Roca v. . Byrne , 145 N.Y. 182 ( 1895 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] This is a somewhat peculiar case upon its facts and the question is whether the plaintiffs, having traced the avails of the drafts, which they had remitted to their agent, shall have them, as against the claims of other creditors upon the insolvent estate of Byrne. The general and well-recognized rule is, and has been, that a principal is entitled, in all cases, when he can trace his property, whether it be in the hands of the agent, or of his representatives, or of third persons, to reclaim it and it is immaterial that it may have been converted into money; so only that it is in condition to be distinguished from the other property or assets of the agent. (Story on Agency, § 231;Thompson v. Perkins, 3 Mason, 232; Robson v. Wilson, 1 Marshall Ins. 295; Van Alen v. American Nat. Bank, 52 N.Y. 1;Importers', etc., Bank v. Peters, 123 id. 272.) The difficulty, here supposed to prevent the application of the general rule, arises in the nature of the course of dealing adopted; which, as it is argued on behalf of the appellant, shows that the relation of debtor and creditor, only, existed between the plaintiffs and their deceased agent. The moneys, it is insisted, proceeding from the drafts remitted to Byrne, were not impressed with any trust; but were in part payment on account of a balance due from the plaintiffs. It is undoubtedly true that the relation of debtor and creditor existed, according as the state of the accounts showed the balance to be one way or the other; but that fact was not inconsistent with, and could not affect, the fact that the relation was also of a fiduciary character. Byrne received all drafts in virtue of his agency and they, or the proceeds, were received for purposes connected with that agency. It was not necessary that they should have been remitted against any specific obligations. They may have been remitted generally and generally credited in the account; but their purpose was to discharge obligations incurred, or to be incurred, or disbursements made, by their agent for them. What was the evident, the indisputable fact here? Plainly, that there resulted an excess, over what was incumbent upon the plaintiffs to pay, of a sum of money, which was not Byrne's; but which belonged to the plaintiffs. This excess being unused, or not required for the purpose for which remitted, how could Byrne, or his representatives, claim it, in equity? The legal title to the moneys may have been in him; but the right, in equity, to follow them, as the proceeds of their drafts, was in the plaintiffs. If Byrne, or his representatives, placed the moneys in the bank to the credit of his account, that would not affect the question as to whom they belonged beneficially; a question which equity, in a proper case, will always inquire into. If received, as here, in the course of transactions between the principal and the agent, the character of the moneys would be unchanged by the deposit; provided they could be identified. They would still be moneys held for the principal. However peculiar the circumstances here, from the particular course of dealing, the cardinal fact stands out, that the plaintiffs' property was sent to their agent, as such, and for purposes comprehended within the agency. The case cannot be likened to that of bills sent on general account between a merchant and his correspondent; nor to the case of the deposit of bills on a general running account with a banker and without specific appropriation to other bills. It is more like the case supposed by Lord Chancellor COTTENHAM, in his opinion in Jombart v.Woollett (2 Myl. Cr. 390), who, stating the result of the law as laid down in some cases cited, said: "Unless there be a contract to the contrary, if a person, having an agent elsewhere, remits to him, for a particular purpose, bills not due, and that purpose is not answered, and then the agent carries them to account, and becomes a bankrupt, the property in the bills is not altered, but remains in the party making the remittance." InVeil v. Administrators of Mitchel (4 Wn. C.C. 105), the plaintiffs sent the defendant's intestate two bills of exchange, with instructions to remit the proceeds. The intestate sold the bills; remitting a part of the proceeds of one; but keeping the rest and a post dated check which had been taken for the other. He died before the maturing of the check; which was collected by his administrators. On another account the plaintiffs were indebted to the intestate in a certain balance. The intestate died insolvent and the question reserved for the court was, whether the plaintiffs are entitled to recover the amount of the check and of the unremitted portion of the proceeds of the other note, after deducting what was due upon another account to the intestate. Mr. Justice WASHINGTON rendered judgment for the plaintiffs, upon the principle that, "where the principal can trace his property into the hands of his agent or factor * * * he may follow it, either into the hands of the factor, or of his legal representatives, or of his assigns, if he should become insolvent or a bankrupt."

If it be objected that the proof here is that the bills were not remitted for a particular purpose; but generally on account of all obligations incurred and disbursements made by Byrne on account of plaintiffs, I think that is not a substantial distinction. The remittances were, in fact, to an agent for a purpose within the scope of the agency and to meet the obligations or expenditures incurred for the remitters by the agent. I think, within the stipulated facts, the purpose of the remittance may be regarded as a particular one. We might paraphrase it as a general remittance for the particular purpose of furnishing moneys to the agent, to cover the obligations and liabilities incurred by him as such.

If the business relations between the plaintiffs and Byrne had been of the character of such which ordinarily exist between merchants and their correspondents, there would be no case; but it is because Byrne was the plaintiffs' agent, that property, received by him for them, became impressed with a trust character and, if not disposed of, in good faith, to others, and if distinguishable from the agent's property, could be re-claimed by the principal, as against the general creditors of the agent. I am unable to see that, in truth, the nature of the dealings between the parties, of which so much has been made, necessarily did deprive their relations of their fiduciary character. The manner of his keeping the account, or of stating half-yearly balances, and the general nature of a remittance to him upon account, are facts, which need not have changed and, in my opinion, did not change the fiduciary nature of the relation held by Byrne to the plaintiffs. Under the conceded facts of the case, whatever he did, he did as their agent. The duties enumerated as devolving upon and performed by him were all consistent with his acting therein as agent.

In the account of June 30th, 1891, showing a balance against the plaintiffs of $24,953.63, was included $9,721.58 of acceptances by Byrne, maturing after that date and which were not paid by him, but which were eventually paid and taken up by the plaintiffs. The plaintiffs' indebtedness to him was, therefore, only $15,232.05. The drafts remitted by plaintiffs between June 20th, 1891, and August 1st, 1891, and realized upon and credited to Byrne's account in the bank, amounted to $18,313.69. There was, therefore, an excess over the amount necessary to discharge the indebtedness to the agent of $3,081.64. Can it be said that these moneys did not, in equity, belong to the plaintiffs? I cannot see it otherwise than in that light. I think it is a very plain case, where the principal has been able to trace a remittance of bills, made for the purpose of putting his agent in funds to meet expenditures and liabilities incurred on his account and in excess of what was needed to discharge their indebtedness in account, and where it has been possible to distinguish the moneys in bank as the avails of those bills with absolute certainty. That the proceeds of plaintiffs' drafts did not, by being deposited to the credit of Byrne's bank account, lose their character, is indisputable. InVan Alen v. The Bank, (supra), the money sought to be recovered was mingled with some of the agent's own money; but this was deemed of no consequence. The controlling fact was that the plaintiffs' moneys were in the bank. In that case the authority of the Ætna Bank case, (46 N.Y. 82), was not deemed in point; inasmuch as there was no question of title in the plaintiff; but, merely, of the discharge by the defendant bank of an obligation to a depositor.

I think the affirmance by the General Term was correct and that the judgment should be affirmed, with costs.

All concur.

Judgment affirmed.