This equitable action was brought to recover a fund amounting to $50,000, alleged to be held by the defendant, and to have been acquired by him as trustee of C. Bunting & Co., bankers, a corporation organized under the laws of Utah.
It is claimed in the complaint that this fund was derived *457from the proceeds of a life insurance policy issued on the life of Charles Banting, deceased, for the sum of $50,000, on November 29, 1894, payable on tbe death of Bunting, to his estate. The testimony shows that in case of loss, the policy was payable to his heirs, executors, or assigns. Therefore this action was brought to recover this fund upon the ground that the sum of $5,110 of the money of C. Bunting & Co., bankers, of which the plaintiff is the receiver, was used by Bunting from the funds of C. Bunting & Co., bankers, in the payment of three premiums on the life policy prior to his death, and that a trust resulted in favor of the bank and its receiver to the extent of the entire sum of $50,000, derived from the policy. It is also alleged, and not denied, that in 1896 the policy was assigned to the defendant. The testimony shows that it was assigned in August, 1896, and that the insurance company then sent the usual notice for payment of the premium to the defendant. It is also alleged that the assignment was made without any consideration. This allegation is admitted. In May, 1897, after proof of Bunting’s death, the insurance company paid to the defendant the full amount of the policy.
C. Bunting & Co., barkers, was organized December 9, 1892, and Bunting, up to the time of his death,, which was on May 16, 1897, was its general manager, and since October 14, 1893, had owned all the stock of the bank.
It is also alleged that to pay the first premium on July 1, 1895, Bunting executed his note, which he caused to be discounted at his bank; that the second premium, due November 22, 1895, was paid by draft on the bank, and third premium, due November 9, 1896, was paid by charging the same to his own account.
It is further alleged in the complaint, that in his lifetime the said Charles Bunting procured his life to be insured *458on or about the 29th day of November, 1894, by a life insurance policy, executed by the New York Life Insurance Company, in the sum of $50,000, payable to his estate in the event of death; that a policy was duly issued to him therefor, as aforesaid, by said life insurance company; that at the time of such payments Bunting had no credit or funds in the bank with which to pay the same; that said sums taken from the bank for such purposes amounted to $5,110; that such money was the property of the bank; that such bank was in truth insolvent during a large portion of the said three years prior to the appointment of the receiver on February 21, 1898, if an accounting had been had of its debts and assets.
Prior to October 14, 1898, Mr. Wallace owned an interest in the bank, and then sold his interest therein to Bunting. Up to that time Bunting had had credit at the bank, and his overdrafts, when made, were paid Jjy permission of the board of directors.
Upon the hearing in the court below it was ordered and decreed that the fund so received by the defendant was impressed with a trust, and the defendant was ordered to turn over to the plaintiff the entire fund of $50,000. From this decree the defendant appealed to this court.
The testimony shows that on November 29, 1894, for the purpose of insuring his life in the New York Life Insurance Company for $50,000, Bunting gave his note for $1,500, payable to his own order on July 1, 1895, and that he delivered the same, indorsed, to W. C. Fritter, who was then the general agent for the State of Idaho, for said insurance company. The policy was delivered to Bunting at the same time. The complaint alleges the delivery of the policy to Bunting, and it bears the same date as the note. It was found among Bunting’s private papers after his death, and in the absence of proof to the *459contrary, tbe general presumption is that the policy of insurance was delivered to Bunting at the time it bears date. Devlin on Deeds, Sec. 265; Treadwell v. Reynolds, 47 Cal., 171.
The amount of the annual premium on this policy was $1,805. The note given was for $1,500. Whether the agent discounted $305 from his commission, or whether Bunting paid the difference between the note and the full premium in cash, does not appear from the testimony given in the case, but it does appear that $1,805 was the full yearly premium.on the policy which the company required to be paid. This sum must have been arranged or paid by someone. The policy was in the possession of Bunting. The presumption follows that it was rightfully there, and that he paid the insurance company the premium, amounting to $1,805, or the sum of $305 over and above the note for the first premium. But whether this $305 was actually paid to the agent, or whether the agent discounted that much from his commission, or made Bunting a present of it, would not change the result or effect of giving the note for the first premium. Bunting delivered the note to Fritter, and Fritter thereafter, before maturity, and for value, indorsed and transferred said note to the First National Bank at Pocatello. Thereafter, on July 6, 1895, the said last-mentioned bank forwarded said note for collection to C. Bunting & Company, bankers, and the amount of the note was paid by it, by charging to Bunting’s account, and credited to the First National Bank of Pocatello. At this time Bunting’s bank had a credit at the Pocatello bank. No money was actually paid by the Bunting bank, except as stated. Thum tes- ' tified that Bunting told him that the note was given over to Fritter, the insurance agent.
