205 Mass. 356 | Mass. | 1910
It has been decided that the plaintiff is entitled to require the original defendants, the executors of the will of
One of these funds, which has been called in argument the “for whom it may concern” fund was created and is held by the defendants Hayes and Wing individually. They were acting under the power of attorney given to them by Bangs after the death of Wells. This fund was made up of the posh found in the cash drawer of the firm which belonged to the firm itself and of other sums which also belonged to the firm, either as the proceeds of its property or as commissions due to it or otherwise. This fund is now deposited in the Shawmut National Bank in the names of the defendants Hayes and Wing “for the benefit of whom it may concern.” It now amounts to more than $10,000. In our opinion this fund, which has been derived entirely from the property of the late firm, should be paid by Hayes and Wing to the plaintiff as prayed for in the bill; and the decree will so order.
The “ S. G. W. fund,” it has been found, belongs as between the late firm and the individual estate of Wells entirely to the former. This finding was excepted to by the executors of Wells; but it seems to us that it is not inconsistent with any of the subsidiary findings upon which it was based, and the evidence is not reported. It follows that this exception to the master’s supplementary report must be overruled.
Certain of the intervening claimants have excepted to the master’s finding that the S. G. W. fund was one entire bank account, in no way separated or divided into parts so that any separate or distinct parts thereof were or could be established as trust property belonging to any of the claimants, and also to the
It is not disputed and we do not doubt that the relations between the late firm of Bangs and Wells and each of its members on the one side and the respective parties for whom they acted, including these claimants, on the other side, were strictly fiduciary. Either the firm or one of its members had been appointed and was acting as trustee for some of them, either by virtue of an appointment by the Probate Court or under some agreement between the parties. . In other cases the firm was acting as the representative or agent of other trustees or in the management of property which had been committed to its care by the owners thereof. Their relations were strictly confidential and fiduciary, and they were under the ordinary obligations of trustees. Campbell v. Cook, 193 Mass. 251. Matter of Le Blanc, 14 Hun, 8. Union Stock Yards Bank v. Gillespie, 137 U. S. 411. Gibert v. Gonard, 54 L. J. (N. S.) Ch. 439.
This fund, which had been deposited in the name of Wells in the City Trust Company, was really a continuation of the general bank account of the firm. Both money belonging to the firm itself and money collected by it or by Wells for it, but belonging to different principals or cestuis que trust for whom it had been collected, were deposited in this account. The latter amounts however made up the larger part of the deposits. Wells also drew checks against this fund or account, partly for the private uses of the firm or its partners, but mainly for proper payments to or for some or others of the parties to whom it equitably, in part at least, belonged. But all the amounts, including what belonged to the firm or to either of the partners therein and the different amounts that should have been paid to the respective principals or beneficiaries for whom it was held,
But these considerations do not dispose of all the questions raised in the case. We regard it as settled, to go no further than the facts in the case at bar, that when a trustee deposits in a bank in one fund without any earmark money of his own and money which he holds in trust for another, the beneficiary, though wholly unable to identify his money in the bank, may yet at his election follow the mixed fund which has been thus created by the trustee, and enforce a claim or charge thereon for his indemnity. And for the protection of the beneficiary it will be presumed that withdrawals made by the trustee by check from this mixed fund were made from the trustee’s own part of the fund and not from that part which consisted of the trust money, so long as there remains in the fund available for use any part of the trustee’s own money. National Bank v. Insurance Co. 104 U. S. 54, citing and stating the cases of Pennell v. Deffell, 4 DeG., M. & G. 372; Frith v. Cartland, 2 Hem. & M. 417; In re West of England & South Wales District Bank, 11 Ch. D. 772; In re Hallett’s estate, 13 Ch. D. 696; Taylor v. Plumer, 3 M. & S. 562; Farmers’ & Mechanics’ National Bank, v. King, 57 Penn. St. 202; Van Alen v. American National Bank, 52 N. Y. 1. The rule in Clayton’s case, 1 Mer. 572, that checks are to be applied against deposits in the order of their respective dates, has been modified to this extent, as is shown by the cases above cited. And see further as to the general principle stated, Houghton v. Davenport, 74 Maine, 590; Cush
The beneficiary is not allowed a charge upon the entire fund, regardless of deposits and withdrawals made after the deposit of his own money, but only upon what is left in the fund after the application in the mode we have stated of whatever withdrawals have been made by the trustee. Peters v. Bain, 133 U. S. 670. In re Mulligan, 116 Fed. Rep. 715; and 9 Am. Bank. Rep. 8, 11. Boone County National Bank v. Latimer, 67 Fed. Rep. 27. Ober & Sons Co. v. Cochran, 118 Ga. 396. Woodhouse v. Crandall, 197 Ill. 104. Burnham v. Barth, 89 Wis. 362. He is not given a charge upon the general estate of the trustee, on the ground that that estate has heen enriched at his expense, but is merely allowed to hold a charge upon the specific account or fund into which his money has gone, and in which equity can presume that it still remains. See the discussion of this question in the note to Board of County Commissioners v. Strawn, 15 L. R. A. (N. S.) 1100.
