Multnomah County v. Oregon Nat. Bank

• Decision Date: 01 June 1894
• Docket Number: 2,091.
• Citation: 61 F. 912
• Parties: MULTNOMAH COUNTY et al. v. OREGON NAT. BANK et al.
• Court: U.S. District Court — District of Oregon

61 F. 912

MULTNOMAH COUNTY et al. v. OREGON NAT. BANK et al.

No. 2,091.

United States Circuit Court, D. Oregon.

June 1, 1894

C. A Dolph and John H. Hall, for Multnomah county.

G. W Hazen, for city of Portland.

F. V Holman and John M. Gearin, for defendants.

BELLINGER District Judge.

This is a suit to decree certain deposits of money made by the sheriff in the bank to be the property of the county, that such bank and its receiver hold the same as trustees for the benefit of the county, and that the county have a lien upon all the moneys, choses in action, and other property in said bank to the amount of $149,280.05, the aggregate of the deposits so made. The city of Portland intervened as a complainant, praying like relief with the county, to secure the sum of $14,574.65 of its funds, deposited in the bank by the city treasurer. Answers were filed to these complaints, all the material portions of which are excepted to.

The vital question presented by these exceptions is the question can the county and city whose funds have been wrongfully commingled with the funds of the bank, and paid out, secure a preference over other creditors or a lien on the property of the bank in the hands of an assignee? It is settled that a person may follow and reclaim his property, wrongfully appropriated by another, so long as he can find it. If its form has been changed, he may follow the substantial equivalent of his property, in whatever form. The property into which his own has been changed is impressed with a trust in his favor. But the great weight of authority is against any extension of the rule beyond this. The cases most relied upon by the complainants were those in the supreme court of Wisconsin, but, since the argument, defendant has called my attention to the case of Silk Co. v. Flanders (decided in the supreme court of Wisconsin in March of this year) 58 N.W. 383, which overrules former decisions upon this question, and declares the doctrine that when trust money becomes so mixed up with the trustees' individual funds that it is impossible to trace and identify it as entering into some specific property, the trust ceases; that the court will go as far as it can in thus tracing and following trust money, but when, as a matter of fact, it cannot be traced, the equitable right of the cestui que trust to follow it fails. The recent cases of Slater v. Oriental Mills (by the supreme court of Rhode Island) 27 A. 443, and Association v. Austin (supreme court of Alabama) 13 So. 908, are to the same effect. The case of Shields v. Thomas (supreme court of Mississippi) 14 So. 84, is similar to the present case in its facts. The sheriff of a county, without authority, deposited in a bank, which shortly afterwards failed, taxes collected by him, the officers of the bank knowing the character of the fund. The...