75 F. 771 | 6th Cir. | 1896
after stating the facts as above, delivered the opinion of the court.
In every case relied on by counsel for appellant, recovery, if decreed, was based on the fact that the property in the hands of the assignee or receiver of the person or bank against whom the
The exact question is discussed with satisfactory fullness in Bank v. Latimer, 67 Fed. 27; and the necessity for the presence of the proceeds of the very thing obtained by fraud in the mass of assets to be distributed is clearly pointed out.
Mr. Justice Bradley, in Frelinghuysen v. Nugent, 36 Fed. 229-239, describes the growth of the equitable doctrine on this head and its limits as follows:
“Another difficulty in the complainant’s case is the want of identity of the property claimed with the proceeds of the money abstracted from the bank. Formerly the equitable right of following misapplied money or other property into the hands of the parties receiving it depended upon the ability of identifying it, the equity attaching only to the very property misapplied. This right was first extended to the proceeds of the property, namely, to that which was procured in place of it by exchange, purchase, or sale; but if it became confused with other property of the same kind, so as not to be distinguishable, without any fault on the part of the possessor, the equity was lost. Finally, however, it has been held as the better doctrine that confusion does not destroy the equity entirely, but converts it into a charge upon the entire mass, giving to the party in.iured by the unlawful diversion a priority of right over the other credito”s of the possessor. This is as far as the rule has been carried. The difficulty of sustaining the claim in the present case is that it does not appear that the goods claimed — that is to say, the stock on hand finished and unfinished — were either in whole or in part the proceeds of any money unlawfully abstracted from the bank. On the contrary, the goods and stock on hand were purchased of the other creditors of Nugent & Co. almost entirely, if not wholly, on credit, and really stand in the place of, and represent the debts of, the firm due and owing to said creditors. This is true with regard to all the raw stock on hand, and with regard to all the stock and materials from which the manufactured or partially manufactured goods were produced. If any moneys derived from the bank entered into the latter, they were those moneys which were regularly drawn by checks of the firm weekly for the payment of their hands. It seems impossible, therefore, to sustain any such general charge or trust upon ihe goods and property of Nugent & Co. as that which has been set up and claimed by the complainant.”
See, also, National Bank v. Insurance Co., 104 U. S. 68; In re Hallett’s Estate, 13 Ch. Div. 696.
Counsel for appellant contend that the evidence shows that the sending of the draft to the National Bank of .the Republic had resulted in releasing and returning to the receiver collaterals of more value than $5,000, and that these must be treated as the proceeds of the draft. It is enough to say that there is no competent evidence of this in the record. The only foundation for the claim is 'that the president of the City Bank testifies that a bank examiner told him of the return of the collaterals a considerable time after the event, at a bankers’ convention. This, of course, was hearsay evidence, and wholly incompetent to prove the fact. Indeed, it was not introduced for that- purpose, but only to explain the apparent laches of the City Bank in making no claim for a preference in accepting dividends as upon an unpreferred claim, and in not filing'the bill
In view of our conclusion upon the merits, we need not consider the question of waiver and laches, which were also formidable obstacles in the path of complainant to success in this case. The decree of the circuit court is affirmed, with costs.