FIRST DEPARTMENT, NOVEMBER TERM, 1891. manner been made, Robertson, the treasurer of the company, deposited this sum to his credit in the National City Bank, of the city of New York, where he mingled it with his own funds, but he made no payments on account of the company until after the discovery of the fraud. In January, 1889, the sum of $10,000 was drawn against this credit in favor of the company and sent by it to the State of Michigan, where it was deposited as security for a person who had become surety on the issuing of attachments against the personal property claimed to belong to Mrs. Friend and another person, and as security for costs in suits commenced, and to be commenced, in behalf of the company, or of these two defendants, and which money was to be returned when all such liabilities should cease. The residue of the $28,108.80 was drawn from the bank for different objects, with the exception of the payment of a balance owing to the bank itself. And in that manner the entire proceeds derived from the purchase of the ninety-six shares of stock were disposed of. And that reduced necessarily the claim of the plaintiff to this sum of $10,000, so far as the identity and following of the fund has been presented by the case. That the representations and agreement made by these two defendants with the persons who purchased these shares created a trust for the disposition of the proceeds of their sales, or, at least, imposed upon these individuals a fiduciary obligation to fulfill their representations and agreement, seems to be reasonably the result of what is shown to have taken place. For, without the assurance on their part that this money would be used and employed to obtain the process alleged to have been discovered for the refining of sugar by electricity, it is clear that these purchasers would not have parted with their money or taken the title to these shares. And under this state of the case the defendants who obtained the money in this manner became obligated so to use it. What they represented and agreed to do were sufficient to create this obligation. For, as it was said in Day v. Roth (18 N. Y., 448): “A written agreement is not necessary to create a trust in money or personal estate. Any declaration, however informal, evincing the intention with sufficient clearness will have that effect. Such declarations stand on somewhat peculiar grounds. They are not to be regarded as admissions merely of some antecedent fact in relation to the subject, but are to be looked upon FIRST DEPARTment, NovembER TERM, 1891. and received as constituting the very trust which they acknowledge. The doctrine of equity is, that by their own force they impress the fund with a peculiar character, and hence they are receivable on the same grounds as a precise and formal agreement. A person in the legal possession of money or property, acknowledging a trust, becomes from that time a trustee, if the acknowledgment is founded on a valuable or meritorious consideration." (Id., 453.) And the obligation which was incurred by these two defendants through their representations and agreements was founded upon a meritorious consideration. For, without that, there is not the least reason to suppose that this money would have been parted with by the persons who took these shares, and so speedily, upon the discovery of the fraud, endeavored to rescind their purchases and secure a return of their money. It has been supposed, inasmuch as this money, the proceeds of the sales, was deposited in the bank by the treasurer of the corporation, with other moneys standing there to its credit, that the power of following it was thereby extinguished. And upon an examination of the cases In re West of England, etc., Bank (L. R., 11 Ch. Div., 772), that was considered to be the law, upon a review of the antecedent authorities, where no actual trust attached itself to the fund, but, at most, the obligation was one of a fiduciary character. But this decision, upon a further examination, was overruled in the case of In re Hallett's Estate (L. R., 13 Ch. Div., 696). And it was held, in substance, that there was no solid distinction, so far as the right to follow the fund should be in controversy, between the case of a technical trust and the existence of a fiduciary obligation. And that has been considered to be a true exposition of the law as it has been administered in this State, and also in the Supreme Court of the United States. (Importers and Traders' National Bank, etc. v. Peters, 123 N. Y., 272, 278, 279; National Bank, etc. v. Insurance Co., 104 U. S., 54, 67-69.) And the correctness of this principle was fully held and enforced in Newton v. Porter (69 N. Y., 133, 139) and in Ferris v. Van Vechten (73 id., 113) and Baker v. New York National Exchange Bank (100 id., 31). That the money obtained from the sale of the fifty-seven shares now in suit went into the account of Robertson and Coterill on the books of the company, and to the credit given to Robertson, as its treasurer, and into the New York City National Bank, and was then, in FIRST DEPARTMENT, NOVEMBER TERM, 1891. part, and to the extent of $10,000, drawn out and sent to the State of Michigan, for the purposes already mentioned, where it now remains in that manner, are facts clearly found and declared by the decision of the court. And that certainly entitled the plaintiff, as the assignor of these purchasers, to follow, at least, so much of their money as went into this sum of $10,000. That it was made up to over six-tenths of the amount by their funds appears to be free from any substantial controversy. And to that extent the plaintiff is entitled to reimbursement out of this sum of $10,000. And they should, at least, have been permitted so far to maintain their action against the receiver of the company. For neither the company nor the