Court Opinion

ID: 7934617
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:08:10.270251+00
Date Added: 2024-06-11T16:33:29.542037
License: Public Domain

Morse, J.,
(dissenting). When this case was here before,' the testimony of George L. Maltz, the principal manager of the plaintiff, and its chief witness, carried the impression and conviction to us that there was deposited in the plaintiff bank sufficient funds derived from the trust mortgages, of which Maltz was trustee, to pay in full the class of notes to which these in suit belonged. We were strengthened in this conviction by the brief of plaintiff’s counsel, which plainly carried the same impres*33sion. We tlien held that the money thus received on these mortgages by Maltz, and held by him on deposit, in his individual name, in the Alpena National Bank, was, by the terms of his trust, applicable to the payment of these notes, and must be so applied; that the.money belonged to the bank, to be applied for this purpose, and in law would be considered as so applied. We then understood, as the case appeared in the record, and as it was argued, that such application was refused, not because there were no funds left from the trust to pay the notes, but because the bank entertained the idea that it could not apply the money in Maltz's hands, and deposited in his name, until he saw fit to pass the money over to the bank, which it claimed had not been done.
Under these circumstances, we held that, when the means were in the hands of the president and real manager of. the bank, Maltz, and ’ needed only entries on the proper books to' transfer the account, the bank had no right to delay such action, and was bound to collect and apply the money. We further said,- in reversing the case and granting a new trial, that there was no occasion or reason for going through another .trial, which would be a wrong to defendants, who ought not to be harassed further. Alpena Nat'l Bank v. Greenbaum, 74 Mich. 157. A motion for rehearing was subsequently made; but, upon such motion, we saw no reason for changing our views entertained at the first hearing. Id. 159. Since then a change of yenue has been taken to the Ingham circuit court, and a trial there" had, resulting in a verdict for defendants. The plaintiff now comes, to this Court, alleging certain errors upon the trial.
The counsel for the defendants, in his argument here, first meets these assignments of error by the contention that the testimony upon the second- trial was substantially *34the same as upon the first, and is therefore governed by the law as laid down by us when the case was first here. But I am satisfied, from the record of the last trial, that the plaintifi attempted, in view of our opinion, to claim that there were not sufficient funds derived from the mortgages to pay the class of indebtedness in full to which the notes sued upon belonged; and Maltz testified on this trial that February 15, 1886, there was paid over to the bank by himself, as trustee under these mortgages, the sum of $13,842.65, to apply on the last indebtedness specified in said mortgages, to wit:
“Also, the remainder of the indebtedness to the Alpena National Bank, about the sum of $59,000, and arising from paper of first party held by said bank.”
It will be remembered that this suit was brought by the Alpena National Bank, aga.inst the defendants, ujmn two certain promissory notes made by the Prentiss Lumber Company to the order of John C. Comfort, cashier of said bank, which notes were indorsed by the defendants. These notes came under the provision of the mortgages from the Prentiss Lumber Company to Maltz, as trustee, and therefore, when upon the stand as a witness for the bank at the last tidal, Maltz testified that the proportionate share of this $13,842.65 to be indorsed on these notes as of the date of February 15, 1886, would be $273.35 upon one, and $309.79 upon the other; that the indorsements had never been made, but that the bank now made it as of the date above; that it had not been .indorsed before because he did not suppose it could be done until after the decision of the Supreme Court after the first trial. He computed the balance due upon both of the notes after such indorsement, and at the date of the last trial, to he $2,473.87; and the plaintiff claimed judgment for this amount. Maltz also testified that he received, all told, in money, from the property described *35in the mortgages, the sum of $112,320.33. He paid all the indebtedness under his trust in full except this last •class of $59,000.
