The Albany Law Journal.

ALBANY, NOVEMBER 30,

Current Topics.

1895.

should be strong enough to encourage such a healthy change. Let this be done, and to their advantage as well as to the public will it redound. If they do not, or if the movement is left for a few to accomplish, simplicity in procedure will never come, or else some fellow in the future will reap the advantage of the slow change. The desire to have such a modification as we have suggested is not by any means new. The promoters of this scheme have done what they could in the past. Bar assoE publish in this issue of the LAW JOUR- ciations have attempted it. But it is really piti

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JOUR-ciations

WE Pub the opinion of Judge Follett, oftiation convenattempted few who have such a

these measures.

An important decision in regard to banks and banking, assignments for the benefit of creditors and following a trust fund has been made in the District Court of Chisago county, Minn., in the the Matter of the Assignment of James F. Kingsland. The court holds that a bank which makes collections from time to time and at stated intervals remits the proceeds thereof, is a mere debtor of the owner of the moneys colAnd where, upon lected, and not a trustee.

the General Term, First Department, in Bowen beneficial desire sufficiently to actively urge v. Sweeney et al. It is not only clearly expressed and terse in its phraseology, but it is also important to show the cumbersomeness of our present practice, a subject on which we are ever ready and willing to write. Judge Follett shows that after an elaborate trial of the issue of testamentary capacity in a proceeding before a surrogate for probate, and an adjudication in favor of the will, the heirs of the testator, although parties to the former proceeding, may still re-litigate the question of the validity of the will in an action of ejectment or for partition. It is shown that a similar anomaly in the law of England was abrogated by statute in 1857, it being then provided that a decree of a probate court, admitting to probate a will which relates to realty and personalty, is binding on the heir in case he had notice.

the insolvency of such bank, it cannot be shown. that among the moneys turned over to the assignee are the identical moneys collected by the bank, the creditor will not be treated as a cestuis que trust, and the moneys in the assignee's hands as trust funds, but such creditor will have to share with the other creditors in the dividends of the estate. The opinion by Judge Williston is as follows:

It would seem as though it has become necessary for the courts to point out the unfortunate condition of our practice and to demonstrate that simplicity is a much-to-be-longed-for end. The thought of entering into litigation is dreaded by the public, who recognize the cumbersomeness of our prevailing mode of prac-moneys received by the assignee, nor was any

This

tice and the delays to be encountered.
feeling is one which reacts on the legal profes-
sion and not on the members of the bench,
who, however, reveal their interest in their call-
ing by again and again pointing out what, at
present, constitutes its greatest detriment.
Would it not be beautiful to read the address
of the President of the American Bar Associa-
tion at the next annual meeting if he could
show that the legislatures of the different
States had stopped passing new laws and were
endeavoring to simplify those which had al-
ready been passed? The influence of the bar
VOL. 52 No. 22.

Upon the hearing of the order to show cause, no proof was offered tending to show that the moneys so collected formed any part of the

proof offered tending to show what disposition. said assignee made of any such money.

In this proceeding the petitioner prays that the assignee be directed to pay over to it the moneys so collected, deducting the agreed commission thereon due the assignor for making the collections; in other words, it claims that it is to be treated as a preferred creditor.

It bases its right to be so treated as a preferred creditor upon its claim that the insolvent stands in the relation of a trustee for the petitioner; that the moneys collected by him were at all times the property of the petitioner, held

in trust for it by the insolvent; that, as trust funds, they came into the hands of the assignee, who holds them impressed with the trust; and that, wholly ignoring the rights of the other creditors, the petitioner is of right entitled to be paid in full out of the moneys in the hands of the assignee. For anything to the contrary appearing, the moneys so received by the insolvent may have been used by him in paying his debts, or in some other manner been wholly dissipated prior to the assigment..

and banking business in like matters. Commercial Bank of Pennsylvania v. Armstrong, 148 U. S. 50, 58, bk. 37, L. Ed. 560, 367; Henry v. Martin (Wis.), 60 N. W. Rep. 269; Westfall v. Mullen (Minn.), 59 N. W. Rep. 633.

Second. Admitting that the relation of cestui que trust and trustees did exist between the parties, the petitioner is not entitled to the relief demanded. The principle is not questioned that whenever a trust fund has been wrongfully converted into another species of

The petitioner is not entitled to such a pref-property, if its identity can be traced, it will be

erence for:

First. The relation existing between it and the insolvent was that of debtor and creditor. It appears from the contract between the parties that it was not by either party intended that the identical money collected should be remitted to the petitioner, or that it should by the insolvent be kept separate and distinct from the funds used by him in his general banking business; on the contrary, it does appear that it was the intention of each party that the moneys collected should become a part of the common banking fund and moneys of the insolvent, to be held and used by him in the same manner as the moneys deposited with him by general depositors. The language of the contract is:

