146 Ky. 194 | Ky. Ct. App. | 1912
Opinion of the Court by
Commissioner
Affirming.
On April 25, 1908, T. A. Pedley was appointed receiver of the Owensboro Savings Bank & Trust Company. He immediately qualified and took charge of the assets of the bank. On May 12, 1908, he brought suit against the Savings Bank and its creditors to settle the estate. On April 22, 1910, appellant, American National Bank, appeared in court and filed a petition which it asked to be treated as its answer. To this petition and answer a demurrer was sustained in so far as it asserted a lien on or preference to the fund or any part thereof alleged to have been collected by the Owensboro Savings Bank & Trust Co. of John D. Williams, agent of the Brazilian Government. Appellant having declined to plead further the petition and answer were dismissed to that extent. To review the propriety of this ruling this appeal is prosecuted.
It is repeatedly alleged in the petition and answer and earnestly argued on this appeal that the transaction in question created between the Savings Bank and appellant the relation of trustee and cestui que trust. It is not claimed that the original and identical money collected by the Savings Bank is intact. On the contrary it is alleged that the money was placed to the credit of “James H. Parrish, President,” and commingled with the other funds of the bank. Nor does it appear that there was as much as $1,034.56 in cash in the Savings Bank when the receiver was appointed. The question-is, Is appellant entitled to a preference over the other creditors in the distribution of the assets of the insolvent Savings Bank? This is not a ease of a special deposit, so the rule governing such deposits has no application. There is nothing in the facts of this case to differentiate it from the case of commercial paper transmitted in the ordinary course of business by one bank to another for collection. In each case it is the duty of the collecting bank to account to the other for the proceeds, and the same rule of law applies. While there is very respectable authority to the contrary, the generally accepted doctrine on the subject is that the relation between a bank transmitting paper for collection and the bank receiving and collecting such paper and mingling its proceeds with its other funds is that of debtor and creditor merely, and the creditor bank has no lien upon or for moneys collected, and no preference over the other creditors of the receiving bank. (Richmond First National Bank v. Davis, 114 N. Car., 343; Commercial Bank v. Armstrong, 148 U. S., 50; Merchants, etc., Bank v. Austin, 38 Fed. Rep., 25; People v. City Bank, 93 N. Y., 582; National Butchers’, etc., Bank v. Hubbell, 117 N. Y., 384; Reeves v. State Bank, 8 Ohio St., 465; Nonotuck Silk Company v. Flanders, 87 Wis., 237; Henry v. Martin, 88 Wis., 367, overruling McLeod v. Evans, 66 Wis., 401.) While the relation is one of trust in the ordinary sense of that word, in that the forwarding bank has confidence in the receiving bank, and therefore entrusts it with the collection of the paper, the relation is not one of trust in the legal sense; that is, such as to impress upon the money collected the character of a trust fund payable out of the assets of an insolvent bank in preference to other debts. This view of the law is well
“Some of the courts so hold, but we will not follow their lead to this absurd result. It is enough to allow the correspondent who sends his claim to a bank for ‘collection’ to pursue and reclaim his own, without depriving others of their rights. There is no such magic in the word ‘trust’ as to convert all the assets of a bank into a fund to secure one who deals with it for convenience of collecting claims,, in preference to others ’who trust it and deal with it. * . * * "We should not be beguiled by the use of words, and call one claim a ‘trust’ in order to secure it a preference over ‘debts.’ Wherever there is a trust, it may be enforced as such,. but calling one sort of claim a trust merely to place it on a better footing is not allowable.”
Judgment affirmed.