the plaintiff placed certain money in the hands of the intestate to be repaid to him on her death, only the relation of debtor and creditor was created, and the plaintiff could not be preferred to other creditors.1 § 123. A direction to trustees that a certain person shall be employed as agent and manager for the trustees if there should See Peak v. Ellicott, 30 Kans. 156; Ellicott v. Barnes, 31 Kans. 170. And see also on this general subject Nat'l Bank v. Ellicott, 31 Kans. 173. [See infra, § 828, notes.] 1 Kershaw v. Snowden, 36 Ohio St. 183. the bank agrees to hold intact the funds deposited, it has the right to mix them with other funds and to use them in its business in all respects as its own property. Its obligation is merely to return a like amount to the depositor. Citations, infra, this note. The fact that the depositor is known to be a trustee and deposits as such or in some other representative capacity does not effect a change in this relation unless the bank has notice that a general deposit is in breach of the trust. Officer v. Officer, 120 Iowa 389; Paul v. Draper, 158 Mo. 197. In some States an official having the custody of public funds is forbidden by law to make a general deposit even as trustee. A bank receiving such funds with knowledge that they are public funds, and mixing them with its general funds or paying them out in its business, becomes liable as for a breach of trust. Fogg v. Bank, 80 Miss. 750; Board or Com'rs v. Strawn, 157 Fed. 49; City of Lincoln v. Morrison, 64 Neb. 822; Hill v. Miles, 83 Ark. 486. The same would doubtless be true if the terms of a trust forbade the trustee to make general deposits in banks, provided the bank receiving the funds on general deposit was informed of this limitation upon the trustee's power. Mere knowledge that he is a trustee would not be sufficient notice of such a limitation, and description of the depositor as trustee does not make his claim against the bank any different from that of any other general depositor. Officer v. Officer, 120 Iowa, 389; Paul v. Draper, 158 Mo. 197; citations, infra. The bank owes no duty to the cestui except the negative one of not participating in a breach of trust. It must honor all checks drawn by the trustee in proper form and is not required to inquire into the application of the funds. American Trust & Banking Co. v. Boone, 102 Ga. 202; National Bank v. Ins. Co. 104 U. S. 54; Boyle v. No. Western Bank, 125 Wis. 498; Interstate Nat. Bank v. Claxton, 97 Tex. 569; Manhattan Bank v. Walker, 130 U. S. 267; Duckett v. Mechanics Bank, 86 Md. 400, 412; Gray v. Johnson, 3 Eng. & Ir. App. Cas. 1; Penn. Title, etc. Co. be occasion for such services gives no interest in the estate to such person, nor will any kind of trust be implied which equity v. Meyer, 201 Pa. St. 299; First Nat. Bank v. Valley State Bank, 60 Kan. 621; Nehawka Bank v. Ingersoll, 2 Neb. unofficial, 617, 89 N. W. 618. See also Cunningham v. Bank of Nampa, 13 Idaho, 167, 10 L. R. A. (N. s.) 706. "The mere payment of the money to or upon the check of the depositor does not constitute a participation in an actual or intended misappropriation by the fiduciary, although his conduct or course of dealing may bring to the notice of the bank circumstances which would enable it to know that he is violating his trust. Such circumstances do not impose upon the bank the duty or give it the right to institute any inquiry into the conduct of its customer, in order to protect those for whom the customer may hold the fund, but between whom and the bank there is no privity." Interstate Nat. Bank v. Claxton, 97 Tex. 569. But the bank cannot accept from the depositor, or appropriate without his consent, part of the trust account in settlement or payment of the depositor's private indebtedness to the bank. Such conduct would be participation in the breach of trust, and would give the cestui the right to treat the bank as trustee for the amount