Gray v. Elliott

• Decision Date: 28 June 1927
• Docket Number: 1329
• Parties: GRAY v. ELLIOTT [*]
• Court: Wyoming Supreme Court

257 P. 345

37 Wyo. 4

GRAY v. ELLIOTT ^[*]

No. 1329

Supreme Court of Wyoming

June 28, 1927

APPEAL from the District Court, Platte County; HON. WILLIAM A RINER, Judge.

Rehearing Denied.

Mentzer & Pickett, for plaintiff and appellant.

J. E Jacobson, W. B. Jones, and O. O. Natwick, for defendant and respondent.

BLUME Chief Justice. KIMBALL, Justice, concurs. POTTER, Justice, absent.

OPINION

ON PETITION FOR REHEARING

BLUME Chief Justice.

Under the findings of the court the question involved in this case succinctly stated, is whether or not a deposit made in a bank by an administrator in his individual name, and assuming, without deciding, that the bank knew that the money belonged to him as administrator, constitutes a special deposit, so as to make a claim therefor a preferred claim against the assets of the bank which subsequently becomes insolvent. We held in the original opinion that it did not. 255 P. 1. A petition for rehearing has been filed herein, and notwithstanding what was said in the original opinion, counsel again take the same position which they took originally, make largely the same argument which they did previously, and have cited to us numerous cases of the same general character cited before--many of them the same cases contained in the brief on the original hearing--so that it would seem that counsel have not understood the decision of this court, and that it requires some further statements on our part. Counsel have cited cases to the effect that a trustee must deposit trust funds in the name of the beneficiary of the trust, and that if he does not do so, he will be personally liable if the bank fails and a loss occurs. We have, of course, no fault to find with this rule, and we fail to see its application here. This rule was not relied on in the case at bar; it was, in fact, specifically sought to be avoided by attempting to obtain a preferred claim herein and thereby shift the burden on the general depositors of the bank, instead of holding the administrator liable under the rule mentioned. Again numerous cases are cited to the effect that where a bank assists a trustee in converting property belonging to a trust fund, it can be held accountable therefor. We may select a case at random from among the many cases relied on, and take for example the case of United States Fidelity and Guaranty Co. et al. v. United State National Bank, 80 Ore. 361, 157 P. 155, L.R.A. 1916 E. 610. In that case the bank permitted a fund deposited in the name of a guardian to be depleted by checks drawn by the guardian individually. The court held the bank liable, because guilty of aiding the guardian in misappropriating the fund. That case, and the numerous other cases cited to a like effect, could not aid us in solving the question here. These cases did not involve the point--the only one involved in the case at bar--as to whether a deposit was a general or special deposit. The confusion evidently arises out of terminology. We agree with the general rule that if a trust fund can be traced, it may be recovered. But it must first be established that there is a trust fund to be traced. Where such fund, consisting of money or other property, is deposited with a third party who has knowledge of the trust character thereof, and the property is converted by or with the knowledge of the depositee, equity will ordinarily disregard form, hold the depositee liable and protect the beneficiary of a trust, without reference to the fact whether the property was deposited generally or specifically. 3 R. C. L. 553; Central Nat. Bank v. Insurance Co., 104 U.S. 54, 26 L.Ed. 693. But where a deposit of money is made in a bank, and the bank becomes insolvent, another element enters into the case, which counsel have completely ignored; the bank then virtually disappears as a responsible party; the rights and equities of general depositors must then be considered, and the maxim that equality is equity should then, according to the great weight of authority, play a predominant part, and should not, in that event, make a favorite of the beneficiary of a trust, unless the deposit was a special deposit within the meaning of the rules recognized by law in such cases. As we pointed out in the original opinion, the mere fact that the money in question in this case was a trust fund in the hands of Paul L. Gray in his relation to Rachel E. Gray does not, according to the great weight of authority, in any manner establish that when that money was deposited in the bank a trust relation was created between the bank and the depositor. The bare fact that money deposited in a bank is trust money does not make the bank trustee, but creates the relation of debtor and creditor in similar manner as when money is deposited by an individual. Tiffany on Banks and Banking, 44; 3 R. C. L. 555, in addition to the authorities cited in the original opinion. Special circumstances must exist in order to make the deposit special instead of general, and inasmuch as equality is equity, courts have been careful to limit the number of special circumstances which will create a special instead of a general deposit. At the risk of repetition, we might again point out that three exceptions only to the rule that a deposit will be treated as a general deposit were recognized in City of Sturgis v. Meade County Bank, 38 S.D. 317, 161 N.W. 327, namely, (1) where money or other thing is deposited with the understanding that that particular money or thing is to be returned to the depositor; (2) Where the money or thing deposited is to be used for a specifically designated purpose, and (3) where the deposit itself was wrongful or unlawful. There can be no pretense that the first exception has any application in the case at bar. The court found against the claimant in this case and that implies that the court found against the contention made below that the money collected by the bank was to be used for a specific purpose, and hence the second exception above mentioned has no application in this case. Nor do we think that the third exception applies. The deposit was not received fraudulently. That is implied in the general finding of the court. There are a number of cases to the effect, and it seems to be the general rule,...