Montgomery v. Rauer

HEHSHAW, J. Plaintiffs, who are minors, sued defendant by an action in form for moneys had and received. Defendant answered, alleging that “the above-named minors have received all of the moneys deposited by their said guardian, Agnes S. Montgomery, with this defendant.” He followed this averment by a denial that the sum of four thousand dollars demanded in the complaint, or any other sum of money, was due, owing, and unpaid from him to the plaintiffs. The action was tried before a jury, which returned a verdict against him in the sum of fifteen hundred dollars. From the judgment and from the order denying him a new trial, he appeals.

The following are the salient facts: Mrs. Montgomery was a widow and the mother of the plaintiffs. Defendant Bauer possessed her confidence, and managed many of her business and legal affairs. She was guardian of the estates of her children. She put into Bauer’s hands two thousand dollars of her own money and five thousand dollars of the money of the children. Bauer received these funds with full knowledge of their origin, character, and ownership. He knew that the five thousand dollars were the trust funds of the minors, and so received it. Other moneys of Mrs. Montgomery passed into his hands. Over these there is a conflict in the evidence; over the others, none. Defendant contends that he paid back to Mrs. Montgomery more money than he received; also, that in adjusting the accounts and finding the balance, allowance of many sums which should have been credited him was improperly withheld on the ground that they could not be charged against the minors’ moneys. He insists that he was justified in offsetting against all the moneys which he had received from Mrs. Montgomery all the payments which he had made to her, and all items chargeable against her, and that he was not accountable to the minors for their separate funds as such.

But Bauer received the children’s moneys from their guardian, knowing their character. Knowing them to be trust funds, and having received them as such, he could not charge them with the individual debts of the guardian. (Wallace v. Brown, 41 Ind. 436; Baughn v. Shackleford, 48 Miss. 255; Austin v. Willson, 21 Ind. 252.)

Yet this in many instances is precisely what he attempted to [230]do. Moreover, there being evidence to establish the fact that a voluntary relation of personal confidence and trust existed between Mrs. Montgomery and Rauer, Rauer became a trustee for the minors under section 2290 of the Civil Code, which dedares that: “Everyone who voluntarily assumes a relation of personal confidence with another is deemed a trustee within the meaning of this chapter, not only as to the person who reposes such confidence, but also as to all persons of whose affairs he thus acquired information which was given to such person in the like confidence, or over whose affairs by such confidence he obtained any control.” Therefore, if Mrs. Montgomery personally became indebted to him, it was not permissible to charge such debts against the minors’ funds. If he repaid the minors’ money or any part of it to the guardian, he is, of course, not concerned with the future disposition which she might make of it, nor is he accountable therefor; but he cannot set off against these trust moneys Mrs. Montgomery’s individual liability to himself. The court upon this matter correctly instructed the jury. But whether the amount due be estimated upon this basis, or whether it be computed by subtracting from all the moneys in Rauer’s hands all payments made by him to Mrs. Montgomery, and all items chargeable against her individually, in either case the evidence supports the verdict.