SAN
. fl.,
NAT. BANK.
59
105U.6. 77, 89",tbe that state laws authorizing redemption from sales estate could not be applied to thereal.estate of a corporatiunoperating its property under a frl:\p-, chise and for public use. The court deQreed an absolute sale,because "a sale of the real estate, franchise, l!,nd, personal property separately might in every case prove disastrous to all and defeat. the ends for which the corporation was created." In Steger v. Refrigerator Co., supra, the supreme court of Tennessee ,declared" that the pipes, and th!'llicense or easement under which they are laid, would certainly pass under a sale of the property as an entirety,an<l for operating purposes, no reservation being made." So, also, in the case of Railroad Co. v. Parker, 9 Ga. 377, where judgment cr!'lditors were proceeding to sell separate, portions of the railroad, a court of equity arrested the execu·: tions, ap!J decreed a sale of the road, "with all the rights, franchises, and property connected therewith," and distributed the proceeds among creditors according to their respective rights. The eminent Judge LUMPKIN, reviewing ,this decree, observes: "Thechancellol', then, in taking this matttlr in hand, ,and directing a sale of the entire interest for the benefit of aU concerned, was but invoking the powers of eqUity to aid the defects of law, and applying analogous principles to the existing emergency; and, so far from transcending his authority, he is entitled to the thanks of the parties and the country for the correct arid enlightened policy which he.adopted. Had he faltered, or shunned the responsibility thus cast upon him, be would have shown himself unworthy of the high office which he filled. As it is, this precedent will stand in bold relief as a landmark for future adjudications." I follow these landmarks, guiding me, as I think, to a correct con' Let there be a decree for complainant, declaring a lien for its debt upon the waterworks plant and upon the interest of the defendant in the premises in question; directing a sale of the plant, and such interest in the lands, and of the franchise of maintaining and operating th0 plant for the uses to which it is devoted by the law of the defendant's incorporation, as an entirety, and that the proceeds of sale be brought into the registry of the court, for distribution among all who mayshow right thereto.
SAN DIEGO COUNTY
v.
CALIFORNIA NAT. BANK
et aZ.
COircuit
court, B.
D. Callforn1.a. FuNDS.
October 3, 1892.)
1.
BANKS AND
Where the treasurer and tax collect.or of a cojlnty, without authority oUaw, de,positcountY!J1oneysln a bank, and receive certiftcatesof deposit marked "Special," the title to the moneys does not pass, although there ill no agreement that the identical bills shall be returned, and they are mixed with the bank's general funds, and the county is entitled to recover an eg,ual amount from.a receiver of the bank prior to the payment of the general depOSitors.
S. SAME-EQUITABLE REMEDIES. The county's rights in such case are enforceable only by a bill in equity) for there i8 no privity of contract bet,ween it aDd the bank. National v. lnsura-nc. , 11K U. S. 54, followed. ,
60
.
REPORTER t
vol. 52.
In Equity. Bill by the countyofSan Diego againsttheCaJifomia National ·Batik and Fredrick N. Pauly, as receiver thereof, to recover certain II}'Oneys deposited in the bank by the county treasurer and the tax coUecwr. 'Heard on demurrer to the complaint. Overruled. Work8& W()rk8, for complainant. M. T. Allerlifor defendants. Ross, District Judge·. This suit was originally brought in the superior court of San Diego county against the defendant bank, a national bank organized under and pursuant to the laws oithe United States, and which beca.me insolvent and suspended payment on the 11th day of November, 1891, and against Fredrick N. Pauly, the duly appointed and acting receiver of the. assets and property of the bank, on whose motion the suit was transferred to this court. The complainant is a municipal corporation of tlie state of California,and by its bill charges that on the 15th day of August, 1891, its then duly elected, qualified, and acting treasurer, C. R. Dauer, mada with the defendant bank a deposit of the Inoneys of the complainant then in his custody as such treasurer, of $5,975.70, lawful money of the United States, and took from the pank a certificate of deposit therefor, in, the words and figures following,to "5,975.70 The California National Bank. " ·"Dollars. ca "San Diego:, Cal., 18, 1891·.
J 1,Dg. "
order.()f same, on return pf this certificate properly indorsed. ·, . ':CJI:, . . "G.N. O'BRIEN, Cashier." .", " ,": '; :'J')
,>,' ,. .,'
,
."'!
C'-? U J " . '
'.
as such cOImty treasurer, aggregatare also al.leged, for'
\
I
,:
..
then duly elected, qualified, and a,cting tax collector, ':H.W. Weirieke,' of the county comphiinant, made with the defendant a deposit of the moneys of the complainant then in his custody as such collector, of $6,114.85, lawful money of the United States, and took from the bank its certificate of deposit therefor in the followi1'lg, to wit: words "6,114.85' .,. The California National Bank. "Dollars. . <a "San Diego, Cal., November 2.1891· . .. ":No. 6.891. -1:4 has deposited In this bank six thousand fI:2 one eighty-five one hundredths dollars. payable to the order·ofsame on1'eturn of this certificate properly indorsed. . . "G. N. O'BRIEN. Cashier." Other similar deposits by Weineke, as such county tax collector, ap;of c01l1plaipanfs money, also allep;ed, for which similar certificates of deposit are aUeged to have heen issued by
BAN DIEGO COUNTY
CALIFORNIA NAT. BANK.
