[225 N. Y.] Opinion, per HISCOCK, Ch. J. [Feb., defendant deposited in a special account in a specified bank, and plaintiff subsequently came to defendant's office to perfect such arrangement. When, however, upon her request the money left with the defendant was produced to her she changed her plans and the money was left with defendant pending some arrangement to be made for transmitting the same to Italy without the appointment of herself as such guardian as aforesaid. This balance of about $900 which was thus offered to her and which she decided not to take was left in a general way with defendant pending some indefinite arrangement to be made in the future and there was no understanding or arrangement that the identical fund was to be preserved intact or that it was even to be placed in a special account. As a matter of fact it is assumed and we think must be that it was passed into the account maintained by the defendant as agent, to which we have referred. In all of these transactions the evidence shows conclusively and beyond question or debate that the plaintiff was dealing with the Illinois Surety Company through defendant as its agent and that he was not in any sense acting as principal. The occurrences last detailed took place on August 25th and in the following December defendant's agency for the surety company was terminated, and apparently this was done under such circumstances of dissatisfaction and friction that the surety company refused to repay to the plaintiff the moneys thus left with its agent and has been potential in procuring this litigation to be started against the latter to recover in conversion for the moneys left with him as aforesaid. We search in vain for any facts upon which there may be founded a judgment against him for such conversion. We shall pass the proposition which certainly may be argued with much force that the final arrangement. under which plaintiff left her moneys with defendant was 1919.] Opinion, per HISCOCK, Ch. J. [225 N. Y.] that of a simple deposit creating the ordinary relation of creditor and debtor and assume that the surety company held them in a fiduciary capacity. Even so, in the absence of some special agreement it was not compelled to hold the identical moneys or even to deposit them in a special account. It had the right to deposit them in a general account with other moneys. This method was doubtless subject to certain risks, but it did not amount to a conversion. (Matter of Barnes, 140 N. Y. 468; Bischoff v. Yorkville Bank, 218 N. Y. 106.) And of course a different aspect was not given to these acts because the surety company permitted these moneys temporarily to be deposited in an account maintained. for it by and in the name of its agent. Furthermore, it is obvious that an agent would not ordinarily become personally liable for conversion to a third person because in behalf of his principal he performed acts and carried out a course of dealing which it was lawful for the principal to perform and carry out. If the principal would not become liable for conversion because of the deposit of fiduciary moneys in a general account, certainly under ordinary circumstances the agent through whom this deposit was made and in whose name the account was kept would not become personally liable in the place of the principal. It is, however, claimed, so far as we are able to understand it, that the defendant has been guilty of conversion because he has exceeded his authority and used for his personal benefit the moneys which were received from plaintiff. It being permissible for the surety company to deposit the funds received from plaintiff in the general account without being guilty of conversion, I think it is at least debatable whether the company would have become guilty of conversion if it had used the balance in such account for its business uses so long as it retained in some other account sufficient funds with [225 N. Y.] Opinion, per HISCOCK, Ch. J. [Feb., which to meet its obligations. If it could have used the balance in such account for the purpose of meeting its business engagements with defendant without being guilty of conversion, the defendant himself would not have been guilty of conversion because he received or used the balance in the account in a manner authorized by the surety company. Assuming, however, that the defendant would have been guilty of conversion if he had used in his business as authorized by his principal the balance in the account kept by him as agent, including the deposit of the moneys of the plaintiff, there is no intelligible evidence that he did any such thing. Plaintiff's moneys were finally left with the surety company on August 25th, but for some reason they do not seem to have been deposited in the account kept by the defendant until September 30th. There is no evidence that defendant drew from this account for his own uses except to the amount due to him for commissions and there is no evidence that his drafts for such purpose ever reduced the account below a sum which would leave it good for the amount due the plaintiff. The general custom was that each month after the defendant had drawn the amount due to him for commissions, a statement and remittance covering the balance in the account was sent to the surety company. There is some indefinite evidence that sometimes defendant remitted to the surety company sums left with him as agent as against bonds which had been issued and that sometimes he did not. As already stated we interpret the rather loose evidence on this subject as meaning that sometimes special remittances were made to the surety company for such deposits and do not regard it as contradicting the other evidence which was given by the same witness, that the custom was to remit each month the balance of the general account kept by defendant after withdrawing the sums to which he was entitled for 1919.] Opinion, per HISCOCK, Ch. J. [225 N. Y.] commissions. There is no evidence to rebut this testimony in respect of the general custom followed by the defendant in dealings with his principal or to show that in making these remittances there was excepted and retained in his possession the moneys left with him by plaintiff. It is true that there is evidence that when he left the employ of the surety company in December there was a balance in the account of about $11,000, but it appeared by other testimony which has been assumed to be reasonable and truthful, although given by the defendant, that subsequently and before the commencement of this action he paid to the surety company an amount equal to this balance. Independent of this latter evidence however, there is nothing to show that this balance was not created by sums deposited in the account subsequent to the date when the moneys belonging to plaintiff were deposited and that the remittances made by the defendant to his principal did not exhaust all balance in the account in favor of the principal down to and including the sum belonging to plaintiff deposited in said account. If defendant has remitted to his principal these moneys he received and held for it he certainly is not subject under the circumstances of this case to a claim of conversion. If plaintiff was to succeed in charging defendant with conversion of moneys paid knowingly and undoubtedly to him as agent for a known principal on the theory that he had retained these moneys and used them in an unauthorized manner for his personal benefit, that theory ought to have been sustained by reasonably clear and definite testimony and such testimony we do not find in the record before us. Therefore, I conclude that the views of the Appellate Term were right and that the judgment of the Appellate Division should be reversed and the determination of the Appellate Term affirmed, with costs in this court and the Appellate Division to appellant to abide event, the date [225 N. Y.] Statement of case. [Feb., of a new trial to be fixed by the Appellate Term in case the parties are unable to agree. COLLIN, CUDDEBACK, CARDOZO, POUND, CRANE and ANDREWS, JJ., concur. Judgment reversed, etc. ISRAEL T. DEYO et al., Respondents, v. CHARLES I. HUDSON et al., as Copartners under the Firm Name of C. I. HUDSON & Co., Appellants. Unanimous decision of Appellate Division after special verdict remedial liability principal and agent - fraud and deceit - false promise made with intent to break same action by members of law firm to recover money embezzled by their junior partner and lost in stock speculations, on margins, in a branch office of defendants conducted and managed by their agent when defendants not bound by false statements and by acts of their agent in concealing speculations of the junior partner when evidence insufficient to show authority of defendants' agent in acts complained of or that acts were ratified by defendants - proximate cause deceit followed by negligence not the immediate cause of loss. 1. When a defendant's motion for a nonsuit is granted after a special verdict in favor of plaintiff and the Appellate Division unanimously reverses the judgment entered thereon and grants judgment on the special findings of the jury, the reversal of the judgment is reviewed in this court on the evidence and not on the special findings. The power of the Court of Appeals to review on the evidence is not defeated even by the unanimous decision where the exceptions to rulings on evidence and to the charge of the court sufficiently present the question whether the special verdict rests on a foundation of legal error. 2. A promise made for the pecuniary advantage of the promisor, with the present intention to break it, may be deemed to be the false statement of a material existing fact because it falsely represents the state of promisor's mind and the state of his mind is a fact. Remedial liability may arise from such an unqualified falsehood when loss results therefrom. |