Court Opinion

ID: 6654920
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:57:04.579746+00
Date Added: 2024-06-11T09:04:06.483671
License: Public Domain

Hastings, C.,
dissenting.
Tbe writer, with the utmost regret, finds himself nnable to agree with the conclusions of the learned commissioner to whom this cause was assigned. This regret is increased by a thorough knowledge of the pains and conscientiousness with which he has considered and investigated the case, and, still further, by the polith al aspect which it has borne since its inception. The result, however, of the most careful investigation which the writer has been able to bestow upon it, is all that can be given.
On this third appearance of the cáse, the state of facts differs in only two material respects from that set forth in the former opinion, 59 Nebr., 483. That opinion was written under the impression that the warrant, whose payment is the foundation of the action, had been indorsed by “J. H. Millard,- Pt.” The uncontradicted testimony at the last trial is to the effect that the name “J. H. Millard, Pt.,” on the back of that warrant, was not there when it was paid and surrendered, and is not in Mr. Millard’s handwriting. The fact also developed at the last trial that this warrant was sold through the defendants, Millard and the Omaha National Bank, and was by them transmitted to New York, as the result of such sale, to the Chemical National Bank. This fact appeared as long ago as the trial of treasurer Bartley on a criminal charge (Bartley v. State, 53 Nebr., 310, 333), but was not shown at the former trial of this case. At the former trial, the jury were instructed to find for the defendants. It appears that in reviewing that trial in this court Chief Justice Nor val did not sit, and that Justice Harrison concurred only in the conclusion that the case should be reversed, because of the refusal of the trial court to dismiss the case without prejudice on the plaintiff’s motion. In the opinion by Justice Sullivan, the conclusion is expressed that the collection of this warrant by the Omaha National Bank and its president was a conversion. The action of the court in finding prejudicial error in denying the motion to dismiss *906without prejudice and in sending the case back for retrial, was equivalent to saying that a cause of action was alleged. Probably the former reversal, in the manner in which it took place, can not properly be said to establish anything else as the law of the case.
At this last trial the one question referred to the jury was whether or not the defendants had actual knowledge of the want of right of the treasurer to draw this check to pay the warrant in question. The finding was that defendants had no such knowledge, as a verdict was rendered in their favor. The errors complained of by the state are: (1) The refusal to give either of the peremptory instructions for a verdict in plaintiff’s favor, either against all the defendants or against the bank alone; (2) certain alleged errors in the admission of testimony; (3) that the instructions are erroneous, and did not properly submit the question' as to the defendants’ knowledge, even if that shall be found to have been required to be submitted. The defendants assert : (1) That no cause of action is set out in the petition; (2) that, if there is any, it is only for conversion, and no conversion is shown by the evidence; (3) that there Avas no error in refusing plaintiff’s instructions for a verdict, but on the contrary one should have been given for a verdict for defendants; (4) any error in the instructions or in admitting evidence for defendants is wholly immaterial, as under the facts shoivn there could be no recovery.
It will be seen from this that the parties to this cause disagree in their positions and conclusions with a completeness rare even in lawsuits. Perhaps one cause of this may be the complicated situation, and the different positions held at the same time by the parties to the transaction. In it Bartley appears as Joseph S. Bartley individual, and as state treasurer. Mr. Millard appears as an individual, as an agent negotiating the sale of this warrant, and as president of the Omaha National Bank. The Omaha National Bank appears as state depositary, as an agency for the sale of the warrant, and also for its collection on behalf of the Chemical National Bank. The *907rights and liabilities of each of these parties vary greatly in the different capacities in which they act. One of the results of neglecting these changes in the relative positions of the parties is shown in the claim of defendants that it was incumbent upon the plaintiff to show that Bartley did not put the proceeds of the sale of this warrant into the state treasury. It need only be.pointed out that Bartley sold the warrant and indorsed it as an individual. The claim that, as a public officer, he is presumed to do his duty and put the money of the state into the state’s treasury, has no application when it is considered that in the very act of selling the warrant he was claiming property in it, — asserting ownership of the warrant and consequently of the money received for it. That money was either his own, if he had the right to sell the warrant, or the Chemical National Bank’s, if he had no such right; and in either event there is no presumption that one cent of it was placed in the state treasury.
