Packer v. Crary, 121 Iowa 388

Packer v. Crary

121 Iowa 388 | Iowa | 1903

McOuain, J.

There is no real controversy as to the facts, and, so far as involved in the decision.on the petition of intervention, they are substantially as follows: Hall was the owner of certain cattle, purchased to some extent with money of Adams, the intervener, and he was indebted to Adams to an amount largely exceeding the value of the cattle. Hall delivered these cattle to Orary to be fattened and marketed, with the agreement that Orary should account to Hall for .the proceeds, after deducting expenses and commissions. Subsequently Hall gave to Adams an order on Orary for such proceeds, and Orary recognized this order, and assured Adams that he would turn the proceeds over to him in pursuance thereof. Orary deposited the proceeds of the cattle — rabout $1,150 —in the bank to his own general account. It is uncertain, under the evidence, whether a portion of the proceeds were checked out by Orary to Hall’s benefit, or not, but it is undisputed that Orary is indebted either to Hall or to Adams, by virtue of the order, for an amount exceeding the balance in the bank to Orary’s credit as net proceeds of Hall’s cattle; and the sole question is whether Orary’s creditors, by virtue of the garnishment, have a right to this fund as against the intervener, Adams, claiming under the order on Orary given to him by Hall, and recognized by Orary before the garnishment proceedings were instituted. Although the proceeds of the cattle were *390deposited by Orary to his own individual account, nevertheless, as Orary was not the owner of the cattle, but merely the agent of Hall for the sale thereof, the proceeds, if they can be reached, belong to Hall, or to Adams under the order given to him by Hall, and not to Orary.

i. deposit by agent of principal’s funds: rights of principal, The proceeds of the cattle, in Orary’s hands, were in one sense a trust fund; that is, a fund as to which Orary had the apparent legal ownership, but to which Hall had the legal or equitable right. There can be no controversy as to the proposition that, when . an agent deposits his principal’s funds in a bank in the agent’s individual name, the principal has the right to such, funds as against the agent or the bank, and it is immaterial that the funds have been mingled with other funds of the agent. As is said by the court in Van Alen v. American Nat. Bank, 52 N. Y. 1, 7: “When a trustee deposits trust moneys in his own name in a bank with his individual money, the character of the trust money is not lost, but it remains the property of the cestui que trust. If such money can' be traced into the bank, and it remains there, the owner can reclaim it. When deposited, the bank incurred an obligation to repay it, which is not lessened or impaired because it incurred at the same time an obligation to pay other money belonging to the agent individually. If A Sells B’s horse for $100, and puts it in a box with $100 of his own, the $100 of B may be claimed by him, although the particular bills constituting it could not be identified. So, if the same $200 were deposited in a bank to the credit of A, the title of B to $100 would not be affected by the association, and the bank would owe that money to B, in equity, although it owed A also for his individual money. These views are not only consonant with integrity and justice, but are fully sustained by authority.”

*3912. Same. *390The fact that, after depositing the socalled trust fund the agent checks out from his individual account such por*391tion of his general deposit as belongs to him in his individual right, leaving a balance representing all or a part of the so-called trust fund, does not deprive the principal of the right to assert his claim to such balance as his own property. Pennell v. Deffell, 4 De Gex, M. & G. 372, cited and quoted from in Van Alen v. American Nat. Bank, supra. In Farmers’ & Merchants’ Nat. Bank v. King, 57 Pa. 202 (98 Am. Dec. 215), it appeared that an agent had deposited funds of his principal, with his own funds, in a bank, and that creditors of the agent had garnished the bank for his deposit, which included not only the fund of the plaintiff in that case, but also of other principals. After the garnishment the principal had demanded so much of the funds of his agent as represented the deposit of the principal’s money. The court said: “It is undeniable that equity will follow a fund through any number of transmutations, and preserve it for the owner so long as it can be identified. And it does not matter in whose name the legal right stands. If money has been converted by a trustee or agent into a chose in action, the legal right to it may have been changed, but equity regards the beneficial ownership. ■' It is conceded — for the cases abundantly show it — that, when the bank received the deposits, it thereby became a debtor to the depositor. The debt might have been paid in answer to his checks, and thus the liability have been extinguished, in the absence of interference by his principals to whom the money belonged. ■ But surely it can-not be maintained that when the principals asserted their right to the money before its repayment, and gave notice to the bank of their ownership, and of their unwillingness that the money should be paid to their agent, his right to reclaim it had not ceased. A bank can be in no better situation than any other’debtor. * * * But it is insisted there was no earmark to the money. What of that, if the money can be followed, or if it can be traced into a sub-*392statute? This is often done through the aid of an earmark. But that is only an index enabling a beneficial owner to follow his property. It is no evidence of ownership. An earmark is not indispensable to enable a real owner to assert his right to property, or to its product or substitute. Evidence of substantial identity may be attached to the thing itself, or it may be extraneous. It is freely admitted that if a trustee or agent receive money of a oestui que trust or principal, and mingle it with his own so that it cannot be followed, the oestui que trust or principal cannot recover it specifically. This is not because the ownership is changed, but because a court cannot lay hold of the property as that of the owner. But in regard to money, substantial identity is not oneness of pieces of coin or of bank bills. If an agent to collect money puts the money collected into a chest where he has money of his own, he does not thereby make it all his own, and convert himself into a mere debtor to his principal. The principal may by law claim out of the chest the sums which belonged to him before the admixture.”

3 garnish-creditors. It must be borne in mind that the controversy here is not one as to the right of the principal to a preference as against other creditors of an insolvent bank, in which the principal’s money has been deposited by the agent in his own name; nor is it as to the right of the principal to follow the funds into the hands of a creditor or assignee of the agent who has received it without knowledge of the nature of the fund, and in extinguishment of some debt or obligation of the agent. The plaintiffs acquired no higher right by virtue of the garnishment under their attachment proceeding than that of their debtor, and if Crary was not entitled, as against intervener, to the money remaining in the bank to Crary’s credit, after intervener and established ■ his' claim thereto, then plaintiffs have no right to the same fund by virtue of the garnishment proceeding. *393Howe v. Jones, 57 Iowa, 130; Shaver Wagon & Carriage Co. v. Halsted, 78 Iowa, 730. That the assignment from Hall to intervener entitled intervener to assert any right to the proceeds of the cattle which Hall could have asserted is unquestionable. Whether this assignment was legal or equitable is immaterial, for it gave Orary a right to the proceeds of the cattle — a right which the trial court, adjudicating the equitable issues arising under intervener’s petition, should have recognized. Des Moines County v. Hinkley, 62 Iowa, 637. Indee 1, it was wholly immaterial, so far as the rights of the parties in this case were involved, as to whether Orary had received notice of, and acquiesced in, the assignment, or not. No creditor of Orary, without any lien or claim as to this specific fund, had a right to appropriate it to the payment of Orary’s •debts, as against the conclusive proof that the fund did not belong to Orary at all, but belonged to some one else.

The decree dismissing intervener’s petition is therefore REVERSED.