Foster v. Rincker

• Citation: 4 Wyo. 484,35 P. 470
• Parties: FOSTER, RECEIVER, ETC., v. RINCKER
• Decision Date: 16 January 1894
• Court: United States State Supreme Court of Wyoming

35 P. 470

4 Wyo. 484

FOSTER, RECEIVER, ETC., v. RINCKER

Supreme Court of Wyoming

January 16, 1894

Commenced in District Court May 9, 1893.

ERROR to District Court for Laramie County. HON. RICHARD H. SCOTT Judge.

Action by Herman C. Rincker against Joel Ware Foster, as receiver of the Cheyenne National Bank, to recover the proceeds of a note left with the said bank for collection, and collected by it before its insolvency. The prayer of the petition was that the amount be declared a trust fund, and that the receiver be ordered to pay the same to the plaintiff. Judgment was rendered in favor of the plaintiff and the receiver instituted proceedings in error. The facts are stated in the opinion.

Decree affirmed.

B. F Fowler and Baird & Churchill, for plaintiff in error.

The obligation of the drawer of a draft or maker of a check is that the drawee will accept and pay the bill. (Daniels Neg Instr., Sec. 898; Randolph Com. Paper, Sec. 122; Tiedeman Com. Paper, Sec. 507.) Such liability is to be determined by the law of the place where the draft was made (Randolph, Sec. 21; Tiedeman, Sec. 507). In Wyoming the liability is the same as the first indorser of other negotiable instruments (L. 1888, p. 154). The liability is therefore contingent by way of guaranty until dishonor. (Randolph, 1136, 122, 739; Daniels, 898; Tiedeman, 507.) Dishonor arising after failure of the bank, no trust is created after its failure (Venango Nat'l B'k v. Taylor, 56 Pa. 14; Sec. 5242, R. S. U. S.). In Wyoming, by statute, a check after presentment is an assignment pro tanto of the deposit. In the absence of pleading to the contrary it must be assumed that the rule of law is the same in Nebraska (Sutherland Stat. Const., p. 248; Bank v. Lambert, 4 Rob., 463; State v. Cross, 68 Ia. 180; Hickman v. Alpaugh, 21 Cal. 225; Walsh v. Dart, 12 Wis. 635; Ellis v. Maxon, 19 Mich. 186; Savage v. O'Neill, 44 N.Y. 298; Lucas v. Laden, 28 Mo. 342; Connolly v. Riley, 25 Md. 402; Green v. Rugely, 23 Tex. 539; Hall v. Pillow, 31 Ark. 32; Territt v. Woodruff, 19 Vt. 182). The check issued by the bank to plaintiff was presented after the act of insolvency on the part of the Cheyenne bank. Assignments after insolvency are prohibited on the part of national banks. (U. S. Rev. Stat., Sec. 5242; Bank v. Colby, 21 Wall., 609.) Where funds assigned by check are paid over to the maker, their identity becomes lost and cannot be followed. (Row v. Dawson, 1 Ves. Sr., 331; Cowperthwaite v. Sheffield, 3 Comst., 243.) The bank terminated its trust relations with respect to the collection by issuing a draft upon a debtor bank, because the proceeds were mingled with other assets of the bank. (Phila. N. B'k v. Dowd, 38 F. 172; Merchants &c. Bank v. Austin, 48 F. 25.) The funds must be traced or a trust will not arise. (Com'l &c. Bank v. Armstrong, 39 F. 692; Franklin Co. Bank v. Beal, 49 F. 606; Overseers v. Bank, 2 Gratt., 544; Whitley v. Foy, 6 Jones Eq., 34; Thompson v. Perkins, 3 Mason, 232; Kip v. Bank, 10 Johns., 63; Van Alen v. Bank, 52 N.Y. 1; Bank v. King, 57 Pa. 202; Cook v. Tullis, 18 Wall, 332; Schuler v. Bank, 27 F. 424; Bank v. Ins. Co., 104 U.S. 54; Cavin v. Gleason, 105 N.Y. 256; Anheuser-Busch &c. v. Clayton, 56 F. 759, and cases cited; First N. Bank v. Armstrong, 42 F. 193).