The transaction of the sale of the warrant is not mentioned directly in any of the pleadings in this case. The petition merely alleges authorization by the governor of the bringing of this action; the incorporation of the de-. fendant bank; that it was’ a state depositary, and Millard its president; that Bartley Avas state treasurer, and had in the bank more than $201,884.05 to the credit of the general fund; that on January 2, he fraudulently dreAV his check for that amount payable to J. H. Millard, Pt., on the defendant bank, and so unlawfully directed it to pay itself and Millard that amount; that the money was paid to Millard and by him to the bank; that the bank had no claim or right to it, and that the defendants well knew this, and that Bartley had no authority to make the payment; that in accepting payment of the check, defendants wrongfully took the money and “by reason of the premises” unlawfully converted.to their OAvn use the money, to the damage of the state in that amount; and that Millard acted personally, — not as agent or president in Avhat he did. The answers admit the character and positions of the defend*908ants in the making of the check; say it was intended, to be in favor of the bank, which at the time held as collecting agent for the Chemical National Bank of New York the warrant, and that it had been registered; that the New York bank was a regular correspondent; that Bartley came of his own accord and without solicitation and delivered the check, which was charged to the general fund account, as therein directed; “that the defendant bank without delay, and in the due and ordinary course of business fully' accounted to the said Chemical National Bank for the said sum and every part thereof;” deny that the money was received for defendants’ benefit, or that they derived any profits from the transaction; deny all notice or knowledge that the check, was wrongfully or fraudulently drawn; deny any knowledge of the warrant’s form or of the purpose for which it issued, or any knowledge that it was not a valid obligation of the state which Bartlev had lawful right and authority to pay; allege that the warrant was in fact a legal obligation of the state, and that the state, through Bartley, treasurer, received its full proceeds, and was legally liable, for its payment; and that the state has no cause of action because of any acts or things set forth in the petition. The reply denies all neAv matter; sets out in full the warrant, dated April 10, 1895, for |180,101.75, drawn to the order of J. S. Bartley, to be paid to him “for to reimburse state sinking fund,” which appears in full in the former opinion of this court. The reply alleges that the check and money of the state were paid to Millard for the purpose of paying said warrant, and that upon such payment defendant bank surrendered the warrant to Bartley, and that it constituted the only consideration for the sum of $201,884.05 so paid to defendants ; that the warrant was null and void, and the defendants were aware that it was no claim against the state; that defendants had no right or authority to collect it or receive the money; and denies that any of the proceeds of the warrant were received by the state.
Whether the warrant was void or valid, it did not belong *909to Bartley, and be bad no more right to sell it than be bad to sell tbe state’s capitol building or tbe ground it stands on. It is bardly necessary to cite any of tbe numerous declarations to that effect, wbicb have been made by this court. “Tbe title to tbe warrant never vested in him, and be could not transfer to another by indorsement that wbicb be never possessed. He could not divest the title of tbe state in tbe warrant by tbe sale thereof to tbe Chemical National Bank, since be possessed no power to sell or negotiate the instrument. Nor was the bank an ‘innocent purchaser’ within tbe meaning of that term as applied to commercial paper, inasmuch as tbe warrant disclosed on its face tbe purpose and object for wbicb it was drawn, and the bank was bound to know at its peril that the defendant bad no title to tbe instrument.” Bartley v. State, 53 Nebr., 310, 335. On the rehearing of tbe same case another judge of this court announced tbe conclusion : “We are entirely satisfied with tbe arguments and conclusions on this subject expressed in tbe former opinion.” 55 Nebr., 294, 298. When tbe action of tbe state against Bartley’s bondsmen was before this* court, it said, as to this warrant and tbe money used to pay it: “The warrant and tbe money were tbe property of tbe state.. Tbe designated sum was but to be changed from one fund to another, as authorized by the legislative act, and tbe treasurer took tbe method indicated, presumably to effect tbe desired transfer.” State v. Bartley, 56 Nebr., 810, 817. On tbe following page tbe court approves unreservedly an instruction of tbe trial court that Bartley bad no right or authority to transfer this warrant to tbe Omaha National Bank, nor to pay it to that bank, nor to any one else, except into the sinking fund of tbe state of Nebraska.
