W.G. Jenkins & Co., Bankers v. Greene
| Decision Date | 19 May 1927 |
| Docket Number | 4617 |
| Court | Idaho Supreme Court |
| Parties | W. G. JENKINS & CO., Bankers, Respondent, v. INA N. ANTHES GREENE and GEORGE A. GREENE, Husband and Wife, THE NATIONAL BANK OF IDAHO AT POCATELLO, a Corporation, Appellants |
APPEAL from the District Court of the Fifth Judicial District, for Bannock County. Hon. Ralph W. Adair, Judge.
Action on note. Judgment for respondent. Affirmed in part and modified in part.
Judgment in favor of respondent and against the Greenes affirmed; judgment in favor of respondent against appellant The National Bank of Idaho modified. Costs awarded to appellants.
Jones Pomeroy & Jones, for Appellants.
There is a misjoinder of causes of action where there is united in the same complaint an action against one defendant in tort and against another defendant in contract, particularly where each cause of action does not affect both parties. (Kruger v. St. Joe Lumber Co., 11 Idaho 504, 83 P 695; Beane v. Givens, 5 Idaho 744, 51 P. 987; Johnson v. Kirby, 65 Cal. 482, 4 P. 458; Buell v. Dodge, 79 Cal. 208, 21 P. 735; Jasper v. Hazen, 2 N.D. 401, 51 N.W. 583.)
Intent is a necessary element of conversion and one cannot be held for conversion without proof of an intent to convert the property to his own use. (38 Cyc. 2010; Merz v Croxen, 102 Minn. 69, 112 N.W. 890; Himmelman v. Des Moines Ins. Co., 132 Iowa 668, 110 N.W. 155.)
Attorney's fees are not recoverable as damages in a conversion suit. (Roy v. Clark (Mont.), 215 P. 232.)
"Where the payee of a note for which collateral has been pledged transfers the note by indorsement, but retains possession of the collaterals, he holds the collaterals as trustee for the holder of the note." (Ramboz v. Stansbury, 13 Cal.App. 649, 110 P. 472.)
In an action to enforce a trust or for breach thereof, the pleadings must clearly allege the existence of the trust and the facts constituting the breach of trust. (Perreau v. Perreau, 12 Cal.App. 122, 106 P. 728; Applegarth v. McQuiddy, 77 Cal. 408, 19 P. 692.)
Where recovery is sought for breach of trust, a demand is a condition precedent to the right to maintain the action and must be alleged and proved. (Burke v. Maguire, 154 Cal. 456, 98 P. 21.)
In an action against the trustee for an accounting, the trustee is entitled to an opportunity to comply with his duty before being subjected to a suit against him. (Way v. Shaver, 2 Cal.App. 650, 84 P. 283; 39 Cyc. 595; Blackburn v. Fitzgerald, 130 Ala. 584, 30 So. 568; 26 R. C. L., sec. 205, pp. 1340, 1341; 2 Perry on Trusts, sec. 843, and footnote 3.)
Where a trustee at foreclosure sale, without authority to do so, bids in the trust property in his own name for the use and benefit of the cestuis que trustent, he is not liable to account for and pay to the beneficiaries the amount for which the property was bid, as the measure of his ability is to account for the specific property or in case of subsequent wrongful conversion for its value or its proceeds. (Mareck v. Minneapolis Trust Co., 74 Minn. 538, 77 N.W. 428.)
In no case will a trustee be held for more than he receives, if he is in no fault and has committed no breach of the trust. (2 Perry on Trusts, sec. 848.)
J. H. Peterson and T. C. Coffin, for Respondent.
The complaint in this action properly charges both the makers of the note, the Greenes, and the National Bank of Idaho, and does not improperly join either parties of the causes of action. (Bank of Roberts v. Olaveson, 38 Idaho 223, 221 P. 560.)
The plaintiff bank herein became entitled to the possession of all the collateral securing the Greene note which it held, and even though the National Bank of Idaho, the respondent, did not deliver that collateral with the note, nevertheless the National Bank of Idaho held the collateral as trustee for the plaintiff bank. (Perry v. Parrott, 135 Cal. 238, 67 P. 144; Ramboz v. Stansbury, 13 Cal.App. 649, 110 P. 472; Duncan v. Hawn, 104 Cal. 10, 37 P. 626; Church v. Swetland, 243 F. 289; Edwards v. Bay State Gas Co., 184 F. 979.)
