Bonebrake v. Jefferies

The opinion of the Court was delivered by Mr. Chief Justice Stabler. In 1927, Thomas B. Butler, now deceased, was appointed by the Court as receiver of the defunct Bank of Blacksburg. In September, 1929, as the result of an audit made in the matter, it was discovered that he was short about $27,425.-00 in his receivership accounts. Thereafter, the American State Bank, in which the trust funds had been deposited by Butler, was also placed in the hands of receivers, against whom this action was brought to recover the full amount named. After setting out some of the items constituting the shortage, the complaint alleged, among other things, that the American State Bank aided and participated in the misappropriation of the trust funds deposited with it, by permitting the' receiver to' check out such funds for purposes other than that of the trust, knowing or having information at the time that they were being misappropriated by him; and that the depository bank, for that reason, and for the additional reason that it received and applied the proceeds of certain checks to the payment of personal obligations of Butler to it, became liable as trustee ex maleficio of the funds so misappropriated. The defendants, by their answer, denied the material allegations of the complaint. The Special Referee, to whom the case was sent, found as a matter of fact that the American State Bank did not receive any of the trust funds alleged to have been misappropriated by Butler or derive any benefit or advantage from any of the transactions named; and that the bank was not, therefore, as a matter of law, responsible as trustee ex maleficio, as claimed by the plaintiffs. On exceptions to the report, the Circuit Judge concurred in the Referee’s findings of fact, and gave judgment for the defendants. *112 A careful study of the record for appeal convinces us, applying correct legal principles to the facts of the case, that Judge Sease reached the right conclusion, and we approve the result of his decree. His order, therefore, which will be reported, is affirmed. Messrs. Justices Carter, Baker, and EishburnE, concur. Mr. Justice Bonham disqualified.