The question arises whether the giving and delivery of *460the note and the receiving of the policy operated as a payment of the first year’s premium.
The note in question was a negotiable one, indorsed, delivered, and accepted by the insurance company as payment, of the premium, and thereafter by it sold and transferred, before maturity, for value
In Riverside Iron Works v. Hall, 64 Mich., 165, it is held that a draft or note is regarded as a payment whenever it appears that such was the intention of the parties, which may be shown by the acts and conduct of the parties, as well as by proof of an express contract or agreement; and the surrender of the evidence of the debt or liability strongly indicates such payment.
So in Farnmen v. Phoenix Ins. Co., 83 Cal., 247, it is held that in ease the policy had contained an express provision that the company should not be liable on the policy until the premium was paid (which is not shown) such provision is waived by the unconditional delivery of the policy to the insured as a complete and executed contract, under an express or implied agreement that a credit shall be given for the premium by note or otherwise, and in such a case the company is liable for a loss which may occur during the period of credit.
To the same effect are: 2 Parsons on Contracts, 624, Thacher v. Dinsmore, 5 Mass., 299; Reed v. Insurance Company, 59 Pac., 21 Utah,—2 Greenl. on Ev., Secs. 52, 519; American Cent. Ins. Co. v. McCrea, 6 Lea., 520; American Cent. Ins. Co. v. McCrea, 41 Am. Rep., 647; Tremont v. Travelers Ins. Co., 31 Fed., 322; 2 Beach on Insurance, Secs. 469, 770, 773; 1 Joyce on Insurance, Sec. 76.
In the case of the Michigan Mutual Life Ins., Co. v. Bowes, 42 Mich., 19, -the court, speaking through Judge Cooley, on p. 22, in discussing a similar question, where *461notes were given for a premium, said, “The company may-have sold them (the notes), and this as between the company and Mrs. Bowes (the assured) would have been equivalent to collection. ’ ’
A life policy which stipulates for the payment of an annual premium by the assured, with a condition to be void in case of non-payment, is not an insurance from year to year, but the premium constitutes an annuity, the whole of which is the consideration for the entire assurance for life. The condition is a condition subsequent, making the policy void by non-performance of the condition. N. Y. Life Ins. Company v. Statham, 93 U. S., 24; Mobile Life Ins. Co. v. Pruett, 74 Ala., 487.
So if the note is given for the annual premium, the acceptance of the note is a waiver of the payment of the premium, and brings into operation such conditions in the policy referring to the note.
In this case the policy was not placed in evidence, no condition of invalidity is shown, and no violation of its provisions can be presumed.
The testimony clearly shows, and I find, that at the time of obtaining the policy Bunting gave his negotiable promissory note and indorsed it over to Fritter, together with the $305, previously referred to, as arranged, in payment of the first year’s premium on the policy. The policy for $50,000 was then delivered to Bunting. Fritter thereafter sold and indorsed the note to the First National Bank of Pocatello, without recourse. This constituted an absolute, completed transaction between the parties, and operates as a full payment of the premium for the first year, even if the note was never paid. The sale of the note to the bank by Fritter, operates, as between Bunting and the insurance company, as a collection of the note. The insurance company would thereafter *462be estopped from claiming a forfeiture of the policy because of the non-payment of the note. So the insurance' company would be estopped after it had collected subsequent premiums on the policy. The fact that Bunting afterward directed the cashier of the Bunting bank to pay the note at maturity, does not change the character of the transaction, nor create nor stamp the fund or the policy with a trust. It necessarily follows that the note and the $305, previously paid, make up the first year’s premium on the policy, amounting to $1,805. This did not constitute a trust fund, and never was a part of the assets of the bank. The funds of the bank were not used in making the first payment, or any part of it, at the time Bunting obtained the actual ownership of the policy. So far Bunting must be held to have paid the full premium and to be the owner of the policy unaffected by any trust liability.
