Washbon v. Linscott State Bank

Citations

• 87 Kan. 698
• 125 P. 17

Syllabus

<p>SYLLABUS BY THE COURT.</p> <p>1. Trust Funds — Misappropriation — Participation by Bank. Where a bank knowingly participates with a depositor in a misappropriation of trust funds and reaps the fruit of the breach of trust it becomes liable to the beneficiary for whatever loss the latter sustains.</p> <p>2. Lodge Funds — Defaulting Treasurer — Overdraft—Liability of Bank. The treasurer of the grand lodge of Masons deposited the funds of the order in defendant bank. With knowledge that he was a defaulter the bank, for the purpose of aiding him in concealing his shortage, permitted him to overdraw his account and issued to him a certificate to be exhibited to the grand lodge showing that he had on deposit the amount of the certificate, the bank taking as collateral security for the overdraft notes representing loans made by him as treasurer to various individuals. After his reelection as treasurer he returned the certificate to the bank, it was credited to his account, the overdraft was taken up and the collateral returned to him. Upon his death the grand lodge for the first time learned that he was a defaulter and sued the bank for the amount.of the overdraft. Held, that the overdraft was a loan to the treasurer individually, that it was paid when the account was credited with the proceeds thereof, and that the bank with knowledge of the trust character of the fund could not accept any part thereof in payment of the personal debt of the treasurer and is liable to the grand lodge for the amount óf the overdraft.</p> <p>3. Action — Implied Contracts — Tort. An action by the grand lodge against the bank to -recover the amount of such overdraft, wherein the petition states the facts in ordinary and .concise language, is held to be an action upon an implied contract to refund the money and not in tort nor for relief on the ground of fraud.</p> <p>4. - Statute of Limitations — Trust Funds. Upon the facts stated the statute of limitations would not begin to run in favor o