7 N.Y. 1 | NY | 1873
The learned counsel for the appellant is undoubtedly right in the position that if, as between the plaintiff and Van Alen & Rice, there was no trust impressed upon the deposit in the bank, defendant, to an amount equal to the proceeds of the bonds sold by Van Alen & Rice for the plaintiff, this action cannot be maintained. It is settled that the holder of a check cannot maintain an action against the drawee, after a refusal to pay, for want of privity, and that a check against a general bank account does not operate as an assignment. (46 N. Y., 82; 10 Wal., 152, and cases there cited.) This action is based upon another principle equally well settled, viz., that so long as money or property belonging to the principal or the proceeds thereof may be traced and distinguished in the hands of the agent or his representatives or assignees, the principal is entitled to recover it unless it has been transferred for value without notice. (2 Grattan, 544; Pennell v. Deffell, 4 D. Gex., M. & G., 372 ; 6 Jones Eq. R., 34; 2 H. & M., 417; 2 Kent’s Com., 796, 801.) It appears to me clear that Van Alen & Rice were the agents of the plaintiff to sell the bonds, and were bound to keep the proceeds of the same for him. He owned the bonds, directed their sale, and also directed that the proceeds should be kept for him in a particular manner, and he was notified by Van Alen & Rice that they had been sold and the avails placed and would be kept as directed. These undisputed facts establish the relation of trustee and cestui que t/rust between the plaintiff and Van Alen & Rice as to the proceeds of these bonds.
It is claimed, however, that this principle is not applicable because the identical money for which the bonds were sold was not deposited. This objection would be fatal if there had in fact been no substitution of other money for the pro
It is objected also that the money was so mingled with the agent’s own money as not to be traceable in the hands of the defendant. When Van Alen & Bice deposited this money for the plaintiff they included with it a few dollars of their own. But this does not affect the plaintiff’s right to it. 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 bé 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.
The case of Pennell v. Deffell (4 De Gex., M. & G., 372) is a leading and very instructive case upon this whole subject. It was a contest between the successor of one Green, an official assignee in bankruptcy, and the personal representatives of Green for moneys standing to his individual credit in The Bank of England and another bank. These moneys had been deposited from time to time by Green, and consisted of funds received by him in his official capacity as
In the case of The Overseers of the Poor v. The Bank of Va. (2 Grattan, 544), an attorney deposited a check for the amount of a judgment in favor of his clients to his own credit, having a small amount of other money to his credit, and died. On the day of his death a note fell due belonging to the bank which it claimed to set off, but the court held that the clients were entitled to the money. Stanard, J., says: “ The credits to Langhorne with the bank are several and the sources of each distinctly identified. * * * They are as distinct and distinguishable as they would be were they in separate parcels in the hands of Langhorne, with labels on each designating the sources from whence they were derived.” The same principle was decided in 6 Jones Eq., 34. So also in Frith v. Cartland (2 Hem. & Mil., 417), where a person received from the plaintiff certain acceptances to take up paper owing to the plaintiff, and got them cashed and ran away. After mingling the money with his own, and making various changes an(L transformations he was arrested, and the plaintiff was decided to be entitled to the money in preference to creditors; V. 0. Wood saying that “ the court attributes the ownership of the trust property to the cestui que t/rust so long as it can be traced.”
The same principle was decided in Veil v. Mitchell (4 Wash. C. C., 105), in respect to the avails of certain foreign bills collected by an agent.
In Merrill v. The Bank of Norfolk (19 Pick., 32), involv
It was suggested on the argument that notice to the bank by the depositor was necessary to protect the rights of the plaintiff, but this is not so. The title of the plaintiff does not depend upon whether the bank knew he had a title or not. That rested upon other facts. A notice to the bank
The appellant also claims that the plaintiff’s money was in fact drawn out by the check for $15,000 on the 4th of February.
The authorities before cited adopt the rule that moneys first deposited apply upon checks first drawn, and the accounts in the case of Pennell v. Deffell were adjusted upon that principle.
Without undertaking to determine when this rule should, and when it should not be adopted, it is sufficient to say that the $15,000 credit and debit was a special transaction. The check of a third person was put in to pay an accommodation note of Van Alen & Eice and used for that purpose,so that the general rule would not apply to that item. With that exception no money was drawn after the deposit of $1,711, which included the proceeds of the bonds. The decision in Etna Nat. Bank v. Fourth Nat. Bank (46 N. Y., 82) has no bearing on this case. There was no question of title in the plaintiff in that case, and this court held that the obligation of the bank defendant to the depositor was discharged by the payment of another nóte against the depositor before the plaintiff’s note became due, and that the plaintiff had no right of action.
The judgment must be affirmed.
All concur except Allen and Gtbovbe, JJ., dissenting.
Judgment affirmed.