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Home > Journals > Michigan Law Review > MLR > Volume 21 > Issue 8 (1923)

 

Abstract

Many difficult questions are continually arising in the field of trusts, but few of them are of more practical importance than the one presented where A, being trustee of two or more trust estates, wrongfully uses money of one trust estate, and takes money from another to pay it back. Such a question was presented in the recent case of Whiting v. Hudson Trust Co. (N. Y., 1923), 138 N. E. 33. In that case, one Eckerson was executor of the Denham estate and trustee and executor of the Snyder estate. He kept an account with the trust company as the representative of the Snyder estate, and also an account designated as "special" in which he deposited funds raised by the sale of securities of the Denham estate. Having embezzled funds of the Snyder estate, Eckerson took funds from the "special" account and paid them over to the Snyder estate, a distribution being then made to the legatees of that estate. On the death of Eckerson some six months later his thefts were discovered, and suit was brought against the trust company and also against the Snyder estate. The court held: First, that the trust company was not liable as a party to the wrong, the executor being legally entitled to deposit trust funds to his personal account, and that his depositing them in a special account instead of in his general account did not of itself constitute a conversion. On this point we may well agree with the court. Using its language, "the transactions of banking in a great financial center are not to be clogged, and their pace slackened, by overburdensome restrictions." See also 36 HARV. L. REV. 762. Second, that the plaintiff was entitled to a personal judgment against the Snyder estate to the extent of the unjust enrichment, viz., the amount of money which was withdrawn from the Denham estate and turned over to the Snyder estate. The judgment was to be enforced out of the assets remaining in the Snyder estate.

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