Court Opinion

ID: 6654918
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:57:04.570808+00
Date Added: 2024-06-11T09:04:06.400182
License: Public Domain

Holcomb, J.,
concurring.
Until the commencement of the September term of court, I had hoped the case at bar could be decided without participation, on my part, in the decision rendered. My disinclination to sit in the cause arises from the fact that as governor of the state I formally authorized the attorney general to institute any and all legal proceedings his judgment approved of, which seemed advisable and required, in order that the state should recover its dues by reason of a shortage in the accounts of its former state treasurer, Joseph S. Bartley, which was discovered to exist at the time of the expiration of his term of office as such treasurer; and I was also cognizant of the institution *880of the present action against the defendants herein under the general authority thus given the attorney general. Since it has become apparent that I must act if a decision is rendered in the case, I have devoted some attention to the proposition of whether a legal disqualification as to my participating in a decision existed, and if so, to make formal declaration of the conclusion reached in respect thereof, thus leaving a decision of the appeal of the state to my two associates, and if they could not agree, to allow it to await the passing of time until by changes in the personnel of the court a decision could be reached by an agreement of at least two members of the court, which the constitution requires in order to render a valid judgment of affirmance of the judgment of the trial court or a reversal thereof.
The defendants have challenged my qualifications to take part in a decision of the case, not in the proceedings now pending, but in a branch of this same case heretofore before the court. State v. Omaha Nat. Bank, 60 Nebr., 232. It is quite obvious that if in the collateral proceedings valid objections existed to my taking part in the deliberations of the court on the questions therein presented for adjudication, such objections apply with much greater force in a decision of the controversy incident to a trial of the main issues. The alleged disqualification is grounded on the assertion that, while acting as governor, in the performance of my official duties as such, I inquired into the facts in the case at bar and formed the opinion that the state was entitled to recover from the defendants the amount sued for, and directed the attorney general to bring this action. The ground of objection is stated broader than the facts warrant, all of which appear in the record of the proceedings last referred to. The authority to the attorney general was general, authorizing and requesting that he bring such action or actions as would in his judgment conserve the interests of the state and conduce to a recovery of the moneys due it by reason of the defalcation of its state treasurer. I was cognizant of *881the fact that the action now here for review was begun for the purpose of recovering a portion of the moneys lost to the state and that such action was based on the theory that a conversion of that much money belonging to the state had taken place, and that the attorney general had examined into the facts and in his opinion the defendants were liable; that the suit was in its general characteristics an action for conversion. Personally I was not acquainted with the facts connected with the transaction out of which the alleged liability grew, except certain prominent and patent facts connected therewith which were known of all men. I did not act as counsel with the attorney general'or make a personal investigation of the law and the facts which must ultimately determine the defendants’ liability. The examination of the record now presented for review is my first intimate acquaintance with the details of the transaction as disclosed therefrom. I have heretofore entertained no settled convictions either as to all the facts on which the alleged liability of defendants rests or the law applicable thereto and the proper legal deductions to be drawn therefrom. Save my former relation to and connection with the case of the purely official character mentioned, and which was occasioned by my occupying at the time the office of governor, I have not otherwise been identified in any manner with the action; and if éxcused from participating in a decision of the questions presented, which I would greatly prefer to be, it must rest on the sole proposition that the general authorization given the attorney general to institute such actions as seemed necessary and knowledge that this action was being prosecuted to fix liability on the defendants, constitutes a legal disqualifying cause.
