
    BENJAMIN F. BUTLER, Appellant, v. ALPHONSE DUPRAT, Respondent.
    
      Declaration of ti'ust.—Equitable assignment—Kow constituted—When irrevocable.—Remittance of funds.—Corporation—Power of officers.
    
    To constitute a declaration of trust, the acts or words relied on must be unequivocal. The question is mainly one of intent.
    As a rule, a remittance of funds with instructions to pay them over, will not be construed as constituting an irrevocable trust, so long as the funds are at the risk of the remitter.
    The treasurer of a corporation cannot so remit funds as to constitute an irrevocable trust without special authority.
    Funds remitted to a trust company, with instructions to pay them to the holder of a negotiable obligation of the remitter, which is by its terms payable there, remain at the latter’s risk.
    An appropriation not amounting to a declaration of trust will not be held irrevocable, except to protect some one who has parted with value on the faith of it.
    Funds drawn out of bank by the treasurer of a corporation, on express authority of the board of directors, and thereafter held by him apart from his own funds, cannot be considered as held by him personally, but they are to be considered as in the possession of the corporation or of himself as treasurer of the corporation.
    
      Decided December 1, 1884.
    Rogers Locomotive Works i>. Kelley (88 If. T. 234), distinguished.
    Before Sedgwick, Ch. J., Van Vorst and Freedman, JJ.
    Appeal from judgment of the special term, dismissing plaintiff’s complaint on the merits, with costs.
    This action is brought to follow what was claimed to be a fund held by defendant in trust for plaintiff.
    Henry B. Hammond, as treasurer of the Colorado Cattle Company, on June 26, 1880, remitted $11,672.50 to the Union Trust Company, with the intention thereby to provide for the payment of certain coupons falling due July 1, 1880. This intention was understood by the Trust Company, but no words were used by either party importing an irrevocable direction to that end. Hammond wrote :
    1 ‘ The semi-annual interest on the bonds of the Colorado Cattle Company will be due on the first day of July next, and I enclose check for the amount.” The Trust Company replied : “Tour favor of the 26th, with inclosures amounting to $11,672.50, is received, and the amount placed to the credit of the Colorado Cattle Company’s coupon account.” These coupons were obligations of the Cattle Company, in terms payable at the office of the Trust Company July 1, 1880. There is no entry of any authorization, touching this deposit or remittance, upon the minute-book of the Cattle Company’s directors, but it appears that the Cattle Company, by resolution of its directors, raised these moneys, on its notes, for the purpose of paying the coupons. The Trust Company credited the amount, to Colorado Cattle Company coupon account.
    Thereafter defendant succeeded Hammond as treasurer of the Cattle Company; the Trust Company between June 26, 1880, and January 26, 1881, applied in payment of such coupons all these moneys save $490, which represented the amount due upon fourteen coupons (embracing the ten in suit), which had not then been presented for payment. On January 24, 1881, defendant was authorized by the board of directors to draw the balance of the coupon account, 8490, out of the Trust Company. Enowing the purpose for which the original deposit was made, he drew a check for the amount in the name of the Cattle Company to his own order, and collected it through his bank, the Trust Company honoring the check. He thereafter held the $490 in his own safe, but as treasurer of the Cattle Company, separate and apart from his own funds, the sum being in an envelope, marked “Colorado Cattle Company.”
    Plaintiff, during all these times, was owner of some of the coupons of July 1, 1880, which, was intended to provide for this by remittance to the Trust Company. Plaintiff demanded payment of them, both from the Trust Company and from defendant on October 23, 1882. Payment being refused, he brought this suit in December, 1882. At this time defendant still held the $490 as treasurer of the Colorado Cattle Company in the maimer above stated, and continued to so hold it, until after January, 1883.
    Duprat, as treasurer, never held or had within reach any other funds of his company than the $490 so drawn out. Prior to October 23, 1882, he had paid by check from his private funds more than $490 on account of the company, viz. : $70, to another coupon-holder and $448.55 for legal expenses in a suit in which the company was interested, and reimbursed himself from the $490. He had not heard from plaintiff as to these coupons prior to making such payments.
    Further facts appear in the opinion.
    
