Myers v. Board of Education of City of Clay Center

• Decision Date: 11 March 1893
• Citation: 51 Kan. 87,32 P. 658
• Parties: D. H. MYERS, as Assignee of the Estate of John Higinbotham, v. THE BOARD OF EDUCATION OF THE CITY OF CLAY CENTER
• Court: Kansas Supreme Court

32 P. 658

51 Kan. 87

D. H. MYERS, as Assignee of the Estate of John Higinbotham, v. THE BOARD OF EDUCATION OF THE CITY OF CLAY CENTER

Supreme Court of Kansas

March 11, 1893

[Copyrighted Material Omitted]

Error from Clay District Court.

ACTION brought by the Board of Education of the City of Clay Center against D. H. Myers, as the assignee of the estate of John Higinbotham, to recover $ 3,265.71, alleged to be a trust fund in the hands of the assignee, to which it was entitled. Upon the evidence submitted, the district court made the following findings of fact and conclusions of law:

"FINDINGS OF FACT.

"1. For several years prior to the 8th day June, 1889, John Higinbotham was doing business as a private banker at Clay Center, Kansas, and carrying on a private bank under the name of the Clay County Bank, and H. G. Higinbotham was cashier of said bank and manager of said John Higinbotham's banking business, having full supervision and control of the same.

"2. On the 8th day of June, 1889, and for 10 years prior thereto said H. G. Higinbotham had been treasurer of the board of education of the city of Clay Center, the plaintiff herein and as such treasurer had received and disbursed large sums of money belonging to said board of education, and during all the time he was such treasurer he was also cashier and manager of said private bank of John Higinbotham.

"3. During all the time said H. G. Higinbotham was acting as such treasurer he had an account on the books of said Clay County Bank as H. G. Higinbothan, treasurer, and all moneys which came into his hands as treasurer of the board of education of the city of Clay Center were deposited by him in said bank and credited to said account, and mingled with the general funds of the bank, and orders drawn on him as such treasurer were paid out of the general funds of the bank and charged to said account. No other money except such as came into his hands as such treasurer was credited to said account, nor were any payments, except such as were made on orders drawn on him as such treasurer, charged to said account.

"4. During the time he was treasurer of the board of education of the city of Clay Center, and prior to the 8th day of June 1889, the said H. G. Higinbotham, as such treasurer, had deposited in said bank to the credit of said account $ 3,265.71 more than had been paid out and charged to said account, which said sum, $ 3.265.71, had been mingled with the general funds of said bank and used in the ordinary course of the private banking business of said John Higinbotham, in the payment of the debts of the bank.

"5. The last money coming into the hands of said H. G Higinbotham as such treasurer, which was so deposited in said bank and credited to said account, was deposited on the 3d day of April, 1889; on the 8th day of May, 1889, the total amount of cash in said bank was $ 544.15, and no more; after said 8th day of May, 1889, there was paid out of the funds of said bank, on orders drawn on said H. G. Higinbotham and charged to said account, $ 1,236.02; and on the 8th day of June, 1889, when the business was closed, the total amount of cash in said bank was $ 1,535.57.

"6. Said John Higinbotham knew that said H. G. Higinbotham was depositing the money coming into his hands as such treasurer in said bank, and that such money was being used in the same manner as other funds of said bank in the ordinary course of its business.

"7. The board of education of the city of Clay Center never authorized said H. G. Higinbotham to deposit the funds coming into his hands as its treasurer in the Clay County Bank, and never consented thereto; but some of the members of said board of education had actual knowledge that said funds were so deposited for some time before the 8th day of June, 1889.

"8. On the 8th day of June, 1889, said John Higinbotham made an assignment of all his property and assets of every kind, including said banking business, to D. H. Myers, for the benefit of his creditors, and on that day said Clay County Bank was closed, and thereafter no further business was done therein.

"9. Said D. H. Myers, who is the defendant in this action, took possession, as temporary assignee, of all the property and assets of every kind belonging to said John Higinbotham, and being afterward duly elected permanent assignee of said John Higinbotham, and duly qualified as such assignee, he retained possession of said property and assets, and still has the same in his possession, or so much thereof as have not been paid out in the due course of the administration of said estate; and there was at the time this suit was commenced, in his hands as such assignee, belonging to said estate so assigned to him, real estate of the value of $ 7,000 or more.

