TRUSTS--CONSTRUCTIVE TRUST--TRACING FUNDS INTO THE HANDS OF AN INNOCENT PAYEE-ANTECEDENT DEBT AS VALUE

Plaintiffs advanced $3,200 to X intending to make a loan to Y secured by Y's note and mortgage. X delivered to plaintiffs a note and mortgage to which he had forged Y's name, and deposited $3175 of the money in his personal bank account, which theretofore had shown a balance of $7.09. Two days later, and before any other deposits were made, X withdrew $1000 from his account by check, with which he purchased a draft payable to defendant. This he delivered to defendant in satisfaction of a debt he owed defendant.

Eighteen months later X died, plaintiffs discovered the forgery, and in the present action sought to compel defendant to account as trustee for the funds received from X. Held, a constructive trust will be impressed upon funds obtained by fraud, and an innocent party, who obtained such funds in satisfaction of an antecedent debt and without change of position will be required to account therefor to the equitable owners. Meier v. Geldis, (Neb. 1947) 27 N.W. (2d) 215.