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bank, every general depositor is a creditor of the bank. Technically every creditor is a general creditor. lf one is entitled to payment in full it is either because the bank holds a special deposit or security, which has always remained his property, the bank being a bailee under an agreement, or because the bank has violated a trust and by reason of the wrong holds a special fund which belongs to the owner. In a national bank all general depositors and other creditors share alike. In some States the depositors in State banks are by statute preferred over other creditors and are paid in full before other claimants of an insolvent bank.
5. Frequently when a bank fails attempts are made to establish rights to preferences by showing that certain deposits were “special deposits.” But the ordinary manner in which banks do and in these days must do, their business, to satisfy the demands of commerce, facilitate negotiations and meet the customs which present day business methods require, and the general intentions of those who do business with banks, when sifted out, will show the fallacy of this clamor for preferred payment of claims, as well as the obvious injustice of the claims. See Sec. 198 et seq.
6. Even though money is deposited for a specified time, or upon unusual conditions, if there is no understanding that the money is not to be mingled, the bank will mingle the amount received with the general mass of its property, and in most States, the deposit is a general one, to be repaid out of the general mass of the bank's assets.
7. One who purchases from a bank a draft drawn on another bank has a claim on the draft only, and not upon the specific money which he paid for the draft, unless the bank official who issued the draft knew when he drew it that there were no funds in the bank upon which drawn to meet it. This of course would be a fraud, and if the purchase money could be traced the purchaser would have a right to recover it. Where, however, a customer of the
bank purchases a draft and pays for it by check on his account in the same bank, if the draft is not paid, even though the officer knew when he issued the draft that it would not be paid, the customer would still remain a general creditor. He has simply failed in an attempt to withdraw from his account the amount of the draft purchased. The bank received no actual cash from him. It was a bookkeeping transaction only. He was a general creditor when he purchased the draft, and the draft being worthless he is still a general creditor. Clark v. Toronto Bank, 82 Pac., 582, a Kansas
8. If A deposit money in bank to be paid to B, upon a contingency, this is a general deposit unless there is an agreement that the identical money will be kept separate and paid to B. As to whether A or B would be the proper claimant we will discuss hereafter. See Sec. 37. 390.
9. Frequently one who is already a depositor in a bank, for his own convenience, or to prevent confusion, will open another account as "attorney," "agent,” or “trustee,” etc. It may be that he is treasurer of some organization and wishes to keep the fund as treasurer separate from his own moneys. As to the depositor this is a special fund, but it is not the creation of a special fund as between himself and the bank, except that checks drawn on his personal account cannot be charged against the special account, and vice
It represents an account of a general creditor and in case the bank failed there would be a general claim only.
10. Where an officer of a State or of the Federal Government is not prohibited by law from depositing his money as such officer in bank, and he does deposit it, this is a general deposit. A case recently decided in Oklahoma holds that where the officer did not have authority, though not prohibited, the deposit was wrongfully made and when the bank failed the fund.was held to be a trust fund and paid prior to other creditors. This case is contrary to the de
cisions in other States and was not well considered. Watts v. Board of Com'rs., 95 Pac., 771; In re Salmon, 145 Fed., 649, and see Par. 27b. Usually security is required to protect the Government and the officer is held personally liable, but as to the assets of the bank there is only a right to share with other creditors. If the law prohibits the deposit by an officer, the bank is guilty of a wrong in receiving such deposit and where the money can be traced it can be recovered in full.
II. If money be deposited in bank to A's credit, A intending to use the money for a special purpose, this does not alone make it a special deposit. It is not any special purpose, use or trust which A impresses upon the deposit which makes it a special deposit. No matter what A might intend to use the money for, it is a general deposit unless otherwise made special.
12. One who holds a certificate of deposit is a general creditor, except where he is given preference as a depositor in a State or savings bank under the State law.
13. Deposit a Debt-After the deposit has been made, the indebtedness of the bank is absolute until payment. The title to the money passes to the bank and, though the identical pieces of money be stolen, embezzled or destroyed before the deposit is mingled with the other moneys of the bank, the bank is indebted to the depositor just the same. If the bank be insolvent when the money is received, yet the money becomes the property of the bank and the depositor becomes a creditor to that extent, unless the officers knew that the bank was actually insolvent at the time the money was received. If a bank receive deposits after business hours and hold same over till the next day, and the bank fails to open the next day, the deposits should be returned, unless the bank was in the habit of receiving deposits after usual business hours, when they would be regarded as having been accepted on that day.
14. Forged or Counterfeit Paper.-If forged or counterfeit paper or money be deposited, even though the amount purporting to be represented by such deposit has been credited to the depositor, the depositor is entitled to no credit and the amount can be charged back to his account. The paper or money being worthless, no consideration passed to the bank for the credit given and the bank is not bound thereby. See Sec. 88e, 112, 138.
15. A specific deposit is where money is deposited with a bank with specific instructions to apply the money in a certain way, as to pay a note of the depositor, or to credit to some one else, or to take up a mortgage, etc. In such cases the bank must follow instructions and use the money for the purpose for which it was deposited, and if it does not do so, or misapplies the fund, the money can be recovered, provided the bank received money, or collected money from paper received and it can be traced. See Sec. 201.
Where money is deposited in Bank A, to the account of Bank B, with instructions to telegraph the amount to Bank C, this is a specific deposit. It is not a special deposit, for the reason that it is not to keep the money or deliver the identical pieces to C, and it may mingle the money received with its other funds, but it must telegraph a like amount to Bank C. It is not a general deposit because there is a duty to perform, and if it violates this duty it will not be indebted to the depositing bank, but will be deemed a trustee with a fund of $1,000 in its hands belonging to Bank B by reason of the wrong committed. If the $1,000 remains in Bank A, or there is on hand a like amount which cannot be proved to have come in afterwards and to have some other trust attached, it can be recovered.
16. Items deposited with a bank for “collection only," money collected by the bank as agent and money deposited for the purpose of having the bank send, lend or pay the same, also papers delivered to the bank as security, are the property of the depositor, and if the bank violates its duty, or fails before it has had an opportunity to perform the duty, and the items or the proceeds thereof remain in the bank at the time it is closed, or come in after the bank has been closed, they should be returned to the depositor in full. So where a bank, the officers not being certain as to its solvency, keeps out deposits and marks them with the depositors' names, and the bank is found to be insolvent and closes, the deposits so held out should be returned in full. In any case there can be no return, or payment in full before other creditors, unless the item or money can be traced into the hands of the receiver. Commissioners of Crawford Co. v. Strawn, 157 Fed., 49. See Sec. 201.
17. Change From One Class to Another-A general deposit may, by agreement or order, be changed to a special deposit or a specific deposit. Likewise a specific or a special deposit may be changed to a general deposit, a specific deposit to a special, and a special to a specific.
Where a general deposit is ordered to be changed to one of the other class, however, the depositor remains a creditor until the change has actually been made and the money actually separated in the case of a special deposit, and the appropriaion actually made by the bank in the case of a specific deposit. This is because the bank does not actually receive money, but changes a credit of the general depositor into a fund.
18. Where bonds, stocks, or other valuables, or money in a separate package (or even loose money where the identical pieces are to be kept) are placed with a bank, to be