The Fifth Nat'l Bank v. the Vill. of Hyde Park.

• Decision Date: 31 March 1882
• Citation: 101 Ill. 595,1881 WL 10717,40 Am.Rep. 218
• Parties: THE FIFTH NATIONAL BANKv.THE VILLAGE OF HYDE PARK.
• Court: Illinois Supreme Court

101 Ill. 595

1881 WL 10717 (Ill.)

40 Am.Rep. 218

THE FIFTH NATIONAL BANK

v.THE VILLAGE OF HYDE PARK.

Supreme Court of Illinois.

Filed at Ottawa Sept. 26, 1881.Rehearing denied March Term, 1882.

OPINION TEXT STARTS HERE

APPEAL from the Appellate Court for the First District;--heard in that court on appeal from the Circuit Court of Cook county; the Hon. MURRAY F. TULEY, Judge, presiding.

In April, 1873, A. D. Waldron became treasurer of the village of Hyde Park, and entered upon his duties as such. He continued to hold the office (being from time to time selected as his own successor) until May, 1878, when he was succeeded in that office by Geo. A. Follensbee. On May 20, 1873, he opened an account, in his individual name, with the Fifth National Bank of Chicago, in which account he deposited funds of the village coming to his hands as such treasurer, and so continued to do until the 11th day of June, 1877, paying dues of the village from time to time by checks on that bank, signed “A. D. Waldron,” and charged against that account. On that date he closed that account, and opened a new account with the same bank in the name of “A. D. Waldron, Treasurer,” by transferring the amount at that time to his credit as ““A. D. Waldron,” to the new account. He continued the account under the head of “A. D. Waldron, Treasurer,” until May, 1878. At that time it was discovered that he was a defaulter to the village in the sum of $114,032.62. Thereupon he was removed from office, and his successor was appointed, and the amount of the defalcation was afterwards reduced to the sum $76,636.13, by credits on account of property of Waldron turned over to the village on that account. Waldron, from that time to his death, appears to have been without property or assets, and wholly insolvent.

This is a suit brought in January, 1879, by the village of Hyde Park, against Waldron and the Fifth National Bank. The bill charges that Waldron misapplied a large part of the village funds in his hands, and asks an account to fix the amount, and also that the bank received a large amount of the misapplied funds under such circumstances as to render it liable as trustee in that regard; that Waldron is insolvent, and prays that the bank be required to refund to the village the funds so received, to be applied in satisfaction of Waldron's defalcation.

Pending the suit, and before final hearing, Waldron died, and as to him and his estate the suit was abated. The bank answered, a replication was filed, and the cause was finally brought to a hearing on pleadings and proofs. The circuit court found that for no part of the moneys paid by Waldron to the bank by checks on his deposit account while the account was kept in the individual name of “A. D. Waldron,” could the bank equitably be charged, but that as to certain moneys of the village paid by Waldron to the bank by checks on his deposit account while the account was kept in the name of “A. D. Waldron, Treasurer,” in payment of certain loans made by Waldron, and for which he had given his own promissory note, the bank was chargeable as trustee for the use of the village, and rendered a decree against the bank and in favor of the village for the sum of $57,959.95, and interest thereon from the coming in of the answer. From this decree the bank appealed to the Appellate Court, and there the decree was affirmed. From that judgment of the Appellate Court the bank appeals to this court.

It appears from the record in this cause, that the predecessor of Waldron, as treasurer of the village of Hyde Park, kept the moneys of the village in his hands on deposit in bank, in a deposit account in his own name. When Waldron opened his first account with the Fifth National Bank, as stated above, it was known to the bank that he was the treasurer of Hyde Park, and that the first deposit in that account was the sum of $30,602, received by him as treasurer from his predecessor as funds of the village, and that a large part, if not all, of the moneys deposited while the account was kept in his own name, were in fact funds of the village. Waldron testifies that in this account he did not deposit or mix with funds of the village any of his own private or personal moneys, and there is no proof in the record contradicting this statement. But no proof tends to show that the bank officers knew that all the moneys so deposited were funds of the village. While Waldron was treasurer, while the account was kept in the name of A. D. Waldron, several loans were made from the bank, avowedly for the use of the village. Part of them were made by him in his individual name and on his personal credit, supported by personal securities and collaterals, and part of these loans were made in the name and upon the credit of the village, and one of them was made in the name of one Lawrence, and secured by Lawrence's note, signed by Waldron as security, and supported by collaterals. Of loans thus made was one on June 24, 1873, made upon a certificate given in the corporate name of the village, and signed by the president and treasurer thereof, for the sum of $35,000; another was made on July 27, 1874, in the name of the village, on a certificate signed by appropriate officers thereof, for the sum of $35,000. Both these loans were duly authorized by appropriate resolutions passed by the board of trustees of the village. The funds so borrowed were deposited to the credit of the account of A. D. Waldron.

