Court Opinion

ID: 6688635
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:35:09.747677+00
Date Added: 2024-06-11T16:01:02.281693
License: Public Domain

McCOY, J:,
dissenting. I am unable to concur in the majority opinion. It is my view that the law which is applicable to trust personal property generally is not applicable to money and commercial paper, — that the law as to cash and commercial paper is regulated by decisions and usages peculiar to itself. Saltus v. Everett, 20 Wend. (N. Y.) 267, 32 Am. Dec. 541; Faucett v. Osborn, 32 Ill. 411, 83 Am. Dec. 278; Linnen v. Cruger, 40 Barb. (N. Y.) 633; Hazard v. Fiske, 18 Hun (N. Y.) 277; Bank of Toledo v. Shaw, 61 N. Y. 283; Follett Wool Co. v. Utica Trust Co., 84 App. Div. 151, 82 N. Y. Supp. 597; Stollenwerck v. Thatcher, 115 Mass. 224. Appellant is- not suing for the conversion of his wheat as personal property. He had an election between two remedies: (1) to sue the bank for converting his wheat; (2) to ratify the 'conversion and claim the *122benefit of the transaction with the bank. Appellant has -made his. election to ratify the transaction at the 'bank and- asks that he be adjudged to be the owner of the sight draft and of the proceeds thereof. Stegner then occupied the identical position as if lie had such sight draft in his possession for the purposes of collecting the proceeds thereof and delivering the same to appellant as his agent or trustee. Now, the proceeds of this sight draft were advanced by respondent to Stegner, immediately upon the drawing of the sight draft. When respondent advanced the proceeds of the draft to Stegner he made a cash deposit thereof with respondent. This was the legal effect of the transaction at the bank as ratified by the appellant. By so ratifying such transaction appellant had made the law relating to cash and commercial paper applicable to the facts of this case. Hence, when said sight draft was issued and the proceeds thereof advanced to Stegner, such draft and the proceeds thereof became trust property in his hands, and subject to the.law relating to such trust property. This was the sole theory on which this case was tried, and the only theory on which this case has been presented to this court. The respondent contends that not having notice that the same was a trust fund, at the time it received such cash deposit, it had the right under the circumstances shown, to satisfy said overdraft, although a preexisting debt, from such cash deposit, even if Stegner might have been guilty of converting to his own use the proceeds of appellant’s draft. The rule which seems to me to be sustained by the great weight of judicial authority, is that where an agent or trustee, converts to his own use and deposits in a bank and causes to be credited to his private account, money of a trust fund, without giving any notice that it is not his private property, the bank, in the absence of such notice, may apply such money so deposited to the payment of a pre-existing debt of the agent or trustee. Wood v. Bank, 129 Mass. 358; 37 Am. Rep. 366. School Dist. v. Bank, 102 Mass. 174; Smith v. Des Moines Bank, 107 Iowa, 620, 78 N. W. 238; Kimmel v. Bean, 68 Kan. 598, 75 Pac. 1118, 64 L. R. A. 785, 104 Am. St. Rep. 415; Hatch v. Bank, 147 N. Y. 184, 41 N. E. 403; Stephens v. Board, 79 N. Y. 183, 35 Am. Rep. 511; Michie, Banks and Banking, vol. 2, p. 1046; Garrison v. Union Trust Co., 139 Mich. 392, 102 N. W. 978, 70 L. R. A. 615, 111 Am. St. Rep. 407, 5 Ann. Cas. 813; Bank v. Kenney, 116 Md. *12324, 81 Atl. 227, Ann. Cas. 1913B, 1337. It is conceded by the majority opinion that the respondent -bank had no notice or knowledge of any kind that said deposit was of a trust fund, and that the appellant had clothed Stegner with apparent or ostensible power to dispose of said draft as if it was his own private property. If the proceeds of said draft, as represented by said cash deposit, had still been in the bank to -the credit of Stegner at the time this suit was commenced, or at the time appellant gave respondent notice, of course appellant might have followed, identified, claimed and recovered the same as a trust fund, but that is not this case; the law in relation to the following of trust funds, under such circumstances, has no application to this case. In principle the facts of this case have the same legal force and effect as if Stegner, as agent, had sold plaintiffs wheat to some third party and had received the cash therefor, and -then had wrongfully converted and embezzled said money by taking the same to the bank, and handing the cash over to the bank in payment of a debt he owed the bank. Under such circumstances, where the bank had no notice of the trust character of the money so received, a recovery back from the bank by the true owner, of a like sum, cannot be sustained. The principle involved in this case is the same as if a thief or highway robber had paid his individual pre-existing debt with -stolen money without any notice on the part of the creditor who had received it that it was stolen money, and long thereafter the -owner of the stolen money should bring suit against such creditor -to recover, not the same identical money, but a like amount of money, -claiming that the .money with which such debt had been paid was stolen money in the -hands -of the thief, and that the creditor had parted with no value at the time he received such money. We are of the opinion that the original owner f-ro-m whom the money had thus been stolen could not recover, — that -when a creditor receives cash in payment of a pre-existing debt -he is not required or bound to make inquiry as to the manner in which such debtor obtained possession, of su-ch money.
The judgment appealed from should be affirmed.
SMITH, P. J., concurs.