197 Iowa 393 | Iowa | 1922
Lead Opinion
The material facts are not in dispute and, briefly summarized, are substantially as follows: 0'n or about July 3,1920, appellants consigned 46 head of steers to the Ward Commission Company, a corporation located, and engaged in the live stock commission business, at Sioux City, Iowa, for sale upon the market, with directions to remit the net proceeds derived therefrom to the Hudson State Bank, of Hudson, South Dakota, the point at which the shipment originated. The steers
Some time before the close of business on July 7th, the bank charged the account of the Ward Commission Company with $4,897.41, the amount due on the notes, and issued a cashier’s check to itself for $2,338.03, the balance then remaining in the account. The cashier’s check was still held by appellee at the time of the trial.
It is not claimed by appellee that the beneficial owner of a fund deposited in a bank by a factor or commission merchant to his own credit may not maintain an action in equity against the bank to impress a trust on such fund and to recover the same from the bank, if it has acquired no equitable fight thereto, without notice of the claim of such beneficial owner, nor that, if any portion of the proceeds of the sale of the steers in question is now in the possession of the appellee bank, appellants
The law is well settled that the title to property consigned to a factor or commission merchant for sale remains in the consignor, and that such factor or commission merchant holds the proceeds derived from the sale of such property in a fiduciary or trust capacity, and that its character is not changed by being placed to his credit in the bank (Union Stock Yards Nat. Bank v. Gillespie, 137 U. S. 411 [34 L. Ed. 724]; Central Nat. Bank v. Connecticut Mut. Life Ins. Co., 104 U. S. 54 [26 L. Ed. 693]) ; that the owner may maintain an action in equity against a bank, to impress a trust upon any portion of the funds deposited therein by such factor or commission merchant to his own credit and remaining in said bank, unless it has acquired an equitable right thereto without notice of the true claims of the owner (Smith v. Des Moines Nat. Bank, 107 Iowa 620; Packer v. Crary, 121 Iowa 388; Shotwell v. Sioux Falls Sav. Bank, 34 S. D. 109 [147 N. W. 288]; Fidelity & Dep. Co. of Maryland v. Rankin, 33 Okla. 7 [124 Pac. 71]; Union Stock Yards Nat. Bank v. Gillespie, supra; Central Nat. Bank v. Connecticut Mut. Life Ins. Co., supra; Clemmer v. Drovers’ Nat. Bank, 157 Ill. 206 [41 N. E. 728]; Hewitt v. Hayes, 205 Mass. 356 [91 N. E. 332]); that a bank may appropriate a general deposit of a debtor to the discharge of a matured indebtedness (Smith v. Sanborn State Bank, 147 Iowa 640); that a cestui que trust cannot recover trust funds which were deposited in a
We are of the opinion that the bank was charged with notice of the trust relation of the commission company with its customers, and that the funds deposited, less the items above suggested, belonged to the shipper. It was clearly the duty of the bank to pay all cheeks drawn by the commission company and presented to it, so long as there were funds to the credit of the drawer for that purpose; and so far as the fund in question was withdrawn by the depositor, the bapk is relieved from liability.
Some contention is made by appellants, upon the authority of Garst v. Canfield (R. I.), 116 Atl. 482, and Hungerford v. Curtis, 43 R. I. 124 (110 Atl. 650), that the court will presume that the deposits made after July 6th were of funds belonging to the commission company, and that they were made for the purpose of replacing the trust funds. This contention is sufficiently answered by the fact that the inference to be drawn from all the testimony is that these deposits were the proceeds received from the sale of live stock consigned to the commission company and sold in the regular course of the commission business, and that the only interest the commission company had therein was such charges as it could rightfully make against its customers.
It follows that the judgment of the court below must be reversed and the cause remanded for judgment and decree in harmony with this opinion.—Reversed and remanded.
Rehearing
Supplemental Opinion.
A petition for rehearing having been filed in this case by appellants, we have again reviewed'the record. We now reach the conclusion that the original opinion should be modified to the extent of permitting the appellants to recover $2,338.03, with interest as provided by law.
It is contended by appellants, upon the authority of Garst v. Canfield, (R. I.) 116 Atl. 482, and Hungerford v. Curtis,
We are not disposed to follow the Rhode Island cases to the disregard of this distinction. If they are so followed, the logical conclusion would be that, to the extent of plaintiffs’ claim, the subsequent deposits by the commission company
The bank applied a portion of the funds so deposited to the payment of an obligation that, on the face of it, was the individual undertaking of Ward, but which appears, in fact, to have been given for money that went to the use of the commission company. The commission company and Ward both acquiesced in this, and plaintiffs, as mere general creditors in respect’to all of the deposit not impressed with a trust in their behalf, are in no position here to question it.
The same thing is true, we think, in respect to the item of $200 applied by the bank to the commission company’s obligation to pay stockyards charges.
The bank has no claim upon this balance, and no other-creditor is claiming it. We see no reason why plaintiffs may not, in this equitable action, under their prayer for general equitable relief, be awarded this. Such a result is not in con
In all other respects, the petition for rehearing is overruled. The judgment of the court below is reversed, and the cause remanded for judgment and decree in harmony with the views expressed in this supplemental opinion. — Reversed and remanded.