W. H. Fanning and Potter & Burke, for defendant in error.

A claim sent to a bank for collection establishes as between the sender and the bank the relation of principal and agent. The receiver of the bank acquires no better or different title to the moneys coming into his hands as such than that which the bank had. (Gluck & Becker, p. 193; Casey v. Society, 2 Woods, 77; Cutting v. Damerel, 88 N.Y. 410; Lincoln v. Fitch, 42 Me. 456; Butterworth v. O'Brien, 23 N.Y. 275; Nat'l Ex. Bank v. Beale, 50 F. 355; and 55 F. 894.) Money received by a bank as the proceeds of a collection constitutes a trust fund, and can be recovered from the receiver even though it may have become mingled with the general funds of the bank. (McLeod v. Evans, 66 Wis. 401; Francis v. Evans, 69, id., 115; Bowers v. Evans, 71 id., 133; Peak v. Ellicott, 30 Kan. 156; Ellicott v. Barnes, 31, id., 170; Meyers v. Board &c., 32 P. 661 (Kan.); Nurse v. Satterlee, 81 Ia. 491; Griffin v. Chase, 54 N.W. (Neb), 572; M'f'g Nat'l Bank v. Continental Bank, 148 Mass. 553; Continental Bank v. Weems, 69 Tex. 489; Kinney v. Paine, 68 Miss. 258; People v. City &c., 96 N.Y. 35; In re Blanc, 14 Hun., 8; People v. Bank, 39, id., 187; McCall v. Fraser, 40, id., 113; Thompson v. Bank, 8 Atl., 97; First Nat. Bank v. Armstrong, 36 F. 59; First Nat. Bank v. Hummell, 23 P. 896, and 32 P. 72 (Colo.); San Diego Co. v. Cal. Nat. Bank, 52 F. 62; In re Armstrong, 33 F. 405; Fifth Nat. Bank v. Armstrong, 40, id., 46; Peters v. Bain, 133 U.S. 670; Nat. Bank v. Ins. Co., 104 U.S. 54; Grimes v. Cannell, 23 Neb. 189.) Money received by one standing in a fiduciary relation to the owner and by him placed in a special fund can be recovered wherever found, if it has not passed to an innocent purchaser for a valuable consideration. (Farmers &c. Bank v. King, 57 Pa. 202; and cases cited above.) The drawing and delivery of a draft is an assignment of so much of the funds upon which it is drawn as the draft calls for. (Fonner v. Smith, 31 Neb. 107; 4th Nat. Bank v. City Nat. Bank, 68 Ill. 398; Ridgely v. Patton, 109, id., 479; Union Nat. Bank v. Bank, 80, id., 212.) The money upon which the draft was drawn being in Nebraska, the law of that state must govern. (Nat. Bank of Am. v. Ind. Banking Co., 2 N. E., 401.) The proper remedy is pursued (Nat. Bank v. Ins. Co., 104 U.S. 66; People v. Bank, 39 Hun., 187; McAllister v. Fraser, 40 id., 113; People v. Bank, 96 N.Y. 33). An abuse of a trust can confer no right upon the party abusing it, or those in privity with him (2 Story Eq. Jur., 1258; Snell's Jur., 155).

Counsel for plaintiff in error in reply contended that the draft issued by the collecting bank to the owner of the note constituted a payment and cited in addition Taylor v. Williams, 11 Metc., 44.

CLARK, JUSTICE. GROESBECK, C. J., and CONAWAY, J., concur.

OPINION

CLARK, JUSTICE.

This was an action brought in the court below by defendant in error in which he sought a decree declaring certain funds which came into the possession of plaintiff in error, trust funds, and ordering that they be paid over by plaintiff in error to him with interest. To the petition of plaintiff below the defendant there interposed a general demurrer. The demurrer was overruled and defendant below electing to stand by his demurrer, proofs were offered sustaining the allegations of the petition, findings of fact made by the court and a decree entered as follows:

"It is therefore considered, ordered, adjudged and decreed that of the sum of sixteen hundred and thirty-five dollars collected by the Cheyenne National Bank for the plaintiff as aforesaid, sixteen hundred and thirty-four dollars thereof is a trust fund, and that the defendant, as receiver of the Cheyenne National Bank be, and he is hereby directed and ordered to pay to the plaintiff, out of any moneys in his hands, or should there not be sufficient funds in his hands at this time, then out of the first moneys received by him as such receiver, the full sum of twelve hundred and fourteen and forty-six one-hundredths dollars ($ 1,214.46) and to the clerk of this court the costs of this suit, taxed at $ 6.50."

Thereafter motion for a new trial was filed and upon hearing was overruled. Exceptions were duly reserved by defendant below to all the rulings, orders and decree of the trial court, and the cause came here upon the record setting forth the petition, demurrer, and ruling thereon, the findings of fact, decree, motion for new trial and ruling thereon.

Without setting forth in haec verba the petition or findings of fact made by the court below, the facts disclosed by the record are substantially as follows:

On the 11th day of November, 1891, The Cheyenne National Bank was and for some time prior thereto had been a banking corporation, organized under the national banking laws of the United States, and was located at and carrying on its business of banking at Cheyenne, Wyoming, and so continued until it ceased to do business on the 13th day of November 1891, as hereinafter stated. On the first named day, November 11, 1891, it held for collection for plaintiff below the note of one Charles F. Coffee, payable to the order of said plaintiff and upon which there was due on the said day the sum of $ 1,635.00. The note was received by the bank solely for collection, and was at all times until paid the property of the plaintiff below. On said day, November 11, 1891, Coffee paid to the bank the amount due upon the note, to wit: $ 1,635.00, giving to the bank in payment thereof a draft drawn by the Commercial National Bank of Harrison, Nebraska, upon the United States National Bank of Omaha, Nebraska, for said sum. On the same day the Cheyenne National Bank remitted the said draft to the First National Bank of Omaha, Nebraska, with instructions to collect and credit to the account of the Cheyenne National; and at the same time it (the Cheyenne National) forwarded by mail to the plaintiff below at Crawford, Nebraska, its draft upon the First National Bank of Omaha for the sum of $ 1,634.00, being the net proceeds of the collection. While it is not so stated in the pleadings or in the findings of fact, it is evident from the facts which are stated, and was admitted upon the argument, that the difference, viz. : one dollar, between the amount collected and the amount remitted to plaintiff below, was the charge made by the Cheyenne National Bank for the collection and remittance. At the time of drawing the said draft for $ 1,634.00 the...