The only statute law we have on the subject is found in section 87,* chapter 19, entitled “Courts — Supreme and District.” It is there provided: “A judge or justice is disqualified from acting as such, except by mutual consent of parties, in any case wherein he is a party, or interested, or *882where he is related to either party by consanguinity or affinity within the fourth degree, or where he has been attorney for either party in the action or proceeding, and such mutual consent must be in writing and made a part of the record.” Assuming that the statutory provision .just quoted applies to a member of the supreme court, Avhich I do for my present purposes, it will be observed that three grounds of disqualification are recognized, any one of which, if existing, would preclude a judge from participating in a decision oMhe cause. First, in any case wherein he is a party or is interested; second, where he is related to either party within the fourth degree; and third, where he has been an attorney for either party in the action or proceeding. In applying the principle of disqualification of a judge by reason of the common-law rule, or statutory or constitutional provisions such as have been noted, it has been a rule of the courts to give such provisions a liberal rather than a narrow and technical construction and to apply them to all classes of cases and to all judicial officers. State v. Hocker,* 25 L. R. A. [Fla.], 114; Hall v. Thayer, 105 Mass., 219; Curtis v. Wilcox, 74 Mich., 69. With this rule of construction I am entirely satisfied, and believe it to express a sound principle of law. By the common law the only ground of disqualification recognized was that of a direct interest in the subject-matter of litigation and this was based on the fundamental principle that “It is against reason, that if wrong be done any man, that he thereof should be his own judge.” Coke on Litt., sec. 212. This ground of disqualification contemplated a pecuniary interest, — a legal interest in the result of the action. Sjoberg v. Nordin, 26 Minn., 501. The objection that the judge had been of counsel or was related to a party to the action was not recognized as a disqualifying clause by the common law; for, as it is said, “The law will not suppose a possibility of bias or favor in a judge, who is already sworn to administer impartial justice.” 3 Blackstone, Commentaries, 361 and note 64; Townsend v. *883Hughes, 2 Mod. [Eng.], 150; Russell v. Belcher, 76 Me., 501; 12 Am. & Eng. Ency. Law, 41. This may have been and probably was a violent presumption, and not in accord with modern ideas nor in consonance with our more refined views as to the proprieties which should be observed in the administration of justice. Because of a more enlightened view and to the end that “evil appearances should be avoided that the fountain of justice may be kept pure,” constitutional and statutory provisions have been added which, in this state, not only will not allow a judge to try his own case, but also disqualify him on account of relationship and where he hás been of counsel for one of the parties in the action. Where a legal disqualification does exist and the judge by reason thereof is prohibited from sitting in the trial of the case, a judgment rendered by him in such a case is generally held to be void. Wigand v. Dejonge, 8 Abb. N. Cas. [N. Y.], 260; Franco-Texan Land Co. v. Howe, 3 Tex. Civ. App., 315; Fechheimer v. Washington, 77 Ind., 366; Chicago & A. R. Co. v. Summers,* 113 Ind., 10; Bailey v. Kimbrough, 37 Mo., 182; Reams v. Kearns, 5 Coldw. [Tenn.], 217; Newcome v. Light, 58 Tex., 141, 44 Am. Rep., 604.
If a disqualifying cause as to myself in the case at bar exists, it must arise by an application of the principle underlying the rule to the effect that a judge is disqualified from deciding a cause in which he has been an attorney or of counsel for one of the parties to the action. This principle can be invoked only on the theory that as governor I examined into the facts and the law of the case as an attorney ordinarily Avould do before bringing an action, formed an opinion as to the liability of the defendants and thereupon directed the attorney general to institute the proceedings by which the defendants are sought to be held liable for a part of the moneys due from the ex-treasurer to the state. This, however, is an erroneous conception of the true condition of affairs. As governor, when I was informed of the fact that the ex-treasurer had defaulted, I *884became concerned as to the enforcement of the law with respect thereto, and that all proper legal steps should be taken to protect the state's interest and recover the moneys due it. The attorney general, as the law officer of the state, was given charge of the matter and authorized to investigate the facts and bring such action or actions as seemed to be required to accomplish the desired object. The executive was not called upon to determine the liability of any one against whom an action might be brought to recover all or any part of the moneys which the state had lost. This duty devolved upon the attorney general, as the state's chief law officer, by a resort to the courts. The executive might have been a layman, without any special knowledge or legal attainments by which to judge as to the liability of any against whom a recovery was sought. The relationship of attorney and client, as between the state and myself, or of cocounsel, as between the chief executive and the attorney general, was not created, nor did it exist in the remotest degree, nor did I assume in the slightest to act the role of an attorney in the case. The action actually taken would be more analogous to that of a judge, who might instruct the proper prosecuting officer to file an information against one charged with having violated the law, or begin proceedings regarding a matter of public importance, and yet by reason thereof it would not, I apprehend, be seriously urged that because such action had been directed by a judge, he was thereby disqualified from trying the case brought as a result of such direction.
By the constitution the supreme court is composed of three members, two of whom must concur before a valid judgment can be rendered. No provisions are made by which a cause can be decided save in the one manner stated. A judge can not, as I conceive the law to be, when qualified, excuse himself from participating in a decision, where such action is necessary in order that parties to a case may have their cause decided when brought to this court, as contemplated by the constitution. Even though the duty may be an unpleasant one, it must nevertheless *885be discharged, if no legal disqualification exists. As is said in Reed v. State, 11 Tex. App., 587, nor can a judge excuse himself unless a legal disqualification exists nor escape the discharge of a duty devolving upon him in his official capacity. From considerations of the character heretofore commented upon and an examination of many authorities, I am led to the conclusion that it is my duty to participate in a decision of this cause and therefore enter upon a discussion of my views concerning the merits of the controversy.
