Shields v. Thomas

• Decision Date: 27 November 1893
• Citation: 71 Miss. 260,14 So. 84
• Court: Mississippi Supreme Court
• Parties: WALTON SHIELDS, DISTRICT ATTORNEY, v. G. D. THOMAS, RECEIVER

14 So. 84

71 Miss. 260

WALTON SHIELDS, DISTRICT ATTORNEY, v. G. D. THOMAS, RECEIVER

Supreme Court of Mississippi

November 27, 1893

FROM the chancery court of Washington county, HON. W. R. TRIGG Chancellor.

The case is stated in the opinion.

Affirmed.

Thomas & Griffin, for appellant.

The fact that, the money was deposited to the credit of Griffin "as sheriff," was notice that it was held in a fiduciary capacity, and that the deposit was unlawful. Shaw v. Spencer, 100 Mass. 382; Fisher v Brown, 20 Am. St. R., 467; 52 N.Y. 1; 100 Ib., 31; Shelton v. Laird, 68 Miss. 175.

Here the bank had actual notice. See Armour v. Bank, 69 Miss. 700.

The receiver is not a purchaser for value, and does not hold innocently. He holds only such title as was in the bank subject to all the equities that could be asserted against it.

It is immaterial that there are no "ear-marks" to identify the money. It can make no difference whether one particular dollar is substituted for another, so long as its intrinsic value is the same. Harrison v. Smith, 57 Am. R., 571, s.c. 83 Mo. 210; Bank v. Insurance Co., 104 U.S. 54; Carley v. Graves, 24 Am. St. R., 99, s.c. 85 Mich. 483.

The money cannot be specifically traced, but enough appears to warrant the inference that the bank has mingled the trust-fund with its own means, and rendered identification impossible. In this way it has increased its own assets. Bank v. Hummel, 20 Am. St. R., 257, s.c. 14 Col. 259; Plow Co. v. Lamp, 20 Am. St. R., 442, s.c. 80 Iowa 722.

The facts in this case are almost identical with those in Sandiego Co. v. Bank, 52 Fed. R., 59, where the court held that the receiver had no title to the money, and fixed a lien upon the entire assets of the bank in his hands for the amount unlawfully appropriated.

The receiver cannot be heard to say that, although the bank committed an unauthorized and illegal act, and although there are sufficient assets to discharge the obligation, yet the particular money cannot be identified, and the owner must suffer for a breach of the trust.

The general creditors of the bank cannot complain, since they had no interest in this fund, and the bank has gotten the benefit of the money by unlawful appropriation.

The acts of the bank should be declared unlawful under the general statute of the state, and as violative of public policy. As it used this money without authority, a lien should be fixed upon the entire assets in the hands of the receiver.

The facts in this case are entirely different from those in Billingsley v. Pollock, 69 Miss. 759.

J. H. Wynn, on the same side.

The money deposited belonged to the public. The bank officials knew this, and could only receive it for safe-keeping. They had no more right to use it than the tax-collector. Code 1880, §§ 548, 2787, 2789; 67 Miss. 405. It did not lose a trust character by going into the vaults of the bank. 104 U.S. 54; 44 Miss. 99; 69 Ib., 700.

While the authorities differ as to the right to follow funds after identity is lost, the weight of authority is for following the sum into the general assets. Perry on Trusts, §§ 447, 837; 66 Wis. 401; 52 N.Y. 1; 96 Ib., 32; 57 Pa. 202; 30 Kans., 156; 104 U.S. 54; Peters v. Bain, 130 Ib., 670; 36 Fed. R., 239; Sandiego Co. v. Bank, 52 Ib., 59. This last case is directly in point. While we have no statute, as in Californian, prohibiting tax-collectors from depositing taxes in bank, yet it is unlawful for them to use or loan the same, and it is unlawful for a bank to receive it except for safekeeping.

The court will note that the petition alleges that the money was in the hands of the receiver, or had gone into the assets of the bank, and that the receiver then had on hand $ 15,000 in money assets of the bank, and this is not denied.

The owners of the money did not voluntarily become creditors of the bank, and the money should be repaid in preference to simple creditors or voluntary depositors.

The receiver is not a purchaser for value. Other creditors cannot complain that priority is given in the payment of this fund. They can only ask distribution of what belonged to their debtor.

Billingsley v. Pollock, 69 Miss. 759, is not an authority against our claim, for the court in that case emphasizes the fact that Mrs. Billingsley voluntarily dealt with the bank, and knew that the transaction was a legitimate one, and that the money collected on her note would go into the general cash assets of the bank, to be remitted by exchange.

