Being unable to agree with the conclusion proposed in this case by Mr. Justice Bonham in his opinion, I shall state the reasons for my views. In so doing I shall refer to the Easley Bank Trust Company, as he has done, as the Easley Bank, and I shall refer to the appellants as the "shippers" and to the persons who finally received the cotton as the "buyers."
In the case of Ex parte Bank of Aynor, 144 S.C. at page 159, 142 S.E., 239, 243, Mr. Justice Cothran states the principle contended for by the appellants in this case as follows: "But the case is quite different from a constructive trust ex maleficio. There the trustee has acquired no more title to the misappropriated fund, than a thief would have acquired. As a matter of law and morals he occupies that detestable position; and the beneficiary occupies a much more favorable position than that of the general creditors, or the beneficiary of a simple constructive trust. If it can be shown, *Page 72 therefore, that the misappropriated fund went into the coffers of the corporation prior to receivership, was disbursed by the corporation in the payment of its debts or in the acquisition of property, there can be no reason or justice in allowing the general creditors to receive the benefit of the stolen property simply for the reason that a corresponding amount of money was not turned over to the receiver. The corporation will have received the benefit of the stolen fund by the reduction pro tanto of its liabilities; the general creditors should not be heard to say that they may hold onto the benefit of the theft and not account for it."
The decision of this case must depend upon the proper application to the facts of this case of the principle thus stated and declared by Mr. Justice Bonham to be the law of this case.
The facts of the case, except as to immaterial matters, are undisputed. It appears from the evidence that each of the appellants had contracted to sell to Smith Bros. certain cotton to be delivered in each case at an appointed destination named by Smith Bros. The cotton was to be paid for in cash before delivery. Under the custom of dealing between the sellers and Smith Bros., each shipper turned his cotton over to a carrier for delivery, receiving a bill of lading for the same, and attached such bill of lading to a draft drawn on Smith Bros. for the correct amount of the purchase price of the cotton, which draft, with the bill of lading attached, was sent to the Easley Bank for collection.
Smith Bros. could not procure the cotton from the carrier without the bill of lading, nor could that firm legally procure the bill of lading without paying the draft to which the bill of lading was attached. The bill of lading, in the hands of the Easley Bank, was the property of the shipper, and represented his or its title to the cotton contracted to be sold. Instead of collecting the draft in each case, before delivering the bill of lading, as was its duty, the Easley Bank allowed one or the other of the Smiths, members of the *Page 73 partnership of Smith Bros., who were also officers of the bank, and who had access to the papers of the bank, only through such officers, to purloin the bill of lading, and attach such bill of lading to a draft on a person to whom they, Smith Bros., had contracted to sell the cotton. The bill of lading, the property of the shipper, as already stated, with the draft of Smith Bros., to which the bill of lading was attached, was redelivered to the Easley Bank. That bank, through its other offices, either under instruction of one or the other of the Smiths, or in accordance with a course of dealing established by the bank with the Smith Bros., of which the appellants had no knowledge, then proceeded to forward the Smith draft with the shipper's bill of lading attached, to its correspondent bank in Greenville, collected from the buyer of the cotton the amount agreed to be paid to Smith Bros. therefor, and through its collecting agent, delivered to the buyer the bill of lading of the shipper. The cotton went into the hands of an innocent party, but the proceeds of the sale, under the instructions of the Easley Bank, were deposited with its correspondent bank to its own credit and such proceeds of sale were checked out by the officers and agents of the Easley Bank, presumably in paying its debts or in acquiring other assets.
I reach this conclusion because there is nothing in the evidence to show that the money procured from the buyers of the cotton was used for any purpose other than a legitimate purpose of the Easley Bank. The officers and agents of the bank, other than the Smiths, participated in and had full knowledge of all acts by which the bill of lading of the shipper representing his or its cotton, which had not been paid for by Smith Bros., was turned over to the buyer from Smith Bros. Charged with the duty of holding the bill of lading of the shipper, representing the cotton contracted to be sold, until it had collected the shipper's money which the bank was to remit, the officers of the Easley Bank sold the shipper's cotton and appropriated the proceeds thereof to *Page 74 the use of the bank. The Smiths, no more than the other officers and agents of the Bank of Easley, are chargeable with this breach of trust. For the officers and agents of the bank other than the Smiths to say that they took the property of the shipper and sold it and appropriated the proceeds for the use of the Bank of Easley because they were told to do so by one of the Smiths will hardly be considered by the Court as an excuse for the fraudulent breach of trust.
Nor, as I view the evidence, did the Smith Bros. reap the benefits of the illegal and fraudulent delivery of the bill of lading to the buyer who paid for the cotton. The money for the bill of lading, or for the cotton which the bill of lading represented, and that is what the Easley Bank was authorized to receive for remittance only, went to the credit of that bank in a Greenville bank and not to the credit of the Smith Bros. Not a dollar of the money was received by the Smith Bros. or was it ever transferred from the Greenville Bank to the Smith Bros.
