Farmers' and Mechanics' National Bank v. King

• Decision Date: 20 February 1868
• Citation: 57 Pa. 202
• Court: Pennsylvania Supreme Court
• Parties: The Farmers' and Mechanics' National Bank <I>versus</I> King.

Page 202

57 Pa. 202

The Farmers' and Mechanics' National Bank versus King.

Supreme Court of Pennsylvania.

January 10, 1868.

February 20, 1868.

January 10th 1868.

Before THOMPSON, C. J., STRONG, AGNEW and SHARSWOOD, JJ. READ, J., at Nisi Prius

Error to the District Court of Philadelphia: No. 62, to January Term 1867.

COPYRIGHT MATERIAL OMITTED

H. Wharton (with whom was R. L. Ashhurst), for plaintiff in error.—The title of the true owners to the money after it was deposited was precisely as it had been before: Taylor v. Plumer, 3 M. & S. 562, 574; Eden on Bankruptcy 2; Pennell v. Deffell, 4 De G., M. & G. 389; 23 Eng. Law & Eq. 460.

They referred to and commented on the cases supposed to have decided the question otherwise: Jackson v. Bank of U. S., 10 Barr 61; Bank of Northern Liberties v. Jones, 6 Wright 536; Sims v. Bond, 5 B. & Ad. 389; Cooke v. Seeley, 2 Exch. 746.

The account was sufficiently distinguished as a firm account by continuing in the same name: Cooke v. Seeley, supra; Bodenham v. Hoskins, 13 Eng. Law & Eq. 222; s. c. 2 De G., M. & G. 903.

A fund may in equity be followed wherever its substantial identity can be traced: U. S. v. Waterbury, Davies' U. S. Rep. 15; Goepp's Appeal, 3 Harris 428; Scott v. Surman, Willes 407; Whitcomb v. Jacob, 1 Salk. 160; Taylor v. Plumer, supra.

G. D. Budd and H. E. Wallace, for defendant in error, cited Cooke v. Seeley, Jackson v. Bank of U. S., Bank of Northern Liberties v. Jones, Pennell v. Deffell, Taylor v. Plumer, Bodenham v. Hoskyns, Goepp's Appeal, supra; Tassell v. Cooper, 9 C. B. 509; Pott v. Clegg, 16 M. & W. 321.

The opinion of the court was delivered, February 20th 1868, by STRONG, J.

There was evidence at the trial that the money which had been deposited in the bank by John H. Curtis was not his own, but that it belonged to his clients. He obtained it as their agent, and he held it as such. And, had the additional evidence offered been received, it would have appeared that at least $835.81 of the amount belonged to the Philadelphia Saving Fund Society and to the trustees of the Fotteral estate. It had been collected for them and deposited to the credit of their agent. Their right to it was not lost because it was thus deposited. It is undeniable that equity will follow a fund through any number of transmutations and preserve it for the owner so long as it can be identified. And it does not matter in whose name the legal right stands. If money has been converted by a trustee, or agent, into a chose in action, the legal right to it may have been changed, but equity regards the beneficial ownership. It is conceded, for the cases abundantly show it, that when the bank received the deposits it thereby became a debtor to the depositor. The debt might have been paid in answer to his checks, and thus the liability have been extinguished, in the absence of interference by his principals, to whom the money belonged. But surely it cannot be maintained that when the principals asserted their right to the money before its repayment, and gave notice to the bank of their ownership, and of their unwillingness that the money should be paid to their agent, his right to reclaim it had not ceased. A bank can be in no better situation than any other debtor. If an agent receives money of his principal and lends it, taking a promissory note to himself, the note belongs to the principal, and the borrower may not pay the agent after he has been informed that there is a superior right, and has received notice not to pay the agent. This is a rule of general application. Story, in his treatise on Equity, in section 1259, remarks: "It matters not in the slightest degree into whatever other form different from the original the change may have been made, whether it be that of promissory notes or of goods or of stock, for the product or the substitute for the original thing still follows the nature of the thing itself, so long as it can be ascertained to be such." Even at law an unknown principal may often avail himself of a contract made with his agent. In the case of a simple contract he may show that the apparent party was his agent, and treat the contract as made with himself, not, however, injuriously affecting the rights of the other party. In many of these cases he is allowed to sue directly upon the contract. But wherever he can show that his money has been placed in the hands of another by his agent, it is no objection to his claim that that other has promised to pay it to the agent. In Frazier v. The Erie Bank, 8 W. & S. 18, it was ruled that if an agent procure the note of his principal to be discounted and deposit the proceeds in bank to his own credit, the principal may maintain an action therefor against the bank in his own name, and this though the bank had no notice when the deposit was made that the money deposited did not belong to the agent. There are several English cases at law, some cited in the argument, and others referred to by Read, J., in Bank of Northern Liberties v. Jones, 6 Wright 536, that may be noticed; Sims v. Bond, 5 B. & Ad. 389, is one. It was an action brought to recover the balance of an account with a banker, in the name of another, upon the allegation that it was the money of the plaintiffs, and it was held that plaintiffs who seek to recover the balance of such an account must show that the loans were made by them. So in Tassell v. Cooper, 9 C. B. 509, where the bailiff of Lord Dudley had paid a check belonging to his employer into his own account with certain bankers, who received the cash for it, and gave credit for it in the bailiff's account, it was held that the bailiff could recover it, even after Lord Dudley had given notice to the bankers of the fraud, and indemnified them. These cases are hardly reconcilable with our own case of Frazier v. The Erie City Bank. It is perhaps fair to surmise that they would have been differently decided did the English system of pleading allow parties to stand in a court of law either as plaintiffs or defendants on a mere equitable right. In Pennell v. Deffell, 23 Eng. Law & Eq. 460, we have the rule as understood in equity. It was a contest between an official assignee in bankruptcy and insolvency and the executors of a prior deceased assignee, who had kept an account with bankers, into which he had paid his own money, as well as moneys of the trusts. The accounts were not distinguished as official accounts, but were opened in the depositor's own name. There was nothing to show that he was not alone interested in the sums due from time to time from the bankers. Lords Justices Knight Bruce and Turner held that the assignee was entitled as against the executors of the depositor. The former said that "when a trustee pays 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." There is much more in the case. It is particularly to be noticed that the moneys of several distinct trusts were carried...