In the opinion prepared by Mr. Commissioner Day, which was concurred in by Chief Justice Noeval before his retirement from the bench and which is now concurred in by Judge Sedgwick in a separate opinion, the purported warrant on the state treasury is treated as having been properly and regularly issued and delivered to the state treasurer for the purpose of effectuating the object of the legislature in having transferred from the general to the sinking fund the amount mentioned “to reimburse said fund for same amount tied up in Capital National Bank.” From these premises and for the reasons stated in the opinions,, a conclusion is reached affirming the judgment of the trial court, and which exonerates the defendants from liability by reason of ¿ny loss to the state of the funds alleged to have been converted. I can but feel that the premises thus laid, and upon which the conclusion seems to rest, are erroneous and really have no support by the application of any sound legal principles. The warrant, in my judgment, can be regarded as no more than a mere piece of paper containing a memorandum of the act of the legislature authorizing the transfer by. the state treasurer of $180,101.75 from the general to the sinking fund. The provisions of the constitution with reference to the manner of drawing money from the state treasury have no application to an act whereby it is attempted to transfer money in the treasury from one fund to another. It is quite true that the legislation is found in a general appropriation act for the payment of “current expenses of *886the state government,” and is of itself of a crude and imperfect character. Whether this item in the appropriation bill is constitutional, whether the money could he transferred from the first coming into the general fund in the treasury after the law became effective, whether the transfer contemplated by the act must await its turn in relation to the then outstanding obligations on the general fund, or whether it was at all competent for the legislature to create a sinking fund from the general fund to make good that which had been lost by the failure of the Capital National Bank or for any other purpose while there were unsatisfied general fund warrants outstanding, may each be open to serious doubt which it is here idle to discuss or speculate upon. By no logical course of reasoning, however, does it seem to me that this item in the appropriation act could be construed as accomplishing any thing more than an authorization to the state treasurer to transfer from the general to the sinking fund, by simply changing his accounts with respect to such funds, so as to show that one fund had been increased and the other diminished in the amount stated in the law. The accomplishment of the legislative intent and purpose involved a process of bookkeeping and nothing further. The act was in no sense an appropriation of money such as would, when a warrant was drawn in pursuance thereof, after a claim against the state had been adjusted and allowed, create a valid obligation against the state. The state was neither borrowing money nor appropriating money belonging to it to pay itself. The issuance of a valid warrant as an obligation against the state and its treasury presupposes a lawful demand against the state, which has been adjusted by the auditor of public accounts and approved by the secretary of state. On what tenable ground can it be said that by virtue of this legislation for the transfer of money from one fund to another, the state became indebted to Mr. Bartley, either individually or as trustee, to anyone else, or to itself? I know of none. I fully concur with what is said by Mr. Justice Sullivan on this phase of the trama-*887action in Ms opinion in this same case on a former appeal, and with the propositions announced in the syllabus relating thereto. State v. Omaha Nat. Bank, 59 Nebr., 483.
While the instrument is called a warrant, and is in form what it purports to be, it is in fact and in legal contemplation but a mere recital to the effect that the legislature had undertaken to reimburse the state sinking fund for a like amount tied up in the suspended Capital National Bank by a transfer from the general fund in the amount stated, and no rights could be acquired by any one thereunder as a holder of a valid obligation against the state for the sum called for on the face of the warrant. As well might the state treasurer have taken the item found’ in the appropriation bill authorizing the transfer, copied it on a piece of paper, and have undertaken to dispose of it as a lawful demand against the state.
Assuming, then, as I do, that the warrant is utterly of no avail to protect any one claiming any rights thereunder, I proceed to a discussion of the liability of the defendants for a conversion as the case is disclosed by the record now under consideration. Mr. Bartley, it appears, had disposed of the paper, which in form and on its face had the general characteristics of a valid treasury warrant, to the Chemical National Bank of New York; such disposition being wholly without right or lawful authority. At or about the time sufficient funds had accumulated in the general fund to meet the warrant, it was transmitted to the defendant bank, a correspondent of the New York bank, for payment or collection, as you may please to term it. Mr. Bartley appeared at the defendant bank and paid the amount called for by the face of the warrant and interest, by drawing Ms check as state treasurer on the defendant bank as a state depositary, the payee named in the check being the president of the bank, and directing that the face of the warrant and interest thereon at a lower rate than that allowed by law when issued, be remitted to the Chemical National Bank and the remainder of the accumulated interest to the Exchange Bank of *888Atkinson, which the defendant hank did, and for which it is now sought to be held liable as a wrong-doer in assisting in the conversion of the amount of money belonging to the state called for by the check thus paid. The pivotal point in the case is whether when money or property is converted by several wrong-doers, the general rule which holds that each and all are liable for the injury resulting to the rightful owner, regardless of the question of intent, motive or knowledge, shall be held to apply to the facts as disclosed by the record, or whether the defendants come within some of the exceptions to the general rule, which it is freely conceded exist, and which are so well recognized as embodying sound legal principles that it would be folly to deny them. In' the presentation of the case for our consideration, both the present and the former attorneys-general submit it on the theory that whether the defendants had knowledge of the misappropriation of the state’s money, or acted entirely innocently regarding the matter, is an immaterial issue; that they are brought within the general rule as to liability for a conversion, which recognizes no agency, makes all principals, and takes no account of the knowledge or the want thereof, or the motives controlling a party when the effect of his actions is wrongfully to deprive an owner of his property.
