Peak v. Ellicott

The opinion of the court was delivered by Horton, C. J.: The question in this ease is, whether a trust in favor of the plaintiff is impressed upon the $782.50 delivered to the cashier of the Eiley County Bank on November 22, 1881, for the purpose of paying the note of plaintiff executed to the bank, but at that time, owned and held by the Harrison National Bank of Cadiz, in Ohio. When the bank through its cashier accepted the $782.50, it was not paid by the plaintiff as a deposit, nor accepted by the latter as a deposit, nor was the relation of debtor and creditor between the bank and the plaintiff created by the transaction. On the other hand, as respects ¿his specific sum, the relation between the plaintiff and the bank must be regarded as that of principal and agent. After the bank received this sum to satisfy the note of the plaintiff, the bank held the money in a fiduciary capacity: if the money was not applied according to the understanding of the parties to the satisfaction of the note, it should have been returned to the plaintiff. It was not deposited to be checked out or to be loaned, or otherwise used by the bank: in law the bank held it as a trust fund, and not as the assets of the bank. The defendant, as assignee of the bank, succeeds to all the rights of the bank, but as such assignee he has no lawful authority to retain a trust fund in his hands belonging to the plaintiff, and which the bank at the time of receiving the same promised and agreed to apply in payment of plaintiff’s note. As the money was a trust fund, and never belonged to the bank, its creditors will not be injured if it is turned over by the assignee to its owner. Even if the trust fund has been mixed with other funds of the bank, this cannot prevent the plaintiff from following and reclaiming the fund; because if a trust fund is mixed with other funds, the person equitably entitled thereto may follow [162] it, and has a charge on the whole fund for the amount due. (Frith v. Cartland, 2 Hem. & M. 417, 420.) Counsel suggest “if there was a trust created, there must have been a cestui que trust, and that if anyone is entitled to follow and reclaim the money, it must be the owner and holder of the note of plaintiff.” It does not make any difference that instead of trustee' and cestui que trust, the case is one of fiduciary relationship. If a wrong arises out of such relationship, the same remedy exists against the wrong-doer on behalf of the principal, as exists against a trustee on behalf of the cestui que trust. Wherever a fiduciary relationship exists, and money coming from the trust lies in the hands of the person standing in that relationship, it can be followed by the principal and separated from any money of the wrongdoer. (In re West of England & South Wales District Bank, Ex parte Dale & Co., 11 Ch. D. 772; Knatchbull v. Hallett, 13 Ch. D. 696.) Counsel further suggest that the transaction between the plaintiff and the cashier of the bank was outside of the legitimate business of the bank, and if any trust was created it was with the cashier and not with the bank. Not so. The •cashier was an officer of the bank, and the petition charges that the fund delivered to him was credited to the cash account ■of the bank and held and appropriated by the bank to its own use. The knowledge of the cashier under these circumstances is imputable to the bank, and the bank must be held as having notice that the money was received as a trust fund. The relation between the plaintiff and the bank as respects the money delivered to the cashier being that of principal and agent, the plaintiff has the right to follow and reclaim it from the assignee. As the bank in law held the money as a trust fund, as the agent of the plaintiff, its assignee holds it in like capacity. If the facts alleged in the petition are proved upon the trial, the plaintiff will be entitled to a decree for the amount of the fund claimed, with interest. (City of St. Louis v. Johnson, 5 Dill. 241; National Bank v. Insurance Co., 104 U. S. 54, and cases cited therein.) [163] The judgment of the district court must be reversed, and the cause remanded, with direction to the court below to overrule the demurrer filed to the petition. All the Justices concurring. Jesse Ingraham v. Joseph T. Ellicott, as Assignee, &c. The opinion of the court was delivered by Horton, C. J.: The questions in this case are identical with those in Peak v. Ellicott, just decided, and upon the authority of that case the judgment of the district court will be reversed, and the case remanded, with direction to the ■court below to overrule the demurrer filed by the defendant ;to the petition. All the Justices concurring.