Case Name: DURNFORD vs. SEGHERS' SYNDICS
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1821-04
Citations: 9 Mart. (o.s.) 470
Docket Number: 
Parties: DURNFORD vs. SEGHERS’ SYNDICS.
Judges: 
Reporter: Martin (Louisiana Term Reports)
Volume: 9
Pages: 470–489

Head Matter:
DURNFORD vs. SEGHERS’ SYNDICS.
An attorney, who collects and retains money in his hands, is not the depositary of his client
And in case of his insolvency, no privilege exists in favour of the latter.
Appeal from the court of the first district.
Hennen, for the plaintiff.
The plaintiff and appellee claims the amount of a check of $5900, which was given him, by the insolvent, for the balance of money collected by him, as his lawyer. The payment of it is claimed as a privileged debt. The defendants and appellees contest the existence of the debt; aver that the claim is fraudulent and collusive, and, at all events, that it should not be paid as a privileged debt.
That the claim is a real and not a fictitious one, just and free from collusion, cannot be doubted, after the slightest consideration of the evidence. The money was certainly received by Seghers, the records of the court, and his declarations under oath, as a witness, prove that most conclusively. Therefore, the suit was properly brought ; and the syndics must admit the demand, on the tableau, as a debt due by the estate of D. Seghers, and pay the costs of the present suit, as a privileged debt. The confession of Seghers alone, unattended by other proof, would establish the deposit. Acosta, 320, no. 9. But the plaintiff contends, that this money is to be considered as an irregular deposit, in the hands of the insolvent, and that it should be paid as such, by privilege, before any of the chirographary creditors. The counsel for the defendants, admits, that the irregular deposit, according to the laws of Spain, unrepealed by the Civil Code, enjoys the privilege claimed : but denies that this money was an irregular deposit. The sole point, then for the consideration of the court is, was this an irregular deposit. What then is an irregular deposit? It differs most materially from the regular deposit. In the first place, it consists only of such things, as could be counted, weighed, &c. Bolero, 530, 9. Part. 5, 3, 9. In the second place, the same thing deposited, is not to be returned ; but another of the same value, weight, and as a natural consequence, the thing deposited may be used, by the depository. While in the regular deposit, the identical thing must be restored and cannot be used, or consumed. 7 Febrero, 102, no. 201, and the authorities there cited, Merlinus, 456, no. 51, 52. Bolero, 530, 9, part 5, 3, 9.
East’n District.
April, 1821.
It is then, clearly, no objection to this action, that the identical thing is not claimed; nor that the thing claimed has been used. Indeed, in the irregular deposit, the thing becomes the property of the depository, and the risk of its loss is on him. Rodriguez, de Concursu Cred. 108, n. 204. Part. 5, 3, 2, and the Gloss of G. Lopez, n. 4, and Lopez’s Gloss. 1, part, 5, 3, 9. Bolero, 530, 9.
By the law of the Partida just quoted, part. 3, 5, 2 & 9, the irregular deposit is constituted wherever money is received, to be kept without a reward for the keeping or guarding of it. The insolvent in this case, it is true, was to be paid as a lawyer, for collecting the money; but he was to receive nothing for taking care of the money when in his hands. The law makes the essence of the contract turn on this ; was the keeping gratuitous? No one can say that it was not.
So, both by the Roman and the Spanish law, for the same reason, money placed in the hands of a banker, when used by him, but kept gratuitously, shall be repaid to the creditor, in case of the failure of the banker, with the privilege of the irregular deposit. Rodriguez, 110, n. 216, 220, and the authorities quoted by him, Merlinus, 388, n. 3. Bolero, 530, 9, n. 3, 4, 7, and 8.
The 9th law of the 3 tit. part 5, speaks in the most general terms, that in all cases where money has been received by one person, to be kept for another, such money is to be restored as a special deposit.
This money was received by the insolvent, to be kept for the plaintiff, and restored to him whenever he should call for it. It was at the option of Durnford, to let the money remain in the hands of Seghers, and the deposit was not at an end, until Durnford should say so; which is another characteristic of the irregular deposit, Rodriguez, 108, n. 201, and which distinguishes the irregular deposit from a loan.