It cannot be claimed that Smith Bros. obtained the benefit of the illegal and fraudulent transaction because of the fact that the partnership received credit with the Easley Bank for the draft drawn on the buyer of the cotton. It is clear from the evidence in this case that Smith Bros. would have received credit at the hands of the other officers of the bank and at the hands of the bank for any draft which they drew, as readily without a bill of lading as with it, their will dictating the decisions of the bank and of its officers upon all questions. The other officers and agents of the bank who had no interest in the transaction and who were bound under the law to protect the interests of the bank and its customers, as indicated, appear to have been entirely subservient to the Smiths, and in all matters were ready to do their bidding. As stated, therefore, and as shown by the evidence, credit was not extended to Smith Bros. on account of the bill of lading of the shipper, which was attached to their draft but because one or the other of the Smiths required such credit. *Page 75
In addition to this, as a part of the transaction by which credit was given for the draft of the Smith Bros. in each case that firm delivered to the Easley Bank a check on their own account in that bank in the amount of the value of the cotton as represented by the draft of the shipper.
In the transaction by which Smith Bros. took possession of the bill of lading in each case, and I am now speaking of the transaction as between Smith Bros., and the Easley Bank, themselves, and without reference to the rights of the appellants, Smith Bros. could not and cannot now, as against the receiver, claim credit for the deposit represented by the draft which they made upon the buyer of the cotton, without being charged with the amount of the check left with the bank and payable to it, corresponding to the amount which should have been remitted to the shipper. If these checks cannot be paid, the credit given Smith Bros. on account of the draft in each case must be canceled in any proper and equitable settlement of the accounts between Smith Bros. and the receiver. Smith Bros., as between themselves and the receiver of the bank, cannot claim and receive the benefit of an agreement or arrangement between that firm and the bank without performing the obligations assumed by them in order to secure such benefit. In any event, all the benefit that Smith Bros. ever received or could receive in a proper adjustment of their account with the receivers is the amount of the profits contemplated by them in a resale of the cotton and no claim is made here by the appellants for such profits.
The transaction by which Smith Bros., or one of them, purloined the bill of lading from the Easley Bank and redelivered the same to such bank attached to their own draft drawn on persons to whom they had contracted to sell the cotton, and the transaction by which the Easley Bank collected from the buyers of the cotton the proceeds of sale therefor and appropriated the same to its own use, were acts of the officers of and agents of the Easley Bank in violation of the trust imposed upon them by law. Of such violation *Page 76 of, and any intended violation of such trust, the appellants had no knowledge, took no part therein, and had no notice of facts from which knowledge might reasonably have been inferred.
The shipper in each case had every reason to believe that the officers and agents of the Bank of Easley would handle his or its transaction in accordance with law and he or it had no notice of facts which would cause even a suspicion of wrong doing.
If the facts in this case, leaving out the transactions of the Smiths, in taking out the bill of lading of the shipper, and the acts of the other officers and agents of the bank in allowing this to be done, warrant the Court in declaring that the shipper is entitled to the benefit of the principle arising out of a trust ex maleficio, then, should and will the Court deny the shipper his or its rights as established by the cases cited in the leading opinion because the Smiths, or one of them, as an officer of the bank gave or caused to be given to Smith Bros. credit with the bank for some amount to which they were not entitled to credit or because the other officers and agents of the bank allowed them credit for an amount to which they were not entitled to credit, that is, if credit may be held to have been extended Smith Bros. on account of the bill of lading of the shipper being attached to their draft?
Will the fraudulent acts of the Smiths and of the other officers of the Easley Bank in so doing have the effect of denying to the shipper who trusted the bank and its officers to perform their plain duty and who had no knowledge of the wrong doing of such officers and agents of the Easley Bank, and who had no reason to suspect that such wrong doing would take place, those rights to which the law says the shipper is otherwise entitled? To ask these questions is to answer them.
The evidence makes it clear that the Easley Bank, through its proper officers and agents, received the shipper's property, his bill of lading, representing his cotton, for a single purpose *Page 77 — to collect therefor in cash, deliver the bill of lading and remit the proceeds. Instead of doing so, the Smiths and the officers of the bank other than the Smiths, sold the shipper's property in a way not contemplated by law, and the arrangement between the shipper and Smith Bros., collected the proceeds from the illegal and fraudulent sale and used such proceeds for the purposes of the Easley Bank. As stated, the bill of lading of the shipper went into the hands of an innocent purchaser. The cotton of the shipper is gone. Under such circumstances, and under the law as declared in this state, the shipper became entitled to the benefits arising from the stated principle applicable to a trust ex maleficio. It is unreasonable and illogical as I view the evidence and the law to claim the shipper's rights which thus became established were divested and wiped out by the proof of other fraudulent designs and acts on the parts of those who in the first instance betrayed their trust. To allow the rights of the shipper to be thus effected would be to destroy the practical application of the principle fixed in the Ex parte Bank ofAynor case, and in the cases which have reaffirmed the doctrine announced by Mr. Justice Cothran in the case first mentioned, and would make of the principle a mere theory. It follows, therefore, in my view, that the referee and the Circuit Judge were in error in denying to the appellants priority over the general credits and depositors of the Easley Bank in the distribution of the assets of the bank.
I concur in the conclusions of Mr. Justice Bonham in his disposition of the other claims to priority made by the appellants, however.
My conclusion is that the judgment of the Court below should be reversed in the particulars indicated herein and affirmed in all other respects. A majority of the Court agreeing with these views, it is so ordered.
MR. CHIEF JUSTICE BLEASE and MR. JUSTICE STABLER concur. *Page 78
MR. JUSTICE BONHAM concurs in part and dissents in part.