Page:North Dakota Reports (vol. 48).pdf/385

 butter and from the payments received from any of the subscribers to the contract with the Hastings Industrial Company, to the account of the creamery company in the bank. Only one account or fund was kept, and as checks were drawn by the secretary or manager for operating expenses, such as the purchase of cream, salaries, or matters of that kind, he (the treasurer) paid them out of such fund. The evidence shows that prior to December 21, 1915, he received payments upon subscriptions aggregating $1,557, which he so deposited. It also appears that of said sum only $431.26 was utilized in paying the Hastings Industrial Company (for which that company allowed credit upon one of the said three notes), and that $1,122.74 of said $1,557 was disbursed in the payment of the operating expenses of the creamery. It also appears from the evidence that after the creamery ceased to operate, to .wit, after December 21, 1915, various subscribers paid to Hernett sums aggregating $1,739.36, as payment upon their subscriptions under the said contract with the Hastings Industrial Company. The undisputed evidence also shows that the six persons who signed the notes in favor of the Hastings Industrial Company were afterwards compelled to pay them, so that the Hastings Industrial Company has been paid in full.

After the defendant had interposed his answer, the plaintiff served a demand that defendant furnish an itemized statement or account of receipts and disbursements. The defendant furnished such account, showing the amount of moneys collected and expended by him up to and including December 21, 1915; that is, for the entire period that the creamery was being operated. As already stated, it appears, however, that after that date he collected or received from various subscribers to the contract with the Hastings Industrial Company sums aggregating in all $1,739.36. The evidence adduced by the defendant shows that this latter sum was all applied in payment of the indebtedness due the Hastings Industrial Company, and credit given therefor upon the notes given to that company by said six persons.

The contentions of the plaintiff are:

(1) That in so far as concerns the $1,557 received by the defendant from subscribers, prior to December 21, 1915, he had no right to mingle such moneys with moneys received from other sources, such as the sale of butter; that “the stockholders and creditors of the corporation had a right to expect that the capital stock should be held as a trust fund, or applied in payment of the initial indebtedness or in improvements upon