In re T. A. McIntyre & Co.

NOYES, Circuit Judge (after stating the facts as above). The District Judge, in confirming the master’s report, said: “The right of participation in the deposit account of McIntyre & Co. in the Bank of Commerce, granted to persons whose securities were never pledged to that institution — and the subject, of objection -by the trustees— is an extreme application of the doctrine of Knatchbull v. Hallett, 13 Ch. Div. 696, 36 Eng. Rep. 779, yet seems to me correct.” Wc think this statement well founded, and yet the petitioner here seeks to carry the doctrine of following trust funds far beyond anything attempted in the Bank of Commerce matter. Indeed, to follow the funds in the present case, the petitioner is bound to establish: (1) That the proceeds of her stock were deposited in the Bank of Commerce; (2) that they were included in the $20,000 certified check which went to the Corn Exchange Bank; (3) that they passed from the certified check into the certificate of deposit; (4) that they became a charge on the collateral which the application of the certificate of deposit to the loan released. Without considering whether the petitioner, having shared in the balance in the Bank of Commerce upon the theory that the trust funds remained on deposit there, can now consistently claim to recover upon the theory that they were drawn out and went into the Corn Exchange Bank, it is sufficient to say that the proof wholly fails to identify the securities in question with the trust funds. While the doctrine of following trust funds has been much extended in the modern decisions, there has never been a departure in the federal courts from the principle that there must be some identification of the property sought to be charged with the trust funds. But in the present case the proof fails to establish even the first step necessary to establish the petitioner’s claim, viz., that the certified check embraced the trust funds. What proof there is would rather indicate that they were not included in .it, and that the drawing and charging [98] of such check was a special, transaction, because the balance at the beginning and the end of the day when it was drawn and charged was the same. Moreover, we are unable to hold that the petitioner’s failure in proof is helped out by any presumption of law. But if there was any inference that the check included trust funds, they certainly lost all possibility of identification when the check was collected and a certificate of deposit substituted in its place, and when the certificate of deposit was canceled and the amount thereof credited upon the note. , Giving due weight-to all presumptions urged by the plaintiff, we find it impossible to trace the proceeds of the petitioner’s shares into the securities in the Corn Exchange Bank released by the payment of the loan. The order of the District Court is affirmed, with costs.