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Page:Harvard Law Review Volume 2.djvu/54

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Subsequent English cases followed this decision.^ In KnatchbuU V. Hallett,* however, the court (Thesiger, L. J., dissenting, as he felt bound by authority), after having disposed of the view that the cestui que trust had no claim at all, decided that the presumption did not apply where the balance was composed in part of trust funds and in part of the trustee's private funds, but that in such a case it should be presumed that the trustee drew out what he had a right to use, that is, his own money. It certainly should not be presumed unnecessarily that the trustee is a wrong-doer. It fre- quently happens that a trustee deposits trust money to his private account, not from any bad intent, but merely from ignorance of the duties of his position, and he carefully keeps a balance at least as great as the amount of the trust. The presumption of the court should be that fair dealing was intended, so far as the facts proved will allow such a presumption. The American cases which allow the cestui que trust any right against such a mingled deposit are in accordance with the later English rule.

Let it be supposed, however, that the balance at some time falls below the amount of the trust money. In such a case the con- clusion cannot be avoided that as to the difference between the two the trust money has been withdrawn, so that as to this differ- ence the cestui que trust must follow it into what is purchased with it, or if unable to do that, must take the position of an ordinary creditor. Nor will subsequent deposits of the trustee's own money give any larger right in the absence of special circumstances indi- cating an intention on the part of the trustee to fill the deficit in the amount of the trust money, for such an intention cannot be presumed. Unless such an intention be shown, therefore, the equi- table charge on the account can never exceed the smallest balance to the trustee's credit, since the deposit of the trust money. Thus, if the balance were reduced to nothing, even for a day, the cestui que trust would have no specific claim.

In all the cases hitherto considered, the trust money has been traced into some specific investment or deposit, although confused with other property. The case remains to be considered where this cannot be done, but a whole estate can be shown to be in- creased by the amount of a trust fund. A case illustrating this well is People v. The Bank of Rochester.' The defendant bank

1 Merriman v. Ward,! J. & H. 377; Frith v. Cartland, 2 H. & M. 417 ; Brown v. Adams, L. R. 4 Ch. 764; Ex parti Cooke, 4 Ch. D. 123. a 13 Ch. D. 696. « 96 N. Y. 32.