168 A. 880 | Conn. | 1933
The finding discloses the following material facts: The defendant was a private banker and on December 23d 1930, because of insolvency, its functions were suspended by the appointment of a receiver. The Duluth Superior Milling Company, hereinafter referred to as the Mill, is engaged in the flour mill business with a principal office in Duluth, Minnesota. The First National Bank of Superior, Wisconsin, does its banking business. Joseph J. Regina is engaged in the business of selling flour in Hartford and vicinity, and the Mill sold him flour in carload lots, the price being payable on arrival; when a car was shipped a draft was drawn and attached to the bill of lading. At the suggestion of Regina, the drafts and the bills of lading were sent to the defendant for collection. Each draft sent by the Mill through its bank had stamped across the face, "This draft is a cash item and it is not to be treated as a deposit. The funds obtained through its collection are to be accounted for to us and are not to be commingled with other funds of collection bank." Each draft also contained an instruction that "This draft must be paid upon arrival of goods. Surrender bill of lading only upon payment of draft." The defendant as the collecting bank received only a collection fee for handling these drafts and was not to commingle the funds or credit them to the Mill, but transmit them immediately to the Mill. For a release of the bill of lading attached to a draft when the draft was not paid upon arrival, it was customary for the Mill through the forwarding bank to send telegraphic advice. *474
In the regular course of business, from November 1st, 1930, to November 26th, 1930, five drafts with bills of lading attached were sent to the defendant, and these bills of lading were released and surrendered by the manager of the defendant to Regina without written telegraphic authorization and without payment of the drafts to which they were attached. The drafts have remained in the bank unpaid and the Mill has never been paid the amount of them.
The conclusions reached from the facts found were that the relationship between the Mill and the defendant was that of principal and agent; the agent having violated its instructions as to the manner of handling the drafts is liable to the Mill for the loss sustained by the latter, which is $6374.51 with interest; this claim falls within class (3) of § 3955 of the General Statutes, and is entitled to no preference over general creditors or depositors; no trust was impressed upon funds of the defendant in favor of the Mill, as no funds from the payment of the drafts upon which a trust might have been declared ever came into the hands of the defendant.
It has been well established, and the defendant's receiver does not deny, that if a bank receiving for collection a draft with bill of lading attached, under instructions to deliver the latter only upon payment of the draft, surrenders the bill of lading without collecting the draft, it is liable for the loss sustained by reason of such unauthorized action. Merchants Manufacturers Bank v. Stafford National Bank,
The instructions of the forwarder being that the drafts were cash items and the proceeds of collection of them were not to be treated as a deposit or commingled with other funds of the bank, if the drafts had been collected and the funds thereby obtained had not yet been remitted but remained segregated in the hands of the defendant banker, the latter would be regarded as trustee with respect to those funds.Bassett v. City Bank Trust Co.,
The standard expositions of the meaning of this doctrine disclose an obstacle to its application to the present situation in the lack of that definite subject-matter which is essential to a trust. Bassett v. City *476 Bank Trust Co., supra, p. 21. The maxim is stated to mean "whenever the holder of property is subject to an equity in respect of it, the court will, as between the parties to the equity, treat the subject-matter as if the equity had been worked out, and as impressed with the character which it would then have borne."Williamson v. Krohn, 66 F. 655, 659, 13 C.C.A. 668; Lynch v. Moser,
Even as to the proceeds of paper sent to a bank for collection and collected by the bank but not remitted before insolvency, to entitle a claimant to priority over other creditors on the ground that he is a cestui que trust, he must show that such proceeds, in some form, have gone into the assets of the bank. 6 Michie, Banks Banking, p. 63. Clearly, if no collection has been made, there is no fund on which a trust could operate, and this fact precludes the declaration of a trust. Re Assignment of Bank of Oregon,
There is no error.
In this opinion the other judges concurred.