It also appears from the record that Bunting owned all the stock of the bank, was its president and manager, and without hindrance or question from the directors, managed and controlled its business. Since its organization in 1892, up to the time the receiver was appointed in 1897, it had done business as a bank, and was considered solvent during the years 1894, 1895, and 1896, so far as 'being able to pay and in paying its obligations as they matured. The acts of Bunting were open and not secretive. The fraud, if any, consisted in overdrawing his account at the bank which he owned, and in procuring and depositing as assets of the bank to his own credit $107,000 or more of securities which were by him as manager hypothecated in part to secure other obligations growing out of the bank’s indebtedness. Bunting was evidently endeavoring to keep up the credit of the bank and to pay its obligations during a period when strong men *463were driven into despair by a whirlwind of financial adversity, few of whom were able to withstand the gale. The securities he deposited shrunk in value, and many losses followed, but no intentional criminal dishonesty appears on the part of Mr. Bunting in his management of the bank, or in his endeavor to save it from financial ruin.
The record shows that on the 16th day of July, 1895, the $1,500 note was forwarded by the Pocatello bank to the Bunting bank, and it was paid by crediting the same to the former bank and charging the same to Bunting’s account. It also appears that at the time of the payment of said note that Bunting had a balance to his credit of about $20,000 on the books of the bank. At the time the note was given in 1894, it does not appear that Bunting was indebted to the bank.
The second premium of $1,805 was paid by the bank November 24, 1895, on Bunting’s check. At this time Bunting’s account was overdrawn about $10,000. The third premium was paid on Bunting’s check November 27, 1896. At this time Bunting’s account shows a balance to his credit .of over $9,000 on the books of the bank.
So far as I am able to judge from the testimony, with reference to Bunting’s account at the bank, it appears that while he had a credit on the books of the bank, yet as a matter of fact he had deposited to his credit stock and shares of Bunting & Co., merchants, amounting to $107,000, besides other securities, that wore in.part fictitious, as some of it was held as securities for other debts, and was not paid for in full, so that considering these credits as made, his account was overdrawn after the 31st day of December, 1894.
For these reasons respondent seeks to charge the fund derived from the insurance policy with a constructive trust because the sum of $5,110 of the funds of the bank *464were paid in premiums on the policy, and asks that not only the amount paid, but the whole $50,000 be turned over to the bank as impressed with a trust.
Sec. 124 of Perry on Trusts, defining resulting trusts, the author says, “There is another class of trusts which result in law from the acts of parties, whether they are intended to create a trust or not, and they are aptly designated as resulting trusts.”
In Sec. 125, the author says, “In this chapter resulting trusts will be examined under five heads: (1) when the purchaser of an estate pays the purchase money and takes the title in the name of a third person; (2) where a person standing in a fiduciary relation uses fiduciary funds to purchase property, and takes the title in his own name.” * * *
It will be remembered that the policy in question was payable to the heirs, executors, adminstrators, and assigns of Charles Bunting. By giving the $1,500 note to Fritter, who sold the same, and by paying the balance of the first premium and receiving the policy, Bunting acquired the legal title to the policy and its proceeds, and no subsequent payments of premium, maturing thereafter, by him out of the funds of O. Bunting & Co., bankers, could create a trust in favor of said bank or its receiver. The trust, if any, must arise or result from the transaction whereby the trustee acquired the legal title or right to the property in which the trust is claimed, and it must arise at the time the legal title is obtained by the trustee, and not afterward. This doctrine is sustained by the great weight of authority, and the ’principle applies to transactions of this character as well as to cases growing out of real estate transactions.
In Perry on Trust's, Sec. 133, it is said: “The trust must result, if at all, at the instant the deed is taken, and *465tbe legal title vests in the grantee. No oral agreements, and no payments, before or after the title is taken, will create a resulting trust, unless the transaction is such at the moment the title passes that a trust will result from the transaction itself. ’ ’
In re. Wood, 5 Fed. Bep., 443, it is said: “To raise such a trust where the purchase money is paid by one and the title taken by another, the entire purchase money must have been paid by such party; or if a part only be paid, such part must be paid for some aliquot part of the property, as a fourth, a third, or a moiety, and there must be no uncertainty as to the proportion of the property to which the trust extends. Olcott v. Bynum, 17 Wall., 44. And, again, such a trust-must arise at the time of the purchase; it can not arise by after advances.”
