Stoller v. Coates

• Decision Date: 31 October 1885
• Citation: 88 Mo. 514
• Parties: STOLLER et al. v. COATES, Assignee, Appellant.
• Court: Missouri Supreme Court

88 Mo. 514

STOLLER et al.

v.COATES, Assignee, Appellant.

Supreme Court of Missouri.

October Term, 1885.

Appeal from Jackson Circuit Court.--HON. TURNER A. GILL, Judge.

REVERSED.

Karnes & Ess for appellant.

(1) The relation between the plaintiffs and the Mastin Bank was not a trust, but one of debtor and creditor. (2) The money sought to be recovered in this action was first deposited with other money, by Stoller & Hill, to their credit. A check was then drawn for the purpose of placing in the Exchange Bank of Denver, for Earnest, the net proceeds of his cattle. Whatever may have been then said, it is certain that the money, as a matter of fact, remained in the Mastin Bank to the credit of the Exchange Bank, and while thus entering into and constituting a part of the entire balance of assets and liabilities of the Mastin Bank, the transfer was made to the assignee. If a trustee has converted a trust fund into money and mingled the proceeds with his other moneys, so that they are undistinguishable, the cestui que trust cannot follow his funds into the hands of an assignee, or of an executor of such trustee, but must occupy the position of a general creditor of the estate. Mills v. Post, 76 Mo. 426; S. C., 7 Mo. App. 519; Bank v. Bank, 15 Fed. Rep. 858; People v. Bank, 78 N. Y. 269; Bank v. Russell, 2 Dillon, 215; In re Coan Mfg. Co., 12 N. B. R. 203; Story's Eq. Jur., secs. 1258-9; Kip v. Bank, 10 Johns. 62; Trecothick v. Austin, 4 Mason, 29; Thompson's Appeal, 22 Pa. St. 16; Whitcomb v. Jacob, 1 Salk. 160.

L. C. Slavens for respondents.

(1) The Mastin Bank took the money in trust under instructions to place it in the Exchange Bank, and it makes no difference why they failed to do it, if they did fail, the trust relation still exists. (2) When plaintiffs gave their check to the Mastin Bank for the net amount to be sent to the Exchange Bank, it was equivalent to drawing out the actual money and handing it back to the Mastin Bank for that purpose. The money did not pass to Coates by the assignment, because the bank did not own it; it simply held it in trust to do with it as Stoller & Hill had directed it to do. City v. Johnson, 5 Dillon, 241. (3) The fact that plaintiffs proved up their claim before the assignee will not defeat their recovery in this action. Bank v. Coates, 3 McCrary, 9.

MARTIN, C.

This is a suit in equity to compel the defendant to pay over to plaintiffs the sum of $3,757.67 in full, that being the amount of a fund received by the Mastin Bank in trust for plaintiffs before its failure, and not vesting in the defendant, as assignee, for general creditors.

In July, 1878, one F. P. Earnest, of Colorado, consigned to plaintiffs, under the firm name of Stoller & Hill, of Kansas City, ten car loads of cattle, for the purpose of being sold for his account. Stoller & Hill were requested, by instructions accompanying the consignment, to deposit the proceeds of sale in the Exchange Bank of Colorado, to his, the consignor's, credit. The gross proceeds of sale amounted to $3,769.75, in the form of a draft. With this draft, Mr. Hale, book-keeper of Stoller & Hill, repaired to the Mastin Bank for the purpose of carrying out the instructions of the consignor as to remission of the proceeds. The net proceeds payable to the consignor were a little less than the draft, so that it became necessary to take the surplus from the draft, or amount of gross proceeds. Accordingly, the draft was deposited to the credit of Stoller & Hill, and immediately thereafter Mr. Hale drew the partnership check of his principals in the sum of $3,757.56, that being the net proceeds to be transmitted to the consignor in Colorado. This check, payable to the bank or to Stoller & Hill, and indorsed by them, was delivered to the bank, with the request that they (the bank) should place the proceeds thereof in the Exchange Bank of Denver, in Colorado, to the credit of Mr. Earnest, the consignor. Mr. Hale testifies that the bank, through its agent, Mr. Boarman, now deceased, agreed to do this. The difficulty presented in the case arises from the method adopted by the bank, presumably with the approbation of Mr. Hale, to transmit the funds. The Exchange Bank of Colorado was a correspondent of the Mastin Bank; accordingly that bank handed to Mr. Hale the following receipt, or memorandum, addressed to the Exchange Bank:

“THE MASTIN BANK,

)

KANSAS CITY, MO., August 1, 1878.

)

Exchange Bank of Denver, Colorado:

Your account has credit $3,757.56, deposited by Stoller & Hill, for the use of F. P. Earnest.

Very respectfully,

JOHN J. MASTIN, Cashier.

Per J. A. BOARMAN, Teller.”

Stoller & Hill at once sent this memorandum to Mr. Earnest, and the Mastin Bank sent a copy of the same by mail to the Exchange Bank, at Denver. Before it reached the Exchange Bank, the Mastin Bank had closed its doors and made an assignment to the defendant for the benefit of its creditors. The Exchange Bank refused to charge the amount to the Mastin Bank, or to place it on its books to the use of Mr. Earnest. It refused to recognize Earnest as having any claim for such credit, or to pay him the amount thereof.

If the Mastin Bank had remained solvent, it is probable that the credit of that bank would have been allowed to take the place of the actual funds, and that the amount would have been entered to the use of the consignor. Mr. Earnest, the consignor, sued Stoller & Hill for the proceeds of his cattle, and recovered judgment, which has been paid. Stoller & Hill, having thus satisfied the claims of their principal, stand in his place, besides having rights of their own as dealers with the bank respecting the fund. Mr. Boarman, the teller of the Mastin Bank, is dead, and his version of the transaction is wanting. According to the books of the bank, the sum of $3,757.56 appears therein to the credit of the Exchange Bank of Denver, for the use of Earnest. It seems that Stoller & Hill proved up, before the assignee, their claim against the Mastin Bank in the name of the Exchange Bank of Denver, and received dividends thereon, which they have credited upon their present claim, in the sum of $450.90. On these facts the court rendered judgment for plaintiffs in the full amount of their claim less the credits thereon, from which the defendant appeals.

I. It is contended by defendant that the fund claimed by plaintiffs was, with their consent, deposited in the Mastin Bank to the credit of the Exchange Bank of Denver, for the use of Earnest, and that the Mastin Bank thereafter became a debtor for the money so deposited, and that the plaintiffs retained no right to the same except as creditors. Their right to a specific fund in trust is denied. I am not favorably impressed with this view of the transaction. If the credit attempted by the Mastin Bank had been perfected, I am inclined to think the position of defendant would be tenable. When Stoller & Hill drew their check for $3,757.56 on the Mastin Bank, and delivered the same to the bank, payable to the bank, or indorsed over to it, they placed a specific fund in the hands of the bank. The bank was also advised sufficiently that Mr. Earnest was the ultimate owner or beneficiary of the fund. The bank agreed to transmit this fund to the Exchange Bank of Denver, to be received by said bank to the use of Earnest. The Mastin Bank, in good faith, believed that the same end could be...