Emigh v. Earling

134 Wis. 565 | Wis. | 1908

Dodge, T.

The first and probably the most earnestly contested question of fact was whether the transaction between the Jennes in October, 1902, constituted a turning over of the former’s property to Brown as an individual or, instead, to the hank, for its corporate purposes, with Brown serving merely as nominal custodian of title for it; and as a result whether the bank collected the proceeds of the sales of butter or the same were collected by Brown as an independent individual and were received by the bank from him as his money and not the bank’s. The trial court, after hearing all the evidence, seeing all the parties, and evidently considering all the circumstances and conduct, has reached the conclusion that the transaction was with the bank, and that what Brown did the bank did, and where Brown’s name was used such use was nominal only; and has especially found that it was the bank through its officers and directors which took the milk furnished by the patrons, made the same into- butter, and sold it and collected the proceeds. After a careful review of that evidence we .cannot say that it preponderates against this finding in any such manner or degree as could warrant us in reversing the same, even in view of the vigorously urged improbability that a national bank would so far depart from its legitimate business as to engage in the manufacture and sale of butter. We therefore assume such finding of fact as a starting point for considering tlie rights of the parties. The agreement under which the patrons delivered their milt is generally set forth in the statement of facts. We have no doubt that under the authority of Boyle v. N. W. Nat. Bank, 125 Wis. 498, 103 N. W. 1123, 104 N. W. 917, the proceeds of the butter, after deducting the fixed commission or toll allowed the Jenne Creamery Company by the patrons, remained their property and not merely a debt from the person collecting the same, and that the bank, having received the money under and by virtue of these contracts, assumed the place formerly occupied by the Jenne Company, and, when it collected the proceeds, held the same as the property of the owners, the several patrons, until it was in fact paid over to them.

It being established that this butter money belonged to the patrons and was received by the bank for them and under a duty to pay it to them, it follows that when the bank applied such money to another purpose and failed on demand to pay it over, it at least became indebted therefor to the owners. Whether it might also have been guilty of an unlawful conversion need not here be considered, as no judgment has been rendered based upon such view. Now, in the several months prior to October it had done just this thing with the moneys of certain of the patrons. True, it had issued its checks to those patrons, for under the findings of the court the checks drawn in the name of the Jenne Creamery Company by Brown against the moneys which the bank had received must be deemed in all legal effects the same as if drawn by the bank upon itself. But these checks constituted no payment, but merely an evidence of the amount of money which the bank held belonging to each of these patrons. When, upon the closing of the bank, payment of these amounts was refused, and it was made apparent that prior to that time the bank had used the money for other purposes, either to pay expenses of the creamery business or to apply upon the indebtedness to it of the creamery company, or otherwise, the inevitable result was that the bank was at least a debtor of the owners of the money as mnch as any other of its creditors. Hence we cannot donbt the correctness of the court’s conclusion with reference to the $406.97 which was in this situation. The owners had a right to stand as general creditors of the bank and to share in any dividends that might be declared out of its assets, which had been enhanced by the receipt and appropriation to the bank’s uses of their proper moneys.

