PHILIPS, District Judge.
The first question of importance lying at the threshold of this controversy is one of law: If it were conceded that defendants had not paid over the money on the Green loan to Thompson, what right of action would complainant have to recover the fund in defendants’ hands? He could not sue at law therefor, on the ground that defendants owed Green, for the want of privity of contract. This is conceded by complainant’s counsel. The only ground, therefore, upon which he can recover is that asserted in the bill and argument, — as an assignee in equity under Green. I shall not undertake to review the authorities discussing the doctrine of equitable assignments, illustrating the varying circumstances under which such assignments may or may not be sufficient. The field is broad, presenting some incongruities, and much refinement in discussions. I am content with the rule laid down in the text by Pomeroy on Equity Jurisprudence (volume 3, § 1280):
“It is an established doctrine that an equitable assignment of a specific fund in the hands of a third person creates an equitable property in such fund. If, therefore, A. has a specific fund in the hands of B., or. in other words, B., ás a depositary or otherwise, holds a specific sum of money which he is bound to pay to A., and if A. agrees with 0. that the money shall be paid to C., or assigns it to O., or gives to G. an order upon B. for the money, the agreement, assignment, or order creates an equitable interest or property in the fund in favor of the assignee, C.; and it is not necessary that B. should consent or promise to hold-it for, or pay it to, such assignee. In order that the doctrine may. apply, and that-there may be an equitable assignment creating an equitable property, there must be a special fund, sum of money, or debt actually existing, or to become so in futuro, upon which the assignment may operate; and the agreement, direction for payment, or order “must be. in effect, an assignment of that fund, or of some definite portion of it. The sure criterion is whether the order or direction to the drawee, if assented to by him. would [399]*399create an absoluto personal indebtedness, payable by him at all events, or whether it creates an obligation only to make payment out of the particular designated fund.”
• — From which it is clear that it is not essential to such assignment that it should have been in writing, or characterized by any special formulary, or indicated by any set phrase or ceremony. The text is that, if A. has a specific fund in B.’s hands, “which he is bound to pay to A., and if A. agrees with G. that the money shall be paid to 0., etc., the agreement, etc., creai.es an equitable interest or property in the fund in favor of the assignee; and it is not necessary that B. should consent or promise to hold it for, or t.o pay it to, such assignee.” An agreement is the coining together, in accord, of two minds, on a given proposition. This may be shown by evidence, direct and indirect, as any other fact may be satisfactorily established in court. It may arise by positive expression or necessary implication. Did Green consent and intend that the money borrowed through Thompson of defendants should be paid by Thompson directly over to complainant? Thompson was to receive and apply the money. That such was Green’s purpose and understanding there can be no question, and as little question that Thompson so understood the matter. It is true that when Green was critically examined and cross-examined as to the particular words employed between him and Thompson he could not repeat them, but did depose that such was the understanding. And as persuasive proof thereof he acted Thereafter for a year and a half on the assumption that Thompson had received and paid the money over to complainant. And so reliant was he thereon that lie never made inquiry thereof, thus signifying that he, as assignor, had no further interest in the fund.
Equity, regarding that as done which should "have been done, will, in its eagerness to see that exact justice be done according to the very right and conscience of the matter, effectuate the intention and understanding of these parties. Especially should the court lean to this view where both the creditor and the claimed assignee insist that such was the agreement. Thompson, being* complainant's agent to receive the money for him from Green, eouhl bind the arrangement in favor of Leonard, when assented to, as it was, by Leonard. I do not attach much importance to the fact that Leonard did not assent Thereto until after the failure of the bank and flight of Thompson, for the reason that he had no notice of the fact that the loan, had ever been consummated, and he did assent thereto as soon as he was advised of the fact. This aspect of the case is only important as it affects the conduct of the defendants, and the changed relation of the parties, within that lapse of time, which will be considered hereafter.
A more serious question as to the right of complainant’s recovery, in considering the relative equities between these litigants, arises out of the laches of the complainant. The defendants were entire strangers to the complainant and Green in the inception of the transaction in question. Complainant demanded, through Thompson, that Green should pay his debt to them. He authorized Thompson to [400]*400collect it, and was advised by Thompson that Green proposed to raise the required money by effecting another loan on the mortgaged land. He was also advised that, to enable Green to effect this second loan, it was necessary that the record in the recorder’s office oí Pettis county should show a clear title in Green. That this might be accomplished, he assigned his note against Green to Thompson, thus making Thompson the apparent owner thereof, for the express purpose of enabling him to satisfy of record the mortgage. That was done by Thompson. The legal effect of this was to notify all persons subsequently dealing with the land that this particular debt was satisfied against the property; the very object of which was to satisfy the person who should make another loan to Green that the complainant’s debt was not in the way. Thompson sent on to defendants the abstract of title, showing satisfaction of the mortgage, before the loan was made by defendants to Green.
