Independent Dist. of Boyer v. King

• Decision Date: 04 June 1890
• Citation: 80 Iowa 497,45 N.W. 908
• Parties: INDEPENDENT DIST. OF BOYER v. KING.
• Court: Iowa Supreme Court

80 Iowa 497

45 N.W. 908

INDEPENDENT DIST. OF BOYER

v.KING.

Supreme Court of Iowa.

June 4, 1890.

Appeal from district court, Harrison county; SCOTT M. LADD, Judge.

Action in equity to recover for money deposited by the treasurer of plaintiff with the assignors of defendant. There was a trial by the court, and a decree in favor of the plaintiff. Defendant appeals.S. I. King, for appellant.

H. H. Roadifer and J. W. Barnhart, for appellee.

ROBINSON, J.

The plaintiff is an independent district, duly organized for school purposes under the laws of Iowa. For some years preceding the commencement of this action one M. W. Wilson was the treasurer of plaintiff, and as such received considerable sums of money, which he deposited from time to time in a bank owned by Phineas and William C. Cadwell. On the 9th day of October, 1888, the Cadwells, being insolvent, made to defendant a general assignment for the benefit of their creditors. The defendant qualified as assignee, and entered upon the discharge of the duties of the position. The liabilities of the insolvents were found to be largely in excess of their assets. Among the former was a credit of $557.17 in favor of M. W. Wilson. Among the latter, was the sum of $835.61 in money. Wilson visited the bank of the Cadwells about the 1st of September, 1885, to deposit the money of plaintiff, which was then in his hands, and informed Phineas Cadwell, who was present, that he desired to deposit school money. He was given a book marked “Cadwell's Bank, in account with M. W. Wilson.” All the money he ever deposited in that bank belonged to plaintiff, although the account thereof was kept in his name. He made deposits continuously, and drew his checks against them from time to time as was required. The amount to his credit was the balance of his deposits remaining after deducting the amount of his checks which had been paid. The district court found that the money was deposited in trust for the benefit of plaintiff; that the Cadwells knew that fact; and that they had no authority to transfer it to defendant for the benefit of their creditors. The decree awarded to plaintiff the full amount of the aforesaid balance.

1. The principal question presented for our determination is whether the money deposited by Wilson was so impressed with the character of a trust fund that it can be followed, and the trust enforced against the estate of the Cadwells in the hands of their assignee, to the prejudice of their general creditors. It does not appear that any of the identical money deposited went into the possession of defendant. On the contrary, the admitted facts justify the conclusion that he received but little, if any, of it, and, if a trust for the amount in question is established, it must be on the ground that the deposits must be held to have increased the estate of the insolvents, and that the balance due is represented by an increase now in the hands of the assignee. The treasurer of a school-district is not authorized by law to deposit the school money in bank. He is required to hold all money belonging to the district, and to pay out the same on the order of the president, countersigned by the secretary. Code, § 1747. He is liable for all such money which comes into his hands, even though it be stolen without fault on his part. District Tp. v. Morton, 37 Iowa, 551. He is also liable therefor, even though it be destroyed by fire, (District Tp. v. Smith, 39 Iowa, 10;) or lost by the failure of the bank in which it was deposited, (District Tp. v. Hardinbrook, 40 Iowa, 130.) It is well settled that, as a rule, one who makes a general deposit in a bank parts with his title to the money so deposited, and that the bank acquires it. The transaction creates the relation of debtor and creditor, and is, in effect, a loan by the depositor to the bank. Marine Bank v. Fulton Bank, 2 Wall. 252;Thompson v. Riggs, 5 Wall. 663;Bank v. Millard, 10 Wall. 152; Ætna Nat. Bank v. Fourth Nat. Bank, 46 N. Y. 86; In re Franklin Bank, 19 Amer. Dec. 413, and note; Foley v. Hill, 2 H. L. Cas. 28. And it has been held that the same rule applies to deposits of public funds by officers to whom they are intrusted by law, where the fact that the deposits are of public funds is not known to the bank. Long v. Emsley, 57 Iowa, 12, 10 N. W. Rep. 280;Lowry v. Polk Co., 51 Iowa, 50;School-Dist. v. Bank, 102 Mass. 174.

When Wilson made the deposits in question, he had no title to the money, excepting that acquired by virtue of his office as treasurer, and no right to part with that title by making a general deposit. The Cadwells were fully advised as to the material facts, and therefore could acquire no title to the deposit adverse to the plaintiff. As to them, the money deposited constituted a trust fund, which they had no right to convert to their own use, and the fact that they mingled it with other money, so that the identity of that deposited was lost, would not destroy the trust character of the deposits, nor prevent the enforcement of the trust against property to which they had contributed. To hold otherwise would be to ratify a willful violation of law at the expense of an innocent party, and thus perpetrate a wrong. The defendant acquired no property rights, as against plaintiff, which the Cadwells could not have enforced, and he has no special interest which requires protection. The same is...