      De Kay & Hardy and W. J. Hardy, for appellant.
    I. The deposit of these moneys created a simple trust for the benefit of the holders of the coupons, which the depositary accepted and undertook to perform ; and thereafter, such trust could not be revoked or canceled without the knowledge and consent of the beneficiaries, the coupon-holders (Rogers Locomotive Works v. Kelly, 88 N. Y. 234 ; Cunningham v. Freeborn, 1 Edw. Ch. 257 ; 2 Pomeroy Eq. Jur. §§ 1009, 573 ; Martin v. Funk, 75 N. Y. 134 ; Lowery v. Steward, 25 N. Y. 239 ; Watts v. Shipman, &c., 21 Hun, 598 ; Matter of Le Blanc, 14 Hun, 8). The withdrawal of the deposit by the Colorado Cattle Company is not legitimate evidence that it did not intend when the deposits were made to create a beneficial trust for the beneficiaries named. If done with intent to ignore the trust, and to convert the moneys to its own use, it might be competent evidence of a change of purpose, but it throws no light on the original transaction (Mabie v. Bailey, 95 N. Y. 211). And the company may not have been aware that it had no right to withdraw the trust fund ; but that fact would not take away the character which it had given to that fund (Willis v. Smyth, 91 N. Y. 301).
    II. The fund may be followed into the hands of the defendant. He was a volunteer. He also knew the terms of the original arrangement between the parties, and that there were fourteen unpaid coupons outstanding when he withdrew the moneys (2 Perry on Trusts, §§ 828-831 ; Munger v. Shannon, 61 N. Y. 251; Cunningham v. Freeborn, supra, and on appeal, 11 Wend. 240).
    III. The doctrine of laches cannot be invoked in this case (Baker v. Union L. Ins. Co. 43 N. Y. 283; Rogers v. Kelly supra; Re Le Blanc, supra).
    
    IV. It was made a point in the case below, and a basis of a finding by the justice, that there was no resolution of the board of trustees of the Colorado Cattle Company, directing the deposit of these moneys, and that consequently its treasurer was not authorized to deposit these funds “in an irrevocable trust for coupon-holders,” and that it was not “ in the contemplation of any of the parties that the deposit should constitute a trust fund, applicable to said purpose alone, regardless of future instructions on the part of the Colorado Cattle Company.” The evidence is conclusive that the deposit was made by the company, and that in making the arrangement, the treasurer was acting as its agent. A contract purporting to be made by a corporation is binding until impeached by contrary evidence (N. E. Iron Co. v. Gilbert E. R. Co., 91 N. Y. 164), and here no contrary evidence has been offered. And ratification is inferred from acquiescence (Hoyt v. Thompson, 19 N. Y. 218). It does not he in defendant’s mouth to say that the original deposit of the fund by the treasurer of the company was unauthorized by resolution of the directors to that effect, when his own appropriation of the fund was equally without any such authorization. The answer admits that the “ Colorado Cattle Company deposited certain moneys with the Union Trust Company of New York, . . . with the intention of providing thereby for the payment ” of these coupons. The deposit of the funds by the company for the purpose of ■ paying its coupons, constituted it an “irrevocable trust;” and it was wholly immaterial that “it was not in the contemplation of the parties that the depost should constitute a trust fund,” or “ an irrevocable trust for coupon-holders ” (Willis v. Smyth, supra).
    
    
      Burnett & Whitney and Edward B. Whitney, for respondent.
    I. The transactions connected with the remittance in question did not constitute a trust—that is, a technical or irrevocable trust.
    Whether a remittance of funds with instructions h> pay to a third party constitutes a revocable appropriation or an irrevocable trust is a question of intent (2 Pomeroy on Equity Jur. § 1009 ; Young v. Young, 80 N. Y. 423 ; Martin v. Funk, 75 Ib. 134).
    As a rule such a remittance will not be construed as. constituting an irrevocable trust so long as the funds are at the risk of the remitter, not of the intended payee (2 Story’s Eq. Jur. § 1045).
    The funds are at the risk of the remitter, not of the intended payee, until the latter assents to the appropriation (2 Story’s Eq. Jur. §§ 1045, 1046 ; Story, J., in Tiernan v. Jackson, 5 Pet. 580).
    