As we understand counsel for the state, it is readily conceded that neither the bank nor its president had any actual knowledge of misappropriation of moneys belonging to the state, or were guilty of any impure motive or wrong intent. The former attorney general argues the case almost exclusively on the proposition that actual knowledge or guilty intent are altogether immaterial to a proper disposition of the cause. He says: “Our claim rests on their failure as collecting agent in receiving from Bartley money of the state which Bartley had no authoritly to give them, as they were bound to know and did know from the declarations on the face of the warrant and we insist that whether they had knowledge or not the rule which held Cook in Cook v. Monroe, supra, should hold them.” The *889present attorney general says: “We are glad to join the former attorney general in expressions entirely exonerating defendants from all guilty intent to do wrong. It is their misfortune that innocence and good faith are powerless to release them from a burden which the law says they must bear; but it must be remembered that the state was likewise innocent.” The vital question then, is, does the general rule invoked apply, or do the facts as disclosed from the record bring the defendants within any of the recognized exceptions? *
While disclaiming that knowledge on the part of the defendants of the wrongful purpose to which the money was being put is necessary in order to render them liable as for conversion, it is noteworthy that the petition and the reply are framed with the view of establishing liability because of knowledge of the nature of the transaction by which the state was deprived of its funds. In the petition it is alleged, in substance, that the defendants well knew at the time of the payment that Bartley had no right to draw the check for the purpose of paying money to the defendants and that Bartley, in drawing the check and delivering it, and causing the bank to pay it, had no right to do so and that his act was illegal and void and a fraud on the state. In the reply it is charged that the warrant was not legally drawn, was null and void and that defendants well knew, at the time it came into their possession and at all times thereafter, that it was of no force as a claim or order against the treasury or against or upon the plaintiff. In the consideration of the case, we should bear in mind that the transaction out of which this action has grown occurred before it was known that the state treasurer had defaulted in his accounts; that at the time of the alleged conversion by the defendants the presumption of honesty in dealings with the state treasurer'was to be indulged in, and that defendants were warranted in believing that the treasurer, in the transaction of the state’s business, was faithful in the discharge of his official duties. The transaction is to be viewed in the light of known con*890ditions as they then appeared to he, and not as afterwards ascertained actually to have been. Prom the record before us, we are not justified in inferring that the defendant bank and its president regarded Mr. Bartley and his disposition of the public funds in his custody and control as other than would he expected of a faithful officer in the performance of his sworn duties. There then existed apparently no reason to believe or to raise the suspicion that he was derelict in his duties and unfaithful to his trust. The attorney general devotes some attention in his brief to an argument to the effect that the defendants had at least, constructive knowledge of the misappropriation of public funds by the state treasurer which should be charged to them as a matter of law. Such knowledge as they had regarding the nature of the transaction must have been derived from the warrant itself, — what they actually knew by the reading of it or what they are legally chargeable with knowing whether they read it or not. It is the undisputed testimony that the defendants made no examination of the warrant and were unacquainted with its recitals, that the general form and appearance was that of an ordinary state treasury warrant, and further than that they had no knowledge and made no inquiry; that they were in entire ignorance as to the recital therein where it is written, “For to reimburse state sinking fund,” and made no such examination of the warrant as wbuld or did reveal the words quoted.
While I was at first thought disposed to regard this evidence as taxing one’s credulity to the uttermost, maturer reflection has impressed me with its. reasonableness. The bank is one of the larger banking institutions of the state, and probably handles, not only hundreds of thousands, but millions of dollars of money, paper, and credits each business day; and having no direct or legal interest in the warrant, it is not strange or unreasonable that defendants did not concern themselves as to what it Avas issued for, or the nature and character of the obligation it purported to represent. But it is argued by the state that according *891to all the authorities relied on by the defendants knowledge may be either actual or constructive, and that it was at least constructive as to the defendants and they are therefore chargeable with notice of the misuse made by the treasurer of the state’s money. Appeal is made to the rule which says the true test as to constructive notice is whether there is anything which raises the duty to make inquiry, which inquiry, if properly made, would reveal the unlawfulness of the transaction,—citing Duckett v. National Mechanics’ Bank,* 63 Am. St. Rep. [Md.], 513; or, to state the proposition in a different form, if in dealing with a trustee there is sufficient notice to arouse a party’s distrust or put him on his inquiry, this will be sufficient to constitute constructive notice. Bunting v. Ricks,† 32 Am. Dec. [N. Car.], 699.