All that we expect you to do is to receipt the pass-book for the collection and enter the amount collected on the duplicate collection sheets, one of which you will retain and the other you will mail to this office once a month, with draft to cover collections, less your one per cent commissions." The construction of the contract is, that the bank should upon or near the last day of the month remit to the petitioner the amount due it for all collections made during the month, or, if the remittance should not be made until after such last day, but in the early days of the next month, then that such remittance should cover all collections made for the preceding month that the bank should remit, not the identical money by it received or any moneys by it substituted therefor, but by its draft, and that intermediate such collections and remittance the bank should hold and treat the moneys so collected as an ordinary deposit made by the petitioner. That would be according to the usual course of collection

held in its new form liable to the rights of the original owner or cestui que trust, and that such right ceases only when the means of ascertainment fail. The touchstone of the right of the owner of the trust property to be indemnified from any property or fund which represents the original property or fund is the trust fund, into the property or fund out of which the indemnity is demanded; the identi fication not appearing, the right does not exist. Story's Eq. Jur. (6th Ed), §§ 1257, 1259; Perry on Trusts, § 636; Cook v. Tullis, 85 U. S. (18 Wall.) 332, bk. 21, L. ed. 933; Union Natl. Bank v. Goetz (Ill.), 27 N. E. Rep. 907.

A general assignment for the benefit of creditors does not pass a trust estate. In such cases it requires special words to vest the estate in the assignee. If the assignor has converted the trust estate into other property, the cestui que trust may follow it into the hands of the assigneee, so far as he can identify the particular property obtained by breach of the trust; but if the trust property has become so amalgamated with the general mass of the bankrupt's estate that it cannot be traced or identified, the cestui que trust must prove his claim. Perry on Trusts, Sec. 345; Hill on Trustees; Neely v. Rood (Mich.), 19 N. W. Rep. 920.

In the case at bar, if the relation of cestui que trust and trustee ever existed, the trust moneys have become so mixed and mingled with other moneys of the trustee that it is impossible to trace or identify any of them as forming a part of the funds received by the assignee, and, by reason of such mingling, the petitioner is not entitled to the relief demanded.

In Little v. Chadwick, 151 Mass. 110; s. C. 28 N. E. 1005, the court say: "The court

will go as far as it can in thus tracing and following trust money; but when, as a matter of Li fact, it can not be traced, the equitable right of the cestui que trust to follow it fails. Under g such circumstances, if the trustee has become

2016

bankrupt, the court does not say that the money
is to be found somewhere in the general estate
of the trustee that still remains. He
may have
lost it with property of his own, and in such
case the cestui que trust can only come in and
share with the general creditors."

There is nothing to the contrary in National Bank v. Insurance Co., 104 U. S. 54, 66, 71; bk. 26 L. Ed. 693, 695, 700; or in the Matter of Hallet's Estate, 18 Ch. Div. 696, 708.

See also Ferris v. Van Hooten, 73 N. Y. 113; Cavin v. Gleason, 113 N. Y. 256; Atkins v.

Rochester Ptg. Co., 114 N. Y. 168; Appal Hopkins (Pa.), 9 Atl. Rp. 867; Engler v. Offutt, 70 Md. 78; s. c., 16 Atl. Rep. 497; Union Natl. Bank v. Goetz (Ill.), 27 N. E. Rep. 907; Sherwood v. Millford State Bank, 04 Mich. 78; s. c. 53 N. W. Rep. 928; Anheuser-Busch Brewing Co. v. Clayton, 6 U. S. C. C. A. 108; Nonotuck Silk Co. v. Flanders (Wis.), 58 N. W. Rep.

283; Bank of Commerce v. Russell, 2 Dillon's C. C. R. 215.

'The failure of the bank to remit was a breach of duty on its part, but it does not follow that other moneys subsequently received by the bank, and which may have come into the hands of the assignee, became impressed with a trust or charge which would give the petitioner a preference on distribution of the funds received by the assignee..

A trust creditor is not entitled to preference over general creditors merely on the ground of the nature of the claim: Freiburg v. Stoddart (Pa.), 28 Atl. Rep. 1111; Cavin v. Gleason, 105 N. Y. 256; North Dakota Elevator Co. v. Clark (N. D.), 53 N. W. Rep. 175

The case of Westfall v. Mullen, determined by the Supreme Court of this State and cited above, is decisive of the matter at bar. The language of the late chief justice in that case is equally applicable to this, that "to allow such claims to be paid in full out of the assets when all claims can not be paid in full, would give a preference to such claims. There is nothing in the insolvency law justifying it."

there is no principle of common law or of equity justifying the granting of the relief demanded by the petitioner.

