Stanley v. Mellor

Bond, C. J., delivered the opinion of the Court. A trustee in bankruptcy sues the present clerk of the Circuit Court for Howard County in equity for money paid by the bankrupt within four months of the filing of her petition to make good a shortage in the public funds received by her husband, predecessor in the office of clerk. United States Bankruptcy Act sec. 67e [11 U. S. Code Ann. sec. 107 (e).] The bill prays a decree that the money be declared held in trust for the complainant and that it be paid over to him. The appeal is from a dismissal of the bill after evidence taken and an agreed statement of facts filed.

Upon the death of the husband, the former clerk, Howard S. Kuhn, a fund for making up any shortage in his accounts was collected in the name and account of the widow’s brother, Harry S. Owings. Another brother, Basil E. Owings, contributed $8,000, and from life insurance paid to the widow $18,753.57 in all was collected and deposited in the same account, making the total on deposit for the purpose $21,753.57. The state auditor found a deficit in the clerk’s funds of $6,288.81, or, after applying $1,822.46 on deposit in the name of Kuhn as clerk, a net deficit of $4,466.35. And in compliance with a demand of the state comptroller this net amount was paid by Harry S. Owings from the money collected and deposited for the purpose as stated.

Payment was made by a deposit to the credit of Kuhn as clerk. Under an order of the circuit court, the deposit was transferred to the new clerk, the former account closed, and the ⁴⁶⁷ amount distributed by the new clerk to the parties entitled to the replaced funds. The sum of $3,307.09 was ordered to be paid and set apart for the use and benefit of the library of the court under the Acts of 1931, ch. 225, which provides that half of the fines imposed and recognizances forfeited to the court shall be so paid and held by the clerk “to be expended under the direction of the judge or judges of said courts for the augmentation of libraries of said courts.” The deficit having been made good, Harry S. Owings, by check on the account remaining in his name, paid back the sum of $3,000 to his brother Basil E. Owings. It is the sum held in the library fund that is now sought by the trustee’s bill of complaint.

Proceedings in bankruptcy against the widow were instituted a little over three months after Basil E. Owings contributed the $3,000 and started the collection of the fund to pay any deficit. The widow’s indebtedness, which she was unable to pay, was principally on