The mortgages specified the following indebtedness to be paid out of the proceeds of the property mentioned in, •and conveyed by, the mortgages, and in the order named, to wit:
George L. Maltz..................................§ 13,000 00
‘Labor accoimt-.................................. 10,000 00
Alpena National Bank, direct loans and paper indorsed by A. R. & W. P. Linn or George Prentiss, estimated, about..................... 21,535 75
Perry Prentiss............................-...... 1,500 00
Hubbell, Brown & Co......................... 2,000 00
Pierce & Coleman............................... 7,500 00
Mary C. Prentiss................................ 2,700 00
Rectina P. Chase................................ 186 00
Last Class....................................... 59,000 00
Total........................................§117,421 75
The mortgages, two in number,. were dated September 7, 1883, and provided that interest at 7 per cent, per annum should be paid on these sums until paid. It is •contended by the counsel for defendants that the evidence .shows that George Prentiss, of the Prentiss Lumber Company, himself paid the paper indorsed by A. B. & W. F. Linn & Co., which in one of the mortgages is stated to bo the sum of $3,035.75, and that there is also evidence •showing that the amount of the indebtedness to which the notes in suit belonged amounted only to $50,910; that this evidence is found in Maltz’s testimony, where be states the notes held by the bank under that class. It is also claimed that Maltz’s testimony shows that the amount of the direct loans of the bank to the Prentiss Lumber Company was only $11,000; that this testimony, -with the testimony of Prentiss that he paid the paper indorsed by the Linns, reduces, the item of—
*36$21,535.75 to............-.....■.................. $11,000 00'
Add Maltz’s claim............................. 13,000 00
Labor account................................. 10,000 00
Prentiss, Hubbell, Brown & Co., Pierce & Coleman, Mary C. Prentiss, and Chase........... 13,S86 00
Last Class, instead of $59,000.................. 50,910 00
Makes total of claims to be paid by Maltz, not counting interest.................... $98,796 00
Maltz admits that he received in actual cash, and paid into the bank, $112,320.33. Upon examining the record, I find that Prentiss testified that he paid A. E. & W. F. Linn, but that the amount so paid was not over the-$3,035.75 mentioned in the second mortgage. There must have been, from Maltz’s and Prentiss’ testimony, other paper, indorsed by the Linns or George Prentiss, that was not called “ direct loans.” It is true that Maltz. swore that the direct loans only amounted to $11,000, but we do not think that this is all that the bank should be credited with as belonging to the $21,535.75 item. In the first mortgage the direct loans and paper indorsed by the Linns and George Prentiss were estimated at $21,535.75, and the other indorsed notes at “ about $59,000;” making a total of paper held by the bank of $80,535.75. In the-second mortgage, it is stated differently, to wit:
Indebtedness to Alpena National Bank..........$77,500 00
A. R. & W. F. Linn............................ 3,035 75
Making same total as above................. $80,535 75
From the evidence in behalf of plaintiff, we can only-deduct the Linn matter, $3,035.75, from the $21,535.75, leaving $18,500 on this item, or $7,500 more than claimed by defendants’ counsel.
As to the notes belonging to the $59,000 class, Maltz stated on direct examination, in rebuttal of defendants’ case’, that he computed that on February 15, 1886, they amounted, interest and all, to $59,601.27, about $25,000 of which sum was contested, and in suit against the dif*37■ferent indorsers; but on cross-examination, when called upon to give the respective face amounts of these notes in detail, they foot up only $23,445. He states that he has given them all, and that -they amount to $27,000. In making this last statement, he must have meant that the interest and principal amounted to this latter sum. He then goes on and gives the face amount of all the remaining notes in this class, which foot up, as I add them, a total of not over $27,280, making a total of $50,725; but I will call it $50,910, as figured by defendants' counsel. Adding $7,500 to the counsel's total of $98,796, I find the face value of the indebtedness to be paid under these mortgages to be $106,296. This deducted from the $112,320.33 deposited by -Maltz with plaintiff, there is left the sum of over $6,000 to be used on interest account. „ This ought to have taken care of the interest. The proofs show (Maltz's testimony) that the lumber, $37,998.02, was sold, and the cash received, in September, October, and November, 1883, and May, 1884. The logs — $36,638.55—were sold, and cash received, in October, November, and December, 1883, and in 1884 and 1885. These moneys should have been applied on the debts, in their order, as -fast as received.
It must be remembered that these mortgages were made 'September 7, 1883, and Maltz testifies that this bank paper was not all due at that time. The- notes had been discounted, and there was no interest upon them until due, and some of them were four-months notes. It is not probable that any interest was paid on the labor account •of $10,000. It also appears from Maltz's testimony that many of these notes belonging to the $59,000 class were paid when due by the indorsers, — at least the sum of $9,500, — upon which no interest has ever run, the bank having had the use of the money ever since. Maltz testifies as follows:
*38“ Q. So, during all that time, from the first sale of lumber, this money was in the Alpena National Bank, was it not?
“A. Yes, sir; under my care.
“ Q. In use by the bank?
“A. Yes, sir,”- — -showing that, as fast as he collected' this money under these mortgages it was placed in the bank, and used by plaintiff; and yet he also swears:
“ Q. And, after all, you have charged up here interest on these accounts from the 7th of September, until the-15th day of February, 1886, have you?
“A. I did.”
I am not entirely satisfied with the case as it was made-in the circuit, court. Mr. Maltz showed by his own testimony that he had received over $112,000 in money from these mortgages, — more than enough to pay all the-indebtedness secured. Under our ruling in the case-when it was here before, the money so received, although credited to Maltz’s personal account, was considered as-belonging to the bank, to be applied on its debt. This-must remain the law of the case. Therefore, the burden was on the plaintiff to show that the debts amounted to-more than the money received, or some other good and sufficient reason why the $112,000 was not sufficient to-pay the whole indebtedness. Mr. Maltz, as a witness, was speaking for the bank; and he testified on the last trial that he was not only president, but the manager, of the bank; and that when he was present he controlled its-daily business. As a trustee under these mortgages, and as'the manager of the bank, it was his duty to show what, payments he had made, and when, under such trust. Instead of that, he contents himself with stating that he has paid in full all the indebtedness excepting this-$59,000 class, and that has left only about $13,000 to pay on that. Plaintiff’s counsel contend that it was not the ■duty of the bank to show that Maltz had performed his trust, or how he had performed it; but I think differently. *39The money, as collected, was paid into the bank, and was disbursed through the bank; and the plaintiffs own books would show the whole transaction. We held before that when the money was paid into the bank it belonged to the bank, and was its money, and that it was its duty to at once apply it to the payment of its debts. I am not inclined to now hold differently.
