Peoples National Bank v. Waggoner

*301 Hoke, J. In Mfg. Co. v. Summers, 143 N. C., 102, it was held: “When a man's property bas been obtained from bim by actionable fraud or covin, tbe owner can follow and recover it from tbe wrongdoer as long as be can identify or trace it; and tbe right attaches not only- to tbe wrong-doer bimself, but to any one to’ whom tbe property bas been transferred otherwise than in good faith and for valuable consideration; and this applies not only to specific property, but to money and cboses in action.” This in the main is an equitable doctrine which, on the facts of the present record and like cases, is made effective by impressing a trust upon the property and protecting and applying same for plaintiff’s benefit to the extent of bis interest therein, and is very generally recognized in the decided cases and approved text books on the subject. Sumner v. Staton, 151 N. C., 198; Edwards v. Culbertson, 111 N. C, 342; Avery v. Stewart, 136 N. C., 426; Baltimore National Bank v. Insurance Co., 104 U. S., 54; Newton v. Porter, 69 N. Y., 133; Pomeroy’s Equity Jurisprudence, sec. 1053; 39 Cyc., 172. In Culbertson’s case, Shepherd, J., delivering the opinion, quotes with approval from Pomeroy’s Equity Jurisprudence as follows: “In general, whenever tbe. legal title to property, real or personal, bas been obtained through actual fraud, misrepresentations, conceal-ments, or through undue influence, duress, taking advantage of one’s weakness or necessities, or through any other similar means or under any other similar circumstances which render it unconscientious for the holder of the legal title to retain and enjoy the beneficial interest, equity impresses a constructive trust on the property thus acquired in favor of the one who is truly and equitably entitled to the same, although he may never perhaps have had any legal estate therein; and a court of equity has jurisdiction to reach the property either in the hands of the original wrong-doer, or in the hands of any subsequent holder, until a purchaser of it in good faith and without notice acquires a higher right, and takes the poperty relieved from the trust.” And in Newton v. Porter, supra, Judge Andrews, speaking to the question said: “It is immaterial in what way the change has been made, whether money has been laid out in land or land laid out in money, or how the legal title may be placed. Equity only stops the pursuit when the means of ascertainment fail, or the rights of bona fide purchasers for value and without notice of the trust have intervened.” Nor is the position in the present instance materially affected by the suggestion made in behalf of the appellants that the defendants, members of the partnership, had originally invested six or seven thousand dollars in the business, and which, or a part of which, may be represented in the stock, notes, mortgages, etc., the subject of the present litigation, the *302 approved principle being that if, in cases like the present, the holder of the legal title has so mingled his own with the beneficiaries’ property that they can no longer be distinguished, the trust will be declared upon the' entire fund and the loss, if any, must fall on the perpetrators of the wrong. Lance v. Butler, 135 N. C., 419; Wells v. Batts, 112 N. C., 291; Walburn & Co. v. Timmon & Nissen, 55 S. S., 456; Bank v. Ins. Co., 104 U. S., 54; 30 Cyc., 536-538, and cases cited. In this last work, the position is correctly stated as follows: “Where a trustee so mingles the trust fund or property with his own or so invests it in property together with his own that the trust fund or property cannot be separated or the amount of each ascertained, the whole mixed fund or property becomes subject to the trust except so far as the trustee may be able to distinguish or separate his own, and the burden of making the separation or distinction is on the trustee or his representative, and the rule applies as long as any portion of the fund or property with which the trust fund or property can be traced remains. Applying these principles, the facts as found by the court showing that the defendant partnership having corrupted the bookkeeper of plaintiff bank and induced him to purloin its money for their benefit by making false entries in his books, which has been to a large amount, invested in the property, the subject-matter of this litigation, the law as stated will impress a trust upon the property for plaintiff’s benefit. And it appearing further that the safety of the fund is threatened both by the fraud and insolvency of defendants, holders of the legal title, the case comes directly within the equitable principle embodied in our statute on the subject, C. S., 860, and which justifies and calls for the appointment of a receiver to take charge of the property and conserve same pending the litigation. The section referred to, in subsection 1, provides as follows: “A receiver may be appointed, before judgment, on the application of either party, when he establishes an apparent right to property which is the subject of the action and in the possession of an adverse party, and the property or its rents and profits are in danger of being lost, or materially injured or impaired; except in cases where judgment upon failure to answer may be had on application to the court.” See numerous authorities cited in the section. There is no error and the judgment of the Superior Court is Affirmed.