Green v. Cole

• Decision Date: 06 February 1911
• Docket Number: 14457
• Court: Mississippi Supreme Court
• Parties: JOHN GREEN v. J. R. COLE, TREASURER, AND J. A. RAMEY, SHERIFF

54 So. 65

98 Miss. 67

JOHN GREEN v. J. R. COLE, TREASURER, AND J. A. RAMEY, SHERIFF

No. 14457

Supreme Court of Mississippi

February 6, 1911

APPEAL from the chancery court of Wayne county, HON. T. A. WOOD Chancellor.

Bill by J. A. Ramey, sheriff, and tax collector, and J. R. Cole treasurer of Wayne county, against John Green and others. From a decree for complainants, defendant, Green, appeals.

The facts are fully stated in the opinion of the court.

Affirmed.

Mayes &amp Longstreet and Heidleburg & Heidleburg, for appellant.

The real question raised in this case is not discussed in the brief for appellees, to any extent whatever.

In that brief, after citing section 3485 of the Code, quotation is made from the two cases of Fogg v. Bank, 80 Miss 750, and Metcalf v. Bank, 89 Miss. 662, to the effect that the county officers are entitled to priority of payment "out of the assets of the bank." Then reference is made to "Words and Phrases" in order to show that the word "assets" embraces real estate as well as personal property. This is practically the whole argument. It does not touch the true question.

That question is this: What did the court itself mean in the proposition quoted from those decisions? What was it that this court had in mind when it used that expression? What is the reasonable and true rule, which alone the court could have intended to announce?

The question does not turn on any dogmatic definition of the word "assets," extracted from a law lexicon.

In order to deduce the real meaning of the court, and to arrive at the true limits of the doctrine announced, it is best to recite briefly the history of this question, for a few years back.

It will suffice, we think, to begin with the case of Shields v. Thomas, 71 Miss. 260. This case arose in 1891. The bank of Greenville failed. The tax collector had a large sum of money on deposit, for the state, the county, and the levee board. There was only three hundred and sixty-eight dollars on hand. None of the money deposited by the tax collector could be traced into the hands of the receiver, or traced into any of the assets received by him. The decision in the lower court was adverse to the district attorney, who sought to fix a charge on the general assets. He appealed, and this court affirmed the case. This court delivered a long opinion, reviewing all of the cases, and the leading textbooks, which review of authorities will show for itself. In that opinion, the court said, in conclusion that:

"As to the general assets of the Bank of Greenville, we think the petitioner is not entitled to relief upon the facts stated in the petition, because it is not shown that the funds deposited by the tax collector now form a part thereof in any form. The record does not disclose to what purpose the fund was applied. For any thing that appears to the contrary, it may have been lost in trade, appropriated to the payment of pre-existing debts or paid out to the agents and officers of the bank for services rendered, and what, if any portion was so lost or applied could probably not be ascertained with any degree of certainty. The court, in attempting to determine what portion, if any, of the trust fund has been lost and what yet remains as invested in and represented by the existing assets, would, from necessity, act upon mere conjecture."

Thus the law was carefully and definitely announced, as of and for the date 1891, at the October term, 1893. That suit was brought by the district attorney in obedience to a special statute to that end, approved February 10, 1892 (Laws 1892, p. 46).

At the same session of the legislature, the Revised Code of 1892 was enacted; and section 3077 of that Code was inserted into the chapter on Public Officers by that legislature--a new statute, adopted with manifest reference to the Greenville Bank matter; and manifestly intended either to declare the existing law or else to change the law if it should be decided adversely to the state's claim.

As it turned out, the law was changed by the statute, which is now section 3485 of the Code, and is as follows:

"3485. PUBLIC MONEYS ARE TRUST FUNDS. All moneys deposited in bank, or with any other depository, by or for a tax collector, or other officer having the custody of public funds, state, county, municipal, or levee board, whether the same be deposited in the name of the officer as an individual or as an officer, or in the name of any other person, is prima facie public money and a trust fund, and is not liable to be taken by the general creditors of the officer or by the creditors of the depository." What that statute really meant was, that all such moneys should constitute, in effect, prima facie, a special deposit, should be kept in hand, and should not be subject to seizure, either by creditors of the officer (as by garnishment), or by creditors of the bank.