The authorities would clearly and emphatically apply to those who claim anything by virtue of the warrant. It would be out of reason to say such party might claim some right under the instrument, and at the same time plead ignorance of its entire scope and legal effect. But will the rule apply to the defendants, who claim nothing under the instrument, and who receive no right or advantage from it? Are they under the legal duty and obligation to ascertain the terms a> 1 legal effect of the warrant and the application made of the funds in payment thereof, acting, as they did, as a conduit by which the money was transferred from the state’s lawful custodian to the Chemical National Bank, and the Bank of Atkinson? Upon what legal hypothesis can it be said that it was the duty of the bank to inquire into the nature of the transaction whereby Bartley paid the state’s money on this warrant to the holder thereof and ascertain whether the instrument was valid or otherwise. “Constructive notice,” it is said, “is the knowledge which the courts impute to a person upon a presumption so strong of the existence of the knowledge that it can not be allowed to be rebutted, either from a duty to know, imposed by the law, or from his knowing something which *892ought to have put Mm upon further inquiry, or from Ms willfully abstaining from inquiry to avoid notice.” 16 Am. & Eng. Ency. Law [1st ed.], 791. It can not be said that any legal duty rested on the defendants, because they had the possession of the warrant, when they claimed nothing under it, to inquire into its recitals, terms and legal effect, nor would mere possession under the circumstances by which they held it, be sufficient to put them on further inquiry as to its contents; and because they did not examine its recitals while in possession of it, does not necessarily raise the inference that they willfully did not do it so as to avoid notice. The recitals in an instrument, if they be outside a purchaser’s chain of title, do not charge him with knowledge of defects therein. 16 Am. & Eng. Ency. Law [2d ed.], 800, and authorities therein cited; United States v. Pinover, 3 Fed. Rep., 305. The question of constructive notice has become very near res judicata in the case at bar against the contention of the state. On the former appeal the point was considered by Mr. Justice Sullivan and it was then announced that whether the defendants were to have notice of the recitals appearing on the face of the warrant imputed to them was a question of fact to be submitted to a jury. It was there held, in substance, that from the possession, handling and dealing with the paper, a jury might be warranted in inferring notice of the contents of the warrant. State v. Omaha Nat. Bank, supra. On the second trial, however, the evidence is positive and uncontradicted to the effect that the defendants had no knowledge of the written recitals in the warrant which would advise them of its nature and character and the purpose for which executed, nor of facts sufficient to arouse their suspicions that the state treasurer was, in making the payment, misappropriating public funds. We must therefore determine the defendants’ liability from the standpoint of ignorance on their part of the unlawful purpose of the state treasurer in paying out public funds, and innocence of intentional participation in a wrongful conversion.
*893It is insisted, however, by the state, that the defendants are liable for conversion regardless of the question of notice, actual or constructive, or of wrongful intent, under the rule established in Hill v. Campbell Commission Co., 54 Nebr., 59, and Cook v. Monroe, 45 Nebr., 349. In the case first cited it is said by Mr. Justice Nor val, who wrote the opinion, speaking of conversion generally: “In an action for conversion, the motive which prompted the defendant to dispose of, or appropriate to his own use, the property of plaintiff is an immaterial issue. Whether defendant acted in good faith or not is of no consequence. * * * If one sells the chattels of another without authority so to do, the act can not be made any the less a conversión by proving that he acted in good faith, believing himself to be their owner, or was the agent of one whom he regarded to be the owner.” In the other case cited it is said (p. 355) : “He who intermeddles with personal property, which is not his own, must see to it that he is protected by the authority of one who is the owner or has the authority to act, or that he will be himself liable; and that if he do an unlawful act, even at the command of another acting as his principal, and without right, a liability will attach.” In the former hearing of the case at bar, the principle controlling in the two cases quoted from was stated in the following form: “Every act of control or dominion over property without the owner’s authority, and in disregard of his rights, is, in contemplation of law, a conversion. It is not the advantage accruing to the defendants from the act nor the motive inducing it, but the substantial injury inflicted on the plaintiff, which ordinarily constitutes the gravamen of the action.” State v. Omaha Nat. Bank, supra. It will be observed that the principle on which the rule rests embodies the idea that where an owner of property has been wrongfully deprived of it, whoever in the chain of events intermeddles with the property and assists in the conversion, exercises dominion and control over the property without the owner’s authority, and deals with respect to its title, becomes a principal in the transaction *894and is liable for conversion, without regard to the motives actuating him. The chief or substantial cause of action arises because of the injury resulting to the rightful owner, which is in no way lessened by the good or bad faith of any of the actors connected with the conversion. There are some well-defined exceptions to the general rule which relieve from liability those acting innocently and in good faith. The exceptions will shield those who innocently deal with commercial paper before due, with money which has no earmarks by which to identify it, and those who are transporters of property, bailees, etc., who deal with respect to the custody of, rather than the title to, property, and also those who deal with trustees having lawful possession and control of property, but not the right of its unlimited disposal, and whose lawful authority is restricted to a proper execution of the trust. To those who deal with such property or trust funds, having knowledge of the rights of the cestui que trustf and yet participate in a transaction resulting in an impairment of those rights, an action of conversion may be maintained, and recovery had for the damages resulting therefrom, but not otherwise. Mr. Bartley, as treasurer, was acting as a trustee for the state in the discharge of his official duties. He was the lawfully constituted custodian of the moneys belonging to the treasury, and had the rightful control thereof on behalf of the state. He was the legally constituted collecting and disbursing officer of the state, all of which, of course, was known to the defendants. They were entitled to the benefit of the presumption that a public officer, sworn to faithfully administer his trust, would discharge his duties in accordance with law, and that the funds paid by him out of the public treasury would be paid only on lawful demands and valid claims thereon.