Tbe suggestion of counsel that one deficit can not be made good out of another, and so Bartley should be held authorized to raise tbe money on this warrant, can not be considered • for a moment. Tbe sinking fund was to be made good, not by borrowing on tbe credit of the state, but by an appropriation out of tbe general fund. Tbe *910treasurer, after tbe warrant was issued, bad only to register it, as be did, and wait for tbe money to come in, as it came, and then pay it to tbe credit of tbe sinking fund. By so doing be would have lost tbe opportunity to direct defendants to credit tbe Exchange Bank of Atkinson with the difference between 6 per cent, per annum interest and 7 per cent, on tbe whole amount for tbe entire time-tbe warrant was outstanding, but would have executed tbe law. It will, therefore, be considered henceforth in this opinion as settled that Bartley bad no interest in tbe warrant, and that tbe face of it so disclosed and, therefore, be sold none.
Was its collection from tbe state by tbe defendants a conversion of tbe funds so collected? Defendants say that tbe petition is an allegation of conversion of money, that it is clear that no money passed, and that tbe action therefore fails. The petition is an allegation of a payment and a wrongful application of a fund in a bank by nysans of a check. If tbe facts alleged amount to a legal wrong and show a damage to tbe state, it seems hardly material whether the conclusion of tbe pleader that “by reason of tbe premises” defendants converted money is correct or not. It is true that an allegation of conversion is not regarded as a conclusion, ordinarily, but here it is expressly stated as such. Tbe question is as to tbe legal wrong in taking payment on this warrant. Tbe taking it in the form of a check on their own bank hardly makes it any tbe less a wrong on defendants’ part, if its taking was unlawful. There can be no claim that defendants were misled by tbe conclusion in tbe petition that tbe transaction was a conversion of money. It would seem that tbe state bad a’ right to bring this action on tbe assumption that there was money in tbe vaults of tbe bank, subject to its control and direction as to tbe person to whom tbe payment should be made until tbe check was issued and that by tbe check it passed to defendants, and passed through tbe defendant Millard, in whose favor tbe check was drawn. What was accepted . and *911treated by tbe parties as money may be so beld in the courts. Such is the holding in the cáse of State v. Bartley, supra. Surely the rule is as applicable to civil as to criminal pleading. Whatever argument might be urged against the conviction of Bartley for embezzling money on the ground that the information must describe the actual transaction, in a suit for damages what has been accepted as money, served all the purposes of money, and was regarded and treated by the parties themselves as money, should be deemed such. There seems no reason in this case to change the deliberate conclusion of this court in Bartley’s Gase, that this is to be held as equivalent to a payment of money.
Was it tortious on the part of the defendants? There seems to be no question that the presentation and collection of a non-negotiable instrument on behalf of one who has no title is a conversion of the instrument and the funds received upon it. Koch v. Branch, 44 Mo., 542; Murray v. Burling, 10 Johns. [N. Y.], 172; Donohue v. Henry, 4 E. D. Smith [N. Y.], 162; Boyle v. Levings, 28 Ill., 314; Tilden v. Brown, 14 Vt., 164. That this instrument was not negotiable has been sufficiently declared by this court as above shown. It can not be necessary to cite additional cases as to the non-negotiability of vouchers of this kind drawn upon a special fund, nor as to the form of this one.
The distinction between the case under consideration and Koch v. Branch, supra, consists merely in the fact that in Koch v. Branch the government voucher under consideration was stolen from its rightful owner and in this case the warrant was embezzled, and in the further fact that in Koch v. Branch the payment was made by one who had no connection with or authority from the owner. As the conversion arises from want of title, it would seem not to make much difference whether the warrant was stolen or embezzled or even lost. The collection for one not the owner is the conversion. What difference in this respect does it make whether it was stolen by a Stranger or purloined by an unfaithful treasurer?
