276 F. 575 | D. Mont. | 1921
Defendants move for a new trial. At the conclusion of plaintiff’s case in chief, defendants’ motions for a directed verdict were denied, and plaintiff’s granted. The complaint sounds in conversion or detinue, though in essentials it is analogous to ancillary proceedings to compél accounting for trust property in cus-todia legís, with which defendants assumed to deal and dispose.
Plaintiff is trustee of an estate in bankruptcy owning the property, and defendants are Bullyon, the bankrupt, who was not served with process, five insurance companies, which issued to him fire policies on his merchandise, Frank & Gaines, their counsel, and Maury & Melzner, Bullyon’s sometime counsel. Of the complaint it suffices to say it alleges that the policies issued; that the merchandise burned; that in this court involuntary proceedings in bankruptcy were instituted against Bullyon; that suits were commenced on the policies; that de-ferdauts had knowledge of the bankruptcy proceedings pending' and reasonable cause to believe Bullyon would conceal from his estate in bankruptcy any moneys paid him; that with intent to aid him therein
Upon objection, the admissions were limited to the maker, there being no offer to prove, then or later, that the alleged conspiracy or concert continued at the time of the admissions, nor that partnerships existed between Frank and Gaines, and Maury and Melzner, as later developed in the proof. There is no evidence that whatever Bullyon retained of the settlement proceeds was not by him delivered to plaintiff. In consequence the evidence wholly fails in respect to some defendants. Although defendants’ motions for verdict contain the usual stereotyped “failure of proof,” this anomalous state of the evidence and its deficiencies were not suggested, and it was assumed that, if the law was with plaintiff, the facts were proven.
In respect to all defendants the facts are proven as follows: Be- . fore and at the settlement they had knowledge that the policies issued, merchandise burned, bankruptcy instituted, Bullyon answered, Maury his counsel, suits on the policies by Bullyon, Maury his counsel, answers by the companies, .Frank & Gaines their counsel, settlement of policies and suits for $4,000, and, later, that Bullyon was adjudicated bankrupt and a trustee appointed. In addition Frank’s admissions are that before the fire for a debt Bullyon issued him a check, subsequently dishonored; that he next saw Bullyon under arrest for arson, in the county attorney’s office and in jail: that Bullyon was and is accused by the companies and Frank of burning his merchandise; that Bullyon evaded notice to submit to examination in respect to the fire, merchandise, accounts, and books, and concealed himself; that Bullyon permitted sale on executions of the unburned merchandise, neglected to secure $600 surplus in the justice’s hands, Frank “tipped off” creditors’ counsel, so they might get it, and finally told Bullyon, whose counsel got it; that on November 9, 1918, Frank knew he would be “forced” to try the suits the following Monday, and that the bankruptcy proceedings were for trial two days later; that in the evening of the 9th (Saturday) Bullyon and Maury came to Frank’s office and settled policies and suits on Frank’s terms, viz. $4,000 — Frank to retain $140 for an attaching creditor which he subsequently paid to plaintiff, $285 due local agents for premiums on the policies, and about $175 due .Frank for the dishonored check; that he and Bullyon got the money at a hank open evenings, and he gave Bullyon $3,400, perhaps in Maury’s presence.
Maury’s admissions are that, hi discussion of settlement, Frank insisted Bullyon burned the merchandise; that he was at the settlement, and had the policies; let Bullyon have them to receipt upon them for the money and give to Frank (Maury signed the receipts as witness); that Bullyon did his own “agreeing” with Frank, Maury remaining in another room: that he heard “dickering,” but did not know terms nor amount Bullyon actually received; that when Bullyon re
_ In view of the limitations and deficiencies of this evidence, it is clear that the verdict in no part can stand against the companies, Gaines, and Melzner. So far as they are concerned, the gist of the proceedings, viz. that Bullyon misappropriated from plaintiff and withholds any of the proceeds of the settlement, and that defendants paid the proceeds to Bullyon with reasonable cause to believe he would thus violate his trust, is wholly unproven. Before a participant can be held, there must be proof of a principal delinquent. Generally speaking, the companies are bound by the knowledge had, acts done, and admissions made by their counsel during the transactions including the settlement; but this cannot be proven by counsel’s admissions after the transactions are concluded, after the settlement. And if it be assumed that Frank’s admissions, with other evidence competent against him, suffice to warrant the inference that he had the alleged reasonable cause to believe, it cannot be imputed to the companies, because his admissions, as received herein, made when they were, are' incomptent against them. And for the same reason the companies are not chargeable with the portion of the trust fund retained by Frank in the settlement, the only misappropriation and withholding proven against any defendant. So, too, Frank’s and Maury’s knowledge, acts, and admissions are their partners’, but cannot bind 'Gaines and Melzner herein, because .of the objections and limitations when received in evidence as aforesaid. It would, perhaps, have been a simple matter to have secured herein affirmance .from the witness stand of all these admissions b.y the makers, thus rendered competent against all defendants, or otherwise to prove the facts of them. So far as Frank is concerned, if the sufficiency of the evidence to warrant the inference aforesaid against him be assumed, it can serve as a basis for relief only when there be competent proof against him that Bullyon withholds the $3,400 paid him by Frank, and there is none. The inference, however, is not necessary in respect to the $600 Frank withheld in the settlement, and $460 of which he yet withholds from plaintiff. He received it charged with knowledge that it was in violation of Bullyon’s duty and a devastavit in respect to a trust fund.
In respect to Maury, on familiar principles he is entitled to reasonable compensation for his services in the suits and settlement, payable out of the fund recovered, provided his conduct does not render the allowance inequitable. If he received more, the plaintiff can recover
And in respect to Maury, as to all other defendants, no proof that Bullyon withholds any proceeds of settlement that Maury left him, renders unnecessary inquiry whether Maury had the alleged reasonable cause to believe he would withhold them. Maury’s claim of privilege in the matter of his compensation is not maintainable; and as in accounting it is his duty to disclose, were these proceedings avowedly in accounting, as they are in essence, it may be the principle of the ring and missing stone would hold him liable for the $3,400 Bullyon had when he entered Maury’s office, departing with an undisclosed less amount.
It follows that a new trial must be and is granted to all defendants, save to Frank in respect to the $460 he withholds. In his admissions he disclaims any desire to retain the $175 for his own benefit, but asserts that the $285 for the premiums were properly withheld. The inference is that the local agents, as common, gave Bnllyon time to pay the premiums, they paying the amount to the companies when issuing the policies. In these circumstances the local agents became creditors of Bullyon of the same class as others, not entitled to any preference, and Frank improperly retained the amount for them. At any rate, Frank failed to prove the premiums were a debt and set-off to the companies.
It is believed that, in view of the real character of the issues and proceedings involved, defendants may be found liable for different amounts, some severally, some jointly; that the disclosed severance and apportionment or division of the trust fund sufficiently converts the $460 into a separate issue, so that in respect to it a new trial rrjay be denied to Frank, though granted to all other defendants, and a new trial granted, to all defendants in respect to all other of the fund.
Order accordingly.
36 Sup. Ct. 50, 60 L. Ed. 275.