In determining the liability of the defendants we can not, in justice to all parties interested, lose sight of the dual position occupied by the defendant bank at the time of the alleged conversion. The bank was then a lawfully constituted state depositary, and it was its duty, in the *895absence of knowledge of an unlawful purpose, to pay all checks drawn upon it as such depositary by the state treasurer. It could not act in a supervisory capacity over the actions of the treasurer, who was an official choosen to represent the state in the transaction of its business coming under his jurisdiction. The bank had no discretion in; the matter and when a check was presented, properly executed, it could refuse to pay such check only by committing a breach in the conditions of its depositary bond. In fact, it is conceded by the state that the payment of the check was a legal transaction, from which no liability against the defendants could inure to the benefit of the state. In the brief it is said: “It' [the state] admits the legality of the payment of the check but asserts the illegality of the use to which the proceeds of the check were put.” Nothing then, if the bank acted in good faith, which it is conceded it did, can be claimed against the defendants by reason of their action in obeying the directions of the state treasurer for the payment of the state’s money to be applied on the warrant held by the Chemical National Bank and in possession of the defendants. It is agreed on the part of all that Bartley as the state’s trustee had the lawful custody and control of the state’s money in defendant bank as a depositary of public funds and that it was the defendants’ duty to pay such moneys on the checks drawn by the treasurer in his official capacity, as the law provides shall be done, and which the defendant is required to do in order to avoid liability on its depositary bond. The conclusion is irresistible that the payment of such a check will not ordinarily create a legal liability on the paying depositary bank, even though the entire transaction results in a conversion of the state’s money. To illustrate: The treasurer violates his official duty and loans the money of the state to an individual and gives to him a check on a depositary bank on which the individual realizes, and thus is effected a conversion of so much money belonging to the state. It will not, I apprehend, be seriously contended that the bank, in the absence of notice of the illegal transaction, *896would be liable because it paid the money to the one who, with the treasurer, had converted it to their own use. The interest on the warrant in controversy, credited and paid to the Atkinson Bank, was as much a conversion as the supposed case; but the defendants, it occurs to me, can not be held liable except on the theory that they had notice of the. unlawful purpose of the state treasurer in thus wrongfully depriving the state of its property.
The check drawn by Mr. Bartley in payment of the warrant, while given in the name of the president of the bank, was in legal effect an assignment (admitting the same to bé lawful) of the funds it called for, not to the president of the bank (the payee) nor the bank itself, but to the Chemical National Bank of New York and the Atkinson Bank. They were the beneficial owners of the money. It was to them the state treasurer directed the payment to be made. It is difficult to discern any sound legal distinction by which the transaction can be divided into separate parts, one of which is legal and the other illegal. If it is admitted, as, it is, that the payment of the check drawn by Bartley on defendant bank as a state depositary is legal and valid, and for which no right of action accrues to the state, then it occurs to me that the completion of the transaction by paying the money to whom it was directed to be paid and for which the check was drawn follows as a logical and legal sequence of the act of paying the check presented on the depositary bank. If the bank had knowledge of the wrongful use being made of the state’s money, then it could be held as a participant in the conversion resulting from the transaction. If it was without sufficient notice of the wrongdoing to charge it with responsibility for the payment of the check, then certainly it was possessed with no additional knowledge when it transferred the money to whom it was directed to be paid by Bartley, and did only that which could be reasonably expected it would do, and which it was under legal obligations to do, after the payment of the treasurer’s check under the directions given by Bartley at the time. The *897two transactions are so closely interwoven and intimately connected that they can not Avell be separated and one beld good and otlier bad. If it were right and proper for the bank to pay the check, then what, in sonnd reason, conld it do bnt complete the transaction by transferring the money to whom it Avas supposed to belong?' It was not warranted in keeping the money, for that certainly would be a conversion. It could not return it to Bartley or the state, for that act would involve a self-contradiction and include an admission that it was Avrongfully paid out and for that reason should be returned. It logically follows that nothing was left for the bank to do, after the check had been paid, but pay the money to the Chemical National and Atkinson banks, in pursuance of the state treasurer’s instruction, if at the time it honestly believed them rightfully entitled to the money.
