Miller v. Stephenson ( 1901 )

Comstock, J.

The action was brought by the appellee. The complaint is in two paragraphs, the first paragraph being on account and attachment and garnishment, and the second paragraph.being to quiet title to certain money.

The first paragraph of complaint alleged that appellant Miller, defendant below, was indebted to the plaintiff in the sum of $516 for fourteen steers and sought to recover on account as against him. It makes the officers of the Citizens Bank of Orleans and George M. Albertson parties defendant in attachment and garnishment, the proper affidavit and bond having been filed. On motion the appellants McCart and Talbott were made parties defendant. The defendant Miller for answer tO' the attachment and garnishment proceedings filed a general denial and also a paragraph of answer in which he disclaimed any interest in the subject-matter of the proceedings. McCart and Talbott filed answer in two paragraphs; the first a general denial to the attachment and garnishment proceedings and to the first and second paragraphs of the complaint. The second paragraph of answer sets up the following facts: They allege that they are partners in the general practice of law and that on the — day of July, 1898, and prior to the commencement of this suit, Charles Miller, the defendant herein, employed them to defend him in several cases in which he was charged or about to be charged with obtaining property under false pretense, for which Miller agreed to pay McCart and Talbott $500, and McCart and Talbott agreed and promised Miller for said fee of $500 to defend him in all the cases then pending or which might hereafter be brought and prosecuted against him charging said crime. That Miller as a part payment on said $500 gave to McCart and Talbott an order assigning to them the sum of $185 in money and a certificate of deposit in the Citizens Bank of Orleans for the sum of $250, together with a receipt executed by Albertson for the same. That prior to the bringing of this attachment and garnishment proceeding they presented the receipt and order tO' Albertson and demanded said money and certificate, which Albertson refused to deliver to them; they then likewise presented said order to the Citizens Bank of Orleans and demanded the $250 on deposit there, which said hank refused to deliver to them. That said money in the hands of Albertson and in the Citizens Bank was afterwards paid into court and is the money which was garnisheed by the plaintiff in this case. They further set up the services and the value of the services, denied collusion, etc., and prayed that this money be declared their money.

The second paragraph of complaint alleges that by false pretense, stating the facts, defendant Miller fraudulently procured possession of certain cattle belonging to plaintiff Stephenson, and sold the same for cash and deposited $250 of the money so received in the Citizens Bank of Orleans; that said money is still in said bank. That Miller turned over to said Albertson $185 of the money so derived, and that Albertson still retains said money. Plaintiff further avers that Miller is wholly insolvent. “Wherefore, plaintiff prays the court to quiet title to said money in the name of Eli B. Stephenson, plaintiff herein, and asks judgment for $560 and all other proper relief.

The defendants McCart and Talbott filed a cross-complaint in which the facts set up in their second paragraph of answer are alleged, praying this money be declared their money and paid over to them. Defendants McCart and Talbott filed an additional paragraph of answer and of cross-complaint, alleging substantially the same facts as in the original cross-complaint, with the additional allegation of damages to the amount of $50 arising from the wrongful acts of said Stephenson in bringing this suit. To these paragraphs of cross-complaint demurrers were filed and overruled and exceptions taken. The court made a special finding of facts and stated conclusions of law thereon and rendered judgment for the plaintiff.

The facts as shown by the special findings are substantially as follows: The plaintiff Stephenson was a farmer. and stock raiser; McCart and Talbott were lawyers, partners; defendant Miller was a man of no property, who by means of false pretense induced the following persons to sell and deliver to him on July 13th cattle, as follows: Eli B. Stephenson, fourteen head of the vklue of $560; Silas Maudlin, five head of the value of $237; J. B. Chastain and other parties enough to make twenty-four head of cattle. In payment of these cattle, Miller, by the name of D. D. Eisher, after representing that he had $4,000 in the Bank of Orleans, gave checks on said bank, which checks were worthless, as no money was on deposit to the credit of defendant Miller, alias Eisher. Three of the cattle obtained from Stephenson were traded to Jonathan Farr. The twenty-four cattle were sold at Louisville stock yards on July 14th for the sum of $920.07. On his person was found $185 cash and a certificate of deposit in the Bank of Orleans for $250, which money and certificate were placed in the hands of George M. Albertson and held by him until delivered by him into court; and the $185 cash and the $250 in bank was derived from the sale of the cattle, “but what part of it was derived from the sale of plaintiff’s ten head and the three head received from Farr by trading him four of those received from plaintiff, the court cannot state.” That while Miller, under arrest, was being taken from Orleans to Salem by the marshal, they were overtaken by MeCart and Talbott, who had been sent for to defend Miller; at that time Stephenson claimed to MeCart and Talbott that Miller was the man who had got his cattle, and also stated that all he wanted was his money.

