In re Seven Corners Bank

G-ibeillan, C. J. July 31, 1S93, this bank being then insolvent, and known by its officers to be so, Mullen & O’Dowd deposited with it for collection a check payable to them, drawn on the Bank of Minnesota, both being St. Paul banks. The next day the check was sent to the clearing house, where it was wholly absorbed in clearing, off the balance due on that day’s transaction from the Seven Comers Bank to the clearing house. Afterwards, on the same day, that bank made an assignment for the benefit of its' creditors. Of course, no proceeds of the check came into the hands of the assignee. Money, considerably more than enough to pay the check, came into the hands of the assignee, but it was the proceeds of the bank’s business generally, and none of it the proceeds of the check.. The case is not essentially different from what it would have been had the bank received the money on the check from the bank on which it was drawn, and paid with it checks drawn on itself, or used it in any other way in its business. On the application of Mullen & O’Dowd, the court below ordered the assignee to pay to them the amount called for by the check. Had the check come to the hands of the assignee, an order to deliver it to Mullen & O’Dowd would have been proper; or, had the proceeds of it come into his hands in such shape that they could have been identified, an order to pay them over would have been proper. In such case the specific property would have been that of Mullen & O’Dowd. As it was, there existed nothing but a cause of action against the bank for conversion of the check or of the money, its proceeds; and, as such, it stands on the same footing as any other claim upon the assigned assets based on a conversion of money or other property. To allow such claims to be [8] paid in full out of the assets, when all claims cannot be paid in full, would give a preference tp such claims. There is nothing in the insolvent law justifying it. Order reversed. Collins and Book, JJ., took no part in the decision. (Opinion published 59 N. W. 633.)