Evangelical Synod v. Schoeneich

• Decision Date: 20 April 1898
• Citation: 143 Mo. 652,45 S.W. 647
• Parties: EVANGELICAL SYNOD OF NORTH AMERICA v. SCHOENEICH.
• Court: Missouri Supreme Court

45 S.W. 647

143 Mo. 652

EVANGELICAL SYNOD OF NORTH AMERICA v. SCHOENEICH.

Supreme Court of Missouri, Division No. 2.

April 20, 1898.

APPEAL — HARMLESS ERROR — EVIDENCE — INSOLVENCY — PARTNERSHIP — CONVERSION — TRUSTS — RES JUDICATA.

1. Where ex parte affidavits of co-partners, made after the dissolution of the firm, were erroneously read in evidence over objection, but the transaction detailed in the affidavits was fully proved by other evidence, their admission was not reversible error.

2. A trustee of money placed the same in a firm, without the knowledge of his cestui que trust. The firm unlawfully converted the money, and was afterwards dissolved by the death of a partner. An administrator of the firm, which was insolvent, was appointed. Held, that the cestui que trust was entitled to have the amount of the converted fund charged as a preferred demand.

3. A trustee deposited money with a firm, without the consent of his cestui que trust. The partnership was dissolved by the death of a partner. An administrator was appointed. The trustee probated his claim for the money due him, in his own name, without the knowledge or consent of his cestui que trust. Held, that the cestui que trust was not bound by decree in the probate court.

Appeal from circuit court, St. Charles county; E. M. Hughes, Judge.

Action by the Evangelical Synod of North America against H. J. Schoeneich, administrator of the partnership estate of S. H. Merten & Co. Judgment for plaintiff. Defendant appeals. Affirmed.

This is a proceeding in equity by which it is sought to charge the partnership estate of S. H. Merten & Co. with a lien amounting to $3,000 and interest, alleged to have been plaintiff's money, and to have been converted by said company. The firm of S. H. Merten & Co. was composed of Stephen H. Merten, John F. Hackman, and William Hackman. The firm did a general milling business for about 20 years in the city of St. Charles, and was dissolved by the death of John F. Hackman on the 18th day of September, 1893. On the 27th of September, 1893, the defendant, Henry J. Schoeneich, took out letters of administration on the partnership estate, and two days thereafter took out letters of administration on the individual estate of said John F. Hackman. The partnership estate proved to be insolvent, paying not more than 25 cents on the dollar of its indebtedness. Both Stephen H. Merten and William Hackman are insolvent. John F. Hackman died insolvent. The plaintiff is a corporation duly incorporated under the laws of Missouri. Ever since 1887, one Rev. Reinhard Wobus, who had charge of a congregation of the Evangelical Church at St. Charles, Mo., was the treasurer of said synod, up to the time of his death, November 5, 1894, and as such was the custodian of the funds and moneys belonging to said corporation. During the time of his service as treasurer, said Wobus received, in his capacity as such, various sums of money for said corporation, which he deposited with Stephen H. Merten & Co. This he did without the knowledge of the president of the synod, who was during most of the time a resident of Burlington, Iowa. The firm knew that the funds deposited by Wobus with it did not belong to him, but were the funds of the plaintiff, and were only held by him as its treasurer. Most of the money left by Wobus with S. H. Merten & Co. consisted of checks for small amounts, payable to him individually, as treasurer, which said firm deposited, on its own account, and to its credit, in the Union Savings Bank of St. Charles. No interest was ever paid by the firm on these deposits, and, whenever Wobus needed the money, it was returned to him. On the 24th of August, 1893, there were $3,300 in the hands of the firm, thus deposited, of which Wobus on the 14th day of September, 1893, received $300. When, however, he demanded the balance, the firm was unable to return it, for the reason that they had used it in their business. Without the knowledge or consent of the president or other executive officers of the German Evangelical Synod of North America, Rev. Wobus, on November 13, 1893, went before the probate court of St. Charles county, and had said $3,000 allowed in his own name, against the partnership estate of Stephen H. Merten & Co., and $300 in offset. Nothing was ever paid on this allowance, and, as soon as the president of the synod learned of it, he denied that the synod had anything to do with it, and that Wobus had any authority to act for it in respect to said allowance, and soon thereafter instituted this suit. There was a decree in favor of plaintiff for $3,000, with interest from the time of the institution of this suit, which was made a special lien upon the assets of the firm of Merten & Co. in the hands of the administrator. Defendant in due time filed his motion for a new trial, which being overruled, he saved his exceptions, and brings the case here, by appeal, for review.