On the morning of the 19th of July, 1898, McOart and Talbott entered into a contract with Miller to defend him against the charges growing out of the cattle transaction, and Miller agreed to pay McOart and Talbott $500 for their services, and to turn over and give to McOart and Talbott the $185 in Albertson’s hands and the $250 in the Orleans bank. Miller at the same time gave McOart and Talbott an order directed to Albertson comtnanding him to turn over to McCart and Talbott as their property the $185 and the certificate of deposit for the $250 in the Bank of Orleans, and .authorized McCart and Talbott to indorse his name on the back of said certificate. Miller also gave McCart and Talbott the receipt which Albertson had given for the $185 and the certificate of deposit. On the afternoon of July 19th, McCart and Talbott presented said order and receipt to Albertson, and demanded the $185 and the certificate of deposit for $250, which said Albertson refused to deliver to McCart and Talbott, who on the same day, exhibited said written order signed by Miller to the cashier of the Bank of Orleans, and demanded the $250 deposited there by Miller, which demand was refused.

Plaintiff herein instituted this action and caused a writ of attachment and garnishment to be issued against and served on Albertson and the Bank of Orleans after the aforesaid assignment had been made.

The court further found that the services performed by McCart and Talbott and to be performed for defendant Miller were reasonably worth $500. • That defendant Miller was disposing of the money received from the sale of the cattle with the intention of cheating the plaintiff Stephenson and others from whom he had purchased cattle. “That McCart and Talbott knew at the time of the execution of the written order by Miller, directed to George M. Albertson, to turn over the $185 and the certificate of deposit to said defendants McCart and Talbott as their property, that the plaintiff Stephenson was claiming that the defendant had defrauded him out of his cattle by false pretense and sold the same, and defendants McCart and Talbott knew that said money and $15 in the hands of Port Easley was all the money that defendant Miller then had.”

On this state of facts the court stated its conclusions of law as follows: (1) “That the defendant Miller obtained the cattle aforesaid from plaintiff, Stephenson, by reason of criminal false pretenses as defined by §2204 E. S. 1881 and amendment thereto. (2) That the written order executed and delivered by defendant Miller on the morning of the 19th of July, 1898, to defendants McCart and Talbott, and presented by them to George M. Albertson and the Citizens Bank, created an equitable assignment of whatever interest Miller had in the $185 and the certificate of deposit. (3) The defendants McCart and Talbott, were not innocent holders of the said written order of assignment. That where one of two innocent persons must suffer by the act of a third he who has enabled such third person to occasion the loss must sustain it. (!) The defendant Miller, having obtained the money in the hands of Albertson and the money deposited in the Bank of Orleans from the sale of the cattle obtained from plaintiff and others by reason of criminal false pretenses he, Miller, had no assignable interest in the same. (5) While it cannot be said absolutely that the identical money aforesaid was all derived from the sale of plaintiff’s cattle, but as the greater amount contains the lesser, the law as this case now stands would presume that it did,- and as between the defendants Miller*, McCart, and Talbott, and plaintiff, Stephenson, the law is for Stephenson, and he, Stephenson, is entitled to said money, both the $185 and the $250 and have his title thereto quieted.”

The appellants have separately assigned as errors numerous rulings of the court, and have excepted to and assigned as error each conclusion of law.