. The state, hoAvever, insists that the act of the defendants in taking and delivering the money and aiding Bartley in disposing of it Avas the conversion and no authority which the bank may claim, either from Bartley or the Chemical National Bank, can excuse that fact. It is said the principle to Avhich Ave have adverted as to conversion generally must control, and that “the court is governed by the principle of the law and not by any hardship in any particular case.” In Stephens v. Elwall, 4 Maule & S., 259, an early English case cited by the state, in Avhich the above quotation appears, it is said by Lord Ellenborough: “The clerk acted Tinder an unavoidable ignorance and for his master’s benefit when he sent the goods to his master; but nevertheless his acts may amount to a conversion; for a person is guilty of a conversion who intermeddles with my property and disposes of it, and it is no answer that he acted under authority from another, Avho liad himself no authority to dispose of it.” The rule invoked, it is admitted, is a severe one and in many cases works a hardship to one Avho has acted innocently regarding a transaction resulting in the wrongful conversion of the property of another. But the rule is founded in the Avisdom of the ages, has the almost *898universal sanction of tbe courts, and is believed to enunciate a sound principle of laAV, which should govern, rather than any hardship in any particular case. But ought the rule to be carried further than the reason of it requires? Does it not embrace the fundamental principle that whoever voluntarily intermeddles with property without authority from the owner, which results in a conversion, is liable for the injury done? Is not, in such a case, every step in the transaction a wrong, each contributing to the resulting injury? Can it be said that the servant in the case cited acted legally when he received the property of the bankrupt, but was guilty of an actionable wrong when he delivered it to his master? Certainly not. The wrongful action had its inception at the very beginning of the transaction. He was an intermeddler from the first. He had no authority to take the goods in the first instance, and every act from the inception of the transaction to its close was wrongful, and for which he became liable for conversion. In an earlier English case than the one last cited, it is said by Mansfield, C. J.“But it seems a monstrous thing to say, that every one who takes money in the character of a messenger or bearer, should be so liable; it may happen to pass through the hands of two or three persons, who would each be liable to such an action. No case goes that length, and the doctrine of the relation of the act of bankruptcy, is in all cases extremely hard, and in many shocking, and it is not to be carried further than we are compelled to carry it.” Coles v. Wright, 4 Taunton [Eng.], 198. In a Massachusetts case decided in recent times (Hills v. Snell, 104 Mass., 173), it is said by the supreme court of that state, speaking of the rule invoked by the state: “But this severe rule of law will not be applied when the act of appropriation can be justified as having been authorized in any manner by the owner of the property. * * " When the owner has given to another, or permitted him to have, control of the property, no one can be held responsible in tort for its conversion who merely makes such use of the property or exercises such dominion *899oyer it, as is warranted, by the authority thus given,”—citing Strickland v. Barrett, 20 Pick. [Mass.], 415; Burbank v. Crooker, 7 Gray [Mass.], 158. The hank was acting by the direction and under the presumed authority of the state treasurer as much or more so than as the agent of the Chemical National Bank. Bartley had the control and lawful custody of the public funds, acting as the agént and trustee of the state. The bank might rightfully presume, in the absence of notice to the contrary, that the money was being paid for a lawful purpose and in the discharge of a valid obligation. In short,- Avithout notice of a different purpose, it was warranted in presuming that the treasurer, as the state’s trustee, was discharging the duties of his office honestly and in conformity Avith law. The treasurer being the lawful custodian of the funds belonging to the state, and acting in the capacity of a trustee in respect of the duties of his office, this cause must be decided by the rule which fixes and controls the liability of one who deals Avith a trustee, rather than by the application of the general rule which is invoked by the state. The act of Bartley in paying out. the state’s money was unlawful and a wrongful conversion of it. The receipt of it by the Chemical National Bank and the receipt by the Atkinson Bank were likeAvise conversion, because they Avere bound to know and it was their duty to knoAV that the state treasurer was without legal authority to pay them the state’s money on a claim which was void ab initio.
