Pundmann v. Schoenich, Administrator of Merten & Co.
| Decision Date | 17 May 1898 |
| Citation | 45 S.W. 1112,144 Mo. 149 |
| Parties | Pundmann et al. v. Schoenich, Administrator of Merten & Company, Appellant |
| Court | Missouri Supreme Court |
Appeal from St. Charles Circuit Court. -- Hon. E. M. Hughes, Judge.
Affirmed.
C Daudt for appellant.
(1) The default was during Hackmann's first term of office; or at least not clearly proved to have been during his second term hence plaintiff's were not liable to replace the peculated funds. State ex rel. v. Branch, 126 Mo 498; State ex rel. v. Branch, 134 Mo. 592; State to use v. Jones, 89 Mo. 470; State to use v. Atherton, 40 Mo. 210. (2) In order to fasten a lien, or trust, for converted trust funds, it is necessary that the trust funds are clearly identified or traced into an ascertainable property or product. It is not enough to show that they went into the general estate of the person whose property it is sought to charge. 2 Story Eq., sec. 1259; Buck v. Ashbrock, 59 Mo. 200; Dailey v. Dailey, 125 Mo. 96; Huetemann v. Vieselmann, 48 Mo.App. 590; Philips v. Overfield, 100 Mo. 474; Englar v. Offiut, 70 Md. 78; Slater v. Oriental Mills, 27 A. (R. I.), 443; Non Stock Silk Co. v. Flanders, 87 Wis. 241; In re Plankington Bank, 87 Wis. 378; Burnham v. Barth, 89 Wis. 367; Lathrop v. Bampton, 31 Cal. 17; Little v. Chadwick, 151 Mass. 109; Cavin v. Gleason, 105 N.Y. 256; Bank v. Armstrong, 39 F. 684; U. S. v. Waterborough, Daveis, 154; Bank v. Goetz, 138 Ill. 127; Wetherell v. O'Brien, 140 Ill. 146; Mut. Acc. Ass'n v. Jacobs, 141 Ill. 261; Calhoun v. Bank, 20 S.E. (S. C.) 153; Thompson's Appeal, 22 Pa. St. 16; Hopkin's Appeal, 9 A. 867; Carmany's Appeal, 166 Pa. St. 622; Bank's Appeal, 93 Pa. St. 107; Neely v. Rood, 54 Mich. 134; Sherwood v. Bank, 53 N.W. 922; Shields v. Thomas, 71 Miss. 260; Bank v. Ins. Co., 104 U.S. 54; Ellison v. Moses, 95 Ala. 221; Goldwaite v. Moses, 99 Ala. 497; Bank v. Dowd, 38 F. 172; Elev. Co. v. Clark, 53 N.W. 175.
Theodore Bruere & Son for respondents.
(1) The plaintiff sureties were clearly liable under their bond for the defalcation of John F. Hackmann as city treasurer. State ex rel. v. Branch, 134 Mo. 600; State ex rel. v. Dennis, 58 Mo.App. 572; State ex rel. v. Bilby, 50 Mo.App. 167; State ex rel. v. Drury, 36 Mo. 281; State ex rel. v. Berning, 74 Mo. 94; Tittman v. Green, 108 Mo. 40; State ex rel. v. Branch, 112 Mo. 673; Smith v. Gregory, 26 Gratt. 248; Ruffin v. Harrison, 81 N.C. 208; Ruffin v. Harrison, 86 N.C. 190; Gilmer's Adm'r v. Baker's Adm'r, 24 W.Va. 72. (2) After plaintiffs made out a prima facie case that John F. Hackmann was a defaulter during his second term, the burden rested upon the defendant to show that the whole defalcation occurred during Hackmann's first term as city treasurer, and that plaintiff sureties were not liable on their bond executed for John F. Hackmann's second term. State ex rel. v. Branch, 134 Mo. 600; State ex rel. v. Dennis, 58 Mo.App. 572. The default took place during John F. Hackmann's second term of office. (3) The trial court's finding of the facts, even in equity cases, will be greatly deferred in the appellate court. Rawlins v. Rawlins, 102 Mo. 563; Parker v. Roberts, 116 Mo. 657; Boyd v. Hesseltine, 110 Mo. 203; Mathias v. O'Neill, 94 Mo. 520; Taylor v. Cayse, 97 Mo. 242; Barlow v. Elliott, 56 Mo.App. 374; Clark v. Bank, 57 Mo.App. 277; Roberts v. Herryford, 54 Mo.App. 365; Toler v. McCabe, 52 Mo.App. 532; Masterson v. Railroad, 58 Mo.App. 572; Loring v. Atterbury, 39 S.W. 773. (4) The money of the city of St. Charles was, with the knowledge and consent of his other two partners, put by its treasurer, John F. Hackmann, into the business of the firm of S. H. Merten & Company, and mixed up with their funds and converted within five months prior to the time defendant as administrator took possession of the assets of said partnership, and while it can not be identified or traced into an ascertainable property or product, it went into the general assets of the firm and increased them to the extent of $ 4,417.70. The firm having thus received the benefit of the unlawful conversion, equity charges its assets with the amount of the converted fund as a preferred demand. Harrison v. Smith, 83 Mo. 210; Stoller v. Coates, 88 Mo. 514; Munro v. Collins, 95 Mo. 33; Snorgrass v. Moore, 30 Mo.App. 232; Cart Co. v. Stephens, 32 Mo.App. 346; Clark v. Bank, 57 Mo.App. 281; Hockensmith v. Hockensmith, 57 Mo.App. 378; Bank v. Sanford, 62 Mo.App. 394; Brick Co. v. Schoeneich, 65 Mo.App. 283; Leonard v. Latimer, 67 Mo.App. 138; Bank v. Ins. Co., 104 U.S. 67; Peak v. Ellicott, 30 Kan. 156; Thompson v. Bank, 8 A. 97; Plow Co. v. Lamp, 45 N.W. 1049.
