Morrill v. Raymond

28 Kan. 415 | Kan. | 1882

The opinion of the court was delivered by

Horton, C. J.:

The question before us is, whether the money on deposit in the bank of Morrill & Janes to the credit of C. H. Orth, on April 1, 1881,'the date of the service of the garnishment process, was subject to be applied to the satisfaction of the judgment obtained by the creditor of Orth. It is certainly true the relation at that time between the bank and its depositor Orth was merely that of debtor and creditor, and the balance due on the account was only a debt. The bank had no knowledge that the deposit was a trust fund, and the account was made to be checked against in the usual and ordinary way. Notwithstanding all this, upon the hearing it was the duty of the court to decide to whom in equity the deposit beneficially belonged. The evidence upon this question is not conflicting or contradictory. The money advanced by Speer & Co. to Orth, to pay for the purchase of corn, was to be deposited in the bank and to be used by him to pay for corn, and for no other pnrpose. He had the right to deposit it in his own name, but not to use it or any part of it to satisfy his prior creditors. On April 1, 1881, his account with Speer & Co. showed that he ought to have had $692.12 of their money which he had not expended, and his account with the bank at that date showed on deposit $586.50. Orth, in February, 1881, had formed a partnership with one Benner, and after February, 1881, they kept the money of ■ the firm in their safe at their office. Although other moneys had been deposited by Orth in the bank, along with moneys advanced by Speer & Co., yet in February Orth drew out of the bank all the moneys belonging to the other persons, and after that date the deposit account was only the money of Speer & Co. The money, therefore, on April 1st so deposited in the bank, belonged in equity to Speer & Co., and Orth held it in a fiduciary capacity. Its character was not changed by being placed to his credit in his bank account. Before Morrill & Janes, the garnishees, answered, the notice of ownership was given them by Speer & Co. Thereafter the bank had notice of the claim of Speer & Co., and very properly made answer to the garnishment process that the money standing to the credit of C. H. Orth was claimed by Speer & Co. as their own. The money on deposit was Speer & Co.’s, not Orth’s. When the answer of Morrill & Janes was filed, on. April 12th, 1881, all the parties to this action had knowledge of this fact. A creditor of Orth, therefore, was not entitled either by attachment or garnishment to have the deposit in the bank held by Orth as a fund for the use and as the property of Speer & Co. applied to the payment of Orth’s debts. Orth had no right to apply this fund in whole or in part,-to pay or reduce the judgment of Eaymond against him, and the judgment creditor stood in no better position than the depositor. The judgment of the court therefore is wholly unsupported by the evidence. (See Central National Bank of Baltimore v. Conn. Mutual Life Ins. Co., U. S. Supreme Court MSS., October Term, 1881, and the cases there cited.) If the claim of Eaymond had accrued originally upon the faith and credit that the money on deposit was Orth’s individual property, another and a different question would be presented for adjudication; but this we find to be distinctly and fully negatived by the fact that Eaymond’s judgment was obtained long prior to the deposit, and for the conversion of a portable steam engine. The circumstance of the account at the bank, in favor of Orth, had no connection with any transactions between Orth and Eaymond before the rendition of the judgment of the 17th of February, 1879. All the deposit was subsequent to such judgment. The judgment of the district court must therefore be reversed, and the cause remanded for a new trial.

All the Justices concurring.