Appellant, as plaintiff below, sued appellee bank to recover losses paid by appellant as surety for the years 1931-1932 on the official bond of C. D. Greene, as tax collector of Wilbarger county, Texas.
Appellee bank was not an authorized county depository. Between January 1, 1931, and May 21, 1932, when Greene resigned, he deposited to his account as tax collector in appellee bank sums aggregating $97,492.91.- Of this, $37,709.35 was automobile license fees. During the period stated, Greene presented and appellee bank cashed over the counter checks aggregating $13,995 drawn against said account and signed by Greene as tax collector, payable to the order of “C. D. Greene” and so indorsed by him, the proceeds of which Greene converted to his individual use. During the same period, Greene presented at First State Bank in Vernon, Tex., the authorized county depository, -and there cashed or deposited to his personal account, checks aggregating $23,477.64, drawn against his account as tax collector in appellee bank. This group of checks, drawn by Greene as tax collector, payable to “C. D. Greene” and so indorsed by him, were cleared by First State Bank and paid by appellee bank out of said tax collector’s official account. Thus the proceeds were converted to Greene’s individual use. The checks of the first group, cashed over the counter by appellee bank, were for “even” sums, e. g., $25, $130, $1,000, $4,500, and the like. Of the second group some were for “even” and some for “odd” amounts.
Having reimbursed the county for its loss, appellant sued as the county’s subrogee to recover its loss from the appellee bank, but was defeated and appeals.
The District Court found that the total defalcation was $37,442.64, abstracted wholly from automobile license fees collected by Greene from January 9, 1932, to May 21, 1932, and that all funds collected during 1931 had been accounted for. That finding is supported by the evidence.
*101 During Greene’s tenure of office since 1925, and from the time of his predecessor, it had been the custom to carry automobile license collections in a bank other than the designated county depository, so that remittances by checks from automobile owners, which were numerous and in small amounts, could be collected and bad checks adjusted before remitting the proceeds to those entitled to ultimately receive the funds. This practice was known to and acquiesced in by the county authorities charged with the supervision of the tax collector’s accounts, and by those who were the recipients of the funds.
Article 2549, Rev.Civ.Stat. of Texas, enacted in 1905 as part of the depository law, provides that “it shall also be the duty of the tax collector * * * to deposit all taxes collected by him” in an authorized county depository “as soon as collected.” Appellant asserts that since appellee bank was not an authorized county depository, it illegally accepted the deposits and thereby became a trustee ex maleficio.
A bank becomes a trustee ex maleficio by receiving a deposit fraudulently, corruptly, or where the deposit is not merely unauthorized but is forbidden by statute. Board of Commissioners v. Strawn (C.C.A.)
This, however, is not such a case. Greene’s defalcations were wholly from automobile license fees collected pursuant to article 6675a — 1 et seq., Vernon’s Ann.Civ. St.Tex., relating to automobile registrations, enacted long subsequent to the depository act of 1905. Article 6675a — 10 provides that on Monday of each week the tax collector shall deposit such fees in the county depository, thus contemplating their accumulation in the hands of the tax collector from week to week. Obviously, the Tax collector must employ some agency to collect the checks by which he receives remittances of these fees, and t-o keep the funds until the time appointed to deposit them in the county depository. It was in this capacity that appellee bank accepted the deposits. Having the responsibility of keeping the fees until the Monday following their receipt, the tax collector necessarily possessed the concomitant authority to choose the method of keeping them. City of El Paso v. Two Republics Life Ins. Co. (Tex.Civ.App.)
Appellant next contends that if appellee is not accountable as a trustee, it is nevertheless liable because having notice of the trust character of the funds it honored withdrawal checks for unauthorized purposes with notice that Greene was wrongfully diverting the money to his individual use, and thus became a participant in the conversion.
Appellant asserts that the fact that these checks were drawn against Greene’s “tax collector” account, but payable to himself individually, was notice to the bank that he was converting trust funds, also that the “even” amounts of some of the checks was an added indicia of irregularity bécause inappropriate to bona fide remittances of tax collection balances by Greene, which would usually, if not always, be for uneven sums.
It is settled law that one who knowingly assists a fiduciary in a breach of duty is liable to the beneficial owner of the fund. If, as in Farmers’ Bank v. United States Fidelity & Guaranty Co. (C.C.A.)
The bank was dealing with a public official whose integrity had theretofore been unquestioned, in the same manner in which it had dealt with him for more than seven years. No active or conscious assistance or connivance by the bank is shown'. The checks were honored in the ordinary course of business. The utmost that can be charged against appellee bank is constructive notice from the circumstances, and it is upon such constructive notice that appellant relies. The bank was bound to honor the checks in the absence of adequate knowledge or notice that the funds were being unlawfully withdrawn. City of San Antonio v. Burke (Tex.Civ.App.) 65 S.W. (2d)
408;
State Nat. Bank v. Reilly,
Most of the checks in question were cleared through First State Bank in Vernon, the authorized depository, and reached appellee bank with the clearing stamp of the former across the back of the checks, indicating that the funds had reached the county depository. In the circumstances, appellee bank was not bound, under pain of liability as a participant in a conversion, to inquire as to what account in the First State Bank received credit for the checks.
The fact that the checks in question, were payable to and indorsed by Greene individually, and some of them for “even” amounts, is not alone sufficient to charge the bank with liability as a participant in the fraud in the absence of other circumstances requiring the bank, in the exercise of good faith, to inquire further. The further fact that some of them were cashed over the counter was not unusual in the light of the precarious banking conditions then existing, as disclosed by the evidence. In the absence of revealing circumstances other than these, the bank is entitled to assume that the fiduciary is dealing lawfully with the funds and is properly withdrawing them. Bank of Commerce v. United States Fidelity & Guaranty Co. (C.C.A.)
Other contentions urged by appellant present no reversible error.
Affirmed.