*912But in the present case this same treasurer accepted the warrant and by his check paid defendants the money to be applied on it. In this it is sought to find a distinction which will relieve defendants from liability. Undoubtedly the severe rule of law by which one who has in good faith, and fully supposing him to be the owner, participated in a transfer of property from a wrong-doer, is held liable for its conversion, is not applicable, when the act of appropriation can be justified as having been authorized in any manner by the owner of the property. Somewhat singularly the very circumstance ivhich is relied upon by the plaintiff to fix upon the defendants liability for conversion of this money is brought forward by them as their defense, viz., that it was paid to them by the state treasurer for the discharge of this identical warrant. The state says that the payment of this warrant to the Chemical National Bank was a wrong, and because the state’s money was by the defendants received for this wrongful purpose its reception was a conversion, and the fact that it was so designated to be paid by the state treasurer made all of the money received for that purpose a specific fund, which was received under an obligation at the moment of its taking to turn it back to the state, and that this rendered its reception by the defendants a conversion. As held by Lord Mansfield, the taking of money for an illegal purpose rendered it specific. Clarke v. Shee, 1 Cowper [Eng.], 197. The defendants, on the contrary, say that the payment having been made by the full assent and direct authorization of the state’s treasurer, it must be held to have been made with the assent of the state, and no conversion can be predicated upon a taking With the plaintiff’s assent. Hills v. Snell,* 104 Mass., 177; Strickland v. Barrett, 20 Pick. [Mass.], 415.
Here we find the importance in this case of the question of notice and knowledge on the part of defendants and of their good faith in the transaction. It is vehemently *913asserted for tbe state that the question of good or bad faith on the part of defendants is of no consequence whatever; that the sole question is whether or not the warrant in question was the property of the state, and, consequently, whether or not the money paid to the Chemical National Bank was the state’s money, and its receipt, therefore, a conversion, and that the good faith or had faith with which it was paid is entirely unimportant; that it makes no difference in this action how thoroughly the defendants believed in the title of the Chemical National Bank, that belief was no protection unless it was well founded.
It seems clear, both from the decisions of this and other courts, that in a genuine case of conversion the good or bad faith of a party is unimportant. The cases cited above and the numerous ones in plaintiff’s brief establish that where property is converted it is the harm done, not the intention to wrong, that gives the right of action. If any one converts your goods he is liable for them, no matter how firmly he believed he had the authority of the true owner. If there was really a conversion, his good faith does not matter. It may, however, be of the utmost importance in determining whether or not the transaction is a conversion. Its importance in this case grows out of the fact that if the defendants had actual knowledge of the wrong which the treasurer was perpetrating, then any assent which he might give would be entirely unavailing and useless to them. If the assent of the treasurer to this payment would be enough to prevent its amounting to a conversion on the part of a wholly innocent agent, then it becomes of consequence to know whether the agent was innocent. Otherwise, it would not matter. The learned district judge seems to have been of the opinion at the first trial that the assent- of the treasurer to the transaction was a sufficient protection to defendants, even in paying the state’s money to one who had no title to it, if they acted in good faith; and he seems to have further thought that there was in the case no evidence of bad *914faith, and he, therefore, instructed the jury to return a verdict for defendants. In the last trial he seems still to have been of the opinion that the assent of the treasurer to this payment was a sufficient protection to defendants if they were acting in good faith, and therefore the question of their knowledge of the lack of. right on the treasurer’s part was attempted to be submitted to the jury. So far, then, as concerns the alleged error in refusing the peremptory instructions, the question is to what extent the assent of the treasurer to this payment is available to defendants in this action. Evidently if they were acting in bad faith and with actual knowledge of his wrongdoing, it can avail them nothing. If, however, the question of their- good faith was properly submitted to the' jury, the verdict of the jury will have to be taken as conclusive on that subject. Granting that they had not actual knowledge of the treasurer’s lack of right to make the payment, did the treasurer have such authority that his assent would take away from this payment its character of a conversion? As is shown above,.the collection of the money •for one who is not entitled to it upon a stolen or embezzled voucher is conversion, without regard to the good or bad faith of the one collecting it. Their good faith, then, will avail them nothing, except to entitle them to claim the protection of the treasurer’s assent for whatever it may be worth.
