# American Surety Co. of New York v. Jackson

> Court of Appeals for the Ninth Circuit · March 19, 1928 · 24 F.2d 768

URL: https://www.frixlaw.com/law-library/cases/9640816

## Case

- **Full name:** American Surety Co. of New York v. Jackson
- **Court:** Court of Appeals for the Ninth Circuit
- **Decided:** March 19, 1928
- **Citations:** 24 F.2d 768; 1928 U.S. App. LEXIS 2157
- **Precedential status:** Published
- **Opinion:** Dissent by Dietrich
- **Judges:** Gilbert, Rudkin, Dietrich
- **Cited by:** 21 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9640816

## Opinion text

DIETRICH, Circuit Judge
(dissenting). The allegation of the complaint is that the treasurer, having in his possession moneys belonging to the city, illegally “placed” the same in the bank, and that, when the receiver took charge, he took possession of “said moneys of the city of Payette, placed in said Payette National Bank as aforesaid in the amount of $4,322.77.” The burden was on the plaintiff to trace the fund. Schuyler v. Littlefield, 232 U. S. 707, 713 , 34 S. Ct. 466 , 58 L. Ed. 806 . That there was a total failure, by the evidence adduced, to identify the $4,322.77 as money so deposited, cannot be denied. There is no evidence that at any time the treasurer placed any money in the bank, or that upon any date prior to the day. it closed it had on hand money in any amount.
But this want of evidence we are asked to supply by indulging three presumptions. We are first, to presume that the credits shown by the bank books were for money brought to and placed in the bank by the treasurer. Upon the assumption that it was the treasurer’s legal duty to accept nothing but money, the argument .is that we should presume he obeyed the law, and hence had nothing to deposit other than money. But how, without offending reason, can we indulge a presumption of sueh official regularity relative merely to an incidental feature of a general plan and practice under which it is affirmatively shown the officer in question was acting in violation of the law and with an unlawful purpose? To amplify: The principal source of revenue for an Idaho city is property taxes. These taxes are not collected by the city officers, but by the county treasurer, who from time to time makes settlement with the city treasurer. Under the general depository law of the state, the county treasurer is authorized to make a general deposit of public funds coming into his hands in qualified depository banks. On making'such deposit the same relation arises between him and the bank as exists between a private depositor and his bank (that is, the relation of debtor and creditor); and he is authorized by law to draw upon his account by cheek. When, therefore, from time to time the county treasurer transferred to the treasurer of the city of Payette his tax collections upon its account, he was guilty of no wrong in doing so by check, and the city treasurer was guilty of no wrong in accepting the cheek.
Having in mind the illegal arrangement under which the bank here was receiving and handling the eity funds, are we, against all reasonable-probability of fact, to presume as a matter of law that in sueh a case the city treasurer went to the trouble of actually procuring the money upon the cheek in ord.er that he might comply with the'law requiring him to keep the city’s funds intact, when It is affirmatively shown that such was not his desire, purpose, or practice? Every reasonable inference from the facts shown negatives such presumption, and renders it highly probable that, upon receiving such a cheek, whether drawn upon his or some other-bank, he deposited the cheek and took credit therefor; and in neither case would the transaction necessarily result in augmenting the bank’s cash.
Upon the presumption that the treasurer deposited only money, we are next1 asked to presume that the bank did not pay it out, and hence that it was on hand when the receiver took charge; the argument being that generally there is a presumption of legality of action. But how can such a general presumption prevail against the admitted facts? It is affirmatively shown that both the treasurer and the bank had agreed and entered upon a line of conduct, the object of which was to enable the bank to use the money as it would use any other money coming in on general deposit. Not only' in the face of the presumption that they would act legally, the evidence shows they in faet acted illegally, in carrying the deposits in a general account and commingling them with other moneys of the bank, but the natural consequence of such conduct would be the disbursement, of such funds in usual course, and men arc *772 ordinarily presumed .to intend the natural consequences of their acts. Can it be doubted that, even in a criminal ease, the evidence would sustain a verdict against the treasurer and participating bank officials on a charge of misapplying the city’s funds ? In view of this state of the record, it is unnecessary to consider to what extent certain expressions to be found in eases cited from this court, mainly used arguendo, tend to sustain the contention that some sort of a presumption exists under some other set of circumstances, for by no one is it suggested that, if one there be, it is irrebuttable.
The third presumption we are asked to indulge, I concede, is legitimate and well established ; that is, if the treasurer wrongfully brought city money into the bank upon general deposit and the bank wrongfully commingled it with its own funds, and it further appeared that at no time did the cash on hand fall below the amount so deposited, it would be presumed that the cash passing to the receiver, up to the amount of such deposit, was city money. The presumption rests upon a measure of reason, and is justified by considerations of necessity. In such a case the inference that, where the bank pursues a course of unlawfully receiving on general deposit and commingling with its own funds public moneys, its purpose is to apply them to its own use, is rebutted by affirmative proof that in fact it has not so intended, because it has always kept available cash sufficient to cover the public deposit. And the notion that a fund so shown to have been continuously on hand, includes the public deposits, rests not only upon the presumption of legal regularity, but, in so far as it is a fiction, upon considerations of necessity arising out of the bank’s misconduct; that is, where one has wrongfully commingled with his own the property of another, such as money or grain, so that identification and segregation are impossible,- the innocent party is of necessity relieved from making proof which in the nature of things would be impossible. Such is the holding and the extent of the holding in Smith v. Mottley (C. C. A.) 150 F. 266 , cited by appellant, where the court twice refers to the fact that it was affirmatively shown the money in question had been received by the bank and that there* after the cash continuously exceeded the amount thereof. But no such necessity exists in respect to proof of what the treasurer brought into the bank, or the continuity of cash therein; as to those issues, proofs are available, and quite as accessible to one party as to the other. I see no reason why we should, by a pyramid of presumptions, shift the burden from the plaintiff, where it naturally belongs, and impose it upon the general creditors, who are blameless.
I think the judgment should be affirmed.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9640816. Public record. Not legal advice.