The case of bankers holding money in deposit, has been mentioned, as an example put both in the Spanish and Roman law ; but the principle extends to all persons, particularly to those, who from the nature of their office, or employment, receive money for others. Rodriguez, 110, n. 216, 225, 112. 2 Gomez, Variœ Resol. cap. 7, n. 2. 2 Carlevallii op. 218, n. 7. Now, in no employment or office, do men receive money for others more commonly than in that of a lawyer. In the very words of Rodriguez, 112, n. 225, “sub ratione officii, 2 Gomez, Variœ Res. cap. 7, n. 2. The insolvent received this money ; and thereby bound himself, by virtue of the contract of an irregular deposit, to restore the money he received from the debtors of his client. But it will here be objected, Seghers was to be paid for his trouble in collecting this money ; most true. But after he received it, was he to have any thing? Was not his keeping of it to be gratuitous? The insolvent might have refused to have received it ; he might have insisted upon the debtor’s paying the money over to Durnford himself. Seghers’ services were not at all, of necessity, connected with his receiving the money. When the debtor was ready to pay, the insolvent might, I may say, should, have sent for his client to receive the money; in which case, he would be entitled to charge just the same compensation. And he could not augment it, because he voluntarily engaged to receive and hold the money as a deposit for Durnford.
Our statute, moreover (1 Martin’s Dig. 530, no. 6) speaks in the same words, as the 9th law, 3 tit. page 5, when a counsellor, or attorney “shall have received money for his client,” “dineros contados, recibiendo alguno en quasda de otro.” And in both, is an irregular deposit equally implied. In short, if money in the hands of an attorney or counsellor, received for his client is not a deposit, and one of the most sacred kind, I know of none.
But it will be here answered, that Seghers gave Dunford a check for the amount of the money to be paid over. Let us then examine, if this can make any difference. When Seghers gave his check, the money was in the Louisiana bank, to the full amount of it, deposited to his credit, and for months remained, ready on the receipt of the check, to be deposited to the credit of Durnford.—This clearly appears from the books of the bank, given in evidence. The money then, received by the insolvent, was actually deposited in bank by him, and he gave Durnford a check, in other words, an order on the bank, to return what he had deposited, to the real owner of the deposit. The plaintiff neglecting to claim the deposit, cannot at all affect his rights. Had the bank become bankrupt, it is true, the loss would have been his, but that could not change the nature of the contract which Seghers had made ; an obligation to restore the money, whenever called upon for it. Curia Phil. lib. 2, com. ter. cap. 11, no. 49.
Seghers, however, after frequently enquiring at the bank, if this check had been presented, and finding that it was not, thought proper to make use of the money he had deposited, for the payment of it. The motives or correctness of this course of conduct, it is not intended to suspect or question. But does it not more forceably shew that Seghers withdrew a deposit which he had made? A deposit it clearly was in the bank ; could the insolvent by withdrawing it, make it any thing else? The insolvent’s counsel says, that when the insolvent gave his check, the contract of deposit was dissolved, and performed. Not so; the deposit which had existed, continued : and was not dissolved nor performed, and could not be, until the check was paid—no novation was operated by the check. Our courts have determined, repeatedly, that a check, note, &c., is no payment of a debt, even when a receipt in full has been given, until the note, check, &c. has been paid. The admission of the counsel is conclusive. The money was a deposit up to the time of giving the check, the contract was not changed by the check, and the plaintiff had the same right against the bank, for the deposit, which the insolvent had. Schulton. Juris prudentia, 281, no. 8.
I conclude, therefore, that a case of irregular deposit, has been made out ; and, as there is no dispute about the law, that the plaintiff and appellee should recover the amount of it, as a privileged debt of the lowest grade, but before any of the chirographary creditors.
Livingston, for the defendants.
The plaintiff seeks to establish a privilege over the creditors by simple contract, on the following case.
The insolvent being an attorney-at-law, employed by the plaintiff to recover certain sums from several of his debtors; of those debts he secured some and recovered others, and came to a settlement with the plaintiff; delivered over the securities he had taken, taken, and for a balance of $5,900, which appeared due in cash, gave him a check on the Louisiana bank ; for which, the plaintiff gave a receipt (I believe) at the foot of the statement; this, however, will appear by a reference to the record, which I have not now before me.
At the time of giving this check, and for a considerable time after, and also at different periods before his failure, as appears by the testimony of Sel, and by the bank-book agreed to be read in evidence; the insolvent had a sufficient balance in bank, to have paid the check, but the plaintiff never presented it, until the time that the insolvent failed. It is also in evidence, that the plaintiff kept an account in the Louisiana bank, and was in the habit of lodging checks, which were given him on that bank, with one of its officers, in order, that they might be presented, whenever the drawers had a sufficient sum to pay the amount in bank. And it is positively proved, that if this course had been pursued, with respect to the check in question, it would have been paid. This transaction, the plaintiff calls an irregular deposit. Our Code, in defining this contract, takes no notice of this division which, however, I admit was known to the Spanish law, and as there is no express repeal, may, I think, still be said to form a part of our law.