Yerger & Percy, for appellee.

It would seem that the mere statement of this case disposes of it. The deposit by the sheriff created no trust. But if it did, none could be asserted under the facts shown, because the trust fund cannot be traced into the hands of the receiver.

"We should not be beguiled by the use of words, and call one claim a trust in order to secure it a preference over debts." Billingsley v. Pollock, 69 Miss. 759.

In Armour v. Bank, 69 Miss. 700, if the bank had become insolvent after the deposit of the money, the plaintiff could not have had any lien upon the assets of the bank. Here the deposit of the money by the sheriff could give the state no superior claim over what it would have had if the deposit had been made by the state itself.

Appellant relies upon the case of Sandiego Co. v. Bank, 52 Fed. R., 59, which is very similar to this case. There the court held that the county had a lien upon the assets of the bank, but the fatal difference between that case and this is that the opinion of the court is based upon a statute of the state of California, which made it illegal for the officer to make, or the bank to receive, the deposit. There is no such statute in this state. The sheriff had the right to deposit the funds until such time as it should be turned over to the state treasurer, and the bank had a right to receive it, thus becoming the debtor of the sheriff.

Even if the trust existed in favor of the state against the bank, it could not be asserted against the funds in the hands of the receiver, because of the allegations, which were admitted to be true by setting the case down for hearing upon the sufficiency of the plea. These allegations are that it is impossible to trace into the hands of the receiver any of the money.

The Sandiego case is erroneous, although the statute of the state prohibited the deposit. Its doctrine finds no support in authority, precedent or reason. The fact that the state became the involuntary creditor of the bank could not affect the equitable principles which govern the fastening of a trust upon a given fund. If one steals money and dies leaving an estate, there is no known principle upon which the same can be charged with a lien or trust in favor of the person from whom the money is stolen, unless the stolen money can be traced into the assets which remain.

The fallacy of attempting to fasten a lien upon the entire estate in cases like this is demonstrated by the well-considered opinion in Bank v. Dowd, 38 Fed. R., 172. See also Pomeroy's Eq. Jur., §§ 1051, 1058; 2 Story's Eq. Jur., §§ 1258, 1259; 39 Fed. R., 231; 42 Ib., 192; 48 Ib., 25. If the fund cannot be recognized as a distinct one, but is so mingled with other money or property as to be incapable of identification, it can no longer he followed. The utmost relaxation of this rule is illustrated in Frelinghuysen v. Nugent, 36 Fed. R., 229.

The case of Bank v. Insurance Co., 104 U.S. 54, does not support the position of appellant. The decision in Peters v. Bain, 133 U.S. 670, is fatal to the Sandiego case. As said in Calvin v. Gleason, 105 N.Y. 256, upon an accounting in bankruptcy or insolvency, a trust-creditor is not entitled to a preference merely on the ground of the nature of his claim. The general rule is that, in order to follow trust-funds, they must be identified.

OPINION

COOPER, J.

On December 22, A. D. 1891, the Bank of Greenville, doing business in Greenville, Washington county, closed its doors and soon thereafter a receiver of its assets was appointed by the chancery court of Washington county. By an act approved February 10, 1892 (Laws, p. 46), the district attorney of the fourth judicial district was directed to intervene and assert the claim of the state of Mississippi, of the county of Washington and of the board of levee commissioners of the Mississippi levee district to the sum of &14,906.06, which stun had been deposited in said bank by the sheriff and taxcollector of Washington county. In obedience to the direction of that act, the district attorney exhibited his petition in the said chancery court, by which he charged that "during the month of December, 1891, John L. Griffin, sheriff and tax-collector of said county, had deposited $ 14,906.06 to his credit as sheriff, of the funds collected by him from the taxes of the year 1891, for the state, county and levee board, and at the date of the appointment of said receiver there was $ 14,906.06 of said fund which had not been drawn out of said bank by said Griffin." The petition charges that the officers and managers of the bank knew of the character and ownership of the funds when the same were deposited, and that neither Griffin nor any one else could legally use the same in any other manner than to make payment thereof into the proper treasuries. Continuing, the petition charges that "said moneys are now in possession of said receiver, unless said bank had used the same prior to its suspension; that if the same are in the hands of said receiver, then said state, county and levee hoard have the right to have the amounts respectively belonging to them set apart and paid to their respective officers authorized to receive the same; and if said bank had used the same prior to its suspension, then said...