receiver parted with any consideration whatever for the money received by it, and which has been deposited, to the extent of $10,000, in the State of Michigan. And under the case of Bank, etc. v. Peters (supra), it may very well be held, inasmuch as the other persons who purchased the residue of the ninety-six shares have taken no measures to rescind their purchases, that this entire sum of $10,000, subject to the obligations to which it has been subjected as security in the State of Michigan, should be recovered by the plaintiff in this action. The facts upon which hat right depends have all been found in the decision of the court, and they not only warrant, but require, a judgment to this extent to be ordered in favor of this plaintiff. It is not necessary, therefore, to consider the appeal from the order denying the plaintiff's motion for a reargument, for, upon the case as it is presented, the plaintiff is entitled to maintain this action for the recovery of this money. As to its identity there is no possible ground of doubt, and the judgment should, therefore, be reversed and judgment ordered for the plaintiff, with costs of the action and costs of this appeal, to be settled as to its terms upon notice to the counsel for the receiver, and the appeal from the order should be dismissed. VAN BRUNT, P. J., and LAMBERT, J., concurred. Judgment reversed and judgment ordered for the plaintiff, with costs of the action and costs of this appeal to be settled as to its terms upon notice to the counsel for the receiver, and the appeal from the order dismissed. Cases DETERMINED IN THE THIRD DEPARTMENT AT GENERAL TERM November, 1891. THE A. C. NELLIS COMPANY, APPELLANT, v. ARTHUR Estoppel-loan, forbidden by statute, made by a corporation to a stockholder — sale of collaterals not an estoppel or ratification not inconsistent with an action for conversion-Laws of 1848, chap. 40, sec. 14. The president, who was a stockholder and practically controlled the management of a corporation, organized under chapter 40 of the Laws of 1848, induced the treasurer of the company to loan to him, upon his notes secured by the pledge of his stock in that company as collateral thereto, moneys belonging to the corporation, in excess of the value of the stock so pledged. The treasurer of the corporation had been authorized by the board of trustees thereof to loan its surplus moneys to its advantage, taking good and sufficient security for such loans. By section 14 of the act of 848 the corporation was forbidden to loan its money to a stockholder thereof; and subsequently to this loan having been made to the president, who was a stockholder of the company, the loan was called in and the stock pledged as collateral thereto was sold, the amount realized therefrom representing less than fifteen per cent of the amount of the loan. In an action brought by the company against its president to recover the amount of such loans, less the amount obtained by the sale of the stock, it was alleged in the complaint that he had illegally converted to his own use the moneys which had been so loaned to him: Held, that the loan was illegal, being forbidden by the statute. That what the trustees could not lawfully do they could not subsequently ratify. 62h 63 f51ad261 THIRD DEPARTMENT, NOVEMBER TERM, 1891. That their sale of the hypothecated stock, made to reduce their loss resulting from the defendant's unlawful conversion of their property, was not a ratification of the loan and that it did not estop them from suing for such conversion. That the trustees were not bound to restore the stock before action, for the defendant was, in any event, bound to return the money of the company whether he had obtained it in defiance of the statute or as an ordinary borrower. That such sale of the stock had not injured the defendant or altered the position of the parties, and that the company had not thereby elected to adopt a remedy inconsistent with the present action. (MAYHAM, J., dissenting.) APPEAL by the plaintiff, the A. C. Nellis Company, from a judgment, entered in the office of the clerk of the county of Montgomery on the 24th day of February, 1891, dismissing the complaint, with costs, after a trial at the Montgomery Circuit before the court and a jury. This action was prosecuted to recover ten thousand dollars ($10,000) for the alleged wrongful conversion by the defendant of certain moneys belonging to the plaintiff. The complaint alleged the incorporation of the plaintiff, under the act authorizing the formation of corporations for manufacturing, mining, mechanical and chemical purposes, and that the defendant was a trustee and stockholder in such corporation, and charged that, in violation of his duty as such trustee and stockholder, and without lawful authority therefor, the defendant took, received, fraudulently misapplied and converted to his own use the money of the plaintiff, in the aggregate to the amount of $7,150. The answer admits the existence of the corporation, and that defendant was a trustee and stockholder in the same, and alleges that the plaintiff loaned the money specified in the complaint to the defendant, took and held his notes for the same, with 1,200 shares of stock in the company belonging to the defendant as collateral to such loan, and that the defendant had paid the interest and part of the principal on such loan, and that before the commencement of the action plaintiff had called such loan and advertised and sold the stock held as collateral to such loan, and had received and retained the proceeds of the sums realized on such sale. The evidence disclosed that the defendant had held a majority of all of the stock of the company, and was, at the time of the alleged taking of the money, the president of the company and a member of the board of trustees. That before the receipt of the money by |