      An appropriation not amounting to a declaration of trust will not be held irrevocable by equity unless made for valuable consideration (Tallnan v. Hoey, 89 N. Y. 537). Care should be had to distinguish between trusts, in the strict use of the term, and the various quasi-trusts generally called equitable assignments, or agreements “in the nature of a declaration of trust” (Nesmith v. Drum, 8 Watts & Ser. 9). Trusts are irrevocable, and need not rest upon any consideration; some equitable assignments are revocable, and all must rest upon valuable consideration. Equitable assignments from A. to B. of funds in the hands of C. may be divided into three classes : (1) Those where all parties have been notified of the appropriation and have assented to it. Here, of -of course the assigmnent is complete, irrevocable, and binding upon all parties. (2) Those where the beneficiary has been notified of the appropriation, and has assented to it, although the depositary has not yet been notified. Here the appropriation is irrevocable by the assignor, although the depositary, of course, is not yet bound. As to first two classes (See Jones v. Mayor, 90 N. Y. 387 ; Dannat v. Comptroller, 77 Ib. 45 ; Hunger v. Shannon, 61 Ib. 251; Canfield v. Monger, 12 Johns. 346 ; Watts v. Shipman, 21 Hun, 598). (3) Those where tho depositary has been notified, but the beneficiary has not assented. Here the appropriation is still revocable, although for many purposes the deposit resembles a trust fund (3 Pomeroy’s Eq. Jur. §§ 1280, 1281; Morrell v. Wootten, 16 Beav. 197 ; Cowperthwaite v. Sheffield, 3 N. Y. 243; Kelly v. Roberts, 40 Ib. 432 ; Ætna National Bank v. Fourth National Bank, 46 Ib. 82 ; Rodick v. Gandell, 1 De G. M. & G. 763 ; Nicholson v. Crook, 56 Md. 55). In all of the above cases the original debt, to meet which the appropriation is made, forms a sufficient consideration to uphold a suit to follow the fund appropriated, as between the equitable assignee and the possessors of the fund. In cases (1) and (2) there is a new consideration for the appropriation itself, as well as the consideration for the original debt: namely, the novation by which the equitable assignee takes the risk of the solvency of the depositary. In case (3) there is no new consideration for the appropriation itself as between the equitable assignee and the depositor, the latter being just as much hable afterwards as before. Equity, like the common law, favors the principle of consideration, so characteristic of our jurisprudence. This we believe to be the base of the distinction made by the courts in these cases.
    In particular, a sum deposited to meet coupons, remains at the risk of the depositor until the coupon-holder assumes the risk; and this, although the coupons are by their terms payable at the office of the depositary, although the sum deposited is just enough to meet them, and although its appropriation is express (Williamsport Gas Co. v. Pinkerton, 95 Pa. St. 62 ; Adams v. Hackensack Impr. Comm. 44 N. J. Law, 638 ; Ward v. Smith, 9 Wall. 447). In New York this exact question does not seem to have come up as to coupons, but the law is well settled to the same effect-as to promissory notes, and coupons are subject to the same rules as promissory notes (2 Daniel Neg. Instr. §§ 1490, 1507 ; Evertson v. National Bank of Newport, 66 N. Y. 14 ; Wolcott v. Van Santvoord, 17, Johns. 248; Caldwell v. Cassidy, 8 Cow. 271 ; Hills v. Place, 48 N. Y. 520 ; Salt Springs National Bank v. Barton, 58 Lb. 435 ; see also Ruggles v. Patten, 8 Mass. 480 ; Fenton v. Goundry, 13 East, 473 ; Turner v. Hayden, 4 B. & C. 1). Nor is the rule confined to negotiable paper, but it applies, with few exceptions, to all promises of payment at a particular place (Locklin v. Moore, 57 N. Y. 360). Even if the bank fails, with the funds in its hands, this is no defense to the note (Indig v. National City Bank, 80 N. Y. 100).
    There is, therefore, in this case no consideration for the appropriation, as between the depositor and the coupon-holder.
