Wilkinson v. Stewart

Walker, J. The county bonds were specifically pledged, as an indemnity against the liability of the accommodation indorsers of the bill. The pledge was made by the action of the directors of the railroad company. And appellant acknowledges in his receipt, that he had received the bonds, for the purpose of paying this and other notes. That they were placed in his hands, as a trustee of the makers and indorsers, to be sold and disposed of by him, as soon as possible, and the proceeds to be applied in payment of the notes, and to account for any surplus which might remain, to the treasurer of the company. The nature of the transaction, the declaration of the trust in the receipt, exclude the supposition, that this was not designed as a trust fund. That it was such, and appellant was a trustee, subject to all the duties and liabilities imposed by that relation, is too obvious to admit of a doubt. It is, however, insisted, that being the president of the-company, appellant was bound to conform his action, in the sale of the lands, and the disposition of the funds, to the direction of the board of directors. The action of that body, had created the trust, and had designated appellant as trustee, by an order entered upon their records. When the transaction was consummated, it became a binding contract, irrevocable by any of the parties. Appellant after that time did not hold the bonds under the control of the directors, but under the contract. They had no power to alter, change’ or-abrogate the trust, or in anywise alter appellant’s duties or ■ liabilities to appellees. It only remained for the trustee to faithfully execute and perform the trust, or, on failing or refusing to do so, he would become liable for the breach of that duty. The trust fund could not be diverted, unless by the full consent of all parties in interest. Appellant assumed the position of trustee voluntarily, and in his individual, and not in his official character. Having assumed the responsibility as an individual, his acts, his duties," and his liabilities, as such, were no more under the control of the board of directors, than would be those of one not connected with the company. The duties devolving upon him as trustee, had no connection with those of president of the company. He occupies the same position as he would, had he been a stranger to the company. Having violated his trust, he must he held liable, to the cestuis que trust, for any injury they may have sustained by his breach of duty. It is also contended, that there is no evidence of the payment of the bill of exchange. It does appear that appellees took up, and had the instrument canceled, after it had matured and gone to protest. This was done by the substitution of other negotiable paper. It seems thus to have been fully discharged, and if so, it was equivalent to a payment. Ralston v. Wood, 15 Ill. 159; Cox v. Reed, 27 Ill. 434. The new paper was not given as security but as payment, resulting in the extinguishment of the bill of exchange. The only remaining question is, whether appellees consented to the perversion of the trust fund. It nowhere appears that they ever in terms gave their consent. It only appears, that after the bonds had been misapplied, Williams was required, as the secretary of the company, to execute a deed of trust, on other funds, for the company, when he objected, on the grounds that he and his friends had been badly treated, by the pervez’sion of this fund, and insisted that they should be secured out of the funds embraced in the trust deed. He consented, upon appellant assuring him, they should have eleven thousand dollars of land bonds for the purpose. This implies no consent or ratification of the breach of trust, but simply indicates a desire to secure himself and friends out of other property of the company. So far from consenting, Fackney positively objected, to applying the trust fund to any other purpose, until the debts were paid. There were some remarks made by appellees, in reference to the bonds having been given up, but the witness did not understand by whom, or that appellees had released their claim on the fund. We can perceive nothing in the record which indicates their assent before, or ratification of the misapplication of the fund, after the transaction had transpired. .The decree of the court below must be affirmed. Decree affirmed.