12 N.Y.S. 767 | N.Y. Sup. Ct. | 1891
The action was to recover the avails of certain commercial paper forwarded by the plaintiffs to the First National Bank of Dansville for collection, and collected by the bank shortly before its failure in 1887. The defendant is the receiver of the bank, though sued in his individual name, and the complaint demands judgment against him “to be paid out of any moneys in his hands as such receiver before making any distribution of the money or property of said First National Bank of Dansville to the general creditors of the said bank, and in preference thereto. ” The plaintiffs were private bankers at Warsaw, in the county of Wyoming. The First National Bank of Dansville was, as its name imports, a banking corporation, organized under the laws of the United States, doing business at the village of Dansville, in Livingston county. The plaintiffs were accustomed to send commercial paper held or received for collection by them, and payable at Dansville, to the bank mentioned, for collection, and it was the custom of the bank to remit the avails of such collections, less commissions, by drafts drawn by it on its correspondent in the city of New York. On the 16th day of August, 1887, the plaintiffs mailed to the bank at Dansville for collection and remittance four checks, drawn on that bank by depositors therein, aggregating $435.84, and a note of one Beyer for $140.40, payable at the same bank on the 18th day of the same month. The paper was received at the bank on the 17th, the checks were charged to the several accounts of the drawers, which were good for the amounts, and on the same day the bank remitted to the plaintiffs its draft on New York for the aggregate amount of the checks, less fees for collection. The note of Beyer was paid in cash on the 18th. The money was not kept separate from, but was mingled with, other cash on hand, of which about $2,000 was received, and much more than the amount of the note was paid out the same day. On the same day the bank sent to the plaintiffs its draft as usual, for the amount of the note, less fees for collection. On the 20th of the same month the plaintiffs sent to the bank at Dansville two more checks drawn upon it by its customers, aggregating $94.18. These were received on the 22d, and as before charged to the several accounts of the drawers, which were good for the amounts. On the 23d the bank closed its doors on account of insolvency, having received and paid out money in the usual course of its business down to and including that day. Neither of the drafts remitted to the plaintiffs was paid. Soon afterwards the defendant was duly
The theory of the action is distinctly that Of a trust impressed upon the avails of the several collections in the hands of the bank, and accompanying those avails into the hands of the receiver. The court at special term sustains that theory in respect to the avails of the note of Beyer, but found it not applicable to the case of the checks, and gave judgment against the defendant for the amount of the note, with interest, arid for costs. We think the theory fails of application to any portion of the plaintiffs’ demand, for the reason that it is not shown that any portion of the funds in question came into the hands of the receiver. No.principle seems to be better established than that “in order to follow trust funds, and subject them to, the operation of the trust, they must be identified.” The rule is stated in those terms by Andrews, in Gavin v. Gleason, 105 N. Y. 256, 11 N. E. Rep. 504. Of couse, it is not intended that in the case of money the particular coin or bank-notes must be found to be, or shown to have been, in the hands of the person sought to be charged with the trust. On the contrary, the opinion from which we quote recognizes and formulates the rule in equity “ that as between cestui que trust and trustee, and all parties .claiming under the trustee, otherwise than for a valuable consideration, without notice, all property belonging to a trust, however much it may be changed or altered in its nature, or character, and all the fruit of such property, whether in its original or altered state, continues to be subject to or affected by the trust;” and further on the same learned judge says: “A court of equity, in pursuing the inquiry, and administering relief, is less hampered by technical difficulties than a court of law; and may be sufficient, to entitle a party to equitable preference in the distribution of a fund in insolvency, that it appears that the fund or property of the insolvent remaining for distribution includes the proceeds of the trust-estate, although it may be impossible to point out the precise.thing in which the trust fund has been invested or the precise time when the conversion took place.” In this case, as we have seen, the court found in favor of the plaintiffs for the amount of the Beyer note, but there was no finding that the avails of the note ever came into the hands of the receiver, nor that they were not wholly paid out on other demands against the bank before it closed its doors. Such a finding could not have been sustained upon the evidence in the case, the almost necessary inference therefrom being to the contrary. The bank did business on what must have been a very narrow margin of cash for five days after the $140 was received in payment of the note, and at the end of that - time had only $189 of cash on hand. In the nature of things it was impossible to identify any portion of the avails of the note with any portion of the scarcely, larger amount of-cash which came into the hands of the receiver. The latter was as likely to be the avails of any other collection, made at about the same time, as of the Beyer note. And in this connection it is interesting to learn from the report of the case of Arnot v. Bingham, 9 N. Y. Supp. 68, that the same small residue of cash which came into the hands of the receiver had, when this action was tried, already been adjudged to be the property of the plaintiffs in that action upon facts almost precisely similar to those presented by the record before us. That judgment was rendered at special term in the sixth district, and was affirmed, with hesitation, by the general term in the fourth de