    The parties in this case did not intend to constitute an irrevocable trust. The mere form of the credit is imrnaterial (Morgan v. Lariviere, L. R., 7 H. L. 423). Practice of the parties under an agreement shows forcibly what then intent in making the agreement was (Forbes v. Watt, L. R. 2 Sc. & D. 214 ; Pollock Contr. 392 ; Wharton Contr. § 653 ; Foster v. Goldschmidt, 21 Fed. Rep. 70, 74). The Cattle Company also showed, by drawing the money out, what its construction was.
    Hammond had no authority to constitute an irrevocable trust and, therefore, no such trust can have been constituted through him.
    The recent New York cases in which sums deposited have been held or said to be trust funds irrevocable, are not in point here. In Rogers Locomotive Works v. Kelly (88 N. Y. 234), the Mississippi Central and one other railroad had, by consolidation, become the New Orleans, St. Louis & Chicago Railroad Co., and the latter had assumed the payment of the former’s bonds. On May 1, 1875, the assistant treasurer of the consolidated Company deposited with the defendants Kelly and Alexander 825,000 and took a receipt in the following form : “ Received, New York, May 1, 1875, from J. M. C. Rodney $25,000 in trust to apply the same to an equal amount of the coupons .... of the Mississippi Central Railroad Company, .... the said money not to be subject to the control of said company otherwise than for the payment of said coupons as above described.” Andrews, Oh. J., said : “ The intention of the corporation to devote the fund deposited with Kelly and Alexander exclusively to the payment of the coupons, and to place it in their hands as trustees for that purpose is clearly indicated in the receipt.....The corporation parted with all control of the fund inconsistent with the trust declared in the receipt.” The savings bank deposit cases also depend upon the use of technical words from which, by their settled meaning, is conclusively presumed an intent to divest the depositor of all beneficial' interest in the fund deposited (Martin v. Funk, 75 N. Y. 134 ; Willis v. Smyth, 91 Ib. 297). An examination of the papers on - appeal in Matter of Le Blanc (14 Hun, 8 ; aff’d, without opinion, 75 N. Y. 598), shows that the court of appeals did not necessarily decide, and probably did not intend to decide, as would at first appear. Neither the appeal papers nor the appellant’s counsel disputed that the deposit had been so made as to constitute a trust. The petition alleges that the deposit “became the property of the holders of the stock upon which the said dividend was declared,” and in part of the petitioner. The answering affidavit does not deny this, but sets up that the smn drawn out had been paid away by the Erie Railway Company before the receiver was appointed, and did not, therefore, come into his hands. The brief of the appellant’s counsel (the case was submitted without argument) makes only the points that the fund had not come into the receiver’s hands, having been paid away by the company before his appointment; and that, anyway, there was a prior Hen upon the fund. In Watts v. Shipman (21 Hun, 598), it appeared that plaintiff received a check from defendant’s assignor, Duncan, Sherman & Co., “upon the assumption that it would be paid by the National Bank of the State of New York, pursuant to the arrangement between Duncan, Sherman & Co. with such bank.” This arrangement was that the bank should pay all such checks, being amply secured. The securities were therefore equitably assigned to the checkholders.
    II. Even were the remittance a trust fund, this action should have been brought against the Colorado Cattle Company, not Duprat. The fund could not more distinctly have been in the possession of the corporation. There could be no purpose for which, more emphaticaHy “ the officer is the corporation ” (Episcopal Church v. Varian, 28 Barb. 644 ; Carpenter v. Farnsworth, 106 Mass. 561 ;Pollard v. Vinton, 105 U. S. 7). That after the commencement of this action Dupart transferred the $490 to-his own pocket cannot, of course, avail the plaintiff. The plaintiff, in order to be entitled to a judgment, must have the right to recover at the time when he commences his suit (Tiffany v. Bowerman, 2 Hun, 643 ; Royer Wheel Co. v. Fielding, 31 Ib. 274).
   By the Court.

