State v. Foster

• Decision Date: 05 January 1895
• Citation: 5 Wyo. 199,38 P. 926
• Parties: STATE v. FOSTER. BOARD OF COMMISSIONERS OF LARAMIE COUNTY v. SAME
• Court: Wyoming Supreme Court

38 P. 926

5 Wyo. 199

STATE v. FOSTER.

BOARD OF COMMISSIONERS OF LARAMIE COUNTY v. SAME

Supreme Court of Wyoming

January 5, 1895

Reserved questions from District Court for Laramie County. HON. RICHARD H. SCOTT, Judge.

These were separate actions by the State and the Board of the County Commissioners of the County of Laramie against Joel Ware Foster, assignee for the benefit of creditors of Thomas A. Kent, to have declared a trust upon the estate of the insolvent in the hands of the assignee, for certain public moneys deposited with said insolvent as a banker by the State and county treasurer respectively. The facts are fully stated in the opinion.

Charles N. Potter, Attorney General, for the State. (Joel F. Vaile of counsel.)

The moneys of the State in the hands of its treasurer, deposited with the bank, became trust funds in the possession of the bank. (McCall v. Frazier, 40 Hun., 113; Eels etc., v. Robinson, 13 Cal. 134.) The funds of the estate of the banker at the time of the assignment are charged with a trust as part of the funds of the State. (Peak v Ellicott, 30 Kan. 156; Ellicott v. Barnes, 31 id., 170; People v. Bank, 96 N.Y. 35; Frelinghuysen v. Nugent, 36 F. 239; In re Armstrong, 33 id., 405; Bank v. Armstrong, 36 id., 39; 40 id., 46; Bank v. Ins. Co., 104 U.S. 54; Bank v. Hummel (Colo.), 23 P. 986; Hummel v. Bank (Colo.), 32 P. 72; Smith v. Combs, 24 A. 9; Griffin v. Chase, 54 N.W. 572; Anheuser, &c., Brew. Co. v. Bank, 53 N.W. 1037; San Diego Co. v. Bank, 52 F. 59.) If the funds of the State were mingled with the funds of the banker, his estate is charged with the trust. (McClure v. Board, 19 Colo. 122; Myers v. Board, 51 Kan. 87; Hubbard v. Adam, &c., Co., 53 id., 637; Ind. Dist. v. King, 45 N.W. 908.) The funds deposited with T. A. Kent, banker, by the State treasurer, belonged to the State. (R. S., sec. 1696; Art. 14, Const., sec. 7.) A debt due the State is entitled to preference over debts due to individuals. (1 Blackstone, 240; 2 id., 409; 3 id., 420; Brooms L. Max, 69; Giles v. Grover, 1 Cl. & F., 72; 9 Hen. III, chap. 18; 25 Edw. III, chap. 19; 33 Hen. VIII, chap. 39, sec. 74; 13 Eliz., ch. 4; State v. Rogers, 2 H. & McH., 125; Murray v. Ridley, 3 id., 175; Contee v. Chew's Excr., 1 H. & J., 417; State v. B'k, 6 G. & J., 205; Smith v. State, 5 Gill, 45; Green's Est., 4 Md. Ch., 356; State v. Mayor, &c., 10 Md. 515; Orem, Ex'x, v. Wrightson, 51 id., 42; Robinson v. Bank, 18 Ga. 96; Com. v. Cook, 8 Bush., 224; State v. Rowse, 49 Mo. 586; Com. v. Lewis, 6 Binn., 270.) A voluntary assignment does not defeat such right of preference. If the sovereign--the State--is not expressly mentioned in the statute, it will not be bound. (Willion v. Berkley, 1 Plowd., 239a; U. S. v. Hoar, 2 Mason, 311; People v. Gilbert, 18 Johns., 227; Com. v. Johnson, 6 Pa. 136; Josselyn v. Stone, 28 Miss. 753; U. S. v. Green, 4 Mason, 427; U. S. v. Hughes, Crabbe, 307, 313; State v. Garland, 7 Ired., 48; Sav. Bank. v. U.S. 19 Wall., 227; Feather v. The Queen, 6 Best & Sm., 257; Dixon v. London, &c., Co. (L. R.), 1 App. Cas., 632; Divine v. Harvie, 7 T. B. Mon. 439; Den v. O'Hanlon, 21 N.J.L. 582; Trustees, &c., v. Trenton, 30 N.J. Eq. 667; State v. Kelsey, 44 N.J.L. 44; Rex v. Pixley, Bunb., 202; Temple, ex parte, 2 Ves. & B., 394; People v. Rossiter, 4 Cow., 143; People v. Herkimer, 4 Cow., 345; Saunders v. Com., 10 Gratt., 494; Com. v. Hutchinson, 10 Pa. 466; Clemens v. Camden, 51 N.J.L. 426; Greeley v. Prov. Sav. B'k, 98 Mo. 458.) The language of the assignment law shows that it was not intended to apply to the State, to the extent of placing its claims upon the same level as those of ordinary creditors. Under that law the assignee takes the property, subject to the equitable lien of the State, for the amount due to it. (Dunlap v. Gallatin, 15 Ill. 7; cases cited above.) The provision of the constitution is controlling upon this subject. (Art. 3, sec. 40.) See for general application 1 Sugden on Powers, 274; In re Fulton's Est., 51 Pa. 211; Luddington's Pet'n, 5 Abb. N.C. 313; Gifford v. Black, 22 Ind. 444.

J. A. Van Orsdel, A. C. Campbell and Frank H. Clark, for the county, cited same authorities as above.

Baird & Churchill and Lacey & Van Devanter, for defendant.

