Court Opinion

ID: 6897968
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:51:56.230896+00
Date Added: 2024-06-11T16:06:04.104234
License: Public Domain

*5826 November, 1899.
On Rehearing.
Mr. Justice Moore
delivered the opinion.
A rehearing having been granted in this cause, it is insisted that, inasmuch as the testimony conclusively shows that Pfanner placed the $879.84, belonging to the Manning estate in his bank, and thereafter, until the assignment, retained more than that amount therein, it was error in the former opinion, in speaking of the money which was sought to be impressed with a preference, to say that “none of it has been traced or followed into the mass sought to be charged with the lien.” Pfanner, as a witness, says, in substance, that when appointed administrator he was a broker, and kept the funds of the estate in his safe, but when he went into the banking business they were placed in his bank, and that most of his collections as administrator were made after he engaged in the latter business. In speaking of the manner in which the money of the estate was deposited, he says, “It was placed with the bank’s money, the same its any other money.” If Pfanner had continued in the business of a broker, and kept the funds of the estate in his safe, but commingled with his own, it is quite probable that if, at the time of the assignment, the money therein was sufficient to satisfy the demands of his trust, a court of equity, upon proper application, would have enforced a lien thereon in favor of the cestui que trust. So, too, as intimated in the former opinion, if, after having mixed the money of the estate with his own, Pfanner had made a general deposit thereof in a bank, where it remained at the time of the assignment, a court of equity would undoubtedly have impressed the money *583with a lien in favor of the estate: Overseers of Poor of Norfolk v. Bank of Virginia, 2 Gratt. 544 (44 Am. Dec. 399); Stair v. New York Nat. Bank, 55 Pa. St. 364 (93 Am. Dec. 759); Van Allen v. Bank, 52 N. Y. 1; Central Nat. Bank v. Connecticut Mut. Life Ins. Co., 104 U. S. 54. This rule is founded upon the principle that if a trustee mingles with his own money the funds of his cestui que trust, the whole will be regarded as belonging to the latter, except so far as the trustee may be able to distinguish his own: Hart v. Ten Eyck, 2 Johns, Ch. 62, 108.
It has been held, by invoking the presumption that the ordinary course of business has been followed (Hill’s Ann. Laws, § 776, Subd. 20), that, in the absence of evidence to the contrary, a deposit of money in a bank will be regarded as a general deposit (Alston v. State, 92 Ala. 124, 13 L. R. A. 659, 9 South. 732). However, there exists no necessity, in the case at bar, for invoking this presumption, for the testimony conclusively shows that Pfanner made a general deposit of the money of the estate in the bank. This created the relation of creditor and debtor between him and the bank, thereby giving it the right to mingle the money so deposited with its own funds: Morse, Banks, § 289; Cadwell v. King, 84 Iowa, 228 (50 N. W. 975); Catlin v. Bank, 7 Conn. 487; Coffin v. Anderson, 4 Blackf. 395; Horwitz v. Ellinger, 31 Md. 492; Carman v. Bank, 61 Md. 467; Marine Bank v. Fulton Bank, 69 U. S. (2 Wall.) 252; Thompson v. Riggs, 72 U. S. (5 Wall.) 663; Bank v. Millard, 77 U. S. (10 Wall). 152. Although the bank may have retained in its vaults at all times a sum greater than the trust funds, a general deposit thereof was technically a use of such funds in its business: St. Paul Trust Co. v. Kittson, 62 Minn. 408 (65 N. W. 74). In Otis v. Gross, 96 Ill. 612 (36 Am. Rep. 157), a clerk of a court having made a *584general deposit of trust funds in a bank which became insolvent, sought to impress the money of the bank in the hands of a receiver with a preferential lien, but the relief was denied, the court holding that he must share pro rata with the other creditors of the bank. In Wetherell v. O'Brien, 140 Ill. 146 (33 Am. St. Rep. 221, 29 N. E. 904), an executor made a general deposit of the funds of his testator in a bank which subsequently failed, and in a suit to impress with an equitable lien the money of the bank in the possession of its assignee it was held that the suit would not lie ; the court saying : “It is clear that it was impossible, when the assignment was made, to identify the money of the appellee as a separate trust fund, distinct from the other moneys of the bank.”
In McLain v. Wallace, 103 Ind. 562 (5 N. E. 911), a clerk of a court, having made a general deposit of trust funds in a bank in his own name, to which he appended the word “clerk,” sought to establish a lien on the money of the bank in the hands of its receiver ; but it was held that the word “clerk” did not make the deposit a special one, and that the suit would not lie, the court saying: “Deposits in bank are either general or special. Upon a special deposit the bank is merely a bailee, and is bound according to.the terms of the special deposit; but on a general deposit, without special agreement, the money becomes the property of the bank, and the depositor has no longer any claim on that money. His claim is on the bank for a like amount of money: Coffin v. Anderson, 4 Blackf. 395; McEwen v. Davis, 39 Ind. 109. Upon the insolvency of a bank, its general depositors must be paid pro rata." In Fletcher v. Sharpe, 108 Ind. 276 (9 N. E. 142), an administrator having made a general deposit of the funds of his intestate in a bank, which subsequently became insolvent, it was held, in a suit to sub*585ject the money of the bank to an equitable lien/that he was not entitled to any preference over the other general depositors.
The reason for this rule is found in the fact that upon a general deposit of money in a bank it becomes the property of the latter, and, when indiscriminately mixed and mingled with the other money of the bank which becomes insolvent, its identity is wholly lost when any portion of it is checked out, in which case it is impossible to trace the fund into the hands of the bank’s assignee. The fact that Pfanner the administrator and Pfanner the banker were one axxd the same person, so that the bank must have known the character of the funds so deposited, affords no reason for changing the rule that a general deposit cannot be impressed with a trust after the bank in which it is placed has made a general assignment: Shields v. Thomas, 71 Miss. 260 (42 Am. St. Rep. 458, 14 South. 84). Having discovered no error in the former opinion, we are compelled to adhere therein.
Reversed.