Commonwealth v. Tradesmen's Trust Co.

Citations

• 250 Pa. 372
• 95 A. 574
• 1915 Pa. LEXIS 952

Syllabus

<p>Trusts — Trust funds — Confusion of funds — Set-off—Contracts —Failure of performance — Trust companies — Commission—Receiver.</p> <p>. 1. Where a trustee has by his own wrongful act converted trust funds to his own use and mingled them with his own funds or the funds of others, the rule is that if the identity of the fund or property can be traced, it will be subjected to the rights of the cestui que trust in its new form, but whenever the means of identification fails, as where the property or money is mixed with a general mass or fund of the same description, the right to pursue it fails.</p> <p>2. A trust company which had a contract with a builder by which it sold certain securities belonging to the builder under an agreement that the funds received therefrom should be subject to the check of the builder and should be used in a building operation, wrongfully mingled the funds so received with its own funds. The trust company closed its doors and a receiver was appointed., The builder died insolvent and- his representatives and those interested in the building operation claimed the fund. The receiver claimed the right to set off certain notes upon which the builder was liable, alleging that the trust funds could not be traced. Held (1) The fund having been mingled with the funds of the trust company could not be followed as a trust fund. (2) Such notes owing by the builder’s estate as were due and payable could be set off by the receiver of the trust company. (3) The claim of the builder’s estate and of those interested in the building operation tó require the trust company to refund a commission it had charged on the ground that it had not all been earned was no higher than the claim of a general creditor.</p>