Opinion
4 Div. 669.
December 22, 1932.
Appeal from Circuit Court, Crenshaw County; A. E. Gamble, Judge.
C. J. Kettler, of Luverne, for appellant.
Petitioners put up their money with full knowledge of the fact of the insolvency of the bank. It was paid out by the bank in legitimate and usual course of business. It was not held by the bank, and did not come into the hands of the superintendent of banks, and was not on hand when the bank went into liquidation. Petitioner's deposit did not constitute a constructive trust, and petitioners are merely common creditors, and should share in the assets of the bank as other common creditors. St. Louis Brewing Ass'n v. Austin, 100 Ala. 313, 13 So. 908; Hanover Nat. Bank v. Thomas, 217 Ala. 494, 117 So. 42; Bank of Florence v. U.S. S. L. Co., 104 Ala. 297, 16 So. 110.
W. H. Stoddard, of Luverne, for appellees.
Under the terms of the agreement between the officers of the bank and the appellees, the funds were to be used for a special purpose, brought back to the bank to meet an expected run on the bank. This would make the deposit a special one, and the bank was merely a trustee or bailee, and, even if the funds passed into the general funds of the bank, they would be impressed with the trust. 1 Michie, Banks and Banking, § 75 (3); Shopert v. Ind. Nat. Bank, 41 Ind. App. 474, 83 N.E. 515. It is not necessary for appellees to trace the funds into the bank vault and to be able to identify the exact sum as their money in order to impress same with the trust. Hanover Nat. Bank v. Thomas, 217 Ala. 494, 117 So. 42, 43; Perth Amboy G. Co. v. Middlesex County Bank, 60 N.J. Eq. 84, 45 A. 704; Orme v. Baker, 74 Ohio St. 337, 78 N.E. 439, 113 Am. St. Rep. 968. The test is, Did the fund swell the assets of the bank? The bank's assets passing to the receiver were more than they would have been but for this transaction. Willoughby v. Weinberger, 15 Okl. 226, 79 P. 777; Richardson v. N. O., etc., Co. (C. C. A.) 102 F. 780, 52 L.R.A. 67.
Assuming that appellees have the right to impress a trust upon the proceeds of their cotton placed in the possession of the officers of the Farmers' Bank for it on the day it went into liquidation, and which was sold by them contrary to their agreement with appellees, and when they must have known of its insolvency, it does not result that appellees have a preference of payment out of those assets of the bank which were not in the least augmented by such transaction, nor into which an ascertainable portion of the funds were traceable. St. Louis Brewing Ass'n v. Austin, 100 Ala. 313, 13 So. 908; Bank of Florence v. U.S. Savings Loan Co., 104 Ala. 297, 16 So. 110; Nixon State Bank v. First State Bank, 180 Ala. 291, 60 So. 868; Lummus Cotton Gin Co. v. Walker, 195 Ala. 552, 70 So. 754; Hanover National Bank v. Thomas, 217 Ala. 494, 117 So. 42; Kennedy v. Carter, 217 Ala. 573, 117 So. 182.
In this case the officers of the bank wrongfully sold and appropriated the cotton of appellees, and the proceeds became a trust fund in the possession of the bank. But it is distinctly shown that such funds were first deposited in another bank to the credit of the Farmers' Bank, and immediately paid by it to a Mobile bank at the instance of the officers of the Farmers' Bank as an incident of the deposit, and for the purpose of meeting checks which the Farmers' Bank had issued on the Mobile bank. So it clearly appears by the agreed facts that, when the superintendent of banks took over its affairs for liquidation, no part of such fund was in possession of the Farmers' Bank, nor ever went into the possession of the superintendent of banks nor the liquidating agent.
There is no principle, therefore, upon which a preference may be created in favor of appellees upon the other funds of the bank which did go in liquidation, though a great wrong was admittedly done to them. The superintendent did not reject this claim as an unpreferred creditor. So that the decree must be reversed, and one here rendered denying relief to petitioners to the extent of declaring a preference in their favor.
Reversed and rendered.
ANDERSON, C. J., and GARDNER and BOULDIN, JJ., concur.