A similar suggestion might be made as to the contention over whether or not defendants are bound by the terms of this warrant and chargeable-with knowledge of its contents. It, like the whole question of defendants’ good faith, is important only as it may aid or prevent their claiming protection from the state’s supposed assent to this payment. There are, of course, two rules as to notice. One prevailing where, as in the case of negotiable instruments, a presumption of good faith exists which the other party must overcome and which relieves from the duty of investigation and inquiry, and demands only that ignorance shall not be in bad faith or intentional or willful. The *915other arises where there is no such presumption, as where one is claiming more rights than his grantor had because of liona fides in a purchase of property. The necessity of shoAving affirmatively good faith puts upon the claimant the duty to make such inquiry as a reasonable and prudent man would, and charges the purchaser with knowledge of anything which such inquiry would have shown him. In this case, if the treasurer had been acting throughout within his apparent powers, it would seem that defendants might claim the protection of such a presumption. It would seem that there is at least as much presumption in favor of the rightfulness of official action within the limits of an officer’s statutory authority as there is in favor of the good faith of a transfer of negotiable instruments. If the action of the treasurer had been within the terms of the statute as to paying public money, then it would seem that actual knoAAdedge or ignorance so nearly willful as to indicate bad faith would be necessary to charge defendants with participation in his frauds. But the treasurer was known to be a trustee dealing with trust funds and defendants were bound to learn the extent of his authority. O’Herron v. Gray, 168 Mass., 573, 60 Am. St. Rep., 411, 40 L. R. A., 498; Atkinson v. Atkinson, 8 Allen [Mass.], 15; Shaw v. Spencer,* 100 Mass., 382, 97 Am. Dec., 107; Duncan v. Jaudon, 15 Wall. [U. S.], 165; Colonial Bank v. Cady, 15 App. Cases [Eng.], 267. The utmost confidence in him on their part will not avail them to stretch that authority one particle. Actual knowledge of his fraud would do away altogether with any protection from his assent, however good the authority behind it.
How much is his assent worth to remove from this transaction its character of an unauthorized interference with the state’s property, and so a conversion? It is necessary, first, to look again at the terms of the warrant. Somewhat curiously the defendants in their answer plead that at the time of the transaction “the form and nature of said warrant, and the purpose for which it was drawn and issued *916was wholly -unknown” to said defendants hut “each in good faith understood and believed and had good reason to understand and believe that said warrant paid by said check was a proper and lawful warrant to be paid out of said fund and had been properly issued by authority of law.” Following this, in two or three different forms, are allegations that the warrant was a valid and legal claim against the state, and in one paragraph, as above shown, that*the state had received its proceeds and was legally bound to pay it. The warrant itself, as has been stated, read as follows: “Pay to J. S. Bartley or order $180,101.75 for to reimburse state sinking fund.” The defendant Millard and the other officials of defendant bank, who testify, swore that they never read the warrant and did not know its terms, yet they appeal to it as a justification of their action, and declare that they paid it in good faith. Nevertheless, they admit that out of the money paid ostensibly upon this warrant only $198,-253.65 was paid to the Chemical National Bank. By direction of Mr. Bartley and the Chemical National Bank, $3,630.40 was credited to the Exchange Bank of Atkinson.
It does not seem possible that defendants can be allowed any greater justification for a payment of money upon a warrant than is given them by its terms. If they read it and acted upon it they are entitled to such protection as its terms give. If they did not read it and did not act upon it, but acted as they say they did upon the directions they received from Treasurer Bartley and the Chemical National Bank, then they are entitled to such protection as that authority gives. It seems clear that this warrant is no authority for the payment of any money anywhere, except into the state sinking fund. If that is the case, then by reason of the possession of this warrant they have no protection in paying the money to the Chemical National Bank and the Exchange Bank of Atkinson. They are, at the most, no better off than if they had paid on Bartley’s direction alone without a warrant at all. They seem to have feared that they might be worse off on its account. *917If they did not read the warrant and did not know its contents, after acting solely on the direction of the Chemical National Bank and Mr. Bartley, they mnst rely on the authority of snch direction. Such authority as the Chemical National Bank had over state funds depended upon its possession of this warrant, and in the buying, retaining and collecting of this warrant it was a wrongdoer and a tort-feasor.
