Hewitt v. Hayes
| Decision Date | 01 March 1910 |
| Citation | 205 Mass. 356,91 N.E. 332 |
| Parties | HEWITT v. HAYES et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Hewitt & Adams, for plaintiff.
Louis C. Southard, for defendants Boardman, Dyer, and Southard.
Thibodeau & Ellsworth, for defendants Bryant.
Charles A. Williams and Harold Williams, Jr., for defendants.
Robert Homans and Frank J. Sulloway, for trustees.
Robert H. Gardiner, Jr., for intervening petitioners.
It has been decided that the plaintiff is entitled to require the original defendants, the executors of the will of Samuel G. Wells, who was a partner in the late firm of Bangs & Wells, to turn over to the plaintiff all the property and assets of that firm which have come into the hands of the defendants. Hewitt v. Hayes, 90 N.E. 985. This bill is brought to compel them to turn over and deliver to the plaintiff certain specific funds in the possession of the defendants. The main question raised as to each of these funds is whether they should be regarded as assets of the late firm that ought to be applied in payment of its debts or whether they are made up of trust moneys, which the intervening claimants or any of them have a right to hold, or at least to subject to an equitable lien or charge in behalf of the claimants.
One of these funds, which has been called in argument the 'For Whom It may Concern Fund,' was created and is held by the defendants Hayes and Wing individually. They were acting under the power of attorney given to them by Bangs after the death of Wells. This fund was made up of the cash found in the cash drawer of the firm which belonged to the firm itself and of other sums which also belonged to the firm, either as the proceeds of its property or as commissions due to it or otherwise. This fund is now deposited in the Shawmut National Bank in the names of the defendants Hayes and Wing 'for the benefit of whom it may concern.' It now amounts to more than $10,000. In our opinion this fund, which has been derived entirely from the property of the late firm, should be paid by Hayes and Wing to the plaintiff as prayed for in the bill; and the decree will so order.
The 'S. G. W. Fund,' it has been found, belongs as between the late firm and the individual estate of Wells entirely to the former. This finding was excepted to by the executors of Wells; but it seems to us that it is not inconsistent with any of the subsidiary findings upon which it was based, and the evidence is not reported. It follows that this exception to the master's supplementary report must be overruled.
Certain of the intervening claimants have excepted to the master's finding that the S. G. W. fund was one entire bank account, in no way separated or divided into parts so that any separate or distinct parts thereof were or could be established as trust property belonging to any of the claimants, and also to the ruling of the master made upon the tabulations submitted by these claimants and their contention that thereby certain distinct shares or proportions of this fund could be established or identified as trust property belonging to them. And some of the intervening claimants contend that in equity they are at least entitled severally to a charge or lien upon this fund for their satisfaction. Others of the claimants agree with the contention made by the plaintiff. These contentions raise the questions which are now to be passed upon.
It is not disputed and we do not doubt that the relations between the late firm of Bangs & Wells and each of its members on the one side and the respective parties for whom they acted including these claimants, on the other side, were strictly fiduciary. Either the firm or one of its members had been appointed and was acting as trustee for some of them, either by virtue of an appointment by the probate court or under some agreement between the parties. In other cases the firm was acting as the representative or agent of other trustees or in the management of property which had been committed to its care by the owners thereof. Their relations were strictly confidential and fiduciary, and they were under the ordinary obligations of trustees. Campbell v. Cook, 193 Mass. 251, 79 N.E. 261; Matter of Le Blanc, 14 Hun (N. Y.) 8; Union Stockyards Bank v. Gillespie, 137 U.S. 411, 11 S.Ct. 118, 34 L.Ed. 724; Gilbert v. Genard, 54 L. J. (N. S.) Ch. 439.
This fund, which had been deposited in the name of Wells in the City Trust Co., was really a continuation of the general bank account of the firm. Both money belonging to the firm itself and money collected by it or by Wells for it, but belonging to different principals or cestuis que trust for whom it had been collected, were deposited in this account. The latter amounts however made up the larger part of the deposits. Wells also drew checks against this fund or account, partly for the private uses of the firm or its partners, but mainly for proper payments to or for some or others of the parties to whom it equitably, in part at least, belonged. But all the amounts, including what belonged to the firm or to either of the partners therein and the different amounts that should have been paid to the respective principals or beneficiaries for whom it was held, were mingled in the bank in one common fund, so that, after the various deposits and the various withdrawals that were made, it would be difficult, if not impossible, upon any practicable method of identification or computation, to ascertain or distinguish any separate parts thereof as trust property belonging in equity to any of the intervening claimants. This is especially true when we consider that the amount of this fund is only about one-half of the total amount due to the claimants; and no apportionment of the fund could be made among them on the basis of an identification of their property without such inequality as might practically be a denial of justice to some of them. We are of opinion that the exceptions taken by some of the intervening claimants to the master's supplementary report should be overruled.