The contention of complainant’s counsel that Thompson was the general agent of defendants in Pettis county, through whom they transacted in that -locality the business of their loans, and therefore the defendants are bound bv all the information Thompson had respecting the conduct of this particular business between Thompson and complainant, or between Thompson and Green, is wholly untenable. In effecting this particular loan, Thompson was the agent of Green, and therefore the advancement of the money by defendants to Thompson discharged them from any liability therefor to Green. Robinson v. Jarvis, 25 Mo. App. 421-427. The defendants had a right to deal with Thompson upon the assumption that complainant’s debt had been taken care of by Green and Thompson. They demanded an abstract showing a clear title to the land in Green, before the loan was closed. After that they had a right, so far as complainant was concerned, to deal with Thompson as between two independent contracting parties. When they accounted with Thompson in respect of the $5,000, no person, so far as defendants were advised or concerned, had a right to complain thereof, except Green, who made no objection.
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PHILIPS, District Judge.
The first question of importance lying at the threshold of this controversy is one of law: If it were conceded that defendants had not paid over the money on the Green loan to Thompson, what right of action would complainant have to recover the fund in defendants’ hands? He could not sue at law therefor, on the ground that defendants owed Green, for the want of privity of contract. This is conceded by complainant’s counsel. The only ground, therefore, upon which he can recover is that asserted in the bill and argument, — as an assignee in equity under Green. I shall not undertake to review the authorities discussing the doctrine of equitable assignments, illustrating the varying circumstances under which such assignments may or may not be sufficient. The field is broad, presenting some incongruities, and much refinement in discussions. I am content with the rule laid down in the text by Pomeroy on Equity Jurisprudence (volume 3, § 1280):
“It is an established doctrine that an equitable assignment of a specific fund in the hands of a third person creates an equitable property in such fund. If, therefore, A. has a specific fund in the hands of B., or. in other words, B., ás a depositary or otherwise, holds a specific sum of money which he is bound to pay to A., and if A. agrees with 0. that the money shall be paid to C., or assigns it to O., or gives to G. an order upon B. for the money, the agreement, assignment, or order creates an equitable interest or property in the fund in favor of the assignee, C.; and it is not necessary that B. should consent or promise to hold-it for, or pay it to, such assignee. In order that the doctrine may. apply, and that-there may be an equitable assignment creating an equitable property, there must be a special fund, sum of money, or debt actually existing, or to become so in futuro, upon which the assignment may operate; and the agreement, direction for payment, or order “must be. in effect, an assignment of that fund, or of some definite portion of it. The sure criterion is whether the order or direction to the drawee, if assented to by him. would [399]*399create an absoluto personal indebtedness, payable by him at all events, or whether it creates an obligation only to make payment out of the particular designated fund.”
• — From which it is clear that it is not essential to such assignment that it should have been in writing, or characterized by any special formulary, or indicated by any set phrase or ceremony. The text is that, if A. has a specific fund in B.’s hands, “which he is bound to pay to A., and if A. agrees with G. that the money shall be paid to 0., etc., the agreement, etc., creai.es an equitable interest or property in the fund in favor of the assignee; and it is not necessary that B. should consent or promise to hold it for, or t.o pay it to, such assignee.” An agreement is the coining together, in accord, of two minds, on a given proposition. This may be shown by evidence, direct and indirect, as any other fact may be satisfactorily established in court. It may arise by positive expression or necessary implication. Did Green consent and intend that the money borrowed through Thompson of defendants should be paid by Thompson directly over to complainant? Thompson was to receive and apply the money. That such was Green’s purpose and understanding there can be no question, and as little question that Thompson so understood the matter. It is true that when Green was critically examined and cross-examined as to the particular words employed between him and Thompson he could not repeat them, but did depose that such was the understanding. And as persuasive proof thereof he acted Thereafter for a year and a half on the assumption that Thompson had received and paid the money over to complainant. And so reliant was he thereon that lie never made inquiry thereof, thus signifying that he, as assignor, had no further interest in the fund.
