Jones v. Chesebrough

• Decision Date: 10 May 1898
• Citation: Jones v. Chesebrough, 75 N.W. 97, 105 Iowa. 303 (Iowa 1898)
• Parties: THEODORE JONES, Assignee, v. C. E. CHESEBROUGH AND JAMES L GIESLER, Assignees, Appellants
• Court: Iowa Supreme Court

75 N.W. 97

105 Iowa 303

THEODORE JONES, Assignee, v. C. E. CHESEBROUGH AND JAMES L GIESLER, Assignees, Appellants

Supreme Court of Iowa, Des Moines

May 10, 1898

Appeal from Muscatine District Court.--HON. WILLIAM F. BRANNAN Judge.

THE plaintiff is the assignee of Nebergall Bros., and the defendants are assignees of A. A. Ball & Co., both firms having made assignments for the benefit of creditors.The cause was submitted on the following agreed statements of facts: "(1) That on December 12, 1895, E. L. Nebergall and J. A. Nebergall, as Nebergall Brothers, in the boot and shoe business at West Liberty, Iowa made a general assignment to the plaintiff, who accepted the trust.(2) That the defendants are assignees of A. A. Ball & Co., and of A. A Ball and S. T. Chesebrough, the members of said firm.(3) That on Dec. 12, 1895, A. A. Ball and S. T. Chesebrough under the firm name of A. A. Ball & Co., were bankers at West Liberty, Iowa and so continued to the 19th day of September 1896, when the firm and the members thereof made a general assignment for the benefit of their creditors.(4) That the plaintiff, as assignee, opened an account with said firm on the twelfth day of December, 1895, and continued the same, adding thereto from time to time by placing the proceeds of his sales and collections with them, until the 22d day of August, 1896; that he thus placed with them in said period the sum of $ 3,628.95, and withdrew by check the sum of $ 241.60, and that the remainder, to wit, $ 3,387.35, had not at the date of the assignment of A. A. Ball & Co. been delivered to the plaintiff; that no part of the said money was kept separate, but was by said A. A. Ball & Co. mingled with their own money, and used by them in the usual course of banking in the payment of their debts; that, during all of said period, the plaintiff, as an individual, had a personal account with said A. A. Ball & Co.; that he kept the same separate from his account as assignee; that because of the two accounts, he, when depositing, always indicated to which account the credit should be made; that, before said A. A. Ball & Co. received any money from the plaintiff as assignee, he explained to them that he was assignee of Nebergall Brothers, and that, as such, he would place on deposit the funds of his trust, and they agreed to receive them; that afterwards said funds were deposited with them, they knowing at the time each deposit of said trust funds were received that they belonged thereto.(5) That before this suit was commenced, and on December 10, 1896, plaintiff filed his claim with the defendant assignees, setting up his claim as above, and demanding that the balance be delivered to him at once, but said demand was refused.(6) That, at the date of the assignment of A. A. Ball & Co., they had no property of any kind, or securities in their hands, which had been purchased with the money deposited by the plaintiff, and no new loans had been made or property acquired by said bankers after plaintiff began depositing said money.(7) That, within a few days previous to the assignment of Ball & Co., there was paid into their hands a considerable amount of money belonging to the independent school district of West Liberty, most of which was paid out to depositors; that on the 12th day of December, 1896, by decree of this court, at the suit of said district, all the assets in the hands of the defendants as assignees were impressed with a trust in favor of said district to the amount of $ 6,199.43, which sums the assignees have since paid from collections made by them.(8) That the cash on hand at the date of the assignment of A. A. Ball & Co., and belonging to said firm and the members thereof, was only $ 449.62.(9) That, for one year next preceding the assignment of A. A. Ball & Co., the amounts paid out to depositors very largely exceeded the deposits received, and there was paid out to the depositors, and for expenses, all cash on hand and received, including $ 30,000 borrowed by pledge of a part of the notes owned by the bank, save the said balance of $ 449.62, remaining at the time of the assignment.(10) That the assets of the bank at the time of the assignment and coming to the assignees as such were of the estimated value of $ 186,000, and the estimated liabilities at the time were $ 221,000."The prayer is that the money received may be adjudged trust funds, and the claim be preferred.The district court gave the relief asked by the plaintiff, and the defendants appealed.

Reversed.

Carskaddan & Burk and Jayne & Hoffman for appellant.

J. E. McIntosh and P. M. Detwiler for appellee.

OPINION

GRANGER, J.

In Plow Co. v. Lamp, 80 Iowa 722;Independent District of Boyer v. King, 80 Iowa 497, 45 N.W. 908; and in Nurse v. Satterlee, 81 Iowa 491, 46 N.W. 1102this court sustained preference where, under an assignment for the benefit of creditors, the assignee or agent wrongfully deposited funds in an insolvent bank, that were received with knowledge of their trust character where the money deposited had been placed with the several funds of the bank, and used in the payment of debts or the business of the bank, in a way that the identical money could not be traced or other property found into which it had been placed.This holding is based on conclusions of fact that the money was placed in the bank, so that the transaction did not create the relationship of debtor and creditor between the owner of the money and the bank, nor that of depositor in a bank; but, because the deposit was unauthorized and wrongful, the money, as soon as placed in the bank, became a trust fund, and could not, properly, in case of an assignment for the benefit of creditors by the bank, pass to the assignee as a part of the assets of the estate.The case of Independent Dist. of Boyer v. King, supra, recognizes the fact that the authorities are in conflict as to the extent to which the rule should be applied.The facts in this case are such that appellant cont...