could not be devested except by surrender and indorsement. Evidencedeclarations of deceased. In treating the letters as pure hearsay, the court disregarded an important exception to the rule excluding hearsay evidence, which has long been recognized as well settled. In his work on Evidence Mr. Wigmore traces the history of the exception, and shows that it had its origin more than a century ago. Wigmore, Ev. §§ 1456, 1476. The exception is that the declarations of persons, since deceased, are admissible in evidence, provided the declarant had peculiar means of knowing the matter persons since stated, if he had no interest to misrepresent it, and if it was opposed to his pecuniary or proprietary interest. Such declarations are not received as admissions, nor as entries made in the ordinary course of business, nor on the ground that any privity exists between the declarant and the person against whom they are offered. When it appears that the declarant is dead, that the statement was against his pecuniary or proprietary interest, of a fact of which he was personally cognizant, and there was no probable motive to falsify the facts, the declaration may be received as substantive evidence and against third parties. The reason for the exception is thus stated in Greenleaf on Evidence, 148: "The ground upon which this evidence is received is the extreme improbability of its falsehood. The regard which men usually pay to their own interests is deemed a sufficient security, both that the declarations were not made under any mistake of fact, or want of information on the part of the declarant, if he had the requisite means of knowledge, and that the matter declared is true." The facts that the statements are not admissible during the life of the declarant, and that such declarations are sometimes the only mode of proof available, are regarded as additional reasons for the reception of such statements in evidence with out the sanction of an oath by the declarant. Mr. Wigmore vigorously argues that the exception should be so extended as to include confessions of crime or other statements of facts against personal interest. See § 1476. But, as he concedes, this view has not been generally accepted. Chamberlayne on Ev. § 2779, and cases cited. The letters in this case are plainly within the class of declarations con admissibility. templated by by the -letters adexception under dis- mitting theftcussion, and should not have been disregarded. The testimony showed, and the referee found, that Paul was the confidential clerk and bookkeeper of the defendant, and was intrusted with the collection, custody, handling, and depositing in the bank of moneys belonging to the business, as well as keeping the accounts. Entries by Paul on the debit side of the account were declarations by him that he had received the sums specified, and were acknowledgments by him of the receipts, payments, and balances. This exception to the general rule excluding hearsay evidence is so well settled as to call for no elaborate discussion. We only cite some of the many authorities in which the subject is discussed and in which many cases are cited. Wigmore, Ev. §§ 1455-1476; Chamberlayne, Ev. §§ 2770-2789; Elliott, Ev. $$ 434, 436, 439, and 441; Greenl. Ev. §§ 147, 148; 4 Enc. Ev. p. 87. There is careful argument in appellant's brief of the proposition that the letters were not confidential communications between husband and wife, within the meaning of § 4072 of the Revised Statutes of 1917. We consider the proposition sound for several reasons. They were not private commu- letters adnications made and completed during marriage. letter addressed to the plaintiff contained another communication, which she was directed to deliver to a third person, and which repeated -confidential communications mitting theft. The (— Wis. —, the most essential facts to which ob- Although counsel for the plaintiff do not argue that the letters were confidential, and therefore privileged communications, they do strenuously insist, and it was held by the trial court, that they were no part of the res gestæ, and were irrelevant and incompetent as against the beneficiary. Counsel rely on § 2347 of the Statutes, according to which policies payable to a married woman are her sole and separate property, free from the control, disposition, or claims of her husband, and from the claims of his representatives. It is argued that under this statute the title of the plaintiff vested when the policies were issued in her name, and that it could not be devested except by surrender of the policies and indorsement by the insurance companies of a change of beneficiary. Following this line of argument, numerous cases are cited holding that declarations by the insured, inconsistent with those made in the application for insurance, and not part of the res gestæ, are inadmissible. To this proposition the following cases are cited: Rawson v. Milwaukee Mut. L. Ins. Co. 115 Wis. 641, 92 N. W. 378; Johnson v. Fraternal Reserve Asso. 136 Wis. 528, 117 N. W. 1019; Andrews v. United States Casualty Co. 154 Wis. 82, 142 N. W. 487; Maine v. Maryland Cas ualty Co. 172 Wis. 350, 15 A.L.R. In his decision the trial judge said: "Truelsch had the confidence of his employer, but he was a mere employee, and not a trustee within the strict definition of equity." It may be