In re SMITH, THORNDIKE & BROWN CO. SMITH v. WISCONSIN TRUST CO., 170 F. 900

.BAKER, Circuit Judge (after stating the facts as above). The Dis-tiict Court found from the evidence that Smith as treasurer of the Grocers’ Association was authorized by the association to place its funds with the Smith, Thorndike & Brown Company as a general deposit — • that is, not as a special fund to be set apart for safe-keeping, but as a fluid to be used and repaid as demanded — and that nothing was done with respect to the funds which was not contemplated by the parties.

If the finding is correct, the legal conclusion that the only relation between the two companies was that of general debtor and general creditor is inevitable. But even if the evidence is not sufficient to establish such finding affirmatively, we should consider that point unavailing for the following reason.

Against appellant’s prima facie case that moneys of the Grocers’ Association, a corporation, passed from the hands of Smith as treasurer into the possession of and were used by the Smith, Thorn-dike & Brown Company, a corporation, of which Smith was president, appellee introduced evidence tending to prove that such use was approved by the pj-esident, the secretary, and the “executive part of the board of directors” of the Grocers’ Association.

But appellee failed to exhibit any provision in the charter and by-laws of the Grocers’ Association, and any record of official action of its board of directors, either authorizing or forbidding its treasurer to deposit its funds with another corporation in which its treasurer was a stockholder and president.

As the general law of the land does not prohibit the organization of corporations (or voluntary associations) with power through by-laws or action of directors to authorize treasurers to deposit thé official funds with other coi’porations of which such treasurers are presidents, the lack of conclusive proof that the act of Smith as treasurer was authorized cannot be taken as proof that it was unauthorized.

On the contrary, the lack of proof that Smith’s act was in violation of his duty as treasurer as that duty was fixed by the Grocers’ Association made it unnecessary for appellee to undertake to prove that Smith’s act was authorized. The presumption is that men do not commit crimes or breaches of trust. The presumption is that if the act of the treasurer of any corporation or association does not violate any statute of state or nation, neither does it violate the by-laws of the company or the resolutions of the directors.

The Grocers’ Association (in whose place appellant stands) cannot be permitted, in our judgment of the law and sound public policy, by merely charging that Smith’s act as its treasurer in depositing its funds with the Smith, Thorndike & Brown Company, of which Smith was president, was unauthorized by it, to cast the burden upon Smith (or appellee) of proving that the act was authorized by resolution or by-law. Where a defendant has control of the proofs from which the liability for

an act complained of might be established, and the plaintiff might be left remediless if the defendant were not required to produce the proofs, the defendant is sometimes subjected to an adverse assumption of fact by reason of his failure to bring forth the full proof from which nonliability would be established. But where, as here, the full proofs are in the plaintiff’s hands, the reason for such a rule fails. This is sufficient to require an affirmance.

But even if by any possibility it could be held that Smith acted contrary to the by-laws or directions of the Grocers’ Association, we would be obliged to affirm on the fact, as found by the District Court, that no part of the sum claimed ever found its way into the assets of the estate in the hands of appellee. And, further, the Smith, Thorndike & Brown Company never became holders of the fund as a special deposit or separate fund in trust, either by agreement or by reason of knowledge of or participation in Smith’s (wrongfully assumed) betrayal of trust.

The only evidence on this point is quite to the contrary, namely, that the board of directors (other than Smith) were told by Smith that he was expressly authorized by the Grocers’ Association to let the Smith, Thorndike & Brown Company have the use of the money, repayable on' demand. The order is affirmed.