13 Cal. 133 | Cal. | 1859
Field, J. concurring.
This was a bill in equity, to recover certain bonds and choses in action in the hands of defendant. It appears that in 1854, and for several years afterwards, the plaintiffs were bankers and dealers in exchange, in Sacramento; and that Frierson was their cashier and bookkeeper for a portion of this time, and until his death, in February, 1855; and while so employed, he embezzled and converted to his own use moneys belonging to the plaintiffs to the large amount of one hundred and ninety-five thousand eight hundred and eighty-nine dollars.
After the death of Frierson, Eobinson became his Administrator, and plaintiffs in due time after the publication of the statutory notice, presented to defendant their claim for this sum, with an affidavit appended, averring that the estate was indebted to the plaintiffs in this amount; and, also, that fifty thousand dollars of this sum was advanced by Frierson to the Sacramento Gas Company, and that for this amount the plaintiffs claimed a lien upon all the gas stock of the estate, and all bonds of the Gas Company held by defendant as Administrator. The Administrator rejected the whole claim. In May, 1856, plaintiffs commenced a common law action against defendant for the
On the 18th Movember, 1854, one Wm. Glen was the owner and holder of two thousand one hundred shares of the capital stock of the Sacramento Gas Company, of the nominal value of two hundred and ten thousand dollars, upon which an assessment of three dollars per share had been paid by Glen. On that day, Glen and Frierson entered into a contract by which the latter was to advance and pay all assessments that might be made on the stock by the company, for eight months next after the making of the contract; and upon all assessments thus paid, Glen was to pay Frierson interest at the rate of two and a half per cent, per month, payable monthly; and in the event that it was not promptly paid, to be compounded. To secure Frierson in these advances, Glen delivered him this stock as collateral security. On the 28th December, 1854, one Chittenden was the owner of five hundred and twenty shares of the capital stock of the company, of the nominal value of fifty-two thousand dollars, upon which he had paid an assessment of three per cent, on the nominal value of the stock; and, on the same day, he and Frierson entered into a contract of like import to the one with Glen, and this last stock was deposited with Frierson as collateral security for such advantages as he might make. At the date of these contracts, and to the time of his death, Frierson was President of the Sacramento Gas Company. A settlement was made between the Gas Company and the Administrator of Frierson, on the 1st of September, 1855; by which it appeared that Frierson, after the making of the contracts with Glen and Chittenden, advanced to them, in the way of assessments on this stock, the sum of forty thousand two hundred dollars; and by an agreement, and in the way of a settlement of the accounts of Frierson and the company, the Administrator assigned to the company, Frier-son’s demand against Glen and Chittenden for advances, and in consideration thereof, the company issued to the Administrator the bonds mentioned in the complaint. At the time of this set
The Court finds that it was “ admitted that during all the time these deposits were being made with Frierson, and by Frierson, with the plaintiffs, there was a balance against him on the books of plaintiffs.” “ The exhibits introduced show daily balances against him, on plaintiffs’ books, between the 8th of ¡November, 1854, and the 18th of February, 1855, of from a few hundred dollars to upwards of thirty thousand dollars. It is shown that for several months, immediately preceding his death, he was in the habit of falsifying the books and making forced balances of the cash accounts. The testimony of the clerks about the house of Wells, Fargo & Co. shows that the money deposited with Frierson by third persons, for investment, was mingled with plaintiffs’ money and put into their trays.” The Judge proceeds with his finding, thus: “ Their witnesses, also, state that payments were made by Frierson, on account of the Gas Company and for Glen and Chittenden, out of the moneys taken from plaintiffs’ trays, in the banking house. But they were not able to state the amount of these payments. The answer admits that all of the money deposited, as above stated, with Frierson was used by him in paying the assessments on Glen and Chittenden’s stock. There is no evidence to show that Frierson, during the time these assessments were being paid by him, which was between the 2d of ¡November, 1854, and the 23d of February, 1855, had any money of his own with which to pay the same, except the proceeds of his wages, unless the deposits, above mentioned, are to be considered his property. It is also shown, that he was engaged in other transactions requiring the use of large amounts of money, and which were sufficient to consume the whole of his wages. From all the evidence in the case, I am satisfied, and so
Three questions arise on this statement.
1. Can Wells, Fargo & Co. follow this money, appropriated or invested by their agent, and claim the property or securities into which the money went, as theirs, or subject to their claim, assuming that the proofs sustain the claim in point of fact ?
2. If so, have they waived or forfeited their right by the common law suit and judgment; if not—
3. Do the proofs show that their money was so appropriated?
In respect to the first question, it does not distinctly appear by the record what were the powers and duties of this cashier or book-keeper, Frierson, except so far as may be inferred from the designation given him, nor the exact nature and character of the business of plaintiffs, whether it embraced loans on stocks or other securities, or the purchase of such. But it does sufficiently appear that Frierson had the custody and charge of their money, and that very great confidence was reposed in him. The operations into which he carried the money of his employers were entered into on his private account. The money invested by him was embezzled. The question then is, whether, if a confidential agent trusted by a principal with money used in trade, appropriates the money to the purchase of property for his own use and benefit, and the property can be identified as that so bought, the agent can be held as Trustee for the owner of the money. This proposition is, in effect, held by the Judge below, and is denied by the counsel for the Appellant.