Freedman, J.

The theory of the .action is that the deposit of the sum of §11,672.50, by the treasurer of the Colorado Cattle Co. with the Union Trust Co., to be applied in payment of the coupons of certain bonds of the Cattle Company, then outstanding, amounted to the creation of an irrevocable trust; that part of the trust fund came into the hands of the defendant; and that defendant took it as a volunteer and with notice of its character.

Whether a remittance of funds, with instructions to pay to a third party, constitutes a revocable appropriation or an irrevocable trust, is mostly a question of intent. To create a trust, the. acts or words relied upon must be unequivocal (Young v. Young, 80 N. Y. 422). As a rule such a remittance will not be construed as creating an irrevocable trust, so long as the funds are at the risk of the remitter, and not of the intended payee (2 Story’s Eq. Jur. § 1045).

.From the words of the coupons in question it appears that the coupons are payable to bearer at a specified time and place, and that consequently they are negotiable promises for the payment of money and that as such they are subject to the same rules to which promissory notes are subject (Evertson v. The National Bank of Newport, 66 N. Y. 14).

As to promissory notes it is well settled, in this state, at least, that “ funds in bank ” is no defense available to the maker of a note payable at the bank, to an action upon the note, except (if the amount be paid into court), as to interest and costs. In other words, a deposit of money in bank to meet a note payable there, is not a payment, but only a tender (Wolcott v. Van Santvoord, 17 Johns. 248 ; Caldwell v. Cassidy, 8 Cow. 271; Hills v. Place, 48 N. Y. 520 ; Salt Springs Nat. Bk. v. Burton, 58 Ib. 430).

Even if the bank fails with the funds in its hands, this is no defense to the note on the part of the maker (Indig v. The National City Bank, 80 N. Y. 100).

In the case at bar, it was specifically found by the learned judge below, as matters of fact, that in the making of the deposit by the treasurer of the Colorado Cattle Co. with the Union Trust Co., it was not in the contemplation' of any of the parties to the transaction that the deposit should constitute a trust fund applicable to the purpose of the payment of the coupons alone, regardless of future instructions on the part of the Cattle Co., and that the then treasurer of the Cattle Co. was not authorized to deposit funds with the Union Trust Co. in an irrevocable trust for coupon-holders.

Upon a careful review of the evidence, no reason appears for disturbing these findings. The present case is therefore clearly distinguishable from the case of the Rogers Locomotive Works v. Kelley (88 N. Y. 231), in which the stipulation was that the money deposited should not be subject to the control of the company which made the deposit otherwise than for the payment of the coupons.

No trust having been created in the case at bar, the plaintiff, in order to maintain his action, was then at least bound to show that he parted with a valuable consideration on the faith of the deposit, for an appropriation not amounting to a declaration of trust will not be held by equity irrevocable, unless made for a valuable consideration (Tallman v. Hoey, 89 N. Y. 537). But the plaintiff gave no such proof.

The plaintiff having failed to establish either a trust or an equitable assignment, and it having been made to appear that, after the lapse of some six months and prior to any demand made by the plaintiff for the payment of his coupons, the defendant, as treasurer of the Colorado Cattle Co. and under and in pursuance of express authority from the board of directors of said company, withdrew from the Union Trust Co. the balance then remaining unexpended by the latter on account of the deposit, the learned judge below was right in holding, that the sum withdrawn from the Union Trust Co. as aforesaid, was, at the time of the beginning of this action, in the possession of the Colorado Cattle Co., or of the defendant as treasurer of said Cattle Co., and not of the defendant personally, and that no cause of action against the defendant had been made out.

The views so far expressed render it unnecessary to pass upon plaintiff’s exceptions in detail.

The judgment should be affirmed, with costs.

Sedgwick, Oh. J., and Van Voest, J., concurred.  