Leonard v. Marshall

• Decision Date: 21 May 1897
• Citation: 82 F. 396
• Parties: LEONARD v. MARSHALL et al.
• Court: U.S. District Court — Western District of Missouri

82 F. 396

LEONARD v. MARSHALL et al.

United States Circuit Court, W.D. Missouri.

May 21, 1897

This was a suit in equity by M. W. Leonard against T. W. Marshall and William Challfant, Jr., to recover the sum of $2,600 with interest thereon to March 1, 1892. The facts were as follows:

On October 16, 1885, the plaintiff, a resident of Howard county Mo., loaned, through one J. C. Thompson, to one M. O. Green a farmer of Pettis county, Mo., $5,000, and took his note due in three years, secured by deed of trust on 640 acres of Pettis county farm lands. After this note became due, Thompson suggested to Green that he could get him an eastern loan at a lower rate of interest, with which he could take up and pay plaintiff's note. Thompson for a long time had been making loans for defendants, T. W. Marshall & Co., in Pettis and adjoining counties, and had general charge of their loan business there. Green assented to this arrangement, and on July 8, 1891, Thompson, having prepared Green's application for a loan of $5,000, forwarded the same to defendants, who thereafter agreed to make the loan. Thompson prepared the note and deed of trust, securing the same upon the same land on which the plaintiff's note was secured. The note was payable to the order of T. W. Marshall & Co., and the deed of trust was made to J. C. Thompson as trustee for them; and on August 1, 1891, Green executed the note and deed of trust, and delivered them to Thompson for defendants. At the same time he directed Thompson to pay plaintiff's note with the proceeds of the loan he was getting from defendants. Thompson placed the note and deed of trust with his private papers, where they remained until September 30, 1891, when he filed the deed of trust for record in the county recorder's office; but he still retained the note in his hands. On August 14, 1891, defendants wrote, inquiring of Thompson about the Green loan, to which he replied that he had the papers already executed, but was waiting for Green to make up the difference between this loan and the old loan with accrued interest. Nothing further seems to have been done in the matter until about the 25th day of February, 1892, when Thompson wrote to the plaintiff, Leonard, stating that Green had secured a loan, and was ready to take up plaintiff's note, and directing plaintiff to indorse it, so that he (Thompson) could release the deed of trust as the legal holder of the note; which plaintiff accordingly did, sending the note to Thompson for collection and remittance. Accordingly, on February 27th, Thompson released plaintiff's deed of trust, and on the same day wrote to defendants, T. W. Marshall & Co., forwarding to them all the papers connected with their Green loan, making excuses for the delay, and asking them to remit the full amount of the loan, less the commission agreed upon. To this the defendants replied, inclosing a statement of their account with Thompson, as follows:

"We credit you M. O. Green loan .......	$4,875 00
We charge you on acc't of Janney loan ..	$1,000 00
On acc't of David McNair loan ...........	1,600 00
Remittance to New York ..................	2,275 00
---------	$4,875 00"

They accordingly remitted, instead of the full $5,000, less their commission, as requested by Thompson, the balance shown by this account, namely, $2,275. The McNair loan referred to in the account was a loan made by defendants through Thompson, and which had become due, and had been paid to Thompson for the defendants; and it seems that it had been understood between defendants and Thompson that he should retain the amount to be applied upon the Green loan when the transaction should be completed. In regard to the Janney loan of $1,000 charged to Thompson in this account, the facts were as follows: One McGruder owed defendants $2,000, secured by mortgage. Janney also owed defendants $2,000, and was ready to pay $1,000 thereof, and have the remainder extended. McGruder owed Janney $1,000, and an arrangement was made, and carried out through Thompson, whereby McGruder's loan was increased to $3,000, and Janney's debt was decreased by $1,000, which satisfied McGruder's debt to Janney. The result was that the defendants stood, in respect to Thompson, in the same condition as before; but they had charged Thompson with the $1,000 due from Janney, though Thompson had in fact never received it. Thompson was an officer of the First National Bank of Sedalia, Mo., and kept therein the account of the defendants, T. W. Marshall & Co., they apparently trusting this matter entirely to him. As a matter of fact, this account was overdrawn at the time of the transactions in question, Thompson presumably having otherwise appropriated the money. He never paid the principal of the plaintiff's note, or any part of it. Some time after sending the note to Thompson for collection, plaintiff demanded the money therefor, but was informed by Thompson that Green had failed to get his loan. Plaintiff then demanded back his note, but Thompson informed him that it had been lost or misplaced, and that he would look it up soon, and send it to him. Thompson continued to pay interest on plaintiff's note as if it were coming from Green, up to October, 1893, plaintiff supposing all the time that Green was in fact paying it, and that the note was a valid and subsisting lien on Green's real estate; and he did not learn the real facts until Thompson's bank failed, on May 4, 1894, and Thompson disappeared. Green also was ignorant of the real state of affairs. He knew that his deed of trust had been released, and supposed that Leonard had received from Thompson the amount due thereon. When the bank failed, the defendants' account was still largely overdrawn. Immediately on discovering the actual condition of affairs, plaintiff sued the receiver of the bank for the $2,275 that Thompson obtained from defendants for the purpose of the Green loan, and recovered a judgment for the same. Plaintiff, having learned that defendants had deducted the $2,600 which they claimed Thompson owed them from the amount of the Green loan, instituted this suit to recover the same, claiming that in equity it belonged to him, and was wrongfully withheld.

James T. Montgomery, for complainant.

Montgomery & Montgomery, for defendants.

PHILIPS District Judge.

The first question of importance lying at the threshold of this controversy is one of law: If it were conceded that defendants had not paid over the money on the Green loan to Thompson, what right of action would complainant have to recover the fund in defendants' hands? He could not sue at law therefor, on the ground that defendants owed Green, for the want of privity of contract. This is conceded by complainant's counsel. The only ground, therefore, upon which he can recover is that asserted in the bill and argument,-- as an assignee in equity under Green. I shall not undertake to review the authorities discussing the doctrine of equitable assignments, illustrating the varying circumstances under which such assignments may or may not be sufficient. The field is broad, presenting some incongruities, and much refinement in discussions. I am content with the rule laid down in the text by Pomeroy on Equity Jurisprudence (volume 3, Sec. 1280):

'It is an established doctrine that an equitable assignment of a specific fund in the hands of a third person creates an equitable property in such fund. If, therefore, A. has a specific fund in the hands of B., or, in other words, B., as a depositary or otherwise, holds a specific sum of money which he is bound to pay to A., and if A. agrees with C. that the money shall be paid to C., or assigns it to C., or gives to C. an order upon B. for the money, the agreement, assignment, or order creates an equitable interest or property in the fund in favor of the assignee, C., and it is not necessary that B. should consent or promise to hold it for, or pay it to, such an assignee. In order that the doctrine may apply, and that there may be an equitable assignment creating an equitable property, there must be a special fund, sum of money, or debt actually existing, or to become so in future, upon which the assignment may operate; and the agreement, direction for payment, or order must be, in effect, an assignment of that fund, or of some definite portion of it. The sure criterion is whether the order or direction to the drawee, if assented to by him, would create an absolute personal indebtedness, payable by him at all events, or whether it creates an obligation only to make payment out of the particular designated fund.'

From which it is clear that it is not essential to such assignment that it should have been...