Court Opinion

ID: 5171529
Source: CourtListenerOpinion
Date Created: 2022-01-02 04:56:22.466041+00
Date Added: 2024-06-11T08:26:06.724449
License: Public Domain

RICE, C. J.
This is an action for accounting brought by respondent as administrator of the estate of N. C. Hiatt, deceased, against F. H. Lemon, surviving partner of the firm of Hiatt-Lemon. Lemon answered, and thereafter died during the pendency of the action. The action was continued in the name of his personal representatives. After the death of Lemon a stipulation was filed setting forth the facts. No other evidence was received. It was stipulated that Lemon, as surviving partner, paid a note given by Hiatt, and which he had signed as surety, amounting to $2,561.50, out of the funds of the copartnership, and that in making settlement as surviving partner he had deducted the amount so paid from N. C. Hiatt’s share of the proceeds of the co-partnership. It was also agreed that the administratrix of the estate of Lemon had settled and adjusted all items growing out of the closing of her copartnership business, except the item of $2,561.50 paid on the note as aforesaid.
Appellant contends that the stipulation of facts supersedes the pleadings, and that appellant is not bound by admissions in his answer where the stipulation of facts is inconsistent with the admissions. This contention is made in connection with the question of the interest of the copartners in the partnership property. A decision of the question, however, is not required, for it is agreed by the stipulation of facts that the amount paid on the note had been deducted from Hiatt’s share of the proceeds of the copartnership. It is therefore immaterial whether his share was one-half or some other fractional portion of the partnership assets.
*695Lemon, as surviving partner, did not have the right to pay Hiatt’s individual debt out of the partnership funds. Hiatt’s individual debts should have been presented'to his administrator and settled in the course of administration of his estate.
It was stipulated that the respondent did not present his claim to the administratrix of the estate of Lemon.
C. S., sec. 7590, reads as follows:
“If an action is pending against the decedent at the time of his death, the plaintiff must in like manner present his claim to the executor or administrator for allowance or rejection, authenticated as required in other cases; and no recovery shall be had in the action unless proof be made of the presentations required.”
Respondent contends that he is not asserting a claim against the estate of Lemon, but brought the action to recover a trust fund which is not and has never been a part of the estate of Lemon. An action to recover a trust fund from an administrator of an estate is not an action upon a claim against the estate, and C. S., secs. 7588 and 7590, with reference to the presentation of claims do not apply. (Toulouse v. Burkett, 2 Ida. 184, 10 Pac. 26.)
The rule with regard tt> tracing of trust funds is well expressed in the case of Ferchen v. Arndt, 26 Or. 121, 4 Am. St. 603, 37 Pac. 161, 29 L. R. A. 664, as follows:
“This equitable doctrine is put upon the ground that the real owner has the right to retake and reclaim his property, through all its transformations and forms, so long as it may be traced, whether its identity is preserved or is merged into a mass of which it forms a part. To accomplish this end, when'such trust property has been mingled into a mass of which it forms a part, but its identity is lost, equity affords relief by creating a charge or lien upon such mass for its ascertainable value. The right to such relief has its basis in the right of property, and ‘simply asserts,’ as Andrew, J., says, ‘the right of the true owner to his own property.’ (Cavin v. Gleason, 105 N. Y. 262, 11 N. E. 504.)”
*696The opinion in the ease of Nonotuck Silk Co. v. Flanders, 87 Wis. 237, 58 N. W. 383, contains the following:
“In speaking of following trust moneys into other property, it is stated in one of the New York cases cited that ‘the right has its basis in the right of property.’ It never was based upon the theory of preference by reason of an unlawful conversion. This is made clear by a recent and well-considered opinion by the supreme court of Rhode Island. (Slater v. Oriental Mills, 18 R. I. 352, 27 Atl. 443.) ”
This is in substance the rule as announced by this court in the case of Bellevue State Bank v. Coffin, 22 Ida. 210, 125 Pac. 816, which was followed and approved in Russell v. Bank of Nampa, Ltd., 31 Ida. 59, 169 Pac. 180. The court in the case of Bellevue State Bank v. Coffin, supra, distinguished the case of State v. Bruce, 17 Ida. 1, 102 Pac. 831, and limited its application to the ease of a deposit of public funds in a bank in violation of a statute. (See, also, Lowe v. Jones, 192 Mass. 94, 116 Am. St. 225, 7 Ann. Cas. 551, 78 N. E. 402, 6 L. R. A., N. S., 487; Travelers’ Ins. Co. v. Caldwell, 59 Kan. 156, 52 Pac. 440; Lathrop v. Bampton, 31 Cal. 17, 89 Am. Dec. 141; Bradley v. Chesebrough, 111 Iowa, 126, 82 N. W. 472; Nonotuck Silk Co. v. Flanders, supra.)
In the case of Bradley’ v. Chesebrough, supra, it is said: “That plaintiff was a trust creditor does not, of itself, entitle him to preference over general creditors. To obtain that right he must show, by presumption of law or otherwise, that his fund has been preserved in the hands of the assignee, as an increase of the assets of the estate, from which it may be taken without impairment of the rights of general creditors. ’ ’
The stipulation of facts in the case at bar failed to bring respondent’s claim within the rule. The partnership fund in the hands of Lemon was not traced to the possession of the administratrix, either in its original form or mingled with the funds of Lemon. It is not enough that the estate of Lemon may have been indirectly increased by reason of his having used the trust fund to pay his own debts. So *697far as the facts disclose, respondent occupied the position of a general creditor of the estate of Lemon. Not having presented his claim to the administratrix, section 7590, supra, prevents recovery.
The judgment is reversed. Costs awarded to appellant.
Budge, McCarthy, Dunn and Lee, JJ., concur.