Court Opinion

ID: 3995798
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:54:13.23276+00
Date Added: 2024-06-11T13:33:12.514924
License: Public Domain

I concur with the majority as far as they go. However, I think the evidence is more than sufficient to hold the Federal Intermediate Credit Bank to an accounting — at least to the extent of all Simcoe funds received by it and applied on Ragan 
Dunnett's obligations. The correspondence in the Olney deal was sufficient to arouse its curiosity as to how Simcoe's assets were being handled. It was obvious even then that Simcoe and its assets were being used largely, if not solely, to buttress the financial positions of Wool Growers and Ragan  Dunnett with the bank. And, when the financial statement submitted with the application for refunding Simcoe's loan came in showing that Ragan  Dunnett, the president and secretary, owed the company twenty thousand dollars, the bank certainly was put on notice that funds of Simcoe's were being diverted to other than corporate purposes. From then on, June, 1931, under the rule laid down in the following cases, the bank is equally liable, as a trustee de son tort, with Wool Growers for such moneys of Simcoe's as were released from the lien of the mortgage and turned over to Ragan  Dunnett and used by them for other than corporate purposes. Russell v. McCall, 141 N.Y. 437,36 N.E. 498, 38 Am. St. 807; Penn v. Folger, 182 Ill. 76, 55 N.E. 192. See Goodwin v. American Surety Co., 190 Wn. 457, 478,68 P.2d 619. 1 Perry on Trusts and Trustees (7th ed.), 435, § 245. In the section cited, Perry says:
"He [trustee de son tort] is a sort of de facto trustee who is not allowed to escape the responsibilities and liabilities which he has voluntarily assumed. Thus where a trustee wrongfully but without fraudulent intent, turned over to the life beneficiary a large *Page 700 
amount of trust securities, it has been held that the life beneficiary became a trustee de son tort in the absence of evidence that she denied the trust or acted in hostility to it. `Not having acted in hostility to, or in fraud of, the trust, she may be said to have constituted herself by her acts a trustee deson tort of the trust properties. That is to say there had been such a voluntary assumption of responsibilities by her with respect to the trust estate, or to a part thereof, as to estop her and the representatives of her estate from denying an equal and continuous accountability with the trustee, when called upon by those entitled to assert claims to the estate.' This class oftrustees has been held to include those who with knowledge of thetrust participate with the express trustee in an unauthorized useof the trust property, without, however, denying the beneficialinterest of the cestui." (Italics mine.)