Ferguson v. Bauernfeind

Bjgewiit, J. The only question which we find necessary to consider upon this appeal is the one relating to the so.-called trust relation between the defendant and the C. W. Milhrath [46] Company. The court below found such relation was that of debtor and creditor and that the money placed in the hands of the Milbrath Company by defendant was not placed there in trust. This question involves the sufficiency of the evidence to support the findings of the court below, set out in the statement of facts, to the effect that the Milbrath Company was indebted to the defendant upon an open and running account between the Milbrath Company, bankrupt, and the defendant in the sum of $521.25. It appears from the evidence without substantial dispute that for a period of about twenty years before the bankruptcy of the C. W. Milbrath Company it had been loaning the money of the defendant; that on or about February 1, 1905, the defendant called upon Mr. Milbrath of said company and demanded his money; that Mr. Milbrath then stated that they were a little short, but would make it up in a short time, whereupon defendant stated that he could get the money upon the receipts for the money given by the company showing the rélation in which it was held; that defendant did in fact transfer ,the receipts to one Anton Kern and received therefor an assignment of a $3,600 mortgage, the amount of the receipts being $3,000, the defendant paying Kern the balance, $600. Whether the transfer of the receipts to Kern was an absolute sale or transfer for collection we need not consider, since, if the money represented by the receipts was a trust fund and belonged to defendant at the time of the transfer, the payments made by the Milbrath Company could not be recovered either from defendant or Kern. It further appears from the evidence that when money was collected for defendant he was notified and it was paid over to him, or, as in some instances, he took a receipt for the money represented by the collection and permitted the company to reloan it for him. The evidence clearly shows a trust relation between defendant and the C. W. Milbrath Company by which the company took, received, and held the money of defendant for the pur [47] pose of loaning it, and there appears to be practically no evidence of the relation of debtor and creditor. The only evidence from which any inference conld be drawn rebutting the trust ielation is that tending to show that the company may have mixed the funds of defendant with its own. This .alone is clearly insufficient to support the finding under consideration. Upon the evidence in the case the $521.25 paid by the bankrupt did not diminish its assets or enrich the defendant at the expense of the general creditors. Under the bankruptcy act the trustee is vested with no better right or title to the bankrupt’s property than belonged to the bankrupt at the time of the vesting of the trustee’s title. Loveland, Bankruptcy (3d ed.) § 173; Van Ingen v. Feldt, 86 Wis. 345, 56 N. W. 923; In re Royea’s Estate, 143 Fed. 182; Smith v. Au Gres, 150 Eed. 257. We think the clear preponderance of the evidence is against the finding to the effect that the relation of debtor and creditor existed between defendant and the O. W. Milhrath Company, hut, on the contrary, the evidence establishes that the money paid, to wit, $521.25, was the money of the defendant or his assignee. It matters not which so far as this appeal is concerned. In the view we take of the case it becomes unnecessary to treat the other questions argued in the briefs. It follows that no case was made for the recovery of the payments alleged to be preferential By the Court. — The judgment is reversed, and the cause remanded for further proceedings according to law.