Frierson, in this matter, may be considered in equity as a Trustee of this money, which he was to hold and dispose of for the proper uses and purposes of the firm of Wells, Fargo & Co.
Thus, for instance, if A is intrusted by B, with money to purchase a horse for him, and A purchases a carriage with that money, in violation of the trust, B is entitled to the carriage, and may, if he chooses so to do, sue for it at law. So, if A intrusts money with a broker to buy Bank of England stock for Mm, and he invests the money in American stocks, A is entitled to, and may maintain an action at law for those stocks, in whose-soever hands he finds them, not being a purchaser for a valuable consideration without notice. It matters not in the slightest degree into whatever other form, different from the original, the change may have been made, whether it be that of promissory notes, or of goods, or of stock; for the product of a substitute for
Cases may readily be put, where this doctrine would be enforced in equity under circumstances in which it could not be applied at law. Thus, for instance, if a Trustee, in violation of his duty, should lay out the trust money in land, and take a conveyance in his own name, the cestui que trust would be without any relief at law. But a Court of Equity would hold the cestui que trust to be the equitable owner of the land, and would decree it to him accordingly; not upon any notion of his having ratified the act, but upon the mere ground of a wrongful conversion, creating, in foi'o-conscientice, a trust in his favor.”
Thus, it is also held in several cases, that if property has been rightfully sold by an Agent or Trustee, if the proceeds of the sale can be distinctly traced, the property belongs in equity, and often in law, to the principal. Thus, for example, if a factor sells goods consigned to him for sale, and takes notes for the purchase money, those notes, if he fails, will belong to his principal, and not to his assignees or representatives. (1 Atk. 233; 3 Mason, 322; 4 Simon, 438.)
We cannot see that the fact that this money was embezzled makes the rule any the less applicable.
2. It is contended that the plaintiffs have elected to consider the estate of Frierson as their debtor for the amount of this money, including the money advanced to Chittenden and Glen, on this stock; and, therefore, that they cannot recover the stock or the debt due from Chittenden, or the bonds growing out of the transaction. This point rests on the fact, that suit was brought for the money in the common law action, and judgment taken for the full amount. It has been seen that the claim presented to the Administrator was for the bonds as a part of the subject of the embezzlement; and that shortly afterward this bill was filed, setting up this special claim.
This doctrine of election has been a vexed subject of jurisprudence. Judge Story, vol. 2, (Jur.) Sec. 1097, says: “Questions
Questions have also arisen in Courts of Equity, as to the time when, and the circumstances under which, an election may be required to be made. The general rule is, that the party is not bound to make an election, until all the circumstances are known, and the state, and condition, and value of the funds, are clearly ascertained; for, until so known and ascertained, it is impossible for the party to make a discriminating and deliberate choice, such as ought to bind him to reason and justice. If, therefore, h.e should make a choice in ignorance of the real state of the funds, or under misconception of the extent of the claims on the fund, elected by him, it will not be conclusive on him. And, on the other hand, he will be entitled, in order to make an election, to maintain a bill in equity for a discovery, and to have all the necessary accounts taken to ascertain the real state of the funds.” (See also Kent, C. J. Opinion in Dash v. Van Kleek, 7 John. 497.)
We think the suit brought at law by the plaintiffs under the circumstances, and the judgment taken—the bill in equity still
The third and last point is, that the plaintiffs have not shown that their money went into this investment. We do not feel inclined to disturb the finding of the Court below on this question of fact. It may be true that other persons deposited money with Frierson. But if Frierson acted as cashier of Wells, Fargo & Co. in receiving it, we do not see how his Administrator can complain of this being considered the money of the house with which it was deposited. If this money was deposited with Frierson in his individual capacity, and on his individual responsibility, then it is shown he passed it over to his principals as his own, giving them credit on the books for it. We do not see how, under this last view, Wells, Fargo & Co. could be held by the Administrator of Frierson to account for this money, or how he could set up that, possibly, it was this money which was -invested by Frierson in these loans. There certainly was much evidence tending to show that the money of plaintiffs was used by Frier-son in this investment; and we are not disposed to disturb the finding to that effect of the Judge who heard all the proofs.
As these bonds were taken in lieu of the indebtedness and stock pledged as collateral security, they stood'—-as the plaintiffs are willing to affirm the arrangement—as the stock; and the plaintiffs are entitled to receive the bonds for the purpose of their security, as if they had been delivered to them by Glen and Chittenden.
We do not think it necessary to notice other points, as these views are conclusive of the case on the merits.
Decree affirmed.
On a petition for rehearing, the following opinion was delivered by Baldwin, J. J.—Terry, Terry, C. J. concurring.
We deny the petition for a rehearing. Robinson, the Administrator, having taken the credits which came to his hands as Administrator, and which he had reason to believe to be assets of the estate, and with the assent of the agent of Wells, Fargo &