on commission; the proceeds, after deducting commissions and expenses, to be placed to the credit of the Citizens' Bank of Hampton, Iowa, in the Merchants' National Bank of Chicago. That on June 9, 1890, the stock was received by said commission firm, and sold by them. The proceeds, after deducting expenses and commissions, amounted to $1,311.87, and were the property of Clemmer, and were held in trust for him by said commission firm. That it was the duty of said commission firm to keep the money separate from all other moneys, and to remit the same to Clemmer, or place it in the Merchants' National Bank to the credit of the Citizens' Bank of Hampton, Iowa. That without appellant's knowledge, and without any authority from him, but not with fraudulent intent, said commission firm placed all of said moneys to its own account and credit in the Drovers' National Bank, which bank had been the bank through which the said commission firm transacted all its banking business; and that said commission firm placed said money, together with all other trust moneys which it had of the proceeds of sales of stock of other shippers, in said Drovers' National Bank at or about the close of business on the 9th day of June, 1890; and that immediately thereafter, on the 10th day of June, the said bank, wrongfully and without authority, knowledge, or consent of complainant, Clemmer, or Hanna, Son & Co., diverted all of said money and appropriated the same, claiming to have applied said money as a partial payment on a note which said bank claimed to hold against said Hanna, Son & Co. and other parties to Clemmer unknown. That said bank has ever since and now wrongfully retains said money, and claims to hold it as a payment on the said note. That at the time said bank received the money from said commission firm, and appropriated it, it had notice that said money was not the money of Hanna, Son & Co., but that the same was the proceeds of stock sold by them as commission merchants, and held by said commission firm in trust only for the owners and shippers of said stock, and knew that it had no right to apply the same on any indebtedness of the said commission firm, and had notice that the money was the property of Clemmer, and was held in trust only for him by said firm. That the said firm of Hanna, Son & Co., and each member, were at the time of the deposit, and for many months prior thereto, and are now, wholly insolvent, and nothing can be recovered from said firm by any legal proceeding. That such insolvency was unknown to complainant untill after the said deposit and appropriation of such money. That the bank knew of such insolvency at the time it appropriated said money, and had known the same for many months prior thereto. That said bank advised and procured said commission firm to continue in the commission business, and to hold itself out to the public as solvent, and withheld from the public all knowledge of their indebtedness and insolvency, and furnished said commission firm all of its banking facilities, paid its checks and sight drafts, and induced public belief that said firm was solvent, etc. That said bank and firm established ostensibly for convenience a custom in their dealings relative to proceeds of sale whereby said commission firm deposited in said bank all of the proceeds of commission sales by them made; and said bank first placed all of said proceeds, notwithstanding their being trust funds, to the account of said firm, and then afterwards distributed the same to the credit of the parties to whom they in fact belonged. That said course of dealing was followed for a long time next prior to said deposit. That said bank at all times induced said firm to think that it would not in any manner interfere with said trust funds, nor attempt to divert the same to the payment of its private debt; and that all of said acts of said bank were done by it fraudulently intending to come into possession of trust funds, and fraudulently intending to divert and appropriate the same to the payment of its debt, and in pursuance of such purpose and intent to fraudulently divert and appropriate complainant's money as aforesaid. That complainant had no knowledge of the course of dealing between said parties, their businessrelations, said indebtedness, nor of the intention or purpose of said bank; and that, if he had known of such insolvency, indebtedness, or course of dealing, he would not have consigned his stock to said commission firm, nor permitted said firm to come into possession of the proceeds thereof. That, immediately after said diversion and appropriation of said money by said bank, complainant notified said bank of his ownership of said money, and demanded the same of said bank. That said commission firm also notified said bank forthwith of said ownership of complainant of said money, and demanded that the same be delivered to complainant; but said bank refused and still refuses to deliver said money, or any part thereof, to complainant. That on or about the time of the deposit, as aforesaid, said firm also deposited in said bank, as complainant is informed, certain moneys of one John Bower in the sum of $1,104.31, and of the moneys of John Jones $1,094.11, and of the moneys of J. A. Felthous, J. C. Felthous, and A. A. Moore, copartners, etc., $1,348.75, all of whom are made defendants to this bill. That all of said moneys were then and there wrongfully and without authority placed to the credit of said commission firm in their account, and were then and there, together with complainant's moneys, commingled without the knowledge or consent of any of the owners thereof. That, of the moneys of complainant, John Jones, John Bower, and Felthous Bros. & Co., there remained in the hands of said bank on the morning of June 10, 1890, the sum of $3,475, and no part of said money belonged to said commission firm, nor any member thereof, but all belonged to said complainant, said Jones, Bower, and Felthous Bros. & Co., and to no other person or persons whatever; and said commission firm and said bank held all of said money in trust for complainant and said Jones, Bower, and Felthous Bros. & Co. That said bank wrongfully and without authority diverted and appropriated to its own use, and applied on the indebtedness of said commission firm, $3,475, and has ever since claimed to own said money, and refused to pay any part thereof to the owners thereof. That, to avoid litigation, dispute, or question between themselves as to their respective rights to the trust fund and to the proportionate amount due them, this complainant, Bower, Jones, and Felthous Bros. & Co. have mutually agreed to abide by a pro rata distribution of said fund, and that upon such basis there is due complainant from said bank $938.25, with interest. Prays that the defendant bank be decreed and adjudged to be a trustee holding said moneys in trust for the benefit of complainant, and be decreed to pay and deliver said moneys to complainant, with interest from June 10, 1890; and that complainants have judgment against said bank for the said sum of $938.25, together with said interest; and that complainant have judgment against the said commission firm for the balance due him over and above the amount adjudged to be in the hands of the said bank, such balance being the sum of $374; and that the distribution of said trust fund, as agreed upon between complainant and said defendants, Bower, Jones, and Felthous Bros. & Co., be adjudged and decreed and made binding on all parties,-together with a prayer for general relief.

The other appellants answered, admitting Clemmer's bill, and filed cross bills, claiming their pro rata share of the fund. Appellee demurred to the bill, on the ground that it was exhibited against appellee and other defendants for distinct matters and causes in which appellee had no interest, and for multifariousness. The demurrer was overruled, and appellee answered to the merits. After the issues were made, appellee, by leave of court, filed an amendment to its answer, which it asked to have treated and considered as a cross bill, asking for affirmative relief, in this: That Hess Bros. claimed to have a demand against appellee on account of said fund, and as the holders of a certain check drawn in their favor by Hanna, Son & Co., on appellee, for $3,300; that Hess Bros. had since the filing of the bill brought a suit at law against appellee, which was then pending,-prayed that they be made parties, and required to litigate their said demand in this cause, and that they be perpetually enjoined from prosecuting said suit at law, or any suit against appellee for said demand. The hearing of the cause was postponed, and Hess Bros. were made parties as prayed, and, on being summoned, answered, and filed their cross bill, claiming...