Counsel for defendants are entirely correct in saying that the action of trover for a conversion of property is old and its principles well established. One of them is that the assisting in an unlawful and unauthorized sale, in derogation of the owner’s right, of property, is a conversion, no matter how innocent the seller or purchaser may be as to knowledge of the true owner’s claim. Experience having shown that facility in disposing of property was of the utmost assistance to the thief and embezzler, the law has placed upon all who assume to assist in a transfer of title the obligation to learn at their peril the rightfulness of the ownership they help to transfer. The eases cited by plaintiff in error in this court amply bear out the doctrine, and many more are gathered in the note to Bolling v. Kirby,* 24 Am. St. Rep., 789, 812. Noticeable for emphatic assertion, and discussion of this doctrine is Velsian v. Lewis,† 15 Ore., 539; Koch v. Branch,‡ 44 Mo., 542. A mere depositary-or a carrier who has only incidentally assisted in a transfer, is not liable. Burditt v. Hunt,§ 25 Me., 419. The reason given is that he acts on the location, and not the form nor ownership of property. It is only an asportation, not a conversion, on his part. But the same court held that even as to instruments payable to bearer, the agent who sold them for the receiver of a thief was absolutely liable for the property. Kimball v. Billings,|| 55 Me., 147. In Alexander v. Swackhamer,¶ 105 Ind., 81, both the commission house that in good faith bought cattle from one other than the true owner and *918the firm getting them from the first buyer, who sold and delivered them in a distant state, were held jointly liable for their value. That one who attempts to get and to assert title to other than money or negotiable instruments must at his peril learn the soundness of that title, seems beyond all dispute. The Chemical National Bank, then, in buying and in collecting this warrant, was a tort-feasor. It seems reasonably certain that neither the warrant nor the directions from the Chemical National Bank will serve as a justification for the defendants’ disposition of this money, or for their taking it with a view to that disposition.
Will the authority of treasurer Bartley serve any better? Bearing in mind that defendants say they never read this warrant and did not know what it contained, and that the action of the Chemical National Bank was that of a wrong-doer and could give nobody any authority, there is left, then, nothing except the oral direction by Treasurer Bartley of this payment, which, without such authority, would have been a conversion. So far as making this disposition of the money that was made is concerned, defendants are certainly in no better position, under their own testimony, than if they had taken the money of the state merely at Bartley’s direction and paid it over to one who had no color of title to it. They confess they did this with regard to the payment to the Exchange Bank. May any citizen or corporation of the state go to the state treasury and get the state’s money and deliver it as a final payment to one without a color of right, on the treasurer’s mere oral direction? The treasurer’s authority to pay out state money is found in subdivision 2, section 2,* article 4, chapter 88, Compiled Statutes, and is, “To disburse the public money upon, warrants drawn upon the state treasury according to law and not otherwise.” If the defendants had held a warrant entitling them, upon its face, to receive this money, and had in good faith presented it to the treasurer and he had honored such a war*919rant, even though there was no claim against the state on the part of the holder, until the mistake was discovered and the defendants had knowledge or notice of it, they would have been at liberty to treat the action of .the treasurer as valid and to pay the money over to the holder of the warrant. Such payment would have been within the apparent authority of the treasurer, and, therefore, protected as to one innocent of wrong. But they had nothing of the kind. Their warrant called for the payment of money, not to the Chemical National Bank, but to the state sinking fund; and, as above indicated, they must justify the payment either by the warrant according to its terms or without one. It seems tolerably clear that whatever may have been the degree of good faith on the part of these defendants, they can no more appeal to the assent of the treasurer as relieving them from liability for conversion than they can to the terms of the'warrant which they used. Whatever' the hardship of such a rule, it would seem indisputable that the same doctrine should be laid down for the wealthy and powerful that is prescribed for the poor and weak. Unless the state treasury is to be opened to everybody who can get the assent of the treasurer to the taking of funds out of it, only payments made by the treasurer in accordance with the statute can be held to be authorized or to be assented to by the state.
If the positions are correct that Bartley had no authority to sell, and none to pay the warrant, that its purchase and collection by the Chemical National Bank was a conversion both of the warrant and of the funds with which it was paid on the part of all concerned as principals and agents, and that neither the warrant nor the verbal direction of Bartley to pay it was an assent of the state to'such payment, it follows that the request for a peremptory instruction for plaintiff against all defendants should have been granted. This would seem to dispose of the case. Some points raised by defendants, however, call for especial consideration. .