inferred from this statement that the court was of the opinion that it was a condition of recovery on the part of the appellant that he must prove the existence of a conventional or technical trust. If that view was entertained, it is, of course, impossible to say to what extent it influenced the determination by the court of the other questions. The duties of Paul Truelsch have been already stated, and it is plain from all the evidence that the appellant reposed in him the utmost confidence. We do not regard it as very important in this case whether his relation to his employer be described as employee, agent, or trustee. If, during the performance of such duties as were intrusted to him, he stole or embezzled the funds of his employer, and an equitable remedy were necessary to right the wrong and reach the funds or property into which they might pass, there existed a constructive trust, which a court of equity might enforce against the wrongdoer, if he were living. The rule applies in cases where property is stolen or embezzled, although it is most often invoked to prevent the success of fraud in the myriad forms which it assumes. When necessary, the courts thrust the trust on the wrongdoer without regard to whether there was an intention by the parties to create a trust, and in the absence of a technical or conventional trust relation. It seems to have been the opinion in the trial court that the general rule had no application here because the title to the policies vested in the plaintiff and became her sole and separate property, free from any trust or encumbrance, by virtue of § 2347 of the Statutes. It would be a signal failure of justice if one who has become a constructive trustee by reason of wrongfully receiving or securing the property of another could escape the consequences of his acts by changing the form of the property thus acquired. Hence, as between him and the cestui que trust, the latter may pursue the funds into the new investment, and charge that investment with the trust. He may also assert and enforce the same right against third parties to whom the property has been transferred with knowledge of stant each premium was paid. The referee found, as we believe on satisfactory evidence, that none of the premiums were paid by the plaintiff. She was not an innocent purchaser. The statutes guarding the rights of married women in insurance policies and homesteads are beneficent statutes, which are liberally construed in their behalf. But they are not designed to encourage fraud, or to make such property a safe depository for stolen funds. The following are some of the authorities sustaining the right of the cestui que trust to follow funds when misappropriated: Pom. Eq. Jur. § 1051; 26 R. C. L. pp. 1350, 1351; Holmes v. Gilman, 138 N. Y. 369, 20 L.R.A. 566, 34 Am. St. Rep. 463, 34 N. E. 205; Shaler v. Trowbridge, 28 N. J. Eq. 595; Bromley v. Cleveland, C. C. & St. L. R. Co. 103 Wis. 562, 79 N. W. 741; Nebraska Nat. Bank v. Johnson, 51 Neb. 546, 71 N. W. 294. The respondent's counsel argue that there was no constructive trust impressed on the policies because, as they claim, none of the appellant's moneys were used in procuring or maintaining the policies, and the trial court so found, except as to $33.28 used in paying a premium of the Northwestern Mutual Life Insurance Company policy on the day of the death of Paul Truelsch. Dawson, the chartered accountant who first made an examination to ascertain if there were any discrepancies in the books kept by Truelsch, was examined and cross-examined at great length, and from his evidence it appears that he was thoroughly competent for the work. During this investigation, he examined the books of the appellant, all in the handwriting of the deceased, the records of the bank showing bank dealings with both the appellant and Truelsch, including checks, bank statements, and a great number of exhibits. It is neither necessary nor desirable to include in this opinion the details of the method by which the accountant showed from the voluminous records and documents that the deceased had misap (Wis., 202 N. W. 352.) propriated the amounts found by the referee. If the deceased appropriated the appellant's money, intending to defraud him, it was necessary, in order to escape discovery, to adopt some plan of falsifying the books. The plan which had been adopted and was carried on from April, 1914, to the following November, was to conceal the shortages, on the trial balances, by increasing the miscellaneous bills receivable. After that date correct balances would be shown from bills receivable, and the shortage concealed by decreasing the amount of the miscellaneous bills payable by the amount of the shortage. At a later period the plan adopted to conceal the shortages was that of manipulating the adding machine in such a manner as to present false footings. The books of the appellant are here as part of the record, and an examination of them shows that, in the instances pointed out by the accountant, the footings are false. In the numerous instances of this kind, this could hardly be the result of mistake, since, if the cash were correctly counted, the mistake would appear at once in the failure of the books to balance. The following were the shortages disclosed by the examination of the chartered accountant, and which were