1908 (7) TMI 2

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.... Smith and Mrs. V. Smith, either or survivor. On the 13th October 1906, Messrs. Arbuthnot & Co. wrote in reply acknowledging the cheque, and stating that on receipt of the further sum they would, as desired, place the total amount of Rs. 1, 200 in fixed deposit for 12 months, and issue and send Mr. Smith their receipt therefor in favour of himself and Mrs. F. Smith, either or survivor. Mr. Smith did not at once remit the balance, and before he had done so, Messrs. Arbuthont & Co. became insolvents. Mr. G. Smith now claims to be repaid the Rs. 627 out of the general assets in the hands of the Official Assignee, and his claim has been allowed by the learned Commissioner on the ground that Messrs. Arbuthnot &. Co. held the Rs. 627 in a fiducia....

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....ase that a banker who receives money as a trustee is not entitled to mix it with his own and use it, and this is why it is in accordance with the principle explained in In re Hallett's Estate (1880) 13 Ch. D. 696; 49 Ch. 415; 42 L.T.421. In Faley v. Hill 2 H.L. 28, Lord Brougham, at page 44, points out that, if a banker were a trustee he could not use the trust money as his own without a breach of trust, and in The South Australian Insurance Company, v. Randell (1869-70) 3 P.C. 101 it was held by the Judicial Committee to be an indelible principle of trust property that a trustee can never make use of it for his own benefit. Mr. Heber Hart in his book on 'Banking', 2nd edition, page 485, quotes Cane, J., who decided In re Brown ....

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....ble? The learned Commissioner has in effect answered this question in the affirmative by finding that this money was held by Messrs. Arbuthnot & Co. in a fiduciary character, and not in such circumstances as to give rise to the ordinary relation between banker and customer. Now, it is to be observed that Mr. Smith's letter of 12th October 1906 says nothing as to the manner in which the proceeds of the cheque were to be dealt with after collection, pending the remittance of the balance to make up the Rs. 1,200. After that time it was, of course, to be used by Messrs. Arbuthnot & Co. as their own; but even before that time it is contended for the appellant on the authority of Foley v. Hill 2 H.L. 28, that Messrs. Arbuthnot & Co. were enti....