In Bosworth v. Hopkins, 85 Wis., 50, 62, it is said: ‘ ‘ Whether any trust is to be implied in favor of the firm from the alleged secret or fraudulent use of its funds in making the purchase depends entirely upon the facts as they existed November 29, 1875, when the purchase was made, and the subsequent withdrawal of funds of the firm and use of the same in payment of part of the purchase money and interest remaining unpaid, and the payment of taxes'1-!!’ improvements on the land, can not be regarded as material to the rightfulness of the purchase. * * * And subsequent wrongful payments on the purchase price from the partnership funds pursuant to a land contract, and subsequent and prior to the deed, will not be ground for an implied trust, though the firm might, if necessary, have a lien against the land for sums so paid. Conner v. Lewis, 16 Me., 274; Fulton v. Jenson, 99 Cal., 587; French v. Sheplor, 83 Ind., 266; Buck v. Sweeny, 35 Me., 41; Pinnock v. Clough, 16 Vt., 500; Case v. Codding, 38 Cal., 181; Monroe, et al., v. Cummings, 95 Mo., *46633; Bottsford v. Burr, 2 Johns. Ch., 405; Pomeroy’s Eq. Jur., Sec. 1037; White v. Carpenter, 2 Paige Ch., 237; Barnard v. Jewett, 97 Mass., 87; Tilford v. Towes, 53 Ala., 120; Coles v. Allen, 64 Ala., 98; Somers v. Overhulser, 7 Pac. (Cal.), 645.
Under the facts shown the money derived from the policy is not made subject to or impressed with a trust in favor of the bank.
But it appears that the sum of $5,110, of the moneys of the bank was, after Bunting had obtained ownership and title to the insurance policy, used by him in making payments of premiums upon the policy as they matured. This sum is traced into the policy, and as we understand, counsel for the appellant upon the argument consented that this sum, with interest, could be allowed the bank, and made a lien upon the fund.
In Sec. 842, 2 Perry on Trusts, it is said : ‘ ‘ Where the . trust fund constitutes a part only of the purchase money of an estate, the court usually gives a lien on the land only for the amount of the trust fund invested and interest ; but where the entire land is the fruit of the trust fund, the cestui que trust has an election to take the land, or the trust fund and interest.”
In 1 Perry on Trusts, Sec. 128, it is said: “If, however, a trustee purchase an estate with trust funds, and adds funds of his own to the purchase money, a trust will result to the cestui que trust; and the burden will be on the trustee to show the amount of his own funds in the purchase, otherwise the cestui que trust will take the whole. If the purchase is partly with trust funds and partly not, the cestui has a lien on the whole property for the amount of the fund misapplied.”
In Munro v. Collins, 95 Mo., 33, it is held that where a trustee purchases an estate partly with his own funds and *467partly with the trust money, the cestui que trust, on establishing the fact, will have a lien on the whole estate for the whole amount of the trust fund thus misapplied.
See also Bosworth v. Hopkins, 85 Wis., 50; Bottsford v. Burr, 2 John. Ch., 404; Case v. Codding, 35 Cal., 191.
The respondents insist that the $50,000 derived from this insurance policy, which was payable to Bunting’s heirs, representatives, and assigns, should be impressed with a trust because $5,110 of the funds of the bank were used to pay the premiums. He demands that a court of equity shall allow the bank a return of the money invested and $44,890 as a just equivalent for the use of $5,110, for the time named. If the trust created were a constructive trust, and the payments were made of trust money at the time Bunting acquired the policy, this contention would seem more in accordance with the holding of many courts. But in this case, where the fund sought tó be impressed with a trust is so grossly disproportionate ’to the amount of the trust funds alleged to have been used, the application of the rule is inequitable, and courts of equity are not required to do injustice; nor should such a doctrine be invoked under a state of facts like those under consideration in this case.
The case of Holmes v. Gilman, 138 N. Y., 369, which is relied upon by the respondent, differs materially from the case at bar. In that case Gilman embezzled $200,000 from the cestui que trust, and afterward insured his life for the benefit of his wife for $50,000, from the funds so embezzled. The court declared a trust upon the fund, but, on page 385, recognized the existence of the equitable rule here contended for without deciding the question, because it was not before the court. The court said :
‘ ‘ If the proceeds of these policies had been greater than *468the whole amount of the indebtedness of the husband to the cestui'que trust, arising out of the husband’s breach of trust, we do not decide what might in equity be the different rights of the wife and the cestui que trust in the bah anee ; or whether any different rule could be logically applied. The husband in this case converted $200,000 of what stood in the nature of a trust fund, and the plain-tiff recovers only a little over one fourth thereof in case the judgment of the referee’s report be affirmed. We simply decide the case before us.”
