Smith v. Crawford Cnty. State Bank

• Citation: 99 Iowa 282,61 N.W. 378
• Parties: SMITH v. CRAWFORD COUNTY STATE BANK.
• Decision Date: 15 December 1894
• Court: Iowa Supreme Court

99 Iowa 282

61 N.W. 378

SMITH

v.CRAWFORD COUNTY STATE BANK.

Supreme Court of Iowa.

Dec. 15, 1894.

Appeal from district court, Crawford county; G. W. Paine, Judge.

Action in equity to establish a trust in favor of plaintiff as to certain funds in defendant's hands, and for a judgment against defendant. Decree for defendant. Plaintiff appeals. Affirmed.T. J. Garrison and Parker & Richardson, for appellant.

J. P. Connor and C. C. Cole, for appellee.

KINNE, J.

1. The facts as disclosed by the pleadings and evidence are that in 1890 and 1891 one John Carvell, a cattle buyer, became indebted to plaintiff on three promissory notes in a principal sum of about $8,000, which notes were given in payment of cattle purchased by him of plaintiff. At the time this suit was commenced, and after adding interest and deducting payments made, there was still due plaintiff over $6,000 on said notes. In September, 1891, said Carvell executed two chattel mortgages to plaintiff to secure said notes on 238 head of cattle, which he had purchased of plaintiff. On February 3, 1892, said Carvell executed to defendant a chattel mortgage on 309 head of cattle, which included the cattle described in plaintiff's mortgages. This mortgage to defendant was given to secure a note of $8,000 due the bank for money advanced Carvell with which to feed cattle. The bank's mortgage was by its terms subject to the plaintiff's mortgage. Only $5,000 was in fact paid by the bank to Carvell on this $8,000 mortgage. Plaintiff resides in the state of New York, but owns land in and raises cattle in this state. For several years prior to 1891 he had sold cattle to Carvell, who gave him notes for the purchase price, and sometimes secured them by a chattel mortgage upon his cattle, including those purchased of the plaintiff. Carvell would then feed the cattle, and ship them at such times and in such numbers as he chose, and to whom he pleased, including cattle other than those purchased of plaintiff; and the proceeds of such shipments would be remitted to a bank in Denison to Carvell's credit, and from the proceeds of such sales Carvell would pay plaintiff such amounts upon the notes as he saw fit. For a year or two prior to the spring of 1892, plaintiff sent his notes to defendant bank, and the payments were made as aforesaid. At Carvell's request, made at about the time he executed the mortgage to the bank, its officers wrote to plaintiff for his notes against Carvell, so that payments made might be credited thereon when the money should be received. The notes were accordingly sent to defendant. In February, 1892, Carvell shipped the cattle, in his own name, to a commission house in Chicago, and the proceeds were, by his direction, remitted to the defendant bank, and were by the bank placed to Carvell's credit upon its books. The proceeds amounted to $8,544.19. For the difference between the amount received and the amount of Carvell's indebtedness to the bank--some $2,000--Carvell drew a check in favor of plaintiff, and the same was applied upon his notes due plaintiff. The balance of the proceeds of sales of the cattle were applied in payment of Carvell's indebtedness to defendant. Thus far, it is believed, the facts are not in controversy. Plaintiff seeks by this action to have a trust declared in his favor as against the fund received by the bank, and as a reason therefor avers that he had an arrangement with Carvell that he should, as his agent, and in his name, sell the cattle in Chicago, and that the proceeds of such sale should be paid to him, and that said sum should be placed in defendant bank to plaintiff's credit, and appliedupon his notes. He charges that defendant knew of this arrangement when it took its mortgage as well as when Carvell shipped the cattle; that as a matter of fact Carvell shipped the cattle in his own name, and placed the proceeds in defendant bank to his (Carvell's) credit, and that defendant, knowing that said money was to be applied in payment of plaintiff's notes, took and appropriated the same to its own use. Other allegations of the petition need not be noticed. Defendant denies substantially all of the allegations of the petition except that Carvell sold the cattle, and placed the proceeds in defendant bank to his credit. It alleges the execution of the mortgage to it by Carvell to secure his $8,000 note; that he shipped the cattle, sold them, and placed the proceeds to his own credit in defendant bank; that with Carvell's consent it applied sufficient of the proceeds of such sale to the payment of his indebtedness to the bank. Carvell testifies that he never agreed to ship the cattle in plaintiff's name. The court dismissed plaintiff's bill, and rendered judgment against him for costs.

2. The record presents but two questions for our consideration. First. Do the facts disclosed by the testimony establish a trust in favor of plaintiff? Second. Has plaintiff shown that defendant had notice...