During 1875 and 1876 Waldron borrowed money from this bank on several different occasions, giving his own notes for the same, secured by collaterals, and the sums borrowed credited to his deposit account in the bank. Some of these notes were renewed from time to time, and they were all ultimately paid by checks drawn upon his account, kept, as above stated, in his individual name. These loans, not including the renewal notes, with a like loan of $4000, made May 17, 1877, amounted in all to about $89,000.

On the 11th of June, 1877, Waldron made another loan from this bank, of the sum of $52,000, and gave his own note, signed by Lawrence as security, for the sum of $45,000, and the note of Lawrence, signed by Waldron as security, for the sum of $7000, and both these notes were secured by collaterals then deposited by Waldron with the bank.

The proceeds of all these loans were at once passed to the credit of A. D. Waldron, in which, up to that time, all the moneys of the village coming to his hands as treasurer had been deposited.

As to each of these loans so made in the years 1875, 1876, and 1877, embracing the last loan of June 11, 1877, Mr. Lombard, the cashier of the bank, testifies that Waldron stated, at the time of making each loan, that he “wanted the money for the use of Hyde Park, to pay warrants in anticipation of the collection of taxes.”

On June 11, 1877, after the proceeds of this loan of $52,000 was passed to his credit on the books of the bank, Waldron applied to the cashier of the bank for a certificate of his balance in the bank, which was accordingly made out and presented to him, when Waldron said he wished a statement that the balance shown stood to his credit as treasurer. Thereupon the account was changed on the books of the bank, by closing the account as kept up to that time simply in the name of “A. D. Waldron,” and opening a new account in the name of “A. D. Waldron, Treasurer,” and the credit balance in the first account was transferred to the new account as a credit balance. This was done by a check signed by Waldron, payable to himself as treasurer, and indorsed to the bank by him as treasurer. This credit was to the amount of $53,247.82, and to the extent of $52,000 was composed of the money that day loaned to Waldron, upon his statement that he wanted the money for the use of Hyde Park, to pay warrants in anticipation of the collection of taxes. A written statement was then given to “Waldron, Treasurer,” that the balance to credit of his account was $53,247.82. He thereafter kept no account with this bank in the form of a private account. He afterwards made additional deposits to this new account, from time to time, until May, 1878. These deposits aggregated more than $300,000. No loans were made to him, as treasurer or otherwise, after the deposit account to this new form. At the time when the form of the account was changed, June 11, 1877, the bank held the Lawrence note of that date for $7000, and the Waldron note of that date for $45,000, and also a note of Waldron, given for the sum of $4000, of date of May 27, 1877, given for a loan made for the same avowed purposes and under like circumstances with the loan of June 11, 1877.

These loans of May and June, 1877, were afterwards paid to the bank by Waldron, by means of checks drawn by him as treasurer, and charged to the deposit account kept by him in the name of “A. D. Waldron, Treasurer.” The last payment on that account was made December 1, 1877, by a check for the sum of $50,688.88, given in payment of “balance of $52,000, loan and interest.” After the deposit of the moneys arising from this loan, and before the final payment on December 1, 1877, this deposit account had at one time been reduced, by checks drawn thereon, to the sum of $474.17, and was again replenished on the 30th of November, 1877, by a deposit of $97,826.31,--known to the bank officers to be the money of the village,--consisting of two checks drawn by the county treasurer, payable to “A. D. Waldron, treasurer of Hyde Park,” and indorsed to the bank by him, as treasurer.

Mr. LYMAN TRUMBULL, Mr. CHARLES HITCHCOCK, and Mr. MELVILLE W. FULLER, for the appellant:

The decree should be reversed and the bill dismissed, because the village can not keep the bonds pledged as collaterals, and at the same time recover the money paid the bank to procure their surrender.

He who seeks equity must do equity. The bank is now called upon to make restitution of money alleged to have been wrongfully paid to it by...