Banks and Banking — Insolvent Bank — Principal and Agent — Collections — Trustee and Cestui Que Trust — Conversion — Creditor and Debtor.
Plaintiff bank, being ignorant of the insolvency of the Bank of New Hanover, sent to it items for collection and remittance. New Hanover Bank mingled the proceeds of the collections with its own funds, so that the specific money received on the items so sent by plaintiff bank could not be traced. No mutual account was kept between the parties. Before remitting for the items so collected, New Hanover Bank failed, and there was money enough on hand and turned over to the receiver to pay the plaintiff's claim: Held, that upon the collection of the items and the mingling of the proceeds with the assets of the New Hanover Bank, the relation of principal and agent, trustee, and cestui que trust ceased, and that of principal and debtor arose between the parties, and plaintiff became a simple contract creditor with no preference over other creditors, and it is immaterial in such case whether or not the officers of New Hanover Bank knew that it was insolvent.
BURWELL, J.
We find no error in the ruling of his Honor, and hold that his judgment must be affirmed. It is sufficient, we think, to cite the case of Bank v. Dowd, 38 Fed., 172, where Judge Seymour has fully set out the reasons and authorities that led him to the conclusion he reached in a controversy about the assets of an insolvent National bank. Both because it is important that there shall be accord between the rules laid down by the Federal Court in regard to the assets of insolvent National banks in the hands of receivers and those rules which are to govern the distribution of the assets of an insolvent State bank, and because the conclusions there reached are those to which we have come after a careful consideration of the authorities, we content (233) ourselves with referring to the elaborate opinion filed in that case. Later decisions sustain what is there said. Slater v. Mills, 18 R. I., 352; Freiburg v. Stoddard, 161 Penn., 258; Nonotuck Silk Co., v. Flanders, 87 Wis. 237.
Affirmed.
Cited: Packing Co. v. Davis, 118 N.C. 554.
Comments