Farmers & Traders Bank v. Kimball Milling Co.

Citations

• 1 S.D. 388
• 47 N.W. 402
• 1890 S.D. LEXIS 46

Syllabus

<p>1. Where the president and cashier of a bank fraudulently divert the funds and assets of the bank, and invest them in mill machinery, fixtures, real estate, and appurtenances of a corporation of which they were at the time the president and secretary, such corporation holds such property impressed with a trust in favor of the bank to the extent of the hank funds and assets that can be traced into such corporate property, unless such corporation can show that it acquired such funds and asaseis iñ good faith, and for a valuable consideration.</p> <p>2. The fact that such bank officers were the general officers of the milling company from its organization, and during- the time the bank funds, property, and assets were being diverted and invested in the milling- company’s property by them, as well as officers of the bank, constitutes presumptive knowledge on the part of the milling company of the fraudulent acts of such bank officers.</p> <p>3. It is not necessary, in cases of constructive or involuntary trust, as defined, by Section 3920, Comp. Laws, that the bank should show that its funds had paid for any definite or aliquot part of the milling company’s property; but the bank is entitled to have impressed and charged upon the milling company’s property atrust to the extent of its funds and assets, with the profits thereof, which it can trace into said milling company’s property, with notice.</p> <p>4. Where the officers of the bank have received stock of a corporation in paymentfor the funds and property fraudulently obtained from the bank, and invested in the corporate property, the bank is not compelled to follow the stock in the hands of the officers of the bank so receiving it, but may, at its option, follow the property so purchased or created with such fraudulently misappropriated bank funds and assets, with the profits thereof, or their proper proportion, where it is alleged, as in the present case, that substantially all the property of the corporation ha