Gray ex rel. Monroe v. Board of Supervisors

On the argument we were all agreed that the judgment appealed from in this action should be reversed, unless the decision of a case somewhat similar in character, entitled Eva Backer, by Guardian, v. The Supervisors of Schuyler County (decided by this General Term in 1876, and reported in 3 Weekly Dig., 293) was binding upon us. But we are satisfied, from a most careful examination, that the Schuyler county case is easily distinguishable from the one under consideration, as will be attempted to be shown. We are not inclined to extend the doctrine held by Mr. Justice Boardman, for it is evident from the language employed in his opinion, which was in favor of an affirmance, and where every legal presumption or intendment should be indulged in in order to affirm, that he had some difficulty in arriving at the conclusion he did with the facts before him. In the case at bar certain funds of the plaintiff were, by order of the .court, placed in the hands of one Bristol, county treasurer of Tompkins county, with directions to invest for the benefit of the infant. He made such investments and for several years received interest thereon. Finally, without any authority, he disposed of these securities, and deposited the amount received to his credit in the bank or banks where he kept his accounts. All the moneys he received were commingled in one common fund, as *269well the moneys coming into his hands for the benefit of the county and the payment of its indebtedness, as funds which were directed to be placed in his hands, either for immediate investment or to await future orders of the court. In these court or trust funds the county had no interest whatever and received no benefit therefrom. This treasurer, Bristol, who held the office for six years, was, as the evidence shows, a notoriously bad man, though doubtless enjoying public confidence and esteem. It can easily be seen that, during his entire term of office of six years, he was constantly misappropriating funds, using trust and county funds for his own personal benefit; funds of infants deposited with him by order of the court wóre taken to pay county expenses, and the funds of the county to pay funds which he was obliged to account for, which had been so deposited with him by order of the court; and of course at all times subject to its order: the result of this robbery from one fund to make good another at the last was, as can easily be surmised, that he turned out a defaulter and utterly unworthy the position he occupied or of the confidence which had been reposed in him.

This action is brought to recover against the county on the ground that the county treasurer has used the plaintiff’s funds for the benefit of the county, and that, but for these funds, he would have *270been a greater defaulter to the county. I confess I do not see how the action can be maintained. The money of the plaintiff had lost its identity. The investment made of such funds he had, without authority, gathered in, and commingled the avails with funds derived from every other source. Why not the county as well say to the plaintiff (assuming that the plaintiff had received his pay from the treasurer): “You must pay this back because the treasurer paid you from funds raised for county purposes ? ” As the respondent well says in his points “ that any particular money left with the treasurer and deposited, as it was by him in the common fund, loses its identity, and the treasurer becomes the debtor of the depositor.” And if the treasurer should pay a claim from the fund so commingled by him, could every person or municipality interested in the fund maintain an action against the one so fortunate as to receive his pay, on the ground that a part of his or its money must have gone in to make the fund for such payment % Most clearly not. (Perley v. County of Muskegon, 32 Mich., 132; S. C., 20 Am. R., 637; see opinion of Campbell, J., at p. 639.)

As has already been intimated, we have felt some embarrassment from the Schuyler county case above referred to. It probably controlled the referee. The learned judge who wrote the opinion in the Schuyler county case, I think, arrived at his result with some reluctance. But we should feel bound by that decision if there was no substantial difference in the two cases.

But it seems to me there is a clear and well defined difference in the Schuyler county case, the board of supervisors, knowing that the county treasurer' was a defaulter, settled with him, and actually and knowingly received the infant’s funds or securities in payment of the deficit due from such treasurer to the county.

In the case at bar it is true an action was commenced against Bristol and his sureties, but the county received nothing on account of any interest or fund which this plaintiff had with this defaulting county treasurer.

The distinction in the two cases is marked and obvious. Suppose in the case under consideration the county treasurer had been a banker receiving money on deposit from any and all parties desiring to open a bank account with him. These funds he commingled with his own individual funds; funds of the county and funds *271deposited with him by order of the court. An individual depositor is fortunate enough to draw out the amount he has on deposit before the defalcation is apparent. Could the county or the owner of court funds so deposited, or other depositors, recover against the fortunate depositor because it might appear that it was from their funds in whole or in part that the fortunate depositor was able to obtain such payment ? By every process of reasoning it seems to us the learned referee erred in not distinguishing this from the Schuyler county case.

The judgment should be reversed; the order of reference discharged or vacated, and a new trial granted, with costs to abide the event.

I concur in the result in this case. I base my concurrence on the following propositions which I regard as established: .

1st. That the treasurer had the title to the mortgages in which the plaintiffs money was invested (Laws 1848, chap. 277, § 4), and that the money received by sale and collection of those mortgages belonged to the treasurer, although impressed with a trust in favor of plaintiff while it could be traced.

2d. That when the treasurer deposited the money in the bank to his credit, the bank became his debtor to that amount and the money deposited became the money of the bank, although still liable as between the treasurer and the plaintiff, to be applied to satisfy plaintiff’s claim. (Ætna Nat. Bank v. Fourth Nat. Bank, 46 N. Y., 82; 1 Perry on Trusts, § 463.)

3d. That the receipt by the treasurer of money of the county from time to time made him a debtor to the county. (Perley v. Country of Muskegon, 20 Am. R., 637, 639, and cases cited.) And it appears that at the time he received the plaintiff’s monéy, he was a debtor to the county in the sum of over $5,000.

4th. That the payment by the treasurer of the money so deposited by him in the bank, upon the liabilities of the county, was a payment pro tanto of his debt’ to the county in due course of business.

5th. That the county having received the payment in good faith, and without notice of the claim of plaintiff, is not liable to the *272plaintiff therefor. (Stephens v. Board of Education, 79 N. Y., 183; Southwick v. First Nat. Bank, 84 N. Y., 420, 435.)

I think that within the principle of the two last cases cited the case of Backer v. Supervisors of Schuyler County (3 Weekly Dig., 293) cannot stand, and it should be overruled.

Judgment reversed, new trial granted. Referee discharged, costs to abide event.