Court Opinion

ID: 4895252
Source: CourtListenerOpinion
Date Created: 2021-09-02 23:56:23.028723+00
Date Added: 2024-06-11T08:12:43.289337
License: Public Domain

Willie, Chief Justice.
We think the demurrer of B. H. Bassett was properly sustained. The petition shows that he deposited the trust funds with the banking house of Bassett & Bassett, of which he was a member. It is not alleged with any certainty what was the nature of the deposit. It is merely said that it was to the credit of B. H. Bassett, trustee of Ronald Mills and his daughter, who were the beneficiaries of the trust, and that the *272interest on it was paid for the whole time it was there to the said Eonald Hills.
As the trustee did not make the deposit for his own personal benefit we can not insist that it was a misappropriation of the-funds. The whole theory of the plaintiff’s case is that Bassett & Bassett obtained the money from B. H. Bassett and used it in their business, knowing that it was trust funds. The allegations as to the deposit, taken in connection with that as to the payment of interest, make it a case of loan by B. H. Bassett to the-bank, the money being passed to his credit as trustee, as evidence that the bank was indebted that amount to the trust fund. It is not pretended that he drew out any of the money for any purpose. The duty of the trustee was to loan the money so as to-make it yield interest to the beneficiaries. This was accomplished by means of the deposit. That this was a safe investment when originally made, is not disputed; and at what time before the assignment was made it ceased to be so is not shown.
There is nothing to show that B. H. Bassett, by reasonable-diligence, could have prevented this loan from sharing the fate of the bank’s other debts. We can not resort to uncertain and indirect inferences and presume the fact, when if it had been the case, the pleader might easily have alleged it. But if B. H. Bassett mismanaged the trust in any way, the result is no more than to create a debt against him in favor of his beneficiaries. There is nothing in the statute to show that such a debt can not be brought into an assignment as well as any other, and that if the assignment provides for a release by accepting creditors, such a debt is not as well released by acceptance as any other. That it may be entitled to preference out of the assigned funds is another matter, and not a question which we have to decide in passing upon Bassett’s demurrer.
¡No matter what may be the right of the holders of the claim as against the assigned property, it is very certain that they can not go into the assignment agreeing to release Bassett & Bassett and each member of that firm, and at the same time proceed against one of the members to recover the debt in full. The owners of the claim must litigate with the assignees and opposing creditors-as to the amount they shall receive upon their claim. They can not make one of the assignees a party to the suit, as judgment, can not be rendered against him to be paid out of the assigned property.
We have, in assigning the demurrer, treated the assignment as. *273one exacting releases from accepting creditors. This is not alleged in the petition, but in construing its allegations most strongly against the plaintiffs, we must treat the assignment as being of that character. To hold it such, is most unfavorable to their case, and as they have failed to aver a fact which, if true, is important to a recovery on their part, we must presume that it was not true. By no reasonable intendment can the allegations be made to amount to a charge that the assignment did not provide for a discharge of the assignees from all further liability to accepting creditors. (Sanborn & Warner v. Norton & Dietz, 59 Texas, 308.)
This brings us to consider the right of the plaintiffs, under the facts, to recover from the assignees. The assignment was proved to be for the benefit of creditors consenting to release the assignees. It was shown that the money was loaned to Bassett & Basset and that they paid the interest regularly to Ronald Mills, and that his daughter endorsed this action by claiming no interest upon the debt when it was paid, up for the assignees. The loan to the firm was made at the instance of Mills, and was sent from Virginia, where it had previously been on interest, directly to Bassett & Bassett to be lent them. There was certainly no breach of trust on the part of B. H. Bassett in carrying out the provisions of the trust in accordance with the expressed wish of one beneficiary, and with the consent of the other. The money remained with the bank without objection on the part of the beneficial owners.
That B. H. Bassett knew that the money was unsafe in the hands of the bank at any time, and that, if he had known this face, he could have withdrawn the money, is not shown. There is, therefore, a total failure to show any indebtedness from B. H. Bassett to the appellants on account of the trust fund. The bank was indebted by reason of their having borrowed the money, but their relation to it was the same as toward any money that they had borrowed for banking purposes. We know of no law that makes the borrower of trust funds, loaned in pursuance of the express requirements of the trust, himself a trustee for its beneficial owners. That would be a startling doctrine, and would prevent loans being made by trustees, and investments of this character for the benefit of cestuis que trust, though these were the very objects for which the trust was created.
This is not a case where money or property has reached the hands of third parties charged with a trust. When borrowed by *274the bank it was divested of its trust character and became the property of the bank and subject to its disposal in the same manner as money deposited with it on open account, or acquired in any other manner during the course of its business. The bank became its absolute owner, and owed a debt of corresponding amount to B. H. Bassett for the benefit of Mills and his daughter. The trusteeship of B. II. Bassett was not transferred to Bassett & Bassett. They owed the debt, and B. H. Bassett was trustee for its collection. Much less was a trust fastened upon other money or property of the bank which had no connection whatever with the borrowed funds. Hence the money and property acquired by Bassett & Bassett in the course of a business of twelve years, which they conveyed to their assignees, passed to the latter charged with no trust whatever in favor of the appellants in this case. Even admitting that trust debts iust be paid in full by a statutory assignee before the general editors can receive their pro rata, the appellants were not en-led to the relief they sought, because they established no trust against the assigned estate, and the court did not err in giving judgment against them.
Nor was there error in allowing the intervening appellees to come into the case. To allow the claim of the appellants as demanded by them was to diminish, and perhaps totally destroy all their right in the assigned property. They were therefore deeply interested in the judgment to be rendered. The assignees could fight their battles for them, but these creditors were not bound to leave their interest in the hands of the assignees. Having the right under the statute to see that no other creditor obtained more than his share to their injury, we see no reason why they should not appear in a suit where this was the very question at issue, and make common cause with the assignees against creditors seeking to encroach upon their rights to a share of the assets. (Schwarz v. Bank, ante, 317.)
There is no error in the judgment, and it is affirmed.

Affirmed.

Opinion delivered January 25, 1887.