61
tpe bank, and taken by. the tax collector. The bill further alleges that between the 2d and 10th days of November, 1891, tbe aforesaid tax colleetor of complainant made with the defendant bank deposits of the moneys of the complainant then in his hands as such collector, in various amounts, aggregating $24,532.75, for which 110 certificates of (leposit were taken by him. It is averred that all of the moneys so deposited by the treasurer and tax collector of the. complainant county were held by its officers in trust, for the complainant, and were deposited by them, and received by the bank, without authority of law; that the deposits were made by the officers named, for safekeeping; that the bank knew at the time that the moneys so deposited were the moneYfl of the complainant, held by the treasurer and tax collector, respectively, as public officers, and in trust for the complainant; and that. each of the certificates issued therefor was indorsed" Special," because of the fact that the moneys were public and trust funds. It is alleged that no part of the moneys so deposited has been repaid, except the sum of $2,453.27; that the defendant receiver has, since his appointment, received of the assets of the bank a sum sufficient to pay and satisfy the amounts deposited by the treasurer and tax collector, but refuses to pay the same to complainant; that there is not sufficient moneys or assets of the bank to pay its indebtedness in full; and that the receiver is about to, and will, unless restrained from so doing, apply a part of the funds now in his hands, and alleged to belong to complainant, to the payment of the general indebtedness of the bank, thus depriving complainant. of its alleged right to amount of its funds in ftilL . ..' " The defendants, by demurrer, urge two objections to the bill: First, that complainant has a plain and remedy at law; sepond, that thebill,contains no equities entitlirig complainant 'to any relief against thedetendants, or eUller of them. It is very clear that if the bill states a cause of action at all fils 9fan equitable nature, and enforceable in a of National cpurt of eqJ.lity only. .A sim.ilar point was raised in the Bank v.' Insurance Od., 104 U, 54. In that ,case one'Dillon was the ageptoqhe insurance company. He kept an account with the bank; the" was entered on the bank. books with. him as general agent. As agent of ,the insurance company he collected, and it was his duty to remit, the premiums. rnthe cou.rseof his dealings with the bank he borrowed money on his personal obligi:ttion. Finally, the bank sought to'appropriate his depositsto the payment of this debt. The insurance company filed its bill in equity to recover the amount of those deposits, as equitably belonging to it. The fact that they were premiums received fOr the insurance company was shown. The court said: "It is objected that th,e remedy of the complainant below, if any existed, is at law, and ,not in equity, But the contract created by the dealings ina bank the dllPositor and bank alone, without reference to the account is bene6clal ownership of the moneys depos,ited. No one can sue at law fora breacp¢.t.hat, contract the parties to it. There, was no privity created byit,even l,Ipon the facts of the present case, as·we have foundthem between ,tile ban,kl!o1!4,the ins!1rance company. The latter would not have be,en liable ovel'dt;aft by Dillon, as. was decided by this cOllrt in National Bank
s.
'and, conversely, for tM blllgHce due frtitn tbe lmnkinoaction ai:hrw:oponthe :aacoun't'COlJItl bematntai nedby:theins'ui· But,altbtmgb ,the relatiQft ;betweeothebaQkaM its depositor ,j.s, ,of !\I}P ,l:Ialance d .on IlCCOlJD t is tbe js Elljl,uity, does it {: wlui, capaCity, Its character IS not changed liy Ming platiedto hiS ci-lidWitl his 'bank ·
"'.,;rriMWlttW8 Oo.,'103U:
137 U: S. 11 Sup. Ct. Rep. 118: Bank y. )ralker,130 U. 8. 267,9 Sup., Ct. Rep. 519. In! th,El' present case, notc;mly did thecfe'fehdant bank, according to the averments of the bill, have' knowledge. that the depositors of the moneys of officers of the «ounty, arid that so dep'osited belonged to the complaina*hand were theref9re lWld by the officers depositing the slime in trust c()unty, but the b{lnk is with notice'dfthefact that t.1ie'lll.w,of the state madEdt officers tomake,or the bank to receive, such "Yarnell v. City of Lo8 Angeles, 87 Cal. 603,25 Pac. Rep. 767. . .' .. ' . . .' . .' ,'The bank, therefore,acquired no the moneys so deposited, as the complainanh and they contip,ued impressed with the trust Itl,c()lDplainant's favor;)t true that the moneys in question were not riutde as a special, from a deposit, as terills are underst<}'6d)n .that is to say, it was not agreed between the officers deposIts and the bank that the .identical moneys de{losited, ",ere. to be returneq. The moneys deby the officers of complainant were no doubt mingled with the mdneyos of the bank, and,their identity, lost; but can such fact destrbytJle trust. in compla;inant's favor,or prevent the enforcement of it cpu.rt the bank being' the question is be. . .tbe complatnll.tlt the general credItors of the bank represented by t'be,receiver. The orqi,n,a,rycreditors became such voluntarily; they de{losited their money the bank ,. with. their eyes open. But the of the cOl'llplainantwas deposited by its officers,aIid received by the 'bank, not only with9ut the knowledge of complainant, ,but contrary on the .same. plane with the ordinary to #l'w: To put the' creditors. 1"8. to the, former sha.-e in a 'loss to, which it did not volunta:rilrsubject itself, abd to givetotlie latter a in m'Oney which ip equity bElcame the property oftlle bank. , ,This is not 1,'Jt ,was said by Mr. Justice BRADr.JJ;y in Frelinghuysen v. Nugent, 36 ' .. ' '. . . ·.
