111 Wash. 624 | Wash. | 1920
The plaintiff brought this action against the Northern Bank & Trust Company (now insolvent)
The facts upon the first cause of action may be briefly stated as follows: In January of 1913, one H. Ryan and his wife executed and delivered to the Northern Bank & Trust Company four promissory notes in the form of bonds for $500 each. These bonds were made payable to the Northern .Bank & Trust Company or hearer. They were secured by a mortgage upon certain real estate. Thereafter the Northern Bank & Trust Company sold two of these bonds to the plaintiff. Afterwards the Northern Bond & Mortgage Company acquired the interest of Eyan and wife in the mortgaged property. The Northern Bond & Mortgage Company was a depositor in the Northern Bank & Trust Company. The plaintiff was also a depositor in that hank. After the Northern Bond & Mortgage Company had acquired the interest of Mr. Eyan in the real estate, that company deposited its check with the Northern Bank & Trust Company in satisfaction of the mortgage which had been executed by Eyan and wife. The officers of the hank thereupon satisfied the mortgage. The plaintiff was not notified
The counsel for the defendant make the contention here that, because the assets of the bank were not augmented by the transaction, there could be no preference right on the part of the plaintiff, and cite a number of cases to that effect. The rule seems to be, as stated in 14 R. C. L. at page 664:
“But where a trustee has mingled the trust funds with his individual money, the cestui que trust is not generally allowed to follow and hold it as against the creditors ,of the trustee, unless he can trace it and show that the estate has been increased by the misappropriation."
In the case of Empire State Surety Co. v. Carroll County, 194 Fed. 593, it was said:
“It is indispensable to the maintenance by a cestui que trust of a claim to preferential payment by a receiver out of the proceeds of the estate of an insolvent that clear proof be made that the trust prop*627 erty or its proceeds went into a specific fund or into a specific identified piece of property which came to the hands of the receiver, and then the claim can he sustained to that fund or property only and only to the extent that the trust property or its proceeds went into it. It is not sufficient to prove that the trust property or its proceeds went into the general assets of the insolvent estate and increased the amount and the value thereof which came to the hands of the receiver. ’ ’
On page 606 the court said:
“Proof that these checks augmented the cash that went into the hands of the receiver, or that they produced cash which he obtained, was indispensable to any preference on their account.
“But checks of third persons on the bank with which they are deposited which are paid by crediting the bank and charging the drawers on its books fail to increase the cash in its possession and form no basis for a preferential payment to the depositor. Beard v. Independent District of Pella City, 88 Fed. 375, 382, 31 C. C. A. 562.
“Moreover, the deposit of checks of third persons which are credited to the depositor and used by the bank to pay its debts bring no money into its fund of cash and form no foundation for preferential payment to the depositor. City Bank v. Blackmore, 75 Fed. 771, 773, 21 C. C. A. 514.”
In Beard v. Independent District of Pella City, 88 Fed. 375, it was said:
“The foundation of the right on part of the owner of a trust fund to a preference over general creditors in payment out of a fund or estate that has passed to the assignee or receiver of an insolvent person or corporation is, that the trust fund has been wrongfully confused or intermingled with the property of the insolvent, or has been used to increase the value of property, thereby increasing the amount or value of the funds or estate passing into possession of the assignee or receiver; that, if this intermingling had not taken place, the fund passing to the receiver would*628 have been so much less; that the creditors have only the right to subject the property of the debtor to the payment of their claims, and therefore the creditors cannot complain if the total fund coming into the hands of the receiver is reduced by the amount necessary to make good to the owner of the trust fund the sum which was wrongfully used in augmenting the fund or property passing to the receiver. Unless it appears that the fund or estate coming into possession of the receiver has been augmented or benefited by the wrongful use of the trust fund, no reason exists for giving the owner of the trust fund a preference over the general creditors, and this we understand to 'be the doctrine recognized by the supreme court of Iowa and the supreme court of the United States alike.”
The evidence in this case fails to show that there was any augmentation of the funds of the bank by the payment of the bonds in this case. The payment was made by a check drawn upon funds already in the bank. Both the drawer and the payee of the check were customers at the bank. The utmost duty of the officers of the bank on receiving the check in satisfaction of the bonds and mortgage was to pass the amount of the check to the credit of the plaintiff. This was not done. If it had been done the plaintiff would have been a general creditor and nothing more. The fact that it was not done did not place him in any better position than if the officers- of the bank had done their duty and placed the amount of the check to his credit.
The defendant relies upon the case of Carlson v. Kies, 75 Wash. 171, 134 Pac. 808, 47 L. R. A. (N. S.) 317. That was a case where there was a special deposit of $3,070 in the bank to be held for a stated purpose. The deposit in that case clearly augmented the assets of the bank. The point made here was not in that case. Counsel also cite the case of State ex rel. Titlow v. Centralia, 93 Wash. 401, 161 Pac. 74. That
We think it is clear that there could be no preferential claim of the plaintiff upon the funds of the insolvent bank, even if the deposit of the check by or on behalf of the maker of the bonds might be held to be a trust deposit, because the deposit of this check did not increase or augment the funds of the bank, and we see no good reason for giving the plaintiff a preference over general creditors. Furthermore, we are of the opinion that, if the officers of the bank had performed their whole duty, they would.have deposited the check to the credit of the plaintiff when the check was received, and if they had done their duty in this respect the plaintiff would have been merely a general creditor of the bank and entitled tó no preference right. The mere fact that the' bank officers did not do their duty gave him no greater rights than he would have had if they had performed their duty fully. We are of the opinion, therefore, that the trial court erred in establishing this claim as a preference claim over general creditors.
The second cause of action, upon which the plaintiff has appealed, was one where one Hunter, who was at that time an officer of the bank, executed certain bonds and secured them by mortgage upon real estate. Four of these bonds were purchased by the plaintiff. The
We are satisfied from the record here that the trial court properly found upon this cause of action, and the judgment of the trial court thereupon is affirmed.
The defendant, being successful in this court, is entitled to costs.
Holcomb, C. J., Fullerton, Tolman, and Bridges, JJ., concur.