The most earnest contention of defendants at the hearing, and the one to which the larger portion of their *920briefs is devoted, is that there was no segregation of the money from the funds held by the bank as a depositary, and so no conversion. One of the briefs urges that there can be no conversion of money simply as such, and so no cause of action is alleged. Neither of these positions help the defendants, unless the last conclusion is. allowed. This can not be done. If there has been no segregation of the state’s money, these defendants still have it, and are holding it without right. If there is no action for conversion in the pleadings, there is one for money had and received. The allegations of the answers are simply that they “accounted” for the money to the New York bank, not that they have ever paid it over. The cases are numerous holding that where money is received for a principal without right to it, merely putting it to his credit does not relieve the agent of liability, even where the principal was at the time indebted to his agent and it was credited on the indebtedness. Garland v. Salem Bank, 9 Mass., 408, 6 Am. Dec., 86; Cox v. Prentice, 3 Man. & Sel. [Eng.], 344; Story, Agency, sec. 300. It is said that the proof shows the money to have been all paid over by January 14, 1897; but it was taken under objection and in fact merely shows that on the books of the bank its New York correspondent at that time had a debit instead of a credit balance. The able counsel who drew the answer had no doubt thought of the effect on their claim of no segregation which a plea of payment over of the money would have. It would be somewhat hard even for them to show that it had been paid away without separation from the deposit fund.
The writer is of the opinion that a case of conversion of money is alleged. The claim is that defendants got the state’s money from its treasurer by means of his check on the. d (Tend ant bank without-right, that both they and he knew they had none, and that thereby they converted it to their own use. The knowledge that it was the state’s money and the fact that it was taken without color of lawful authority and with the intention to keep it from the treasury, make the money so taken specific. A right to recover it on the part of the state arose at once, which no *921mingling of funds by defendants could defeat. Many of the cases cited by defendants to the point that no conversion arises upon the reception of money to another’s use, expressly base their determination on the fact that no intention to misappropriate the money at the immediate time of its reception is shown. Its receipt by authority of the owner appears, and so a debt and not a conversion arises. This money, however, was taken expressly to be appropriated for the payment of this warrant to one who had no title. It was to pay to the • Chemical National Bank for the latter’s own use this money that by the terms of the warrant was to go to the state’s sinking fund. But, as above suggested, the position that no conversion is alleged does not help the defendants any. One is shown. The sale of this warrant and the assistance of defendants in such sale, was a conversion on their part in any possible view of the transaction. Mr. Millard’s testimony shows this was a bank transaction. It resulted in a large fund in the bank to the credit of a correspondent. The collection of the warrant and crediting of the money was a completion of the sale, and the illegality of that sale makes the receipt of the payment in any view tortious. Tort can be waived and the state recover on assumpsit for money had and received. Carew v. Rutherford, 106 Mass., 1, and cases cited; defendants’ brief, p. 65. It is no defense, for money tortiously received, that it has been paid over to a principal. Tugman v. Hopkins, 4 Man. & G. [Eng.], 389; Kleinwort Co. v. Comptoir National d’Escompte de Paris, (1894) 2 Q. B. [Eng.], 157; Arnold v. Cheque Bank, 1 C. P. Div. [Eng.], 578; Wright v. Eaton, 7 Wis., *595. One wrong-doer can not escape by paying to another tort-feasor in the same transaction. If an immediate liability arose against defendants, because they received this money for the use of others than the state sinking fund, then surely they can not discharge that liability by paying over to those others these very funds. The petition clearly states facts on which an action would arise on assumpsit. The addition of the conclusion that “by reason of the premises” defendants wrongfully con*922verted the money to their own nse would not vitiate this. Conaughty v. Nichols, 42 N. Y., 83. The view that no con- • version is alleged and tliat the action is for money had and received, would admit evidence of any tortious conduct in the transaction of getting the money, including both the sale and collection of the warrant, as well as accepting the check in payment of it. Nothing would be gained, then, for defendants, by treating this as an action for money had and received. The real question would still be left, was taking this payment a legal wrong against the state of Nebraska? If it was, an action lies, whether getting the check was a conversion of money or not. The considering of the petition as one for money had and received makes the sale of the warrant through the agency of the defendants a more directly important feature than does the view that its collection by means of the check was a conversion.
The questions as to the admission of evidence all or nearly all relate to permissions of cross-examination which are claimed not to be at all pertinent to the examination in chief. It is hardly claimed by defendants in brief or argument that the cross-examination of the witnesses was kept within the limits of their examination by plaintiff. The claim made is that, the facts shown in no event constitute a cause of action, and any error in latitude of cross-examination is entirely immaterial, as the verdict rendered was the only one possible. The discussion of this branch of the case need not be further prolonged. The rule in this country, differing from that of England, is that the cross-examiner must inquire as to the evidence in chief and not as to the whole case. It is impossible to see the relation of much of this cross-examination to the evidence of the state.