The special findings must show all the facts necessary to warrant the conclusions of law. If the findings are silent as to any material fact, it will be presumed to be against him on whom the burden rests. The findings show that McCart and Talbott gave a valuable consideration for the money they claim in this action. It is found that their services were worth $500; were contracted and in part paid for by the assignment of $185 and the certificate of deposit for $250. At the time of the execution of the written assignment, McCart and Talbott had agreed to defend Miller, and had already appeared for him at his preliminary hearing before a justice of the peace. The only facts found to show that they were not innocent holders of the written order of assignment are that they knew at the time of its execution that appellee Stephenson was claiming that the defendant had defrauded him out of his cattle by false pretenses and sold the same; that said money and $15 in the hands of one Port Easley was all that defendant Miller then had. There is no finding that they knew that Stephenson was claiming this identical money, or that they knew that it was derived from the sale of the cattle of Stephenson. There is no finding that the money had been derived from the sale of Stephenson’s cattle. The court found that the money in question had been obtained from the sale of cattle fraudulently obtained from the plaintiff and others, and adds “but what part of it was derived from the sale of plaintiff’s ten head and the three head received from Farr by trading him four of those received from plaintiff the court cannot state”. rSTor is it found that they knew that Miller had defrauded the plaintiff out of his cattle.

The third conclusion of law cannot be sustained in the absence of a finding that appellees McCart and Talbott had knowledge before they gave a valuable consideration for the money claimed that Stephenson was claiming the identical money on deposit. The record presents no such findings. It is not enough that evidentiary facts are found. A special finding must find the ultimate facts, and not mere matters of evidence. Christian Church v. Shoemaker, 20 Ind. App. 321.

The presumption in the case before us is that in the absence of a finding that McCart and Talbott had knowledge that appellee claimed the money in controversy, or that it was derived from the sale of Stephenson’s cattle, is that they did not have such knowledge. One who in the usual course of business receives money in payment of a valuable consideration is presumed to receive it without knowledge of tiie source of the title of him from whom it is received; and if under such circumstances any one seeks to recover it, he must show that it was not received in good faith. Tiedeman on Com. Paper, §1; Stephens v. Board of Education, 79 N. Y. 183; Mason v. Waite, 17 Mass. 560; Justh v. National Bank, 56 N. Y. 478.

Counsel for appellee argues that if one person obtains the money or pfoperty of another through fraud or deceit, the title of the owner can not be destroyed by the fraudulent dispossession. That Miller so obtained appellee’s property from which he derived the money in question, and that the wrongdoer had no title in the same which he could transfer. They cite in this connection from our Supreme Court Alexander v. Swackhamer, 105 Ind. 81, 55 Am. Rep. 180; Curme, etc., Co. v. Rauh, 100 Ind. 247, 251; Moore v. Shields, 121 Ind. 267.

In the case first named, the court held that the person to whom the property was delivered by means of fraudulent devices did not become the purchaser, even though a sale was intended; and as there was no purchaser there was no de facto sale. In the course of the opinion the court says: “If the owner of goods is induced by fraudulent representations to deliver them to an irresponsible purchaser, in pursuance of a contract of sale to him, and such purchaser, while in possession, transfers them for a valuable consideration to a third person, who acts in good faith, without notice of the fraud, the title of the good-faith purchaser will prevail over that of the first owner.” Citing Curme, etc., Co. v. Rauh, supra, and Parrish v. Thurston, 87 Ind. 137.

In Curme, etc., Co. v. Rauh, supra, it was held that appellants, who claimed the property in dispute as against the original owners, were not bona fide purchasers.

In Moore v. Shields, 121 Ind. 267, it was held that a broker who sells and obtains money for worthless paper which he knows has been fraudulently issued in violation of law, though he may have paid the money over to his principal, is liable for conversion to the true owner. These cases are not decisive of the question here involved.

The special findings do not find bad faith upon the part of appellants McCart and Talbott, nor their .knowledge of fraud upon the part of Miller; nor that the money on deposit was realized from the sale of appellee’s property. They do show a valuable consideration issuing from McCart and Talbott. The special findings also fail to sustain the fourth and fifth conclusions of law.

It does not seem necessary to consider the other questions discussed.

Eor the foregoing reasons stated, the judgment is reversed, and the trial court directed to grant a new trial.