Picciano v. Miller

GIVENS, C.J. Respondent, under the name “Pocatello Meat Company”, engaged in buying, butchering, and selling livestock, employed appellant Ralph D. Miller, from November, 1933 to December, 1938, as a butcher, salesman, and collector (Miller furnishing his own automobile) at $15 a week, increased March, 1934, to $22.50 a week or $100 a month. Appellant contends that from about the latter date they were partners and were to divide the profits of the business, estimating his share at $50 a week. Respondent contends there was no partnership, merely the above contract of employment, and that appellant unlawfully appropriated to his own use out of the business $6371.50. January, 1935, appellant purchased a house and lot in Bannock County for $1550, $50 down, balance in installment payments after June, 1935, of $20 per month, 7% on deferred payments, and payment of taxes, and insurance, and placed $2000 of improvements thereon, occupying it as his residence. Respondent sued for the $6371.50 and to impress there *762 for a trust upon the house and lot. The court found appellant had abstracted $4588.10, which went into the purchase of the house and improvements, and impressed thereon a lien for said sum in favor of respondent; hence, this appeal. The court found on sufficient, though conflicting, evidence that there was no partnership; hence, appellant was entitled to only a $100 a month salary. The evidence discloses the further situation with regard to his receipts and expenditures : from his salary for the four years he received $4800. He borrowed $200 from respondent and $621.64 from W. S. Berger. Appellant testified he had no other income and had no property except his automobile at the time he entered respondent’s employ. His legitimate receipts thus amounted to $5621.64. He paid $1550 for the house, putting $2000 in improvements thereon. He paid $267.65 interest on deferred payments, making a total of $3817.65, leaving $1803.99, or an average of $37.58 per month for the four years with which to pay the living expenses of his wife and himself, taxes and insurance on the property purchased, and expenses of his automobile in connection with the business, which appellant stated he used more or less constantly in making deliveries and collections, and to pay interest on $1368.73 from October to December, 1938. While the court found appellant had abstracted $4538.10, this amount should be reduced by $1050, made up of these uncollected accounts: $550 on McReynolds, $350 on the Lea Grocery, and $150 from one Meyer. There is no evidence to show appellant was to be responsible for uncollected accounts, and the evidence is too conflicting and unsatisfactory to hold that these amounts were eliminated from the accounting of the two experts employed by respondent. Appellant contends no part of this $3488.10 was traced as having gone into the purchase of the house or the payment of the improvements thereon, relying on Martin v. Smith, 33 Ida. 692, 197 P. 823, and Cox v. St. Anthony Bank & Trust Co., 41 Ida. 776, 242 P. 785. Some authorities hold that where purloined money has been so inextricably mixed and confused with the taker’s own money that no segregation can be made there can be no trust. (Ferris v. Van Vechten, 73 N. Y. 113; Barger v. Barger, 30 Ore. 268, 47 P. 702; Grote v. Service Finance Corp., (Tex.) 119 S. W. (2d) 136.) On the other hand, while recognizing that some portion at least of the funds must be traced, other courts hold as follows: *763 “It is also a well established rule of law that, while the burden is on the party whose property has been misappropriated by a trustee to trace and identify his property either in its original or substituted form, yet, when he has succeeded in doing this, if it is shown that property belonging to the trustee is represented in the property impressed with the trust, then the burden is cast upon the trustee to show what his interest is, and, if he is unable to do so, the whole will be considered trust property. 28 A. & E. Ency. L. 1120, and cases cited. Plaintiff, having shown that at least some of the trust fund was used in making each of the payments above mentioned, the burden was upon Waddell, if any of his own money was used in connection with the trust fund in making these payments, to show how much; and, having failed to do so, each payment will be deemed, as between these parties, to have been made with trust funds only.” (Waddell v. Waddell, 36 Utah 435, 104 P. 743.) And see Spencer v. Pettit, (Tex.) 17 S. W. (2d) 1102. While there must be tracing of the funds, the latter rule is the correct rule for the reason that the person who has taken the money should not escape the consequences of his illegal acts merely by the confusion caused by him and for which he alone is responsible. Otherwise, the person taking the money could always escape reimbursement by merely mixing the funds and thereby acquire all of the ill-gotten gains. While appellant might contend that all of the purloined money went into the living expenses and that he used only the money he received legitimately to pay upon the house, it was a reasonable deduction for the trial court to make ■that some part of the purloined money went into the purchase and_ improvement of the real property. Hence, there was sufficient tracing to bring the case within the last rule above noted. Appellant urges as error the admission of plaintiff’s exhibit “A”, consisting of the records and sales slips of the business during the four years in question, largely kept by appellant. The only objection made was as follows: “I don’t think the exhibit has been properly identified, or verified to entitle it to admission. If they have an audit based on them it seems to me that would be the best evidence and more satisfactory to the court.” An audit based upon these records, made by Jordan, who *764 testified as a witness and was subjected to extensive cross-examination, was later introduced. Considering that these records were largely kept by appellant and the nature of the objection, no error was committed in their- admission. The audit as prepared by the accountant, exhibit “C”, was properly admitted. Exhibits “D” and “E”, being certain pertinent figures, were in appellant’s own handwriting and therefore admissible against him. This disposes substantially of all appellants’ assignments of error, and the judgment, as modified by the reduction noted, is affirmed. No costs allowed. Budge, Morgan, and Ailshie, JJ., concur. Holden, J., dissents.