Wherever the property of a party has been wrongfully misapplied, or a trust fund has been wrongfully converted, if its identity can be traced, it will be held in its new form liable to the rights of the original owner cestui que trust; and conversely, if its identity cannot be traced, the remedy of the cestui que trust against any specific property is lost. (2 Story's Eq. Jur., Sec. 1258; 2 Pomeroy's Eq. Jur., Sec. 1051; 2 Perry on Trusts, Sec. 835 et seq.; Cavin v. Gleason, 105 N.Y. 256; Atkinson v. Rochester, &c., Co., 114 N.Y. 168; Little v. Chadwick, 151 Mass. 109; Nonotuck S. Co. v. Flanders, 87 Wis. 237; Peters v. Bain, 133 U.S. 670; Bank v. Armstrong, 39 F. 684; Bank v. Dowd, 38 id., 172; Multomah Co. v. Bank, 61 id., 912; Bank v. Bank, 15 id., 858; Phelan v. Bank, 4 Dill., 88; Holden v. Piper (Colo.), 37 P. 34; Shields v. Thomas, 71 Miss. 260; Wilson v. Coburn, 35 Neb. 530; Phillips v. Overfield, 100 Mo. 466; Parker v. Jones, 67 Ala. 234; St. L. B. Ass'n, 100 id., 313; Akin v. Jones, 93 Tenn. 353; McAfee v. Bland (Ky.), 11 S.W. 439; Slater v. Oriental Mills, 18 R.I. 352; Neely v. Rood, 54 Mich. 134; Sherwood v. Bank, 94 id., 78; Bank v. Goetz, 138 Ill. 127; Wetherill v. O'Brien, 140 id., 146; Mutual Ac. Asso. v. Jacobs, 141 id., 261; Thompson's Ap., 22 Pa. 16; In re Columbian B'k, 147 id., 440; Peoples B'k Ap., 93 id., 107; Bank v. Stillwater G. Co., 36 Minn. 75; In re Bank, 58 id., 5; Ferchen v. Arndt (Or.), 37 P. 161; Englar v. Offutt, 70 Md. 78; Lathrop v. Bampton, 31 Cal. 17; Goodell v. Buck, 67 Me. 514; Steamboat Co. v. Locke, 73 id., 370; Dyer v. Jacoway, 42 Ark. 186; Bank v. Davis, 114 N.C. 343.) State not preferred unless through some statutory or constitutional provision, or unless through what is known as Crown's prerogative. No statute gives preference. Constitution does not unless it be Sec. 40 of Art. 3. That section does not deal with matters of preference. The weight of authority is that Crown prerogative of preference is not in harmony with our institutions. (19 Wall., 239; Board v. Bank, 29 N.J. Eq. 268; 30 id., 311; State v. Harris, 2 Bailey, 598.) If Crown's prerogative prevailed in Wyoming no such preference in case at bar. Crown's preference was a right enforced by extent. Extents were in chief and in aid, but of equal force. (Giles v. Grover, 9 Bing. 526; id., 542; id., 580.) King's priority was not a lien. (2 Tidd's Pr., sec. 1053; Grover v. Giles, 9 Bing., 519.) The preference is lost by alienation of the property. (6 Gill. & J., 226.) By assignment for benefit of creditors title passed from debtor. (Burrill on As'g'ts, sec. 6; L. 1890, pp. 84, 85, 89.) The transfer was not by operation of law, but by debtor's act and deed.

GROESBECK, CHIEF JUSTICE. CORN and BLAKE, JJ., concur. Hon. J. W. Blake, Judge of the district court for the second judicial district, sat in lieu of Mr. Justice Conaway, who was disqualified by reason of his interest in the proceeding.

OPINION

GROESBECK, CHIEF JUSTICE.

These actions were brought in the district court for Laramie county and by that court were reserved to this court for decision upon certain important and difficult questions arising in them. They were consolidated in the trial court for the purposes of argument and determination and are so considered here, as they present substantially the same questions. The relief sought is of an equitable nature, to impress a trust in favor of the State of Wyoming and the County of Laramie to the amount of certain public funds by the respective treasurers of the State and county deposited in the banking house of Thomas A. Kent, an insolvent debtor, at Cheyenne, in this State, upon the estate of such insolvent in the hands of the defendant as assignee. The court below entered findings of fact in each case, which disclose the following important facts: The assignor, Thomas A. Kent, was engaged in a general banking business prior to his assignment. While doing business as a banker, he received deposits from the treasurer of each of the plaintiffs, all of which were placed to the credit of such treasurer, as treasurer, and which were from time to time checked upon. At the time of the assignment, there was a balance due upon the account with the treasurer of the State of Wyoming in the sum of $ 56,454.70, and a balance due to the treasurer of the county of Laramie in the sum of $ 16,153.98. The balance in favor of the State treasurer were funds belonging to the State of Wyoming and the balance in favor of the treasurer of Laramie county was the property of said county, and these moneys had been received by said Kent with knowledge of such ownership.

Neither of the treasurers had authority to deposit any of the funds with said Kent, as banker, unless such authority is to be presumed by reason of the fact that for at least eighteen years last past the treasurers, both of the territory and the State, with the knowledge of the people, and of the officials of the State, had been accustomed to deposit the funds of the territory and of the State in the manner that the funds in question were deposited; and that in like manner, for the same period of time, the treasurers of Laramie county, with the knowledge of the people and officials of the county, had likewise deposited the county funds in the custody of such treasurers, as such, with bankers in the same manner as was done in the present instance. The moneys belonging to each of the plaintiffs and all other moneys of said Kent, as banker were paid out to depositors on checks in the ordinary course of business, excepting...