"10. At the time said assignment was made, there was in said bank cash to the amount of $ 1,535.57 and no more, and said assignee has never received from the assets of said estate so assigned to him any cash other than said sum, except such as was derived from the sale of some of the assets of said estate, and all the cash so coming into his hands, including said sum of $ 1,535.57, had, prior to the commencement of this action, been used in paying a dividend on claims allowed against said estate, and other legitimate charges against the same.

"11. On the 12th day of June, 1889, said H. G. Higinbotham resigned the office of treasurer of the board of education of the city of Clay Center, and at the time there was in his hands as such treasurer the sum of $ 3,265.71, which said sum has been by him deposited in the Clay County Bank, as heretofore stated in the fourth finding of fact, and which said sum he then, and has ever since, failed to pay over to his successor in office, or to any one authorized by said board to receive the same, except $ 210 thereof, and of said sum there is still unpaid $ 3,055.71.

"12. At the time said H. G. Higinbotham resigned said office of treasurer, there was not, and for a long time prior thereto there had not been, in existence any valid bond executed by him for the faithful performance of his duties as such treasurer.

"13. On the 14th day of June, 1889, said H. G. Higinbotham, in order to secure to said board of education payment of said sum of $ 3,265.71, executed to said board, pursuant to a demand made by it upon said H. G. Higinbotham, to secure the same, a chattel mortgage on certain personal property, and also a mortgage on his homestead, consisting of certain lots in the city of Clay Center, which lots were subject to two prior mortgages of $ 1,200 and $ 120; afterwards said personal property so mortgaged was sold under said mortgage, and the proceeds arising therefrom, amounting to $ 210, were applied by said board in part payment of said sum of $ 3,265.71; and said real-estate mortgage is still in full force, and no action has been taken by said board to realize anything thereon.

"14. In said real-estate mortgage, H. G. Higinbotham and Lillie G. Higinbotham, his wife, were the parties of the first part, and the board of education of the city of Clay Center was the party of the second part, and in said mortgage the following conditions were written, to wit:

"'Provided, Nevertheless, And these presents are upon the following conditions, expressly made, to wit: That, whereas, the said H. G. Higinbotham is justly indebted to the said party of the second part in the sum of thirty-two hundred and sixty-five and seventy-one one-hundredths dollars ($ 3,265.71), the same being the balance of the funds and moneys of the said party of the second part now remaining in the hands of said H. G. Higinbotham, deposited with him as treasurer of the said party of the second part; and whereas, said H. G. Higinbotham has resigned said office, and upon legal demand made upon him for said funds and moneys by his duly-qualified successor in said office, said H. G. Higinbotham has failed and refused to pay over and deliver said funds and moneys to his successor in office; and whereas, a claim for said funds and moneys, made in behalf of the treasurer of the said party of the second part, against the estate of John Higinbotham and D. H. Myers, assignee thereof, is pending, and may be paid, in whole or in part by said assignee: now, if the said first parties shall, on or before the 14th day of June, 1890, pay, or cause to be paid, to the qualified treasurer of said party of the second part the funds and sums of moneys aforesaid, with interest thereon from the date hereof at 10 per cent. per annum, or such part thereof as shall not previous to said 14th day of June, 1890, be paid by the assignee of John Higinbotham's estate, in that case this deed shall become void, and the premises hereby conveyed shall be released, at the proper cost of the said parties of the first part or their legal representatives. And it is hereby agreed and understood, that the execution and delivery of this instrument by said parties of the first part to said party of the second part does not, and shall not, in any way lessen the obligation of said H. G. Higinbotham respecting the funds and moneys of said second party heretofore delivered to him as treasurer as aforesaid; and this instrument is intended as security for the payment of said funds and moneys as aforesaid, in addition and in no way affecting the rights of the said second party under any bond or bonds which may have been heretofore given to said party of the second part, or under any of the laws or the state of Kansas, on and after June 14, 1890.'

"The conditions above recited are followed by a provision that in case the parties of the first part shall fail to pay said funds and sums of money, or the interest thereon, or the taxes or insurance on the mortgaged premises, then the party...