In re Johnson

• Decision Date: 18 December 1894
• Court: Michigan Supreme Court
• Parties: IN RE JOHNSON. v. CENTRAL MICHIGAN SAVINGS BANK. SHERWOOD

61 N.W. 352

103 Mich. 109

IN RE JOHNSON.

SHERWOOD v. CENTRAL MICHIGAN SAVINGS BANK.

Supreme Court of Michigan

December 18, 1894

Appeal from circuit court, Ingham county, in chancery; Rollin H Person, Judge.

Bill by T. C. Sherwood, commissioner of banking, against the Central Michigan Savings Bank, for the appointment of a receiver, and Daniel B. Johnson filed his petition to compel the receiver George W. Stone, to pay to him a certain fund held by the bank in trust. There was a decree for petitioner, and the receiver appeals. Affirmed.

M. V. & R. A. Montgomery, for appellant.

Cahill & Ostrander, for appellee.

Where a trustee, who has mingled the trust fund with his own, pays out money for his own use from the fund, it will be presumed that his own money was paid out rather than the trust money. McLeod v. Evans (Wis.) 28 N.W. 173; Carley v Graves, 48 N.W. 710, 85 Mich. 483; Sherwood v Bank, 53 N.W. 923, 94 Mich. 78; First Nat. Bank of Crown Point v. First Nat. Bank of Richmond, 76 Ind. 561; Kimmel v. Dickson (S. D.) 58 N.W. 561; Peak v. Ellicott, 1 Pac. 499, 30 Kan. 156; Ellicott v. Barnes (Kan.) 1 Pac. 767; People v. Bork, 96 N.Y. 188; Harrison v. Smith, 83 Mo. 210; National Bank v. Insurance Co., 104 U.S. 54; Pomeroy v. Benton, 57 Mo. 531; Jewett v. Dringer, 30 N. J. Eq. 291; 1 Story, Eq. Jur. 568.

HOOKER J.

The Central Michigan Savings Bank of Lansing closed its doors and went into the hands of the commissioner of banking on April 18, 1893, being insolvent. Subsequently, on a bill filed in the circuit court for the county of Ingham by the bank commissioner, George W. Stone was appointed receiver, and took possession of the property of the bank. On May 19, 1893, Daniel B. Johnson filed his petition in said cause, asking that the receiver be required to pay over to him the sum of $7,206.96, which he claimed that said bank held in trust for him, to the exclusion of the claims of other creditors. An answer was filed, and upon the hearing, upon proofs taken in open court, a decree in accordance with the prayer of the petition for $5,581.96 was made, from which the receiver appealed.

The testimony shows that Johnson was a depositor in said bank and that he was the owner of two real-estate mortgages, upon which there was due upon April 14, 1893, about $10,581.96. Johnson died before the hearing. His son, Frank Johnson, testified that the mortgages were put in the bank, he supposed by his father, for collection, and were there some time, and that the witness left some discharges of these mortgages at the bank to be delivered upon payment. He continued: "Q. Now what instruction, if any, did you leave for Mr. Bradley, when you left those discharges? A. My father's instructions and mine both were that as soon as those mortgages were paid to notify us,-notify me there at the store, because the most convenient. Q. Was there anything said by you or by your father to Mr. Bradley about that money being placed to his credit in the bank when it was paid? A. I remember this: my father telling him that he didn't want it to go to his credit; that he had a place for it. And I told Mr. Bradley distinctly that we wanted to be notified as soon as that was paid; let us know, as father had a place for it,-then had a place for five thousand dollars money; and he wanted it just as soon as it was paid in; he wanted it." This testimony is undisputed. It also appears that the amount paid upon the mortgages was not credited upon the account of Johnson, but was credited to "cashier account" until the 18th of April, when it was carried to "Johnson account," apparently with debits consisting of a cash payment of $5,000, and a draft, which will be mentioned later. Petitioner asks relief, upon the theory that this was a special deposit; that it was the duty of the bank to collect the money, and hold it for him, and not treat it as money paid to the bank in the ordinary way, subject to be mingled with other moneys of the bank, credit to be given to petitioner; and that, although the bank did mingle it with other funds, it was wrongfully done, and the fact would not prevent petitioner's recovery thereof if the bank still had sufficient of the fund on hand. Evidence was introduced showing that the bank had more than the amount claimed on hand at all times after the mortgages were paid until the receiver took possession. On behalf of the receiver it is contended that the petitioner was not entitled to the relief granted for several reasons: First, because the bank did not receive payment in money; second, because it received nothing, unless it was a credit with some other bank, and there is no proof that it ever received a dollar upon that credit; third, because, if it was a trust fund, it was divested of that character by the act of the petitioner's legal representative, petitioner being dead. Bradley testified that he delivered the discharges upon receipt of the checks of the building and loan association. He had previously said that $4,300 of the money to pay up the mortgage was furnished through Mr. Ostrander, and the Capitol Building & Loan Association furnished the remainder that was paid. This is all that we discover in the testimony upon the subject of the method of payment. The respective amounts appear credited to the cashier account, as already stated. Whether these checks were payable upon Lansing banks or foreign banks does not appear. Section 3 of the petition alleges that the amount claimed "was paid to the said Nelson Bradley on the 14th day of April, 1893, and that he *** thereupon held the money on behalf of petitioner, and delivered the notes, mortgages, and discharges to the person who paid the same." Section 7 of the answer "admits that on April 14th last the amount due upon the mortgages was paid to the cashier,"-i. e. Mr. Bradley; also that the notes and mortgages were delivered, etc. It denies that the bank held the money on behalf of the petitioner as agent. Section 8 of the answer "denies, upon information and belief, that said money was not, when so received by said cashier, deposited with the funds of the bank, but was by him held and kept as a separate deposit for petitioner until April 18th;" and it avers, on like information and belief, that "when said money was so received by said cashier it was by him placed in the vaults of said bank, with the other currency belonging thereto, and the amount thereof was at once entered in the books of the bank, in what is known as the 'cashier's account,' to the credit of said petitioner." The witness Roy Jones, an employ� of the bank, stated that the cashier's account "shows money that was left in the bank for a short time, to be paid out without starting a special account for the money or credit." The evidence quoted, together with the allegations of the petition which were admitted by the answer, may be said to establish the fact that the bank was expressly prohibited from placing the proceeds of the mortgage to the credit of the petitioner in any such way or sense as to establish the relation of debtor and creditor between the bank and himself, and that the bank received the money. Force is...