Harrison v. Smith

• Decision Date: 31 October 1884
• Parties: HARRISON v. SMITH, Assignee, Appellant.
• Court: Missouri Supreme Court

83 Mo. 210

HARRISON

v.SMITH, Assignee, Appellant.

Supreme Court of Missouri.

October Term, 1884.

Appeal from Jackson Circuit Court.--HON. T. A. GILL, Judge.

AFFIRMED.

W. H. Watts and Henry Smith for appellant.

First. The relation of respondent Harrison to the Missouri Valley Bank was, throughout the entire period of thirteen months, which covered the transaction in question, never anything but that of creditor to debtor. The fact that Harrison deposited his money in the Missouri Valley Bank, with the view of loaning the same through that bank on real estate in Kansas City, does not in the least change the nature of the deposit. Second. Neither the fund in question, nor any proceeds therefrom, ever formed any part of the assets assigned to appellant Smith, or ever came into his hands in any condition whatever. Third. If the court should find that the money in question was a trust fund and did in effect come into the hands of Smith, assignee, Harrison would yet be without the remedy which he seeks by this action, for the reason that his money had been, prior to the assignment, as he admits in his petition, “mingled with the cash and other assets of said bank,” and was so mixed and mingled with such assets as to be incapable of separation or identification. In support of the above propositions, appellant refers to the following authorities:

2 Story Eq. Jur., §§ 1210, 1258, 1259, 1260, 1264; Story's Agency, §§ 229, 231; 1 Perry on Trusts, § 463; 3 Sugden on Vendors, 270, 273; Pennell v. Deffell, 23 Eng. L. & E. 460; 4 DeG., McN. & G. 388; Knatchbull v Hallett, L. R. 13 Chan. Div. 696; Taylor v. Plummer, 3 Maule & S. 562; Hobbs v. Hapgood, 14 N. B. Reg. 495; Brocchus v. Morgan, 5 Cent. Law Journal 53; Kipp v. Bank, 10 Johns. 63; F. & M. Nat. Bank v. King, 57 Pa. St. 202; Thompson v. Perkins, 3 Mason 232; Goodell v. Buck, 67 Maine 514; Steamboat Co. v. Locke, 73 Maine 370; U. S. v. Waterborough, Davies 154; Cook v. Tullis, 18 Wall. 332; Illinois T. & S. Bank v. First Nat., 16 Rep. 261; Buck v. Ashbrook, 59 Mo. 200-203; Mills v. Post, 76 Mo. 226; 7 Mo. App. 519.

Gage, Ladd & Small for respondent.

(1) The appellant's first position, that Harrison was an ordinary depositor with the bank, and consequently only had the rights of an ordinary creditor, cannot be maintained as a matter of fact. (2) Under the modern doctrines of equity, or rather the modern application of old and well-established equity doctrines, the plaintiff is entitled to the relief granted him by the decree of the circuit court. It is the combination of two well-known equity doctrines that accomplishes the result in such cases. One is that “so long as the trust property can be traced and followed into other property into which it has been converted, that remains subject to the trust;” the other is “that if a man mixes trust funds with his own the whole will be treated as the trust property, except so far as he may be able to distinguish what is his own.” Frith v. Cortland, 2 Hem. and M. 417-420; National Bk. v. Ins. Co., 104 U. S. 70; Mechanics' Bank v. King, 57 Pa. St. 202; Knatchbull v. Hallett, 13 Ch. D. 696; Butler v. Lawson, 72 Mo. 227. (3) The fact that Harrison's draft was drawn on New York, and sent there for credit by the bank, is not material. Substantially the latter had the money of plaintiff in its vaults when it sent the draft to New York.

NORTON, J.

The Missouri Valley Bank was a banking corporation doing business in Kansas City, and on the 17th day of February, 1881, it made a general assignment of its assets to defendant Smith for the benefit of creditors; and this suit was instituted against him for the purpose of impressing the assets in his hands with a trust, and, as a foundation for the claim, it is averred substantially in the petition that the Missouri Valley Bank was acting as the agent of plaintiff, who lived in the state of New York, in effecting loans of plaintiff's money on real estate security; that plaintiff, on being advised by the bank that it could effect a loan of $4,500 to Lycurgus and Elizabeth Raitsback, secured by deed of trust, sent to the bank in the last of December, 1880, or first of January, 1881, the sum of $4,500, not as a deposit, but as a special trust for effecting said loan, and which was to be held by said bank only for delivery to the said Raitsbacks when they executed and delivered a note for the same, secured by a recorded deed of trust; that said sum of money, instead of being applied by the bank, as directed and agreed by and between the bank and plaintiff, was wrongfully mingled with the cash and other assets of the bank which came to the hands of defendant Smith under the assignment. The prayer of the petitioner is that said sum may be decreed to be a lien on said assets, that it be paid out of said assets before the same or any part thereof is used for the benefit of the general creditors.

The defendant set up in his answer substantially that plaintiff was simply a depositor of the bank and that the relation between the plaintiff and the bank was simply and only that of debtor and creditor; it also denied that the bank contracted with the plaintiff as alleged in the petition; denied that the money claimed by him, or any part thereof, was wrongfully mingled with the cash and other assets of the bank, and as such came to the hands of defendant. It is then averred that when the money for which the suit is prosecuted was paid into said bank the same was not kept in a package separate and distinct from other funds, but that the same was mingled with its other money and effects, and was again, and long prior to said assignment, along with other money and effects, paid out by said bank in the usual course of its business, and that no part of said money or its proceeds remained in said bank or formed part of its assets or ever came to defendant's hands. In the trial of the issues involved, the trial court found in favor of plaintiff the sum of $3,150, and decreed its payment by defendant in conformity with the prayer of the petition, and from this judgment and decree the defendant has appealed.

The first question arising on the appeal is: Was the relation between plaintiff and the Missouri Valley Bank, as to the money sued for, that of principal and agent, trustee and cestui que trust, or simply that of depositor and depositary? The trial court found this relation to be that of trustee and cestui que trust, and this finding, we think, is abundantly sustained by the evidence. As the evidence upon this subject is epistolary and embraced in a lengthy correspondence, we omit it in consequence of its voluminousness, contenting ourselves with stating its substance. It appears from it that the plaintiff was a resident of Troy in the state of New York, and that the bank, in the latter part of the year 1879, through its cashier, wrote him a letter stating that loans of money could be effected in Kansas City on real estate security treble the...