·..
the equtt:ableright offoIloW:ing misapplied money or other property into the parties receiving it depended' upon the ability 'of 'the, equityattacbingotHy to the very property misapplied. This' l'igllt 'was to the 'of the property, namely, to that whfchwas procured it by eJICchange. purehase;or:s81e; but if it confused with prope-rty of the 'Same kind, so as not to be distinguishable. without anyfa\1Iton the part o'f'the possessor; the eqUity was lost. Finally, however, it has' t>eEin' held as the betterdoctririe that confusion does not destroy the equitj'entil'ely, but converts it into a charge upon the entire
AUGUSTA,']). ,&G. B. 00., V. KITTEL.
DlasS'\ ,giv)pg(to tpe pa.rty irljpred by the uplav,rtul !liversion; II priority of right
thepossessor.", ' " , This ruie was recognized as correct and applied by the supreme court in Nationaj,Bank v. ,104 U. 8.56,67; PeteJrsv. Bain, 133 U. S. 694, 10 Sup. Ct. Rep. 354; ,and its application to the facts illleged in the bill in the present elise is sufficient'to sustain it. Demurrer overruled.
", t:.,.
¥t Co. et al. V.KITTEL. NO.4!.
1.RA1LBoADOOMPANIES....MoRTGAGES-ATJTlIORITY 011" I'RES1DENT.....EsTOPPEL.
Wllen th. president' of a company!chartered by, jibe state of Florida for the eonunde,r of board of direcj;ors, mortgages the company's lKrld, and tile' money, which is ldaned in good faith, is used by the officers of the company; for COlDpany purposes, aJ;ldtbe validity; of the transaction is by payment of ,and is brought notice of the'directors, bOtb actually and by re'cordatlOn of the deeds, andtbere IS no repudiation of the or denial lif the authority of,the president in the premises, a by parto! the directOrs, made long afterwards, disapprovingand' the president's authority, does not invalidate the transaction or p,r6\"eDt a to:teelosure; ·since:theC,Gll1papy tacitly rl'otified the 'act of the president, by not promptly disaftl,rming,t'hetransaction. B; BAME.;.;..MoRTGAGB 011' LAlm GRAN1'-TlTLE. '1'he.land,·._.as g.ranted. to the COlD.pany by the ;Florida, to. lVhich it had,.been donated,.u,nd"r the overflowed lands act, (Act Congo Sept. Themortgi,ge conveyed all and antintere5t tlie company might !:lave in. the land. HeUl, that lUhe company did nllt have a legal title to the land; by reason of the absence. ohpatent i.D the original grant to the state: it had a full equitable title, and the mortgage passed whatever title the company uad. .. BAXB-'-AoTS'OJ' 13EORBTARY DB FAC'ro'-EsTQPPBL. Wben an assistant secretary of a railroad cO/Ilpany acts as the secretary inJact, transactillg,the business of the company, with knowledge of tbe directors, and, as 8uch''dil1aeto secretary, attaches the seal&' of the company to mortgages executed by thjl, COmpany on its land, it is not necessary for the mortgagee, in establishing the validity of the mortgages, to show that he was an assistant secretary oojWre.' ',' ., .. BAME-CoNSTRUCTION CONTRAOT-VA.LIDITY-l!'RAUD.
T.he mer.e fact that the president of a, railroad compaJ;ly, unknown tel the other directors, ,is interested in a construction 'contract let by the company, does not make the contract void. if it is otherwise free from ira-uIL
Circuit of the United States for .the Northern Distt:ict of Florida. ,, In Equity_, Bill by J. IGttelagainst the Augusta, Tallahassee & Gulf Railroad Company and others to foreclose a mortgage. De-cree for complainant. Defendant company alone appeals. Affirmed. ,J. B. a. l!Jrew, for appellant. ," , 1I. .. ee. , '.. ' . ' , ",Before :pABDE,E aod McCon?4lCK, Circuit Judges, and LOCKE, District Judge. , '