C. Daudt, for appellant. Theo. Bruere & Son, for respondent.

BURGESS, J. (after stating the facts).

1. During the trial, plaintiff read in evidence, over the objection and exception of defendant, the ex parte affidavit of S. H. Merten and William Hackman with respect to the transactions out of which this litigation arose, in which it was stated, in substance, among other things, that Rev. Wobus never advanced or loaned any of the moneys in question to the firm of S. H. Merten & Co., but that said firm always deposited said moneys, as requested by him, in the Union Savings Bank, until during the last few months, when said moneys were used in the business of said firm without his knowledge or consent, so that the firm of S. H. Merten & Co. is now indebted to him, for such money left for deposit, and belonging to the Evangelical Synod of North America, in the sum of $3,000; and in this ruling it is insisted by defendant that error was committed. When the objection was interposed to the admission in evidence of this affidavit, the court admitted it in evidence, accompanied by the remark that it would consider the objection afterwards, but never ruled upon it; and it is now contended by plaintiff that, as defendant brought out the same facts contained in the admission by his own witnesses, this court cannot ascertain from the record whether the trial court admitted or rejected this evidence. But this position seems to us to be untenable, for the reason that the logical effect of the ruling of the court was to overrule the objection; and nothing more was required of defendant, in order that he might have that ruling reviewed by this court, than to save his exceptions thereto at the time, and call the attention of the court thereto in the motion for a new trial. There was, however, other evidence as to the transactions between Wobus and S. H. Merten & Co. upon which to predicate and justify the finding of the court; and in such circumstance, the case being one in equity, the incompetent evidence admitted on the trial can be disregarded by the appellate court, so that the admission of the affidavits in evidence, although improper, is not reversible error. No member of a co-partnership, after its dissolution, can by any act or admission of his bind the firm of which he was a member, except it be otherwise agreed by the articles of association or of dissolution. 1 Greenl. Ev. (15th Ed.) § 112; Story, Partn. §§ 107, 323; Brady v. Hill, 1 Mo., top page 183; Little v. Ferguson, 11 Mo. 598; Flowers v. Helm, 29 Mo. 324; Dowzelot v. Rawlings, 58 Mo. 75. The affidavit, being ex parte, was nothing more than a mere voluntary statement, and, we think, clearly inadmissible in evidence.

2. It is next contended by defendant that the relation between Wobus, or the plaintiff, and S. H. Merten & Co., was that of creditor and debtor, general depositor and depositary, and not of cestui que trust and trustee, or special depositor and depositary. Upon the other hand, plaintiff claims that the relation between the plaintiff and S. H. Merten & Co. was that of cestui que trust and trustee. There can be no question, under the facts disclosed by the record, but that Wobus received and held the moneys, and the checks upon which the funds in question were collected, as trustee for the plaintiff, and not otherwise. He had no personal interest in the funds, and of this Merten & Co. had full knowledge; so that whether he loaned the money to them, or deposited it with them from time to time for safe-keeping, makes no difference in this case. The administrator of the partnership estate is simply the representative of the partnership, and occupies precisely the same position towards Wobus and the plaintiff that the firm did. And the firm of Merten & Co. having received the benefit of the fund by unlawful conversion, the question is, should the partnership estate be charged with the amount of the converted funds, as a preferred demand? The general rule is, where trust funds have been mingled with other funds of the trustee or agent, or of the bailee or depositary, and have not been invested in specific property, so that they can be traced, the cestui que trust loses his lien, and can only come in and share with the general creditors of the insolvent estate which wrongfully converted the funds. The rule announced in Little v. Chadwick, 151 Mass. 109, 23 N. E. 1005, is as follows: "When trust money becomes so mixed up with the trustee's individual funds that it is impossible to trace and identify it as entering into some specific property, the trust ceases. The court will go as far as it can in thus tracing and following trust, money, but when, as a matter of fact, it cannot be traced, the equitable right of the cestui que trust to follow it fails. Under such circumstances, if the trustee has become bankrupt the court cannot say that the trust money is to be found somewhere in the general estate of the trustee that still remains. He may have lost it...