138 Va. 333 | Va. | 1924
after making the foregoing statement, delivered the following opinion of the court:
In our view of the case there are only two questions presented by the assignments of error which need be passed upon, and they will be disposed of in their order as stated below.
1. Was the appellee receiver, under the circumstances above mentioned, a constructive trustee ex maleficio of the money in the bill mentioned, so that, if the money had belonged to and if this suit had been brought by the county treasurer, he would have had the right to recover the money?
The question must be answered in the affirmative.
In Pennington v. Bank, 114 Va. 674, at p. 678, 77 S. E. 455, 457 (45 L. R. A. [N. S.] 781) this is said and held: “The authorities are agreed that when a bank, with knowledge of its insolvency, receives a deposit, it perpetuates a fraud on the customer, and is held to be a constructive trustee of the deposit, and the depositor may recover of the receiver the deposit if it can be identified, or its equivalent, if it cannot be identified, when the customer’s money has been mingled with the bank’s funds, .which, to an amount equal to the deposit, has gone into the hands of its receiver. Western German Bank v. Norvell, 134 Fed. 724, 69 C. C. A. 330; Tiffany on Banks and Banking, sec. 89, p. 349, and cases cited in notes.”
In the citation from Tiffany just mentioned, this is said: “The relation between a bank and its depositor being merely that of debtor and creditor, the depositor is entitled to no preference upon the bank’s insolvency, but must come in with the other general creditors.” And this authority continues: “For a bank to receive deposits with knowledge of the hopeless insolvency,
In Western German Bank v. Norvell, supra (134 Fed. 724, 69 C. C. A. 330), as correctly stated in the headnote, this is held: “When a bank, known by its officers to be insolvent, collects money for a customer and mingles the same with its own funds, which, to an amount larger than the sum so received, go into the hands of its receiver, it is not essential to the right of the customer to recover from the receiver that he should be able to trace the identical money into the receiver’s hands; but it is sufficient to show that the sum which went into the receiver’s hands was increased by the amount so collected.” Citing Richardson v. New Orleans Deb. Red. Co., 102 Fed. 780, 42 C. C. A. 619, 52 L. R. A. 67, and the cases there cited, among which
In Richardson v. New Orleans Deb. Red. Co., just mentioned, this is said and held: “Ordinarily, when funds are deposited in bank, the relation of debtor and creditor immediately arises between the banker and the depositor. The money deposited becomes the property of the banker. He has the right to use it * *. When the banker obtains the deposit by committing a fraud, as by receiving it after hopeless insolvency, the relation between the parties is very different. The fraud avoids the implied contract between the parties that would arise in its absence, and having barred contract, a trust is the equitable result. The fraud itself gives no lien. The fraud prevents the money deposited from becoming the property of the banker, and thereby prevents the relation of debtor and creditor arising between the parties. As the money does not become the property of the banker, it, of course, remains the property of the depositor. In the banker’s hands, therefore, it is a trust fund — as much so as if it had been a special deposit. The money, which the banker has received in the due course of honorable business, before insolvency, has become his property, and he the debtor of those who deposited it. Now, if the banker, having money in his bank, fraudulently receives other money, and mingles it with the money on hand, can the defrauded depositor reclaim his money? That is the question presented by this case. The bank received $1,658.00 of the depositor’s money just before it closed. It was received under circumstances of fraud, so that it remained the property of the appellee. It passed with the other funds to the hands of the receiver, or, if the identical money did not so pass to the receiver, the
In Knatchbull v. Hallett, supra (L. R. 13 Ch. Div. 696, 707), on the direct point in question, Sir George Jessel, master of the rolls, says this: “* * Supposing, instead -of being invested in the purchase of lands or goods, the money were simply mixed with other moneys, of the trustee — using the term * * in its full sense, as indicating every person in a fiduciary capacity. Does it make any difference, according to the modern doctrine of equity? I say, none. It would be very
In Central Nat. Bank v. Connecticut, etc., Co., supra (104 U. S. 54, 69, 26 L. Ed. 693, 700), the Supreme Court approves and adopts the same holding as that just mentioned.
Many other cases, including United States Supreme Court cases, might be cited to the same effect, but the foregoing are enough.
There are other assignments ■ of error, resting upon other allegations of the bill, which are omitted from the statement preceding this opinion, which allege facts from which it is claimed, in substance, in behalf of the county, .that the treasurer had no right to make the deposits as general deposits, or indeed, as special deposits, under the special circumstances alleged, but not set forth above, and that in any case the deposits were special deposits, so that, in equity, a constructive trust arose, and that the receiver, as the custodian or possessor of the money in question, derived as the fruit of the wrongful deposits in and receipts by the bank, must be held to be a constructive trustee of the money, with the consequential right of recovery of it from him above mentioned. And the argument before us upon these subjects, by counsel on both sides of the ease, has taken a wide range, and great industry and ability has been displayed in presenting the very interesting and im
For, while there is some ambiguity in the very words “special deposit,” and there is some seeming conflict in the authorities on the subject, it may be said with confidence that certainly the great weight of authority, and perhaps the almost unanimous real
Similarly, the authorities hold that the effect of' a lack of authority in the depositor to make the deposit-is merely this: The relationship of' creditor and debtor is not, in such case, created between the depositor and the bank, and for that reason the deposit remains the property of the depositor, or of the beneficial owner of' it, and may be recovered back from the bank, or its receiver, as against claims of general creditors of the bank., Myers v. Board of Education, 51 Kan. 87, 32 Pac. 658,. 37 Am. St. Rep. 263; Board of Fire & Water Com’rs, City of Marquette v. Wilkinson, 119 Mich. 655, 78 N. W. 893, 44 L. R. A. 493; In re Bank of Nampa, 29 Idaho, 166, 157 Pac. 1117; First Nat. Bank v. Bunting, 7 Idaho, 27, 59 Pac. 929; and other authorities on the-subject which might be greatly multiplied.
Hence we do not enter upon any consideration of the-subject of whether the deposits in the instant case were-special deposits, or were made without authority, under-the special circumstances.
The remaining question for decision is this:
,2. Is the county, through its board of supervisors,, the proper party plaintiff and entitled to recover back, the moneys involved in this suit in equity?
The question must be answered in the affirmative.
It appears from the allegations of the bill, which upon. demurrer must be taken to be true, that the county is-the sole beneficial owner of the money in question. The;
It' is elementary that in equity the beneficial •owner is the proper party plaintiff in a suit to recover property; and this is true of suits to recover back money, or other property, in proceedings such as that before us, involving trusts ex maleficio. 2 Pomeroy’s Eq. Jur. (4th ed.), sec. 920; 3 Idem, sec. 1053.
Moreover, in the instant case, upon recovery by the ■plaintiff county, through its board of supervisors, the •county treasurer is made by statute the proper hand to receive the recovery, and not the board of supervisors; •and under the prayer of the bill for general relief the -court will enter the proper decree on the subject; so that for all practical purposes the suit stands just as if it were a suit by the county treasurer (who deposited the mpneys), brought for the benefit of the county.
The decree under review will be reversed, and the •cause remanded for further proceedings to be had not in conflict with the views expressed in this opinion.
Reversed and remanded.