J. Allen Smith & Co. v. Montgomery

ANDERSON, C. J. It is well settled by the former decisions of this court that in order for these appellants to have acquired and enforced a lien upon the funds in the hands of this appellee, as receiver of the insolvent bank, they must have traced and identified the money collected for them by the Merchants’ Bank, as being on hand when this appellee took' over the affairs of said bank, and proof that he received or took over a fund into which the appellants’ money had been placed or with which it had been commingled will not suffice. Lummus Cotton Gin Co. v. Walker, 195 Ala. 552, 70 South. 754; Nixon State Bank v. First State Bank, 180 Ala. 291, 60 South. 868; Bank of Florence v. United States Savings & Loan Co., 104 Ala. 297, 16 South. 110. Counsel for the appellant do not question the soundness of the foregoing cases, but contend that the averment in paragraph 4 of his bill removes this claim from the influence of said cases, and that a lien should be fastened on the general balance on hand when appellee took over the assets of the bank, for the reason that there is an averment to the effect that the sum due appellants was never drawn out or exhausted, because the bank had on hand, at all times between the conversion and the time appellee received its assets, a sum of money in excess of appellants’ claim; that its general account during this period exceeded the amount, of appellants’ claim, and presumptively their money, alleged to have been converted by the bank, had never been drawn out. We think that this claim is expressly refuted in the opinion in the case of Lummus Cotton Gin Co. v. Walker, 195 Ala. 552, 70 South. 754, wherein it is stated: “There is no occasion for a particular discussion of appellant’s claim that any funds, much or little, in' the possession of the insolvent bank at the time appellee took over the affairs of the bank under the authority of the statute, should be charged with a specific trust for appellant’s benefit on -the ground that the money collected for appellant was to be found somewhere in those funds which at that time constituted a part of the general estate of the bank. That question has been foreclosed against appellant by the reason and authority of cases heretofore considered in this court”— citing, among others, the case of Bank of Florence v. United States Savings & Loan Co., 104 Ala. 297, 16 South. 110, which said last case deals with two of the leading cases relied upon by appellant, National Bank v. Insurance Co., 104 U. S. 54, 26 L. Ed. 658, and Hallett’s Case, 13 Chancery Division, 696. As stated in the opinion in the Lummus Cotton Gin Company Case, supra: “That question has been foreclosed against appellant by the reason and authority of cases heretofore considered in this court.” True, the bill here avers a balance on hand during the interval in excess of appellants’ claim, but this does not differentiate it in principle from the rule declared in the Lummus Case. There the appellant was *102 i seeking to' fasten a lien upon a portion of a .general fund which it claimed contained its money. Here the appellants are seeking to fasten a lien upon a part of a general fund ■ because it is made up in part by their funds collected by the insolvent bank. There are quite a number of cases holding ■ that a principal may subject funds to his lien when the agent commingles the same with his own, or when a bank places the same to the individual credit of the agent, .and a few which conform to the appellants’ contention; but the contrary rule, which requires identification and more than tracing the money into a common fund held by a bank or receiver for a number of claimants, has been followed by our court, and is ■supported by well-reasoned cases in other jurisdictions. This identical question has ’been recently decided by the Pennsylvania Court, Commonwealth v. Trademen’s Trust Co., 250 Pa. 378, 95 Atl. 577, L. R. A. 1916C, 10, wherein the court after commenting on Knachbull v. Hallett, and other cases, said: “These cases establish the general rule that where a trustee receives money from a cestui que trust and deposits it with his own account,' ■and in his own name, to which account he subsequently adds and -withdraws money, the cestui que trust may claim to the extent of his trust fund the lowest amount which was on deposit at any time during' the continuance of the trust, regardless of the fact that the funds .were commingled and increased or diminished from time to time. This rule is based on the theory that the trustee will not be presumed to have intended to commit a criminal act, and so^ long as there are funds of his own, though mixed with the trust funds, any withdrawal from the account will be considered as a withdrawal of his own money, and not that belonging to the trust, and it is only when the total amount is reduced below the amount of the trust, that this presumption is rebutted, because the circumstances preclude any other possibility. There appears to be no case in Pennsylvania where it has been decided by an appellate court that the above rule is the 'law of this state, nor 'is it necessary to decide here the precise question as to whether the rule should be applied in cases where the trustee is an, individual and deposits money in his own bank account. The trustee here is a trust-company authorized by statute to receive and handle funds of others and do a general banking business. In the conduct of this business it necessarily handled trust funds belonging to a large number of persons. These funds in the present case were deposited iñ a general account and in this way it became impossible to say to whom any particular part belonged. The case is distinguishable from that of an individual trustee who mixes the funds of a single cestui que trust with his own account. In such ease it can readily be determined whether and to what extent he has appropriat'ed the trust funds to his own use. On the other hand, when a trust company deposits in a common account funds belonging to various persons, it cannot be said that the mere fact ' of their being on deposit at all times sufficient to meet the claim of any particular customer of the bank entitled that customer to claim it aS^ against other claimants whose money also went into the same account. Claimant could not trace title to any particular part of the deposits and his claim can therefore rise no higher than the claim of others whose money was deposited in the same general fund.” The present holding is supported in point by the case of Philadelphia National Bank v. Dowd (C. C.) 38 Fed. 172, 2 L. R. A. 480. See, also, Commercial Bank of Baltimore v. Davis, 115 N. C. 226, 20 S. E. 370. The trial court did not err in sustaining the demurrer to appellants’ hill, or petition, and the decree of the circuit court is affirmed. Affirmed. McClellan,' somerville, and thomAS, JJ., concur.