The defendants, however, conceding, as is done, that they were without notice of any intended wrongful application of the money, and having derived no advantage nor claimed anything by reason of the void warrant, occupy an altogether different position. They were dealing with one acting apparently within the scope of his legal authority, who had the lawful control of the property with reference to A\-hich the defendants were dealing. In addition to this, it Avas the manifest duty of the defendant bank to pay on the treasurer’s check, as directed by him, the moneys it had on deposit belonging to the state. The case of Fifth Nat. Bank v. Hyde Park, 101 Ill., 595, cited *900by Judge Sedgwick in bin concurring opinion, is one quite in point in principle with tlie case at bar. That was a controversy over a misappropriation of funds belonging to a municipality by its iioasurer. The decision rested on the proposition that a party receiving trust funds in payment of a private debt was not liable unless he was aware at the time he received the trust funds that the debt to which they were applied was not a debt to which the trustee could lawfully apply the trust funds and that he knowingly participated in a breach of the trust. It is said in the opinion (p. 608) “The teaching of all the authorities is consonant with the proposition that to charge a stranger as a party to the misappropriation of a trust fund, such stranger must knowingly partake in the breach of trust; that he must know or have proof of facts which in law characterize the transaction as a breach of trust.”
In Duckett v. National Mechanics’ Bank, 86 Md., 400, 404, it is said on the same subject: “This liability of the bank depends, however, altogether upon the contingency that it knowingly aided the trustee, Olagett, to commit the default of which he was undeniably guilty. If without knowledge of Clagetfs misconduct, or if without sufficient notice to put it on inquiry that would have enabled it to ascertain that Olagett was mingling with his individual deposits and using as his own, money that the bank knew or had the means of knowing was trust money; or if the bank was merely the innocent agency through which, without fault or negligence on its part, Olagett depleted the trust estate, th(m it was not guilty of aiding him in misappropriating the trust fund and is not liable to restore it.”
Caulkins v. Gas-Light Co., 85 Tenn., 683, was an action for the conversion of stock of a shareholder in a corporation by a trustee, in which veas involved the question of the liability of an innocent party who dealt with reference to such stock, as well as an agent with notice. It is there held: “An agent who knowingly aids a trustee in making or procuring the conversion or unauthorized transfer of shares of stock in a corporation, held in trust for another. *901is liable for tlie loss sustained by the cestui que trust, although he acted in the matters of the agency ‘without benefit or profit to himself.’ ” It is also held that: “A purchaser of shares of stock of a corporation affected with a trust in the hands of the holder, can net be held liable to the beneficiary for damages or return of the stock if his purchase was made in good faith, for value, and perfected without notice, actual or constructive, of the trust,” — citing Cherry v. Frost, 7 Lea [Tenn.], 1; Cornick v. Richards, 3 Lea [Tenn.], 1.
In Munnerlyn v. Augusta Savings Bank, 88 Ga., 333, 338, in discussing the rule, the court says: “Of course, if the bank actually knew the trustee was misapplying the trust money and aided him in so doing — as, for instance, by endeavoring to appropriate such money to the payment of a debt incurred for his private benefit and due by him individually to the bank, — an entirely different question would be presented.” See, also, Tousley v. Board of Education, 39 Minn., 419; Union Stock Yard and Transit Co. v. Mallory, 157 Ill., 554; Howard v. Deposit Bank, 80 Ky., 496; United States v. American Exchange Nat. Bank, 70 Fed. Rep., 232, and authorities therein cited.
Other similar authorities might be cited, but it seems unnecessary. The distinction we have endeavored to draw is that the bank received the money of Avhich it is charged with the conversion from one having the lawful custody and possession thereof as trustee, and in the absence of knowledge or of facts sufficient to put it upon inquiry, and acting merely as an innocent agency for the transfer of the money to the holder of the warrant, it would not be guilty of conversion, and the general rule relied on by the state to fix liability of the defendants is not applicable under the facts as disclosed by the record. Entertaining the opinion I do, as indicated by tire foregoing, I concur with my associate in the judgment of affirmance. There is much that occurred during the trial of the cause in the lower court which I do not approve of, but as the result arrived at is the only one that rightfully could be reached, the irregularities *902occurring at tbe trial can be regarded only as errors without prejudice.

 CoRbey’s Annotated Statutes, sec. 4747.

 15 So. Rep., 581; 34 Fla., 25.

3 Am. St. Rep., 616.

 86 Md., 400.

 2 Devereux and Battle’s Eq,, 130,