First National Bank of Enosburg Falls v. E. E. Bamforth
| Decision Date | 04 February 1916 |
| Citation | 96 A. 600,90 Vt. 75 |
| Parties | FIRST NATIONAL BANK OF ENOSBURG FALLS v. E. E. BAMFORTH |
| Court | Vermont Supreme Court |
February Term, 1916.
GENERAL ASSUMPSIT. Pleas, the general issue and discharge in bankruptcy. Replication, claim not scheduled, fund in question obtained through fraud, and retained in a fiduciary capacity. Trial by court at the March Term, 1915, Franklin County, Fish, J., presiding. Judgment for the plaintiff. The defendant excepted. The opinion states the case.
Judgment reversed and judgment for the defendant to recover his costs.
Hogan & Hogan for the defendant.
S R. Boright and M. H. Alexander for the plaintiff.
Present MUNSON, C. J., WATSON, HASELTON, POWERS, AND TAYLOR, JJ.
Bamforth owed the Bank a note, and put up as security therefor a certain negotiable note signed by one Metcalf. The Bank failed to notify Metcalf of the transfer of his note, and he paid it to Bamforth, who falsely represented that he still held it. Bamforth appropriated the avails of the collateral note to his own use, and was afterwards discharged in bankruptcy. The important question in the case is, Does the Bank's claim against Bamforth on account of such collection and appropriation, assuming the validity of such claim, survive the discharge?
The provisions of the Bankruptcy Act involved here read as follows: "A discharge in bankruptcy shall release a bankrupt from all of his provable debts except such as * * * * (2) are liabilities for obtaining property by false pretences or false representations or for wilful and malicious injuries to the person or property of another, * * * *; (3) have not been duly scheduled in time for proof and allowance, with the name of the creditor if known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy; or (4) were created by his fraud, embezzlement, misappropriation, or defalcation while acting as an officer, or in any fiduciary capacity."
No question is made as to the original validity of the plaintiff's claim, and we therefore assume it. Nor is the provability of the claim questioned; but we recognize the fact that under the rule prevailing with us it would be our duty to sustain the judgment below by a determination of this question, if it could be done. Since the amendment of 1903, some question has been made as to the provability of unliquidated torts, pure and simple. 3 R. C. L. § 150. But all seem to agree that when the tort is of that character that it can be waived and an action quasi ex contractu maintained, the claim is a debt within the meaning of the bankruptcy act and provable. 3 R. C. L. § 72; Note 1 L.R.A. (N.S.) 202; Note 8 L.R.A. (N.S.) 961; Note 9 Ann. Cas. 448; Crawford v. Burke, 195 U.S. 176, 49 L.Ed. 147, 25 S.Ct. 9; Clarke v. Rogers, 228 U.S. 534, 57 L.Ed. 953, 33 S.Ct. 587; Reinhardt v. Friederich, (Ind.) 108 N.E. 258.
That the claim here asserted is of the class named cannot be denied. The plaintiff has in fact waived the tort by suing in assumpsit. He has elected to stand on his contractual rights. Whether this action on the part of the plaintiff affects his tort-wise claim is a question not presented. We may say in passing, however, that if the point had been raised, it would be a question for very serious consideration whether or not the plaintiff has not, by proceeding to judgment against Metcalf on the collateral note, thereby made a binding election of remedies, precluding an action against the defendant.
The claim in suit is not one for obtaining property by false pretences. The right of the plaintiff does not arise from the manner in which the defendant obtained the money and property taken by him in payment. It is true that the latter deceived Metcalf and it is probable that Metcalf could have sustained an action for obtaining money by false pretences. But this does not furnish the basis of the Bank's action. It is, so far as the plaintiff is concerned, wholly immaterial how Bamforth came into possession of the avails of the collateral notes.
Nor can it be said that this liability arose from wilful and malicious injuries to the property of the plaintiff. Neither the money nor the property was paid or received as the Bank's. Title thereto never vested in the Bank,--at least not until the Bank took some action toward asserting ownership of it. The Bank was not obliged to affirm the transaction or in any way notice or recognize it. In fact, the Bank did ignore it and sued Metcalf and pursued the suit to final judgment, thereby repudiating the payments made to Bamforth. It was only after that judgment against Metcalf proved worthless that the Bank turned to Bamforth. It was only in an equitable sense that the Bank had any interest in the money and property received by him.
Subdivision (3) will not avail the plaintiff, because it appears that the Bank had full and seasonable knowledge of both the bankruptcy proceedings and Bamforth's collections on the collateral note.
We conclude, then, that this action must stand or fall by the provisions of subdivision (4) of the section quoted. It is to be noted that the term "fiduciary capacity" relates back to and qualifies the terms "fraud," "embezzlement," "misappropriation" and "defalcation." Crawford v. Burke, 195 U.S. 176, 49 L.Ed. 147, 25 S.Ct. 9; Bullis v. O'Beirne, 195 U.S. 606, 49 L.Ed. 340, 25 S.Ct. 118; Tindle v. Birkett, 205 U.S. 183, 51 L.Ed. 762, 27 S.Ct. 493. So the controlling inquiry is as to the true scope and meaning of the term "fiduciary capacity."
It is fully established that this term carries the same meaning that it did in the Acts of 1841 and 1867, and that it embraces technical trusts only, and not implied trusts. Chapman v. Forsyth, 43 U.S. 202, 11 L.Ed. 236; Hennequin v. Clews, 111 U.S. 676, 28 L.Ed. 565, 4 S.Ct. 576; Stickney's Admr. v. Parmenter, 74 Vt. 58, 52 A. 73; Flanders v. Mullin, 80 Vt. 124, 66 A. 789, 12 Ann. Cas. 1010.
This doctrine, the accuracy and wisdom of which we are not at liberty to question, denies this plaintiff a recovery. In any view, Bamforth was nothing more than a constructive trustee. There was not and could not be a technical trust thus created. The plaintiff argues that Bamforth was a trustee de son tort. It is true that one may become such by assuming the administration of a trust fund or estate. Huntley v. Denny, 65 Vt. 185, 26 A. 486; Bailey v. Bailey, 67 Vt. 494, 32 A. 470, 48 Am. St. Rep. 826. But a single act of conversion or confiscation, or a series of such acts, does not make one a guardian, trustee or executor de son tort. Moreover there can be no trustee de son tort in implied trusts. The term is only applicable to technical...
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