This court, however, construed it more broadly; but it never has been held to mean what is now claimed for it in this case, nor anything near it.

Fogg v. Bank, supra, 80 Miss. 750, was decided in 1902. The facts and the decision were as follows:

The Bank of Friars Point failed. The tax collector had on deposit some of his public moneys. The bank made a general assignment. The tax collector claimed a preference, under the statute. His claim was sustained. In so holding, this court placed its decision on the following ground (pages 755-756):

"The bank received it as a trust fund nolens volens, and the principles of equity relating to trusts fully apply to it. It is a leading principle of equity jurisprudence that 'wherever a duty rests upon an individual, in the absence of all evidence to the contrary, it shall be presumed that he intended to do right rather than wrong; to act conscientiously rather than with bad faith; to perform his duty rather than violate it.' It must therefore be presumed, so far as it may, that the bank as trustee preserved the trust fund until all its other estate was exhausted, and that the trust moneys, so far as possible, are represented in the remaining assets of the bank."

Thus this court held that a presumption arose; but what sort of presumption: Manifestly, a presumption prima facie; that is, indeed, the very provision of the statute. It is not a conclusive presumption at all. Besides, a presumption of what? The opinion answers: "That the bank as trustees preserved the trust fund until all its other estate was exhausted, and that the trust moneys, so far as possible, are represented in the remaining assets."

This statute, as construed and applied, in short, overruled Fogg v. Bank, supra, and provided that such deposits should have priority over general creditors, even though the depositors could not be traced. But it went, at least the case went, not one whit further.

Then came Metcalf v. Bank, 89 Miss. 649, decided in 1906-07. The Merchants and Planters Bank of Greenville had failed and assigned. The tax collector had deposited public moneys, and he was claiming a preference over the general creditors. General creditors filed a bill for various purposes, amongst others denying the right of the tax collector to have any preference. Various points were decided by the court. The question of preference was thus disposed of (and this is all that was said, page 662):

"On the point of the deposit by the sheriff we decide that it was a trust fund, under Ann. Code 1892, § 3077, and entitled to priority of payment out of the assets of the bank. Fogg v. Bank, 80 Miss. 755."

Now in neither of the foregoing cases was the question here raised, either considered or decided. It is true that the court said that "a priority of payment out of the mass of assets arises to the tax collector;" but this remark of the court, under the well known general rule in such case, must be confined to the case before it, and to the assets before it; and they were assets into which, while it could not be proved that the deposits went, yet still it was reasonably possible that they went.

In the leading case, Fogg v. Bank, the conclusion announced was expressly put on a presumption of equity. The operation of the statute, as it was shown by the court, was, not to fix a lien on all the property of the bank, but to fix the character of trust funds on the moneys deposited, whether so deposited expressly as official moneys or nominally as private moneys; and, says the court, the moneys being received as trust moneys, even nolens volens, the presumption of equity attached (because of the trust fund) that the bank has done what a trustee should do, and has retained those trust moneys in its possession, either in its original or in its transmuted form. Observe the careful language employed by Judge Terrall.

Obviously, however, the assets which may be resorted to, out of which to claim a preference, must be, and can only be such assets as there is a reasonable possibility that the trust moneys shall have gone into them. It may not be possible to trace it actually, to show the ear marks on it; but it must be reasonably possible that it is there.

Again, we urge, let this court note the careful expressions of the Fogg case, to-wit: "The principles of equity relating to trusts apply to it. . . . It must therefore be presumed, so far as it may, that the bank as trustee preserved the trust fund until all its other estate was exhausted, and the trust monies, so far as possible, are represented in the remaining assets of the bank."

But here the proof is that, so far as this special asset or fund is concerned, it is not possible that the trust moneys are represented in it.

The case of Hardy v. Bank, 53 So. 395, which is so confidently relied on in the supplemental brief lately filed by the appellee, has no bearing on this...