No explanation is given why there is now a deficit of over $40,000 in this fund, or where it has been applied. Mr. Maltz simply appears upon the stand as a witness for the bank, and testifies that “the trustee” (himself) has paid over only $13,842.65 to apply on this class of indebtedness, and that was the balance left in his hands, to so apply after paying the other indebtedness in full. The counsel for the plaintiff appreciate the situation, and. in their supplemental brief and argument admit that there; was no effort in the court below to arrive at a fair and: full accounting, because the plaintiff claimed it was not. competent to do so, and the defendants did not attempt, it; and it is then suggested that, this balance might have been used by the trustee in paying off prior incumbrances and liens upon the trust property. The counsel then proceeded to state, as upon their personal knowledge, the expenditures of Maltz in the performance of his trust, to> wit, $36,457.36, for taxes, counsel fees, insurance, and the relieving of liens upon the property, and also that, the debts paid in full amounted to nearly $4,000 more than appears upon the face of the mortgages. But Maltz or the plaintiff failed to make • any such showing upon the trial, or even to hint at it.
I can see no good reason why a trustee who has honestly and faithfully performed his trust should hesitate to account fully and freely to the beneficiaries of such trust, and in law there is none. The defendants in this caBe were .interested in the fund derived from those *40mortgages, and entitled to know what had been done with the moneys collected therefrom. The books and all the data showing the collection and disbursements of this fund were in the hands of Maltz and the bank; and the defendants could have but little, if any, information in regard to these moneys, and whether or not they ought to pay anything upon these notes, or, if anything, Avhat amount, except through Maltz and the bank. The facts in this case show over $112,000 in the hands of the bank, to be applied for a specific purpose. The knowledge and information as to what has been done with this money is entirely with the bank, and its agents and officers. The bank is in full possession of all the proof to show that this money has been rightfully expended, and how; and, failing to make this showing, the law will not presume that' they have done so. People v. Swineford, 77 Mich. 573.
This is a stronger case, at law, than the one above cited; for here not only is the money shown to have been in the hands of the bank, but the burden of proof rested upon the plaintiff to show that this fund was not sufficient to pay these notes sued ujaou in full, and why it was not sufficient. But this it signally failed to do; and the bare assertion that only about $13,000 was left to apply on the $59,000 class of notes will not do, unless the deficiency between the $112,000 and the face of the ■debts mentioned in the mortgages is satisfactorily accounted for. This has not been done, by any means, nor has any attempt been made to do so; but, on the contrary, such a showing has been studiously avoided, not only on the last trial, but from the very beginning of this litigation. When the money was all collected, on February 15, 1886, nor at any time thereafter, was any showing of- the disposition of this fund made to the defendants; but suit is brought against them for the full amount of the notes *41and interest, and no hint even given them that there was any indorsement to be made upon them. And yet Maltz now testifies that they were on February 15, 1886, entitled to the indorsements made on the last trial, and so •entitled long before the time of bringing this suit.
The bank obtains judgment on the first.trial for the full amount of said notes and interest, — some $600 more than it now admits it ought to have had; and, had the ease not been appealed to this Court, the judgment would, for all we know, have been collected of defendants. The judgment is reversed by this Court, with a pretty plain intimation that we can see no reason, upon the showing then made, why the defendants should be further harassed. The suit is, however, tried again; and yet no accounting made that is “fair and just,” as admitted by the plaintiff's counsel upon the argument here. I do not think it is necessary to give the plaintiff a new trial, that it may now make the accounting which it has hitherto refused or neglected to do. From the plaintiff's own witnesses, I think it is shown by this record, beyond cavil, that the bank has received more than sufficient money upon these mortgages, had it been properly applied as fast as received, to pay the whole indebtedness secured by them, and that no explanation has been given why such money did not pay the entire debt so secured.
• The case stands practically as it did before; and the jury rightfully found, under the law as laid down by this Court, that the notes sued upon were paid in full before suit brought. As the circuit judge would not have erred had he, at the close of the trial, directed a verdict for the defendants, the allegations of error assigned are immaterial. If any errors were 'committed as claimed, none of them could' possibly have affected the result. None of them went to the main question of the payment of these notes, and the verdict of the jury can *42well be sustained upon plaintiff’s own showing, independently of any testimony introduced on behalf of defend-, ants.
I read the record differently from my brethren; or, * rather, come to a different conclusion from reading it. I cannot divest myself of the conviction that, in this whole business, George L. Maltz and the Alpena National Bank were practically one and the same, and that it should be so treated at law. This was the conclusion we all arrived at upon the first record, and the second reading of the case here has but confirmed my first conviction.
The judgment ought to be affirmed.