Mills v. Swearingen

Citations

• 67 Tex. 269
• 3 S.W. 268
• 1887 Tex. LEXIS 862

Syllabus

<p>Trusts—Assignment—Intervention.—A trustee, at the request of the cestui que trust, loaned the trust money to a banking firm in which the trustee was a partner, the bank paying interest on the same. The interest was paid until one of the firm died insolvent, and afterwards the trustee, who was the surviving member, made an assignment, as such, for the benefit of those creditors who would consent to accept their proportionate share of the assets and discharge the assignor. The beneficiaries in the trust filed their claim with the assignees, but claimed priority over other creditors. The claim was allowed, but priority refused.</p> <p>In a suit by the cestui que trust against the assignees and the surviving partner to enforce priority of payment, held :</p> <p>(1) The claim occupied the same relation to the bank and its creditors that was sustained by any other debt for borrowed money.</p> <p>(2) Such a debt is as much released by acceptance of the terms of the assignment as any other debt.</p> <p>(3) The cestui que trust could not, after accepting the assignment, proceed against the trustee and surviving member of the firm for payment in full. (It was not shown that the trustee knew at any time that the money was unsafe in the bank.)</p> <p>(4) The borrower of a trust fund loaned in pursuance of the express requirements of the trust does not thereby become a trustee for its beneficial owner.</p> <p>(5) When the money was borrowed by the bank it was divested of its trust character, and became the property of the bank as other money borrowed, and the trusteeship was not transferred to the bank because of the trustee’s relations to the bank.</p> <p>(6) There was no error in permitting other creditors to intervene who were interested, as such, in the property assigned.</p>