Here the insurance was made payable to Bunting’s heirs, administrators, and assigns — in effect to his creditors, and |5,110 is the only sum charged in the complaint as having been in any manner misappropriated from the funds of the bank by Bunting. This is the only allegation in the complaint, or claim on that subject, while $50,000 is sought to be applied to reimburse the trust fund thus alleged to have been depleted.
In the Gilman case, at the time the policy was obtained, all of the first premium was paid out of the trust moneys. In this case the first premium was paid by the note of Bunting, for which full credit was given by the company, which vested in him the legal title to the policy at the time of its delivery, relieved from any trust obligation. In the Gilman case the policy was payable to his wife. Upon his death the policy'and proceeds thereof became her separate individual property. In this case the policy was payable to Bunting’s heirs, and thereby became a part of his estate, so that his creditors holding his promise to pay, and to whom he was indebted, could recover therefrom the amount due them. In the one case there was an intent shown to defraud creditors, in the other an intent and disposition is shown to pay creditors.
In the case at bar, neither the insurance policy nor the *469proceeds thereof, were ever impressed with a constructive trust. When Bunting paid, or arranged for the payment of, $305, and gave his note for $1,500 to Fritter,' the agent of the insurance company, in payment of the first year’s premium, and it was accepted as such, and the policy delivered} the title to the policy and the proceeds thereof became vested in Bunting. For all that appears if Bunting had died during that year, the company would have been liable on that premium for its full amount, even if the note had never been paid.
As it now stands, the policy having been made payable to Bunting’s heirs, the fund necessarily belongs to the estate, and becomes liable for the payment of Bunting’s debts, and all his creditors will share ratably in the fund according to the amount of their respective claims. But if the fund is impressed with a trust, then only the creditors of the Bunting bank, to- the exclusion of other creditors, would obtain the sum of $44,890 over and above the amount invested by Bunting from trust funds, as a. regard for his misappropriation of the funds of the bank.
To permit such a disposition of the fund in this case, would, to my mind, not only be an injustice to the heirs and creditors of Bunting, but would be an example against which the conscience of a court of equity would revolt. By giving its sanction to such a disposition of the fund a court of justice would indeed become an engine of oppression and injustice; while by returning the funds misappropriated, with interest, the injured parties are restored to their original' standing, and the financial loss complained of is recompensed.
By insuring his life for the benefit of his estate, Bunting’s creditors were, as it seems, placed in a better position than they otherwise would have been, and this was, possibly, his intention in obtaining the insurance. If he afterward *470entertained the intention of assigning the policy to the appellant, .he did not effectuate that purpose by delivering the assignment of the policy. It still belongs to the estate of Bunting. The respondent is restored to what belongs to it, and the heirs and creditors receive upward of $44,000 that they would not have received but for the alleged fraudulent acts of Bunting.
I am of the opinion that the plaintiff has an equitable lien in the nature of a resulting trust upon the fund in question for the amount of money of the bank used in paying the second and third premiums amounting to $3,610, with interest; but I can not allow the $1,500 advanced by the bank in payment of the note given by Bunting. That payment was of no legal benefit to him, and no equitable lien or trust can arise from its payment. As to Bunting and the insurance company, the premium for the first year was paid.
The record shows that the appellant obtained the policy, with the assignment thereof, attached thereto, after Bunting’s death; that he paid no consideration therefor, and claims no interest therein, except as trustee, for the heirs of Bunting’s estate.
Under such circumstances the money collected upon the policy belongs to the heirs of Charles Bunting, deceased, and should be paid to the administrator of Charles Bunting, deceased, after the payment by him of the sum of $3,610 to the respondent, with interest as stated herein.
It is therefore ordered that out of the $50,000 fund in the hands of the appellant that he pay to the respondent the sum of $1,805, with interest thereon from November 27, 1895, and the sum of $1,805 with interest thereon from November 27, 1896, and that the interest be computed at the rate of eight per cent per annum.
It is further ordered that the findings and conclusions *471of tbe court below be set aside and vacated, and that the judgment and decree be reversed, and that findings a-nd decree be entered in accordance with this opinion.
The costs of this case to be equally divided.