It agrees with the regular deposit, in this, that the object deposited must be placed, by the owner, in the hands of the depositary, who, on his part, engages to return it, on demand.
It differs from the regular deposit on this ; that it must be of something which may be valued by its weight, number, or measure; and that, while in the regular deposit, the identical thing must be restored. In this, others of the same quality, weight, number, or measure, can only be required, and that the depositary may use, or dispose of the articles so deposited. It must, like the other, be gratuitous, and it must, also, be the result of a bilateral contract, in which the one party agrees to make the deposit, and the other to receive and restore it. Vide Civ. Code, 410, and the authorities cited by the plaintiff.
Applying this law to the facts, our first enquiry is, where is the evidence of any contract between the parties, constituting a deposit? Seghers owed money to the plaintiff, and he paid it by a draft on the bank; the contract here between the parties, was very different from that of a deposit. So far from being a contract, it was the dissolution and performance of one. Seghers had contracted to pay the money he recovered for the plaintiff, and he performed it by putting at his disposal, exactly the sum he owed. So far from agreeing to keep, it is the determination to restore; or in other words, to keep no longer. On the part of the plaintiff too, I see no evidence of a deposit in the hands of Seghers. After striking the balance, he receives the check on the bank for the amount; his neglect to present it, cannot be construed into a contract with any one. To such contract, two agents would be required; his own and that of the person with whom he contracts; here, then, was neither. Not his own, because neglect supposes the absence of all violation; not that of Seghers, because he, for a long time, believed the check had been presented and paid. At most, it can only amount (if he designedly returned the check) to a confidence, that Seghers would not draw out of the bank the balance there appropriated. The first ingredient to constitute a deposit being wanting, the question would seem to be at an end. But suppose the objection obviated, by saying, that the contract arose on the original receipt of the money by Seghers, and that it cannot be extinguished until thus plaintiff actually received his payment—there another and as fatal an objection occurs; the contract of deposit must be gratuitous—here the pretended depository received fees and commissions; and, moreover, the monies were never placed in his hands by the plaintiff, either for safe keeping, or to be returned on the happening of a certain grant, or the performance of a certain condition, as is the case in judicial deposits, sequestrations, and deposits by way of pledge; but the money was recovered from the plaintiff’s debtors, to be instantly paid over to the plaintiff, not to lay in the hands of his attorney.
On no principle, therefore, can this transaction be characterised as a deposit, either regular or irregular, and therefore he can be entitled to no privilege—a more serious question for plaintiff is, whether he can even be admitted as a creditor by simple contract? When the court decides this cause, in order to do final justice, as all parties are before them, they must assign the plaintiff his proper rank among the creditors, and, of course, decide whether he is entitled to any place whatever among them.
The retaining this draft for so long a period, without any apparent reason, and by a man who has not been proved to be remarkably ignorant of the value of money, or careless of the benefits to be derived from the use of it, is certainly a very extraordinary circumstance. We see by Mr. Seghers’ testimony, that he was long ignorant of this circumstance, and that when he discovered it, he had no communication with the plaintiff on the subject, and that no demand was made until after his failure.
Under these circumstances, would it be unsupported by principal to say, the plaintiff has made the debt his own, and that, as between other bona fide creditors of the insolvent, the demand is extinguished by his own negligence. In the case of an endorser, or drawer of a similar order, or check, if the drawer had failed, no recovery could be had. Kyd on Bills of Exchange. Now, although in the present case the drawer has not failed, and therefore this might perhaps be no good defence, if the suit were against the drawer himself, yet, every reason of the rule applies to this suit, against his creditors; they would not have trusted him, if a false credit had not been given by the use of this sum ; the state of his bank account must have given him a credit with the directors, and that have induced others to trust him ; whereas, if the check had been presented, nearly his whole balance would have been withdrawn.
I have said, that as the drawee of the check has not failed, the delay of presentation might perhaps be no good defence by the drawer ; but I believe, on reflection, that the proof of loss (where there has been gross and unaccountable
neglect) is not required to be shown
on the part of the drawer. But that such neglect alone, deprives the payee of any remedy
on checks, or bills payable as this was,
on demand ; if so, the case is still stronger in the case of creditors.