Plaintiffs were the securities on the bond of John F. Hackmann, the treasurer of the city of St. Charles. Hackmann was a member of the firm of S. H. Merten & Company, composed of Stephen H. Merten, William Hackmann and John F. Hackmann, which firm operated a steam flour mill and did a general milling business. John F. Hackmann was the bookkeeper and general manager of the concern, and as such received and paid out all moneys of the firm. With the full knowledge and consent of his partners, John F. Hackmann put the city's money which he had received as treasurer into the partnership business. He was twice elected treasurer of the city, his first term being for the years 1891 and 1892, and his second term for the corporate years 1893 and 1894. He qualified on the eighteenth day of April, 1893, and executed his bond in the penal sum of $ 30,000, wherein he was principal and S. H. Merten, William Hackmann, William Pundmann, Henry Grovefeld, F. W. Banze, Herman D. Bruns and A. R. Huning were sureties. John F. Hackmann took charge of and administered the office until his death on September 18, 1893. He deposited some of the city's money in the three banks of the city of St. Charles but by far the greater portion was deposited by him in the Union Savings Bank in his firm's name or was mixed with the firm's money in their drawer at the mill. When city warrants were presented he or his partners would pay them out of said drawer or with firm checks on the Union Savings Bank. At the date of his death $ 1,039.04 of the city money was found deposited in the three banks to the credit of the city, and it was found that he was a defaulter to the amount of $ 4,417.70. This sum the plaintiffs, who were his sureties, after a full investigation, paid to the city, the other two sureties, Merten and Hackmann, being insolvent. The children of John F. Hackmann afterward voluntarily paid the plaintiffs $ 525, thus leaving $ 3,892.70 due plaintiffs. The partnership estate of S. H. Merten & Company is insolvent, paying about twenty-four cents on the dollar. At the time of the trial in December, 1894, the administrator had received in cash due said estate $ 20,536.84, of which $ 12,873.67 had been collected by him on accounts and notes due the firm. The plaintiffs brought this action in equity to have the said balance of $ 3,892.70 declared a trust fund, and asked to be subrogated to the equitable right of the city and to require said administrator of the partnership estate to allow and pay the same as a preferred demand. The administrator, for answer, admits that he is administrator of the partnership estate, and that he has a large fund belonging to said estate amounting to $ 10,000. Otherwise denies each and every allegation in plaintiff's petition. The defendant's real contention is that the defalcation occurred during Hackmann's first term as city treasurer, and, if so, plaintiffs were under no obligation, legal or equitable, to pay the deficit to the city, and any way that the amount of the city money that went into the partnership assets of S. H. Merten & Company is too uncertain and indefinite to form the basis of an equitable lien such as is sought by plaintiffs in this case.
The learned counsel for the defendant concedes that on the issue as to whether the conversion of the money to the firm's use occurred during the first or second term, there is a conflict in the evidence, and the circuit court which heard the evidence found that the misappropriation occurred during the second term. There is no dispute of the amount of the shortage. Upon a careful review of the abstract of the evidence, it seems to us the circuit court could not have found that this defalcation or conversion occurred during the first term of the treasurer. In the treasurer's settlement made July 1, 1893, he charged himself with $ 12,432.89, the aggregate of three funds in his hands. Adding to this the amount he afterward received and deducting from the sum of these the amount of warrants paid by him since that settlement the balance is found for which the sureties were liable. Prima facie an officer and his sureties are bound for the balances for which his own official books show him indebted. There is in this case fortunately not the slightest...
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