The question with reference to the moneys which were shown to have been received by the bank during October and November, and which the receiver was required to pay to the owners in full, involves very different consideration. Of course the receiver could be under no duty to pay to them unless he received their moneys while capable of identification as such. What was not identifiable as belonging specifically to anybody else came to his hands as assets of the bank, and, under the national banking act, must be ratably apportioned amongst all its creditors. R. S. U. S. §§ 5236, 5242 [U. S. Comp. St. 1901, pp. 3508, 3517] ; Davis v. Elmira Sav. Bank, 161 U. S. 275, 16 Sup. Ct. 502. It is a principle generally established and fully adopted in this state, as appears by Bromley v. C., C., C. & St. L. R. Co. 103 Wis. 562, 79 N. W. 741, and Boyle v. N. W. Nat. Bank, supra, that when moneys belonging to other persons are received and mingled in a general fund with moneys belonging to the depositary and then such depositary or trustee pays out generally from such fund for his own purposes, there is a presumption of law that such payments are made from the moneys in said fund belonging to him and do not constitute wrongful misappropriations of the moneys of the cestui que trust, which he has no right to pay out in that way, but that they remain on deposit. Of course this presumption is possible of complete effect only so long as the fund is large enough to contain all the moneys of the cestui que trust and some of the moneys of the trustee. But in this case the court has carefully analyzed the condition of the bank’s funds through the entire months of October and November and has found that at no time after any of the proceeds of October butter came to the bank has its money on hand been drawn down to a sum less than the amounts so received, from which must result the presumption that the balance which it at all times had on hand included the very moneys so collected and belonging to these patrons, and that their moneys, therefore identifiable, were in the possession of the bank at the time of its closing and passed into the physical possession of the receiver. Lest this presumption should be thought to be overcome by proof that the proceeds of any individual draft for butter did not go into the fund of money in the bank’s vaults or custody, but was otherwise specifically disposed of, the court below also traced each specific draft and in great detail ascertained that where they had been sent to one or another of the bank’s correspondents for collection they had been collected- and had been placed to the credit of the bank in its account with said correspondents, where, of course, they remained charged with the same trust as against the defendant bank as if in its physical possession. Boyle v. N. W. Nat. Bank, 125 Wis. 498, 103 N. W. 1123, 104 N. W. 917. The court then proceeded to ascertain in the case of each of the bank’s correspondents who had received any one or- several of such drafts and had collected them, that that particular account had never been drawn down so low as to be less than the total of the amount of the patrons’ money which was included therein; and hence results the conclusion that in each of those accounts was the entire amount of such patrons’ money at the time when the bank closed. It was of course shown that the balances of all such accounts passed to the receiver and had either been collected by him or still remain under his control. Upon this showing, under the authorities already cited, there results inevitably the court’s conclusion of law that the receiver had received in actual money or in credits with correspondents the $2,520.46 belonging to the patrons. If he received the same, of course he could hold it only as trustee for the owners. He did not receive it as moneys of the bank upon any trust to distribute to the creditors of the bank, for he could receive only the bank’s property in that capacity and upon that trust. He is now, and has been at all times, chargeable with the duty of paying it, but to the true owners.

The conclusions of the trial court are attempted to be averted by most vigorous contention that it is wholly beyond the power of a national bank to engage in creamery business, and much citation is made of federal authority to that effect. The exact limits of the power of a bank which, being a creditor, becomes possessed of property or property rights in various forms as security to do acts in management or improvement of such property or development of such rights in order to render them valuable, to the end, in good faith, of thereby securing liquidation of the debts to it, is quite indefinite, and doubtless public policy requires that a hank, like an individual, should have broad powers of the exercise of discretion and judgment, to the end that property or rights so held as security be rendered as valuable as possible so that it may not lose that which it ought to collect. Security Nat. Bank v. St. Croix P. Co. 117 Wis. 211, 94 N. W. 74. But, we need not try to resolve this somewhat uncertain and vexed question. No authority has been cited, and we think none can be, to deny the power of a banking corporation or any other corporation to disgorge property of another which it had got into its possession by any means whatever under a duty to disgorge. It may have had no legal power to take the steps by which the money of these plaintiffs’ assignors came to its hands; but, having taken such steps and obtained their money, no such absurdity exists as a legal obstacle to its surrendering it. It would be a reproach to the law to bold any such doctrine of inequity. Beloit v. Heineman, 128 Wis. 398, 401, 107 N. W. 334.

There are other grounds urged by the respondents, and indeed based upon the facts found by the court, upon which it is claimed that the judgment would be justified even were it not held that the bank was the real holder and custodian of the property turned over by the Jennes and of the right to collect the money of the patrons. Such grounds involve generally the doctrine of the chargeability of a depositary with responsibility to the true owner of funds if it receives them with notice of such rights. We need not discuss how effective such principle might be under other circumstances, having concluded that we must sustain the finding of the court to the effect that the bank was the actual party conducting this business and receiving these moneys. Upon that basis we are satisfied that the judgment of the court below was correct.

By the Court. — Judgment affirmed.