A knowledge of human nature is, perhaps, as essential to the practicing lawyer as a thorough appreciation of the law, its statutes, decisions and general principles. For years past in England as well as in this country the New Woman has caused agitation and discussion by her demands for equality of the sexes, reform of the marriage laws and other In England the movement

similar mcasures.
has been somewhat more pronounced than
elsewhere and has extended to a different class
of people from those interested here, who are
given more to other subjects, such as socialism,

than in the main question of the right of
with the members of the sterner sex.
women to vote and to have absolute equality
It is
true that very little that was tangible has been
accomplished beyond the production of a vast
of problems against which the public appetite
amount of unsavory literature and a long series
of problems against which the public appetite
has already commenced to revolt. In England

especially there were signs that the whole
movement was losing its impetus and that
society was relapsing into the old-fashioned
ideas about woman's sphere, when all at once
there flashed on the horizon a woman whose
remarkable theories and principles extend be-
yond any formerly advanced. It was only
three weeks ago that one lone woman made a
declaration that set all England ablaze with
controversy, which finally landed its author in
a lunatic asylum, from which she was finally
rescued by extraordinary processes of law, and
which is, perhaps, the most conspicuous stand
which any woman has publicly and noto-
riously taken. The woman we have referred to
is Miss Edith Lanchester, who is said to be
very attractive and to come from a family of
means and social position, in fact from a con-
servative English family. Miss Lanchester
was thoroughly educated and became interested
during her term of study in many socialistic
problems which brought her more or less into
contact with others who were likewise con-
cerned in the advancement of the same
theories. Her interest in the problem of
socialism led her to leave her family and take

In this case it might further be said that lodgings, and it was at this time that the

theories and principles which we have referred it appeared that in 1886, Iola, a city under the

to as most remarkable were first advanced.
Miss Lanchester had formerly been regarded
as a sincere, high-minded girl of little more
than legal age, and had never attempted or
threatened to violate any of the conventionali-
ties of life; but, in proportion to the increasing
interest which she took in socialistic problems,
came, also, an added concern in the principle
that man and woman might love each other,
but in order to remain as individuals and as
equals no marriage service of any kind should
occur, Falling in love with a man, Miss Lan-
chester advanced her ideas and proceeded to
carry them out, having in mind at all times a
definite time when she should begin her rela-
tions with the man of her choice. Shortly be-
fore the time set by Miss Lanchester for the
commencement of her relations with the man
in question, her father and brothers, under the
Lunacy Act, sued out a process to enable them
to confine her in a lunatic asylum as an alleged
insane person.
After more or less legal con-
troversy and wrangling Miss Lanchester was at
last released from the asylum and started on
the career which she herself had marked out.
The case is extremely interesting from many
standpoints. To the lawyer, at least, it illus-
trates the many deficiencies and errors which
exist in the marriage laws, as well as calls
attention to a case which may be followed by
other women who may discover that the lack
of uniformity between the laws of our different
States and the absence of respect for the de-
crees of another court has made the relation
and forms of marriage of very little value, at
least in the eyes of many who enter wedded
life and seek divorce with practically the same
sense of obligation.

Constitution of Kentucky, rating as of the third class, granted to the Iola Gas & Coal Company, its successors and assigns, the right to lay gas pipes and mains in the streets and public grounds for the purpose of supplying the city and its inhabitants with gas. In the charter no rates were prescribed, except that the company should not charge the city more than one dol lar per thousand cubic feet of gas for lighting the public buildings. It appears from the facts that on September 12, 1889, the company with the assent of the city, assigned all its rights and interests to one W. S. Pryor and another, their heirs and assigns, one of the conditions being that said assignees would furnish private families with gas at the price not exceeding $2.50 per stove per month and forty cents per month per burner for illuminating purposes; and for some years past, said assignees have been furnishing natural gas to the city and its inhabitants. On May 10, 1895, the city enacted an ordinance providing, among other things, that it should be unlawful for any person, firm or corporation furnishing gas in said city to charge anything in excess of the prices therein fixed, which were very much lower than those named in the assignment, and lower than those received from consumers. The Supreme Court held that such an ordinance is inoperative and void as to said Pryor and his partner, their heirs and assigns, in so far as the same purports to establish prices for gas furnished by them to private consumers. The theory of the decision to us appears to be sound and proper. 'The franchise originally only limited the company as to the price they should charge the city, and their assignees should properly only be limited in the same manner as predecessors, especially in view of the fact that the city conRecently it has become a familiar practice sented to the assignment. We believe that it is with legislatures and governments of munici- dangerous for legislatures and municipal governpalities to attempt to regulate the price of vari- ments to attempt to limit the price of commodious commodities which are sold to the public ties unless the parties furnishing the materials at large. Especially in the legislature of this or products have an exclusive monopoly of the State it has frequently been the case that at- business. In any State the excessive abuse of tempts have been made to regulate the price of the powers granted to a corporation, firm or ingas, and the same general practice has obtained dividual, will result in the commencement of in the different cities of the State. In a case the same kind of business by others and the entitled In the Matter of Pryor, decided by the natural laws will at once begin to operate. We Supreme Court of Kentucky (41 Pac. Rep. 958), I fear that too often legislatures and other law