But it is said that our own recent decisions are at variance with this doctrine. We do not so consider. Little v. Chadwick, 151 Mass. 109, turned on the fact that the trust fund there in question could neither be identified nor traced into any specific fund; and the court said that it was not enough that it had gone into the general estate of the defaulting trustee. But it was expressly stated in the opinion, as indeed is manifest, that there was nothing in that decision contrary to National Bank v. Insurance Co. 104 U. S. 54; or In re Hallett's estate, 13 Ch. D. 696. The same thing is true of Lowe v. Jones, 192 Mass. 94. It was really sought in that case to establish a trust in the general assets of an insolvent estate upon the ground that the proceeds of trust property wrongfully disposed of had gone into those general assets, and thus increased the amount of the estate. There is some authority for that contention (see the cases col
It would be easy to apply the principle which we have stated and to enforce an equitable charge upon this fund for the protection of a cestui que trust whose money has gone into it and has remained a part of it, if we had to do with only one claim of this kind. But here there are several such claimants. And they fall naturally into two classes, by reason of the fact that some of them have proved their claims in the bankruptcy proceedings against Bangs. It must be determined whether that act deprives them of the right to the equitable remedy which they now seek.
Beneficiaries who do not receive from their trustee or agent what he ought to pay them may either bring an action, with or without an attachment of property, taking the position of an ordinary creditor, or they may seek to enforce their rights by such equitable remedies as are available to them. And while the defaulter remains solvent, so that he can be compelled to meet all his obligations, legal or equitable, there may be no difficulty in allowing them to proceed simultaneously in both ways. But upon the bankruptcy of their debtor or defaulter, the case becomes different. If they appropriate to themselves a fund which they can reach upon the equitable doctrine that we have stated, they thereby assume a different position from that of .ordinary creditors of a common debtor; they assert rights superior to those of ordinary creditors; and by the enforcement of those rights they diminish the fund to which those creditors must look for a dividend. If on the other hand they choose to prove their claims as creditors, they can then look, not merely to the specific fund into which they might have traced some part of their money, but to all the assets, and share in those assets parLpassu with the other creditors. Obviously in some cases the one course, and in some cases the other, will be for their advantage. And these
Accordingly we are of opinion that those of the claimants, who have proved their demands against the estate of Bangs in bankruptcy, have thereby waived any right to a charge upon this fund. The question whether this was a final election, or whether those claimants can now, upon expunging their proofs in bankruptcy, reassert their equitable rights, as was done in some of the cases above cited, has not been argued, and is not decided.
If the total amount that can be held by all the claimants who are entitled to a charge upon the fund thus determined exceeds the amount of the fund, then that amount is to be divided among them in proportion to the amounts of their respective charges. McBride v. Potter-Lovell Co. 169 Mass. 7.
A decree will be entered in accordance with the opinion.
So ordered.