Where a mortgagee holds a series of notes secured by a single mortgage, and assigns one of those notes for value, the assignee is entitled to a preference payment out of the proceeds of the collateral. The same rule applies to the case of a person to whom all of a series of notes have been assigned, and who afterwards assigns one of the series. The assignor, under such circumstances, cannot compete with his assignee in the proceeds of the mortgaged property. To permit the prorating of the proceeds under such circumstances would be inequitable. A trustee, under the circumstances stated, is not a guardian, and one of the incidents of the trusteeship is consultation with and information to its beneficiary. Holding the beneficiary in ignorance of the existence of the collateral is a violation of the trusteeship.
The National Bank of Idaho held the notes of Ina N. Anthes Greene and George A. Greene in the sum of $ 45,122.07 and as collateral therefor, notes and a mortgage of the Pocatello Milling and Elevator Company in the same amount. The aggregate Greene indebtedness created an excess loan and for that reason $ 24,000 of the Greene paper was transferred without recourse to D. W. Standrod & Company, at Blackfoot, which bank in turn sold one note in the denomination of $ 10,000 to W. G. Jenkins & Company. The court found on conflicting evidence that in the transfer to the Standrod Bank and in turn to the Jenkins bank they were not informed that this note was collaterally secured by a proportionate share of the mill notes and mortgage. On the other hand, appellants and respondent both take the position that it was so secured and that The National Bank of Idaho held such security as trustee for the Jenkins bank. Thereafter The National Bank of Idaho foreclosed the mortgage against the mill property and there being no cash bidders the property was purchased by and in the name of The National Bank of Idaho, together with other interested parties, whose connection herewith is immaterial, and a deficiency judgment was entered. Thereafter The National Bank of Idaho offered respondent an undivided 5.72 per cent interest in the property foreclosed on, and in the deficiency judgment, the same being a pro rata share, based upon the relation of the $ 10,000 to the total collateral security and the indebtedness secured thereby, on condition that respondent reimburse appellant for respondent's share in the expense of the litigation, amounting to $ 350.86, which offer was refused.
Respondent brought suit against the Greenes for the amount of the note, interest, attorney's fees and costs, and against The National Bank of Idaho for the same and conversion of the collateral security, claiming that it was entitled to full payment of its note out of the collateral and not merely a pro rata share.
No damage, injury, fraud or wrong was alleged or proven because The National Bank of Idaho had not advised respondent that the appellant bank held collateral security for the note in question, the court concluding as a basis for the entry of judgment against the appellant bank for the full amount of the note and not for respondent's pro rata share of the collateral realized upon, as follows, which finding was based upon the allegations of the complaint:
"That on March 30th, 1923, at a time when the action for the foreclosure of the mortgage given by The Pocatello Milling & Elevator Company to the Citizens Bank & Trust Company and others as hereinbefore was pending, and more than three months prior to the trial of said foreclosure action, the defendant The National Bank of Idaho at Pocatello received actual notice that the plaintiff herein was the owner and holder of the note set forth and described in these Findings of Fact and the said National Bank of Idaho at Pocatello did not then, nor at any subsequent time, advise the said plaintiff or any of its officers of the security back of the said note so held by plaintiff or any of its officers of the pendency of the said foreclosure action and that the said defendant The National Bank of Idaho at Pocatello, did not at any time until after the sale on foreclosure in said action, notify the said plaintiff of the said security back of the said note held by the plaintiff as aforesaid and did not notify the said plaintiff of any action which it the said defendant, was taking with respect to the same."
There are two issues of law involved; the first, one of pleading and practice, as to whether there was a misjoinder of parties and causes of action in that the Greenes are liable only as makers of the note in question and The National Bank of Idaho is sued for conversion. In Bank of Roberts v Olaveson, 38 Idaho 223, 221 P. 560, the holding therein being sustained in Berg v. Carey, 40 Idaho 278, 232 P. 904, suit was brought to foreclose a chattel mortgage, an equity action based on contract, and against certain of the parties for the conversion of the property covered by the mortgage, and this court held there was no misjoinder. Herein the action was to obtain respondent's share of the collateral security so it might be subjected to liquidating or at least reducing the...
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