explained by him in great detail: out discovery, especially where great confidence is reposed in the bookkeeper. According to the testimony the shortages were created through operations on the cash drawer before the moneys got into the bank. Dawson testified that it would be too much trouble for him to go into the details of the daily transactions between the dates above mentioned to see how the shortages were concealed between the dates in the list above set forth, nor did he undertake to discover when the moneys were stolen. He only established the shortages, leaving the details for future consideration. He stated, however, that it would be possible to ascertain approximately the date when any money was taken out, by taking each day's receipts and disbursements and verifying the cash in hand and the bank balance, but that it would entail much labor. This labor was later undertaken by Walton Miller, who, from the various books and exhibits in evidence, prepared an elaborate statement consisting of many pages in the printed case, giving a record of each policy, the amounts of premiums paid, and when and how these payments were made, the dates and amounts of deposits in Paul's bank books, and a summary of the deposits, checks, and balances as shown in the books of the appellant kept by Paul. It appears from the testimony that it was the habit of the deceased to increase the amount stated to be in the bank by the amount of the shortage in the cash in the cash drawer, with the result that the total footing would balance. This method was the one used to cover up the shortage of $400 in the bank at the time of the death of Paul, as testified to by Dawson, who further testified that it was a common method of covering up such shortages from day to day until the amount was dropped from the books. Another chart was prepared by Wratten from the exhibits offered in evidence, giving in more condensed form a history of the different policies and the premiums and the times and modes of payment. These statements and charts prepared by Walton Miller and Wratten were sworn to be correct, and the statement prepared by Walton Miller was submitted to respondent's counsel before the hearing and was not challenged. The investigation by Walton Miller was not confined to the period covered by the chartered accountant, but commenced on March 19, 1912. For convenience, counsel for appellant have printed in their brief a schedule showing in more compact form some of the particulars as to the amounts of premiums, the times and mode of payment, and the dates of shortages. This statement has been given in the statement of facts. Its correctness does not seem to have been questioned by the respondent's counsel. The referee had the opportunity of examining in detail the statements and exhibits used in the trial, and of hearing the testimony of witnesses in relation to them. It is a reasonable conclusion from all the evidence that the amounts described as shortages were not taken by Paul in large amounts, but that he abstracted small sums before the money went into the bank, and, at such times as he thought most safe, falsified the books to cover the amounts. He kept a small bank account in which the balances shown were very small, often only a few cents, and never exceeding $19. If there was a systematic scheme to defraud his employer, such a course was safer than to keep a large bank account, which, if discovered, might lead to suspicion. The books, exhibits, and statements used at the trial would probably not alone afford sufficient proof that moneys embezzled were used to pay the premiums. They do show that there was a systematic course of misappropriation of money of the employer, which was continued throughout the period included in the report of the referee; and they show such proximity between the times of embezzlement and the payment of the premiums as affords circumstantial sources of Paul's income, if any he had. These were carefully investigated by the referee, and he concluded that there were only two sources of income, to wit, the salary and the embezzled funds. Paul turned over his salary to the plaintiff, and out of it she paid the household expenses. The flat was subject to an encumbrance for $2,100, and he was not able to pay insurance and taxes on the property, and borrowed money for these purposes. The conduct of the plaintiff in attempting to con- Witness-false ceal letters, and in statementsmaking under oath statements, grossly false, justified the referee in disbelieving her testimony. We shall not pursue this subject further, because, on wellsettled principles, the finding of the referee in respect to it should be upheld. effect. On the subject of tracing the funds, counsel for the respondent relies on the legal proposition that the burden was on the appellant to prove that the money embezzled went into the policies; that, when the funds cannot be traced, the equitable right of the cestui que trust to follow and reclaim a trust fund fails; that the right to follow and reclaim a trust fund is always based upon the right of property, and not on the theory of preference by reason of an unlawful conversion. For this construction counsel rely on the following cases: Bromley v. Cleveland, C. C. & St. L. R. Co. 103 Wis. 562, 79 N. W. 741; Boyle v. Northwestern Nat. Bank, 125 Wis. 498, 1 |