Court Opinion

ID: 8035287
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:20:06.303556+00
Date Added: 2024-06-11T16:37:06.624709
License: Public Domain

Rose, J.,
dissenting.
In my view of this case, the affirmed judgment directs the receiver to distribute the proceeds of claimant’s converted bonds to bank creditors having no lawful right thereto. Regardless of the purpose for which the bonds were procured from claimant, the Beemer State Bank is accountable to her as trustee under established rules of law and equity. Without authority, it officiously under*239took to manage the securities of claimant for her and consequently is answerable to her for its acts as her' trustee. Civil consequences of a corporate swindle are not necessarily averted by insolvency. The insolvent state bank remains in existence as a corporation for the purposes of liquidation, including accountability as trustee where it acted in that capacity.
In a proceeding to wind up the bank’s affairs, Mary Schlickbernd, claimant, intervened and presented a preferred claim for $3,000, payable in full as a trust fund out of the assets in the hands of the receiver. Confidingly trusting the corporation which had been chartered by the state to conduct a lawful banking business, she had left with it for safe-keeping a meager estate consisting of bonds to the extent of $4,000. The bank did not confine its control or duty to the safe-keeping of the bonds, but officiously, without the consent of claimant, controlled and managed them for her; paid her the interest on them; returned bonds in the sum of $1,000; retained the remaining bonds for $3,000 and exchanged them for others. The bank procured for itself and used in its banking business the proceeds of the bonds received in exchange. The tainted fruits of the trustee’s .officious management and betrayal of trust did not inure to any officer of the bank. As I understand the record, evidence of these facts is uncontradicted. The bank is not in a position to escape accountability by blaming its iniquities on its officers. The controlling rule of equity has been stated as follows:
“A person gratuitously or officiously assuming as agent or trustee to control or manage the property or interests of another is as firmly bound by the implied terms of his confidential relation as one who is regularly employed and paid.” Nebraska Power Co. v. Koenig, 93 Neb. 68. See Wright v. Smith, 23 N. J. Eq. 106.
The supreme court of Nebraska unanimously committed itself to the following doctrines:
“It is firmly established, both by English and American courts, that a trustee is bound to perform faithfully the *240duties relating to his trust, and that in doing so he cannot allow his own interests to interfere. If. he unites his. personal and representative capacities, he confuses transactions which the law requires him to keep separate and distinct. If he attempts to acquire an individual interest in the subject-matter of his trust or agency, he creates a temptation to serve himself at the expense of the beneficiary or principal, and enters a realm where his secret purposes with reference to trust property or interests may escape judicial scrutiny. To prevent evil consequences from growing out of the advantages which his position gives him, it will be presumed that what he does in relation to the interests or property involved in the trust or agency is done in a representative capacity. For the same reason, any advantage beyond proper expenses and compensation belongs to the cestui que trust. Adherence to these doctrines keeps personal and representative transactions free from entanglement, removes from the fiduciary the temptation to gain an undue advantage, and permits courts of equity to enforce the fights of the beneficiary. The philosophy on which these fules of law and equity rest came down through the centuries from the Chancellor of Galilee. The wisdom and necessity of such doctrines become more apparent as the forms in which property is held multiply under new conditions, and as earning capital in the custody and control of agents or trustees follows new enterprises over the world, where it is not under the watchful eye of the owner. Courts of equity do not set bounds to the principles which control the conduct and fix the accountability of trustees. The elasticity of these rules extends their, applicability to all of the devices invented by unfaithful fiduciaries to evade their obligations or to defeat the imperative demands of business integrity and sound public policy.” Nebraska Power Co. v. Koenig, 93 Neb. 68.
The proceeds of the bonds or the equivalent thereof in money were procured and used by the bank in 'banking, transactions. If they are not now in the hands of the feceiver, they either augmented the bank assets or re*241duced the bank indebtedness to the extent of $3,000. The trust fund in some form went to the credit of the bank. In the changed form it belongs to claimant, the beneficiary of the trust. It was not a deposit subject to check. Claimant did not elect to treat it as a deposit. It is not an asset of the bank. It is not property belonging to creditors. Neither the legislature nor the court of equity has any right to turn claimant’s trust property over to depositors. Depositors entrusted their money to the bank to be used by it in commercial transactions. Claimant did not. In equity her claim is not in the same class as claims of depositors. There is no legal or moral justification for classifying claimant with general depositors. Claimant did not commit any wrong. She traced her individual property into the bank. The bank unlawfully mingled it with bank assets, the mass of which is chargeable in equity with the trust fund of claimant. She is entitled to have it restored in its changed form out of the assets in the hands of the receiver. Central Nat. Bank v. First Nat. Bank, 115 Neb. 472; State v. Farmers State Bank, 121 Neb. 532; State v. State Bank of Touhy, 122 Neb. 582. The devices employed by rascals to cheat honest and confiding persons out of their property should not be allowed to multiply faster than the means of equity to redress civil wrongs. The judgment permitting the receiver to distribute the trust property of claimant among the depositors of the Beemer State Bank should be reversed and the receiver ordered to pay her claim in full out of the assets in his hands.