But these considerations do not dispose of all the questions raised in the case. We regard it as settled, to go no further than the facts in the case at bar, that when a trustee deposits in a bank in one fund without any earmark money of his own and money which he holds in trust for another, the beneficiary, though wholly unable to identify his money in the bank, may yet at his election follow the mixed fund which has been thus created by the trustee, and enforce a claim or charge thereon for his indemnity. And for the protection of the beneficiary it will be presumed that withdrawals made by the trustee by check from this mixed fund were made from the trustee's own part of the fund and not from that part which consisted of the trust money, so long as there remains in the fund available for use any part of the trustee's own money. National Bank v. Insurance Co., 104 U.S. 54, 26 L.Ed. 693, citing and stating the cases of Pennell v. Deffell, 4 De G., M. & G. 372; Frith v. Cartland, 4 Hem. & Mill. 417; In re West of England & South Wales District Bank, 11 Ch. D. 772; In re Hallett's Estate, 13 Ch. D. 696; Taylor v. Plumer, 3 M. & S. 562; Farmers' & Mechanics' National Bank v. King, 57 Pa. 202, 98 Am. Dec. 215; Van Alen v. American National Bank, 52 N.Y. 1. The rule in Clayton's Case, 1 Mer. 572, that checks are to be applied against deposits in the order of their respective dates, has been modified to this extent, as is shown by the cases above cited. And see, further, as to the general principle stated, Houghton v. Davenport, 74 Me. 590; Cushman v. Goodwin, 95 Me. 353, 50 A. 50; Importers' & Traders' National Bank v. Peters, 123 N.Y. 272, 25 N.E. 319; Ellicott v. Kuhl, 60 N. J. Eq. 333, 46 A. 945; Fire & Water Commissioners v. Wilkinson, 119 Mich. 655, 78 N.E. 893, 44 L. R. A. 493; Peak v. Ellicott, 30 Kan. 156, 1 P. 499, 46 Am. Rep. 90; Elizalde v. Elizalde, 137 Cal. 634, 66 P. 369, 70 P. 861; Richardson v. New Orleans Redemption Debenture Co., 102 F. 780, 42 C. C. A. 619, 52 L. R. A. 67; Hancock v. Smith, 41 Ch. D. 456; Ex parte Cooke, 4 Ch. D. 123. The converse of this doctrine was maintained in In re Oatway, [1903] 2 Ch. 356.
The beneficiary is not allowed a charge upon the entire fund, regardless of deposits and withdrawals made after the deposit of his own money, but only upon what is left in the fund after the application in the mode we have stated of whatever withdrawals have been made by the trustee. Peters v. Bain, 133 U.S. 670, 10 Sup. 354, 33 L.Ed. 696; In re Mulligan (D. C.) 116 F. 715, and 9 Am. Bankr. Rep. 11; Boone County National Bank v. Latimer (C. C.) 67 F. 27; Ober Co. v. Cochran, 118 Ga. 396, 45 S.E. 382, 98 Am. St. Rep. 118; Woodhouse v. Crandall, 197 Ill. 104, 64 N.E. 292, 58 L. R. A. 385; Burnham v. Barth, 89 Wis. 362, 62 N.W. 96. He is not given a charge upon the general estate of the trustee, on the ground that that estate has been enriched at his expense, but is merely allowed to hold a charge upon the specific account or fund into which his money has gone, and in which equity can presume that it still remains. See the discussion of this question in the note to Crawford County Commissioners v. Strawn, 15 L. R. A. (N. S.) 1100.
But it is claimed that our own recent decisions are at variance with this doctrine. We do not so consider. Little v Chadwick, 151 Mass. 109, 23 N.E. 1005, 7 L. R. A. 570, turned on the fact that the trust fund there in question could neither be identified nor traced into any psecific fund; and the court said that it was not enough that it had gone into the general estate of the defaulting trustee. But it was expressly stated in the opinion, as indeed is manifest, that there was nothing in...
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