245 F. 294 | 8th Cir. | 1917
Plaintiff appeals from dismissal of its bill to set aside satisfaction of three mortgages on the ground of fraud, and to have a preference declared as to funds in the hands of the defendant receiver equal in amount to the sum arising from wrongful disposition of the mortgaged property by the mortgagor which had been deposited in appellee bank and checked therefrom by the mortgagor.
The mortgages, satisfaction of which was sought to be set aside, were given by T. C. Ryan to secure the payment of certain notes, and covered cattle. After these mortgages had been in force for some time, and a small payment had been made thereon, for the purpose of consolidating the balances and securing an additional sum, a single note was given, secured by mortgage, purporting to cover all of the property included in the three mortgages, and thereupon those mortgages were canceled. Thereafter the plaintiff ascertained that, largely prior to the execution of this last note, the maker thereof had disposed of most of the chattel security at the instigation and procurement of one Ricker, the president of the defendant Yates Center National Bank, and that the funds arising from such disposition had been deposited in that bank with full knowledge, on the part of the president, both of their origin and of the existence of the mortgages. The bank having passed into the hands of a receiver, and the mortgagor having withdrawn his funds from the bank, this suit seeks to impound the funds coming into the possession of the receiver, equal in amount to the receipts from the cattle, and to secure a preference thereon.
The theory of the bill is that the money came to the bank accompanied by the knowledge of its .improper origin, and therefore the bank and its succeeding receiver obtained and held it as trustee for the plaintiff. It is not disputed that the proceeds from the sold mortgaged cattle were deposited in the bank to Ryan’s credit and later drawn out by him; that the president of the bank, Ricker, had, when they were deposited, accurate knowledge of their origin and the existence of the mortgages; and that no other person connected with the bank had any such knowledge until after Ryan had overdrawn his account. The crux of the case, therefore, is whether or not the knowledge of Ricker was, under these circumstances, the knowledge of the bank.
The evidence referred to, and other on the same line, convince the court either that Ricker was using T. C. Ryan as a tool in working out his nefarious plans against both banks, or that Ricker and Ryan were operating together, in utter disregard of the welfare or safety of the two banks, if indeed they were not moved by a more sinister motive. In any event, Ricker was engaged in reprehensible, if not criminal, conduct toward one or both banks. It cannot be presumed that he would communicate such actions, or the knowledge of the acts of his tool or confederate, Ryan, to any one, much less to his employer, the defendant bank, or that he would use the information to benefit the defendant bank. Therefore his knowledge of Ryan’s dealings with the mortgaged cattle cannot be imputed to the bank. Hence neither it nor its receiver can be held as trustee of any proceeds through such sale.
The judgment is affirmed.
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