Equity, regarding that as done which should "have been done, will, in its eagerness to see that exact justice be done according to the very right and conscience of the matter, effectuate the intention and understanding of these parties. Especially should the court lean to this view where both the creditor and the claimed assignee insist that such was the agreement. Thompson, being* complainant's agent to receive the money for him from Green, eouhl bind the arrangement in favor of Leonard, when assented to, as it was, by Leonard. I do not attach much importance to the fact that Leonard did not assent Thereto until after the failure of the bank and flight of Thompson, for the reason that he had no notice of the fact that the loan, had ever been consummated, and he did assent thereto as soon as he was advised of the fact. This aspect of the case is only important as it affects the conduct of the defendants, and the changed relation of the parties, within that lapse of time, which will be considered hereafter.
A more serious question as to the right of complainant’s recovery, in considering the relative equities between these litigants, arises out of the laches of the complainant. The defendants were entire strangers to the complainant and Green in the inception of the transaction in question. Complainant demanded, through Thompson, that Green should pay his debt to them. He authorized Thompson to [400]*400collect it, and was advised by Thompson that Green proposed to raise the required money by effecting another loan on the mortgaged land. He was also advised that, to enable Green to effect this second loan, it was necessary that the record in the recorder’s office oí Pettis county should show a clear title in Green. That this might be accomplished, he assigned his note against Green to Thompson, thus making Thompson the apparent owner thereof, for the express purpose of enabling him to satisfy of record the mortgage. That was done by Thompson. The legal effect of this was to notify all persons subsequently dealing with the land that this particular debt was satisfied against the property; the very object of which was to satisfy the person who should make another loan to Green that the complainant’s debt was not in the way. Thompson sent on to defendants the abstract of title, showing satisfaction of the mortgage, before the loan was made by defendants to Green.
The contention of complainant’s counsel that Thompson was the general agent of defendants in Pettis county, through whom they transacted in that -locality the business of their loans, and therefore the defendants are bound bv all the information Thompson had respecting the conduct of this particular business between Thompson and complainant, or between Thompson and Green, is wholly untenable. In effecting this particular loan, Thompson was the agent of Green, and therefore the advancement of the money by defendants to Thompson discharged them from any liability therefor to Green. Robinson v. Jarvis, 25 Mo. App. 421-427. The defendants had a right to deal with Thompson upon the assumption that complainant’s debt had been taken care of by Green and Thompson. They demanded an abstract showing a clear title to the land in Green, before the loan was closed. After that they had a right, so far as complainant was concerned, to deal with Thompson as between two independent contracting parties. When they accounted with Thompson in respect of the $5,000, no person, so far as defendants were advised or concerned, had a right to complain thereof, except Green, who made no objection. As Thompson was then indebted to defendants, they had a right, Green not objecting, to settle with Thompson by paying over to him, or under his direction, the balance of the $5,000 after deducting the sums Thompson owed them. It is true, Thompson directed them to deposit the $5,000 in the New York bank, to the credit of the First National Bank of Sedalia, of which Thompson was cashier. Defendants deposited only $2,275, the balance claimed by them as due to Thompson after an accounting with him. As early as March, 1893, they rendered Thompson their account. No objection was made thereto, so far as the evidence discloses, after that, by either Thompson or Green. From that time until the failure of the Sedalia bank, and the published insolvency and flight of Thompson, in May, 1894, the defendants were left in a sense of security respecting the malfeasance of Thompson, or the fact that the complainant had not received his money. During all that time the bank and Thompson had unimpaired credit, and. were responding to all demands asserted against -them.1' So, at any time for over a year after defendants settled with [401]*401Thompson, had limy boon advised oí complainant’s claim, they could have protected themselves against loss on account of this transaction.
The question to be answered by a court of chancery is, who shall bear the loss — the defendants or the complainant — resulting from the malfeasance of Thompson? It is answered by the wholesome rule of equity that, “where one of two innocent persons must suffer by the wrong of another, the one who enables such other to commit the wrong must bear the consequences.” Spraights v. Hawley, 39 N. Y. 441-448; Whittemore v. Obear, 58 Mo. 280, 286; International Bank v. German Bank, 71 Mo. 197; Cummings v. Hurd, 49 Mo. App. 140. The complainant, by transferring his note to Thompson, and investing him with the apparent ownership thereof for the express purpose of enabling him to satisfy his mortgage against Green, put it in the power of Thompson to perpetrate the fraud. Not only that, but for 18 months he left the note, indorsed over to Thompson, in his hands, with the knowledge that thereby he had clothed Thompson with the power to satisfy the deed of trust,’ or otherwise to use the note, without taking the precaution, although within two hours’ ride of the recorder’s office, to look to sec if the mortgage had been satisfied; nor did ho ever, during all this time, make inquiry of Green as to whether he had paid the money to Thompson. Surely he ought not, under such circumstances, to visit the loss of his supineness, and overconfidence in Thompson, Upon the defendants, who dealt with Thompson upon the reasonable assumption that the complainant’s debt had been cared for. The equity of the case, it seems to me, demands that the defendants in this controversy should be acquitted of any liability to the complainant as to not only the $2,275 it placed to the credit of Thompson’s bank with the bank in New York (for which amount the complainant has obtained judgment against the receiver of the First National Bank of Sedalia), but also for the sums actually in Thompson’s hands, owing to the defendants, and for which the defendants accounted with Thompson, as before stated.
