Cuttell v. Fluent
Decision Date | 28 August 1931 |
Docket Number | No. 9078.,9078. |
Citation | 51 F.2d 974 |
Parties | CUTTELL v. FLUENT. |
Court | U.S. Court of Appeals — Eighth Circuit |
R. W. Zastrow, of Charles City, Iowa, for appellant.
J. C. Campbell, of Charles City, Iowa (William Butts, of Rockford, Iowa, and Campbell & Campbell, of Charles City, Iowa, on the brief), for appellee.
Before KENYON and BOOTH, Circuit Judges, and DEWEY, District Judge.
This is an action seeking to recover an alleged trust fund which came into the hands of the receiver of the First National Bank of Rockford, Iowa, when it was closed by the Comptroller of the Currency on the 23d day of February, 1929. On March 26, 1926, a draft on the Minnesota Rural Credit Bureau for $13,500 payable to the administrator of the estate of Henry M. Cline, deceased, was held by said administrator. To carry out an agreement between the widow and heirs, that the widow should receive the interest on $12,500 of this sum during her lifetime, the administrator made an application for and the district court of Iowa authorized him to deposit $13,000 in the First National Bank of Rockford, Iowa. The order by the court which was administering the estate provided, "Said fund to be treated as a special deposit and bond to be given in the sum of $13,000.00 by said bank." This order was shown to the president and cashier of the Rockford bank and the requisite bond was furnished. At the same time and on May 1, 1926, the administrator delivered the draft for $13,500 to the bank, receiving credit for $12,500 and the balance of $1,000 in cash. The deposit was made in the savings department of the bank and the administrator was given a savings passbook showing a deposit of $12,500. The savings account was of the usual character and showed withdrawals of interest on three different occasions prior to the closing of the bank. The draft that was deposited with the First National Bank on the 1st day of May, 1926, was on this same date sent to its reserve or correspondent bank, the First National Bank of Chicago, and on the 3d day of May, 1926, the amount of the deposit was there credited to the First National Bank of Rockford, Iowa. How long the proceeds were left in the Chicago bank does not appear, except that by October 28, 1927, the account of the Rockford Bank with the Chicago bank was overdrawn. When the draft was credited to the Rockford bank on the books of the Chicago bank the Rockford bank had with the Chicago bank $26,868.50.
At the time the bank's doors were closed it had $2,907.45 in cash which came into the hands of the receiver, and it had in cash at all times after May 1, 1926, to the date when it closed at least $2,510.65.
Notwithstanding the express limitation on the deposit that the same should be a special one, the administrator made a general deposit of $12,500 of the funds in his hands in the savings department of the bank. The deposit then was made in violation of the order of the court that it should be special and this violation was known to both the administrator and the bank.
Although in Iowa an administrator or executor may rightfully deposit money belonging to an estate in a solvent bank, yet where such a deposit as in this case is wrongful a trust may be created thereby and, the other elements existing, a preference would be acquired by the cestui que trust. Leach v. Beazley, 201 Iowa, 337, 345, 207 N. W. 374, 378. The parties do not seriously contest the trust relationship. The arguments are directed in the main on the question of augmentation and tracing of the trust funds.
The law with reference to the recovery of trust funds held in a national bank after insolvency is well settled in this circuit. The leading case of Empire State Surety Co. v. Carroll County (C. C. A.) 194 F. 593, 604, lays down pertinent rules, as follows:
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Ferguson v. Reed, 2351.
...was charged from the beginning with the obligations of a trustee to safeguard the fund for the benefit of the infant child. Cuttell v. Fluent 8 Cir., 51 F.2d 974; First National Bank of Forsyth, Montana, v. Fidelity & Deposit Co. of Maryland 9 Cir., 48 F.2d 585; Allen v. United States 1 Cir......