of funds thus misappropriated. Knowledge of the nature of the funds is sufficient notice that the trustee has no right to use them for the payment of his private debts. National Bank v. Ins. Co., 104 U. S. 54; Am. Trust & Banking Co. v. Boone, 102 Ga. 202; Farmers' & Traders' Bank v. Fidelity & Dep. Co., 108 Ky. 384; Jeffray v. Towar, 63 N. J. Eq. 530; Murphy v. Farmers', etc. Bank, 131 Cal. 115; State Bank v. McCabe, 135 Mich. 479; First Nat. Bank v. Wakefield, 148 Cal. 558; Globe Sav. Bank v. Nat. Bank of Commerce, 64 Neb. 413. Where the bank, though not directly receiving the trust funds or applying them on an account owed by the trustee in a different capacity, derives a benefit from a misuse of the trust funds by transferring them on the order or check of the trustee to the credit of another depositor whose account at the time was overdrawn, whether or not the bank is a participant in the breach of trust depends upon whether or not the bank knew that this use of the funds was a breach of trust. This must necessarily be so if the bank knew that the purpose of the transfer was to reduce the amount of the overdraft. The bare fact that this benefit to the bank is a result of the misuse of the funds is not enough. Gray v. Johnson, L. R. 3 H. L. 1; Manhattan Bank v. Walker, 130 U. S. 267. See also Coleman v. Bucks & Oxon Union Bank, [1897] 2 Ch. 243. If the bank participates in a misappropriation of the trust funds, the cestui has a remedy directly against the bank. Munnerlyn v. Augusta S. Bank, 88 Ga. 333; 94 Ga. 356. The trustee also may recover the funds, notwithstanding his own fraud. Mansfield v. Wardlow (Tex. Civ. App. [1906]), 1 can enforce; and so when the trustees were recommended to employ a receiver.2 1 Finden v. Stephens, 2 Phill. 142. 2 Shaw v. Lawless, Ll. & Goo., Sugden, 154; 5 Cl. & Fin. 129; Ll. & Goo., Plunket, 559. In Tibbits v. Tibbits, 19 Ves. 656, a testator made a devise to his son, recommending him to continue A. & B. in the occupation of their respective farms so long as they managed them well; and it was held to create a trust for them. And see Quayle v. Davidson, 12 Moore P. C. 268. In Hibbert v. Hibbert, 3 Mer. 681, a testator directed that H. should be appointed receiver of his estates in Jamaica. adding that he intended the appointment to benefit H. in a pecuniary point of view; and it was held that H. was entitled to be appointed agent, receiver, and consignee of said estates without giving security. And so when a testator appointed an auditor with a remuneration, it was held that the trustees could not remove him, there being no imputation upon his conduct. Williams v. Corbet, 8 Sim. 349. The case of Shaw v. Lawless was a very severely contested case. Mr. Sugden, Chancellor for Ireland, was of opinion that the agent was entitled to the place; but he was overruled, and the conclusion arrived at stated in the text. From the cases cited in this note it would appear that the question is not entirely settled; or it may be that every such provision must depend upon the words and intention of each particular will. 91 S. W. 859; Chaves v. Lucero, otherwise if he has an account as 13 N. M. 368. It has been held in several cases that a bank is not liable to the beneficial owner of trust funds from the mere fact that it places to the credit of the trustee's personal account, funds which it knows belong to him as trustee, where the depositor had no separate account as trustee. Such a deposit gives the bank no reason to believe that the trustee is acting or intends to act dishonestly. Batchelder v. Central Nat. Bank, 188 Mass. 25; Safe Dep. & Tr. Co. v. Bank, 194 Pa. St. 334; Coleman v. Bucks & Oxon Union Bank, [1897] 2 Ch. 243. But see Duckett v. Mechanics' Bank, 86 Md. 400; Barroll v. Forman, 88 Md. 188, But it would usually be 201. trustee. Am. Bonding Co. V. Mechanics' Bank, 97 Md. 598; Batchelder v. Central Nat. Bank. 188 Mass. 25 (semble); Coleman v. Bucks & Oxon Union Bank, [1897] 2 Ch. 243 (semble); Havana Cent. R. Co. v. Knickerbocker Tr. Co., 119 N. Y. S. 1035 (App. Div.). When funds held in trust are deposited to the individual account of the trustee and the bank has no notice of the trust nature of the funds, the weight of authority holds that the lien of the bank attaches to them and that the bank has the right to appropriate the funds to the payment of any debt owed to it by the depositor. Thomson v. Clydesdale Bank, [1893] A. C. 282, 69 L. T. 156; Union Bank v. Murray-Aynsley, [1898] A. C. 693; London, etc. Bank v. Hanover Bank, 36 N. Y. App. Div. 487; Meyers v. N. Y. County Bank, 36 N. Y. App. Div. 482; Smith v. Des Moines Nat. Bank, 107 Iowa, 620; Spaulding v. Kendrick, 172 Mass. 71; School District v. First Nat. Bank, 102 Mass. 174; 1 Morse, Banks & Banking (4th ed.) § 326 (16); see also Reynes v. Dumont, 130 U. S. 354. But see Knight v. Fisher, 58 Fed. 991; Boyle v. No. Western Bank, 125 Wis. 498; Hatch v. National Bank, 147 N. Y. 184. When a note or draft is sent to a bank for collection, the paper itself is held in trust by the bank; but the best opinion is that the moment the bank receives the proceeds of the note or draft, the relation of trust is changed to that of debtor and creditor if the bank is then solvent, for the reason that the presumed understanding of the parties is that the bank shall 19 be allowed to mix the proceeds with its other funds. Freeman's Bank v. Nat. Tube Co., 151 Mass. 413, 418; Hallam v. Tillinghast, Wash. 20, 27; Bruner v. Bank, 97 Tenn. 540; Akin v. Jones, 93 Tenn. 353; Morse, Banks & Banking (4th ed.) § 185; 9 Harvard Law Rev. 428; 12 Harv. Law Rev. 572. See contra, State v. Bank of Commerce, 54 Neb. 725; McLeod v. Evans, 66 Wis. 401 (overruled on another point). The relation of safe-deposit companies to those who hire boxes and have keys thereto is not one of trustee and cestui. Roberts V. Stuyvesant Safety Dep. Co., 123 N. Y. 57. Property so deposited cannot be reached by trustee process, but equity will give the necessary assistance to enable a creditor to reach it by direct attachment. See 9 Harvard Law Rev. 131, 135. CHAPTER V. § 124. § 125. § 126. § 127. RESULTING TRUSTS. Creation and character of a resulting trust. Resulting trust where the purchase-money is paid by one, Resulting trust where trust funds are used to purchase property, and title taken in the name of another. § 128. In what cases a trust results, and when a trust does not result. See §§ 143, 156, 160. § 129. § 130. § 131. When a person uses his fiduciary relation to obtain an interest in, or affecting the trust property. Same rules apply to personal property unless it is of a perishable nature. Where a resulting trust will not be permitted as against law. § 132. Rules as to a resulting trust. §§ 133, 134. Time and circumstances in the creation of a resulting trust. § 135. Parol evidence as to a purchase by an agent not admissible. No resulting trust in a joint purchase. § 136. §§ 137, 138. § 139. § 140. § 141. § 142. § 143. § 144. § 145. § 146. § 147. § 148. § 149. Resulting trusts may be established by parol. May be disproved by parol - the burden of proof. Cannot be changed by parol after they arise. Will not be enforced after a great lapse of time. Resulting trusts under the statutes of New York and other States. A resulting trust does not arise if the title is taken in the name of wife or child. What persons it embraces. Doubts and overruled cases. When it will be presumed to be an advancement. The presumption may be rebutted. Is rebutted by fraud in the wife or child. Creditors may avoid such advancements. When and how. § 150. A resulting trust from the conveyance of the legal title without § 151. § 152. §§ 153, 154. the beneficial interest. Every case must depend upon its particular writing and circumstances. Instances and illustrations. If there is an intention to benefit the donee, there is no resulting trust. |