Bank of Statesville Ex Rel. Connelly v. Waddell

Smith, C. J., (after stating the facts). We do not concur in the opinion of the Court, which seems to have been controlled by the rules governing actions at law, and to ignore the admixture of equitable elements in the present system, under which ultimate results are reached in a single proceeding. It appears from the report, that R. F. Simonton, at the same,time being executor of David Waddell and cashier of the bank, having trust funds in his hands derived from the testator’s estate for the benefit of the defendant alone, or in association with another, made a deposit thereof in the bank in his capacity as such executor, in the sum of $1,466.65, and gave the defendant the liberty of drawing upon said credit at her pleasure. This authority she repeatedly exercised during the lifetime of Simonton, and after his death, in February, 1876, she drew other sums in a similar manner, to the extent of the judgment rendered against her. This fund, so deposited *343 and showing the trust upon which it was held, or at least one half of it, beyond which the defendant had not gone, in equity belonged to her, and was in this indirect way paid to her by the executor and the trustee, as it was meet should be done. Assuming that, upon strict legal principles, the money would' be recoverable only by the personal representative of the depositor, (or the administrator of the testator de bonis non perhaps,) it is plain that a Court administering the rules that are recognized in equity, as do our Courts as well under their present constitution, would not permit a trust fund like this to be collected from the equitable owner and applied to the general indebtedness of an insolvent corporation. And if this were not permitted, still less could it when it reached the hands of the rightful owner, be taken from such owner to be misapplied and lost. The old action of assumpsit was, in some of its features, an equitable proceeding, and the promise upon which the action rests is implied, and arises ex aequo et bono. 2 Greenl. Ev., § 102. The equitable right of the holder of a bond, to whom it has been transferred and delivered unendorsed by the payee, in whose name suit has been brought and judgment recovered, to receive the money when collected, is decided, in Hoke v. Carter, 12 Ired., 324, in which Pearson, J., thus explains the relations between the parties: “ The legal effect of the contract of sale and delivery of the bond was to constitute the testator an agent of Fleming (the obligee) to receive the money. But the money vested in the testator as legal owner the moment it was received; for the chose in action, of which "Fleming was the legal owner, was extinguished by an act which he had authorized to be done, viz.: the reception of the money, and the money vested in the testator, as legal owner, by force of the contract of sale, which thereby became ' executed in the same way as if Fleming had himself received *344 the money and handed it to the testator in execution of the contract.” This ruling recognizes the right of an equitable owner of an unendorsed sealed security for the payment of money, to take and hold the money paid under it against the claim of the legal owner of it; and such is very much the relation occupied by the defendant in the present controversy; and the defendant’s position is strengthened by the new practice, which allows the party who is entitled to the money and to receive it, unconditionally to assert the right in his or her o.wn name in an action instituted to recover it. If the executor did not need the fund in process of administration, but was bound to pay it over to the cestui que trust, as would be his administrator, in discharging the attached trusts, why should s„uch cestui que-trust be required to surrender it when voluntarily paid to iher by the officers of the bank, and use it for the benefit of the creditors of the latter? And again, if it could not have been recovered by the defendant in an action prosecuted against the bank, or the executor trustee, yet it was in fact paid to her as the owner, under no misapprehension of the fact; and no implied promise to return or to account for the money, except as a payment in part, can arise out of the transaction, and most unquestionably no right of action can accrue to the bank or to the receiver, who is its representative. Devereux v. Ins. Co., 98 N. C., 6. It must be declared there is error in not sustaining the defendant’s exception, and to this end the judgment is reversed, and the (hurt below will proceed in accordance with this opinion to render judgment for the defendant. Error. Reversed.