Oswego Milling Co. v. Skillern , 1904 Ark. LEXIS 62 ( 1904 )

Riddick, J.

(after stating the facts.) This is an.action to establish an equitable lien on the assets of a bank ip the hands-of a receiver for the purpose of securing to plaintiff a preference in the payment of his claim over the other creditors of the bank. But we are of the opinion that the facts stated in the complaint are not sufficient to warrant the court in giving the claim of plaintiff a priority over the general creditors of the bank. For, if we conceded that the Howard County Bank held the check of plaintiff sent to it by the forwarding bank for collection only, and as agent for that bank and the plaintiff, and that it held the fund collected as a trustee, still, in order to follow this fund into the hands of the receiver, it must be shown that the identical fund collected went into the hands of the receiver, and-went to swell the funds in his hands. If that was shown, then, notwithstanding the fact that they had been mingled with other funds of the bank in his hands, the court might grant the relief prayed. For; to quote an expression of Sir George Jessel, if these trust funds went “into the bag of money” held by the receiver, the court could compel him to take out an equal amount, and the general creditors would not be injured, for the balance left would be the same as if these trust funds had never been put in. In re Hallett’s Estate, 13 Ch. Div. 696; National Bank v. Ins. Co., 104 U. S. 54; Phila. Nat. Bank. v. Dowd, 38 Fed. Rep. 172; 2 Am. & Eng. Decisions in Equity, 658, 659.

But we- must first know that the money went in before we order it taken out; otherwise, the rights of the general creditors may be prejudiced. Now, in this respect at least, the complaint is not sufficient, for it does not allege that this fund collected by the Howard County Bank ever came into the hands of the receiver. The allegation is that the $516.13 “went to swell the' assets of and funds of the said Floward County Bank, and the said sum of money so collected was and is a trust fund in favor of appellant, and not liable for any of the debts or obligations of that bank; that the appellee now has in his hands and control ample funds to pay all of said $516.31.” Wherefore it prayed for an order of preference.

But it is not sufficient that the money in question went to swell the assets and funds of the Howard county Bank. We must know what became of it. The complaint does not allege that this money went into the hands of the receiver, and the facts alleged in the complaint may be true, and still this money may have been paid out by the bank to other creditors before it quit business. The bank in its last days was no doubt pressed for money, and may have used this fund to pay other debts, and may have disposed of it entirely before the receiver took charge. As the complaint does not allege that this money collected by the bank on the check of Winter-to plaintiff went into the hands of the receiver, we take it that it was spent by the bank before the receiver took charge, but the mere fact that the bank may have used this fund in its own business does not, as we have stated, authorize the court to declare it a lien on the assets of the bank that are now in the hands of .the receiver.

For the reasons stated, we are of the opinion that the chancellor did not err in sustaining the demurrer, and his judgment is therefore affiirmed.