In the instructions, aside from the refusal of the peremptory ones which have been considered, the essential error claimed is that the question of defendants’ knowledge of the facts as to the warrant was not submitted as a question of fact, but as a question of law. The jury were in effect told to find for defendants, if they did not find that the latter knew that Bartley had no right to draw *923this check. Substantially they were told that the deciding point as to the liability or non-liability of the defendants was whether they knew that there was no. right to draw this check. The claim of the state that this was submitting a question of law and defendants’ judgment upon it to the jury seems to be well founded. The question was, not as to their knowledge of Bartley’s right, but of the facts which went to establish or to remove such right. Under the instructions given, the defendants might have been entirely cognizant of all the facts as to the warrant and Bartley’s use of its proceeds and the purpose of the appropriation under which it was drawn, and the state’s ownership, and yet, if they could convince the jury that they supposed, as a matter of law, the treasurer had a tight to pay out the money on it by means of this check, thére could be no recovery.
As above stated, one who deals with a trustee, knowing him to be such, must ascertain the limits of his authority. This would seem particularly applicable to a public officer, whose powers are fixed by public statute. Can it be tolerated that money shall be taken, in such quantities as here, out of the state’s treasury, without right, and the takers, with full knowledge of the facts, or with complete failure to investigate them, be excused on the plea, not that they supposed the treasurer had a right to pay it to them, but that they did not know he was without such right? If the treasurer had been acting within the scope of his apparent authority, the question as to defendants’ knowledge would be, not as to' their legal conclusions of his right or want of it, but as to their knowing or not knowing the facts that would take away that right. It follows, from what has been said, that in any view of this case, instruction No. 4, given by the court, was wrong. The jury should not have been told that the liability of defendants depended on their having reached the correct legal conclusion that Bartley had no lawful authority to pay the warrant. The same objection applies to No. 5, with its direction to' find for defendants if the jury failed to find *924that they knew the warrant was illegal and void and that the check was fraudulently drawn.
Paragraph Ro. 10 of the requested instructions seems to have been given on the theory that the check was payable to the Chemical Rational Bank and the part of the defendants in the transaction merely its payment on presentation. It in effect told the jury that paying the check alone would not make the bank liable even if it knew it was drawn to pyr the warrant, and that such payment was unlawful. The instruction seems clearly misleading, considered in connection with either the pleadings or the proof. The check was to the defendant J. H. Millard, Pt. It is claimed that it was for the defendant bank. That bank pleads that it was acting as agent for its regular correspondent, the Rew York bank, in collecting the warrant. The proof shows that the money was placed in the defendant bank to the credit of the correspondent. This was a borrowing of the money, and borrowing from one known to have no right to lend is a conversion. Arnold v. Cheque Bank, supra; Rice v. Clark, 8 Vt., 109; Kramer v. Wood, 52 S. W. Rep. [Tenn. Ch. App.], 1113. If defendants knew there was no right in the New York bank to get this money, which they put to its credit in their own bank, they are clearly liable for it. This instruction seems manifestly erroneous.
The petition alleges that defendant Millard did what he did in his private capacity and not as agent or president. It is claimed that the proofs do not sustain this. This seems a superfluous allegation in an action based on tort. Whether it is held a proceeding for conversion of money or for money had and received, in either event a conversion .is the foundation of whatever liability there is. In conversion all are principals. Osborne Co. v. Plano Mfg. Co., 51 Nebr., 502. It would seem, therefore, that this allegation is simply a pleading of the legal effect of the acts and should be so treated.
It is therefore recommended that the judgment of the trial court be reversed, and the cause remanded.

 6 Am. Rep., 216.

1 Am. Rep., 115.

 90 Ala., 215.

 3 Am. St. Rep., 184.

 100 Am. Dec., 324.

 43 Am. Dec., 289.

 92 Am. Dec., 581.

 55 Am. Rep., 180.

C.obbey’s Annotated Statutes, sec. 9124.