Another suggestion which the defendants’ counsel are obliged, in duty to their clients, to make, is this—that a judgment given for the plaintiff, after the extraordinary delay which took place, and the first presenting his demand, after so long a lapse of time, when his debtor was insolvent, and solely with the view of sharing with his other creditors, would give rise to the greatest collusions, to ruin of fair creditors.

Opinion:
Porter, J.
The plaintiff claims the right of being placed among the privileged creditors of the insolvent, and paid in preference to those merely personal—on the ground that the debt due him, arose from a deposit.
The facts, proved in the case, show that Seghers had been employed as attorney by the plaintiff, to attend to several suits, and collect debts, and that he received a compensation for so doing. In the month of July, 1812, there was a settlement of their accounts, and a check was received by the plaintiff for the balance due, $5900 7 cents, which, it would appear from the evidence, he retained in his hands several years, without presenting it for payment. It is the amount of this check, that is now contended, should be paid as a privileged claim.
This is clearly not a regular deposit, where the depository is obliged to return the identical thing confided to his care. The plaintiff admits that it is not; but insists it is that species of contract known to our law, called an irregular deposit, which is made of money, or other things that consist in number, weight and measure, and which are delivered without any restriction on the depository's using them, but merely with the obligation to return the same quantity of the article received.
There is no doubt from the authorities cited in argument, that this definition of an irregular deposit is correct, and that it gives the preference claimed. The only question here is, whether the contract now before the court comes within the definition given?
It is believed that it is of the essence of this contract, whether the deposit be irregular or regular, that it should be entered into without compensation on the part of him who receives the object in his care. Pothier Traité du contrat de Depot, chap. 1, art. 2, sec. 3, no. 13. Febrero, part 1, chap. 4, sec. 3, in the language of our Code, it is essentially gratuitous. Civil Code, 410, art. 4.
It is equally necessary that the will of both parties should concur in the contract, that there should be a delivery of the thing to be deposited, and that the principal object of this delivery, should be the taking care of the thing. Pothier, ibid. chap. 1, art. 2, Civil Code, 410, art. 1 and 2, 412, art. 8.
Applying this law to the case before the court, we find that the debt of $5900, was the balance of monies coming into the hands of Seghers, as a lawyer collecting various demands of the plaintiff. The account presented by the plaintiff, and annexed to the petition, shews that $1500 were paid for fees, and other expenses, incident to these services. There is nothing gratuitous in this.
But the plaintiff insists that these payments were made to the insolvent for his services, as a lawyer, prosecuting the claims put into his hands to judgment—that receiving and paying over the money, made no part of his duty, and that, what he did in that respect was entirely gratuitous.
The evidence does not prove this. It shows that the services of the attorney did not end with the judgment; on the contrary, that he acted as the agent of the plaintiff afterwards. The account, already referred to, establishes the fact, that he settled and arranged those judgments by receiving part in cash, and part in other securities, which he paid over. How can it be said, that these services were not included in the sum charged and allowed in the settlement, or that the compensation related alone to obtaining judgment?
But admitting that the evidence did support the plaintiff in the petition, where is the consent of Durnford, that Seghers should be his depository? I cannot discover from the evidence, that he intended the attorney should do any thing more than collect his money, and pay it over, or that he ever contemplated it was to be left in his hands. Pothier, in his treatise already cited, no. 9 ; states, that to make a contract of deposit, it must appear, "que la principale fin de la tradition soit uniquement que celui a qui la tradition est faite se charge de la garde de cette chose." He puts many cases to illustrate this doctrine, and among others, that taken from the Digest, 16, 3, 1, no. 13; that if one party charges another to receive, and take care of an object, which was in the hands of a third person, that this does not make a contract of deposit; because the principal object of the contract, was not that the thing should be kept, but that it should be taken out of the hands of him who had it in possession. It is not easy to perceive the distinction between that case and the one now before the court, unless it be in circumstances still more adverse to the claim here set up—namely—that the attorney took the money, (as the plaintiff insists) without any particular authority to that effect ; and that he received, (as I understand the evidence) a compensation for so doing.
I see nothing in the transaction which distinguishes it from the ordinary case of an agent collecting money on commission, and it is to my mind, a totally different contract from that of one man depositing in the hands of another, an object to be gratuitously kept for his benefit.
I am therefore of opinion, that the judgment of the district court be annulled, avoided and reversed, and that the plaintiff be placed as a simple creditor, on the tableau of distribution of the insolvent estate; that the appellee pay the cost of this appeal, and that the costs in the district court be borne by the appellants.