190 A.D. 549 | N.Y. App. Div. | 1920
Lead Opinion
There is nothing in the record to show any knowledge on the part of appellant of her husband’s wrongdoing. The account was in reality his account. It was his money, disbursed by her for his account without notice or intimation that any one else had claim to it. And now in 1919 she is saddled personally with a judgment for $2,629.32, on the theory of money had and received. I am persuaded that this is an unjust result. The action, while" it is brought at common law, depends upon general principles of equity. (Chapman v. Forbes, 123 N. Y. 532, 536.) This was not a case brought by the party defrauded against the principal who has defrauded him, such as Town of Bleecker v. Balje (138 App. Div. 706),
If a bank receives deposits to the credit of the account of a depositor, and pays out such deposits in good faith on the depositor’s checks, can it be held hable in an action for money had and received, to a stranger from whom the depositor wrongfully obtained the money? If notice is given, it is another thing. In such case if the bank pays out the money notwithstanding the notice, undoubtedly the action would he. Or if the money remained on deposit an action might be maintained to recover it. But where it is paid out without notice of any claim, or knowledge of any wrongdoing or defect in the title, it would be unjust to say that five years thereafter a stranger might come in and oblige the bank to pay it a second time. Stolen funds can be traced until they come into the hands of a bona fide holder for value, when the title is lost, for money has no earmarks. But when the funds come into the hands of an agent, bailee or depository, who either returns them to the principal or lays them out for the principal’s benefit without notice, it would seem that no liability should attach. Under any other rule business could not be safely transacted. It is not necessary to find that the appellant wife was at all times acting as the agent of her husband in disbursing this money, although I think this was the fact. She asserted that she had no interest in the account save to disburse it for her household expenses, etc., and to give Barreto such amounts as he requested. He made most of the deposits,
The cases cited by the learned counsel for the respondent are not opposed to this conclusion. Empire State Surety Co. v. Nelson (141 App. Div. 850) was a case where the defendant received payment of a personal debt from a special guardian, out of the trust money in the special guardian’s hands, “ knowing at the time he received such payment that it was made from guardianship funds.” In Roberts v. Ely (113 N. Y. 128) the complaint was dismissed on the ground that it was barred by the Statute of Limitations. But that case would be no authority for the plaintiff in any event because Ely, the defendant, had notice of the equitable right of the plaintiff. The court in discussing the nature of the action, said (p. 131): “ No privity of contract between the parties is required, except that which results from the circumstances.” But the Court of Appeals in no way intimates that an innocent bailee or custodian of the money was responsible where it had been paid out in good faith without notice of the claim of the plaintiff. The court said: “ The action for money had and received to the use of another is the form in which courts of common law enforce the equitable obligation. The scope of this remedy has been gradually extended to embrace many cases which were originally cognizable only in courts of equity. Whenever one person has in his possession money which he cannot conscientiously retain [italics mine] from another, the latter may recover it in this form of action, subject to the restriction that the mode of trial and the relief which can be given in a legal action are adapted to the exigencies of the particular case, and that the transaction is capable of adjustment by that procedure, without prejudice to the interests of third persons.” It is suggested that the appellant wife did not take the funds as a purchaser for value and that mere absence of knowledge by a volunteer is not enough; that to give good title the receiver must be both innocent and a purchaser for value.
The judgment should be reversed, with costs, and the complaint dismissed, with costs. This court reverses so much of the 10th finding of fact as finds that the proceeds of sale of the bonds have been retained by the defendant Katherine E. Barreto, also the 12th and 13th findings of fact and all of the conclusions of law of the trial justice. And this court finds the facts set forth in defendant’s requests to find numbered 6, 9, 10, 15, 16, 18. This court also makes additional findings of fact as follows: A. That after the deposit of $1,887.05 on April 30, 1913, the defendant Katherine E. Barreto drew checks against her deposit in the First National Bank of Portchester for household expenses, clothing, taxes, insurance premiums, etc., and for cash paid to her husband from time to time at his request and for no other purpose. B. That all of said deposit of $1,887.05 except the sum of $52.06 had been withdrawn from said bank and paid out by said Katherine E. Barreto before August 1, 1913, for the purposes set forth in finding A. C. That such withdrawals and payments were made by said defendant Katherine E. Barreto in good faith and in regular course without any
Mills, J., concurs; Blackmar, J., concurs in separate memorandum; Putnam, J., reads for affirmance, with whom Jenks, P. J., concurs.
Dissenting Opinion
In this case the appellant’s bank account on April 30, 1913, received $1,887.05 proceeds of the two bonds which the husband had sold and converted. Here the trust moneys have been traced into this bank account of the appellant, who is the wrongdoer’s wife. At that time appellant’s bank balance was $40.76. Between April 30 and July 9,1913, she had by various
The court found that appellant paid no consideration for such deposit in her bank account, and that she received and retained said proceeds for her own benefit. Such a holder cannot be considered a bona fide purchaser for valuable consideration and without notice. As against the beneficiary of a trust ex maleficio mere absence of knowledge is not a sufficient defense. To get a prevailing title, such receiver, however innocent, must be a purchaser for value. If a depositary like a bank (for example) pay such funds out to third persons, these payments make a consideration. But if the volunteer uses the proceeds for herself or family, can her own appropriation be a defense? It is not a case of earmarking funds. It is the simpler question of showing a right higher than that of the true owner of the securities, whose proceeds have been thus abstracted. Hence I would affirm.
Jenks, P. J., concurs.
Judgment reversed, with costs, and complaint dismissed, with costs. Settle order, with new findings, on notice.
Concurrence Opinion
I agree with Mr. Justice Kelly that this judgment cannot stand; but with some expressions in the opinion I cannot agree. I do not think that the relationship of husband and' wife, or the fact that the wife was giving her services to the husband, furnished a consideration which would enable her to hold, as against the true owner, stolen funds received from her husband even if she had no knowledge of the tainted source. If, however, moneys were drawn out of her bank account for the husband’s benefit, the wife is not liable. The case is the same as if stolen funds were placed in the hands of any other agent or bailee, who, without knowledge that the property was stolen, disposed of it in accordance with the directions of the principal or bailor.