Bank. Trust, Constructive. Executor and Administrator. Fraud. Equity Jurisdiction, For an accounting. Equity Pleading and Practice, Appeal, Master's report.
In a suit in equity, by the administrator de bonis non of an estate against a bank in which a former administrator of the estate had kept funds of the estate, for an accounting as to certain of the funds which, it was alleged, the former administrator misappropriated under such circumstances that the defendant was chargeable as a constructive trustee, it appeared that the bank had notice of the fact that the money in the account belonged to the estate, that the administrator also had a personal account in the same bank, that the personal account was overdrawn on certain occasions and that in each instance on the bank day next succeeding that of the overdraft the administrator deposited with the defendant a check on the account of the estate and also checks drawn upon other sources more than sufficient in amount to take up the overdraft. A master to whom the suit was referred found that the defendant had no actual knowledge or suspicion that the administrator was misappropriating funds of the estate and that, by reason of the fact that the deposits of checks drawn on sources other than the funds of the estate were more than sufficient in amount to take up the overdrafts, the plaintiff had not shown that the administrator had used funds of the estate to pay his debts to the bank created by the overdrafts. The evidence was not reported. Held, that the findings of the master could not be reversed, and that the defendant therefore was not bound to account for the amount of the checks on the account of the estate deposited to the administrator's personal account on the days following the overdrafts.
In the same suit it appeared that on five occasions checks of the administrator on his personal account were certified by the defendant when such certification would not have been possible if the administrator had not made a deposit on the same day in his personal account of a check improperly drawn by him on the account of the estate. The master found that on and after a date about a month previous to the last but one of the certifications, the defendant, judged from the standpoint of a reasonably prudent banker, had knowledge of such facts as reasonably would lead it to suspect the misappropriation by the administrator of the funds of the estate, but that at no time did it have actual knowledge or suspicion as to such misappropriations. Held, that the defendant was not bound to account to the plaintiff for the amount of the checks on the account of the estate which made possible certification of the checks on the administrator's personal account.
The defendant also was held not to be bound to account for the amount of a check drawn by the administrator upon the account of the estate and deposited in his personal account to make good a check on his personal account which he had delivered to the defendant to take up a personal draft upon him sent to the defendant by a bank in another State for collection.
BRALEY, J.
The defaulting administrator opened two accounts with the defendant bank, one in his own name and one in his name as administrator of the estate of Albert H. Bird. It is found by the master that his individual account at various times was overdrawn for varying amounts, and that the overdrafts may have been respectively repaid the next succeeding bank days by checks drawn on the administrator's account. But as another deposit to the credit of his individual account also had been made on those days sufficient to pay the overdrafts, the master decided that the plaintiff failed to show that the overdrafts were repaid by funds of the estate. The burden of proof rested on the plaintiff to establish the fact that the administrator had appropriated trust funds in payment of his own personal debts, and the evidence not having been reported, the master's conclusion on the facts found by him that no misappropriation had been proved cannot be revised. Ginn v. Almy, 212 Mass. 486.
If these transactions are thus disposed of, there remains the check for $4,000 drawn on the administrator's account, but deposited by the administrator to his own individual credit. By the form of the accounts appearing on its books the defendant was properly held to be chargeable with notice that all moneys deposited in the name of the administrator belonged to the estate. Allen v. Puritan Trust Co. 211 Mass. 409. But under the finding that the defendant had no actual knowledge that the administrator was wrongfully appropriating the funds of the estate for his own benefit the suit cannot be maintained. Allen v. Puritan Trust Co. 211 Mass. 409.
The result is, that the plaintiff's exceptions to the report must be overruled and the bill dismissed with costs.
Decree accordingly.