Another question, however, arises in this connection, — as to whether Thompson in fact owed to the defendants the amount of credits so claimed by them against Thompson. Among the items charged by defendants in said accounting against Thompson was the sum of $1,000, claimed to have been collected by Thompson from one Janney, belonging to defendants. The evidence in this case shows !he facts respecting this item: One McGruder owed the defendants $2,000 oti a matured note, secured by mortgage on Me-Gruder’s land. Janney also owed the defendants $2,000, secured by mortgage on his land. Janney was ready to pay $1,000 on his loan, and to have the loan extended. McGruder owed Janney the sum of §1.000, and the arrangement agreed upon, and carried out through Thompson, was that MeGruder’s loan was increased to $3,000, and a. mortgage taken on his land to the defendants to secure (Ms $3,000 loan. Thereupon Jauney’s debt was decreased by the sum of §1,000, which satisfied MeGruder’s debt to Janney; the result of Ibis arrangement being that defendants stood, in respect of [402]*402the money they were out, and the security they then .had, precisely where they were before the conventional arrangement. It was, therefore, simply a matter of bookkeeping, by which the defendants charged up to Thompson the $1,000 on Janney’s account. As a matter of fact, Thompson never received the $1,000 from Janney, nor did the defendants advance to McGruder in kind. It was simply a rearrangement of the $4,000 thev had loaned to Janney and McGruder; and when the new arrangement was perfected the defendants still held claims against Janney and McGruder to the extent of $4,000, satisfactorily secured by mortgages on real estate. If it was deemed necessary to charge up the $1,000 against Thompson, they should have credited him with a like increase in the Mc-Gruder debt.
It thus becomes apparent that the defendants did not, in fact, pay over to Thompson the amount of the Green loan by the sum of $1,000; and the complainant, as the equitable assignee of this fund, is entitled to a decree therefor against the defendants, unless the contention of defendants’ counsel be sustained, that by reason of the allegations of the bill the complainant is precluded from asserting- the right to a decree therefor. It is contended by defendants’ counsel that complainant’s bill avers, in effect, that Thompson did have in his hands, on account of collections made for defendants, the sums credited to him in the account reudered by defendants to Thompson. The allegations of the bill respecting this matter are that the defendants sometimes allege and pretend that they have paid the full amount of the said $5,000 loan to said Thompson, and at other times that they have paid the same to said Green; but the bill then charges the fact to be that defendants have only paid out of said loan the sum of $2,400, for which the orator makes no complaint against defendants (this having reference evidently to the sums paid by defendants to the Yew York bank, with commissions, etc.). The bill then proceeds in the same connection to state that “they allege that the First ^National Rank of Sedalia, or said J. O. Thompson, or both, were indebted to them, the said defendants, in the sum of $2,G00 on account of the collection of certain notes, made either by said bank or by said Thompson,” and that in remitting to said Thompson for said Green loan the defendants deducted out of the $5,000 the said $2,600. - It is to be observed that the words above quoted, “they allege,” evidently have reference to what defendants claimed, and, taken in its context, it ought not to be construed as an admission by the pleader that Thompson had collected the said $1,000 from Janney. And as the court, in furtherance of justice, if it were necessary, would permit the complainant to make this part of his bill clear to meet the state of the actual facts, I am not disposed, upon such a technicality, to permit the defendants to cover up, after the fashion they have attempted, the $1,000 which they should have paid over to Thompson for Green. One unfamiliar with the distress of mind into which Thompson’s frauds and concealments had brought him might wonder how it was that Thompson acceded to a charge against him of this $1,000 in the account rendered by defendants. Rut the facts disclosed by the [403]*403tlopositions in tills record show that the defendants had reason to suspect the integrity of Thompson, and that he ivas in no condition to maintain any controversy with them; and he deemed it, in his straitened condition, better to submit to this specious bookkeeping of the defendants respecting this $1,000 than to protest or resist. It results that decree is ordered against the defendants for the sum of $1,000, with interest thereon from the date of the institution of this suit.