Bank of Commerce v. Russell

DILLON, Circuit Judge. The bank which files the bill seeks to maintain it on two grounds. The first is that the money collected for it by the bankrupts is money which they held in trust for it, and hence that it did not vest in the assignee. I am of opinion upon the statements of the bill that this principle does not apply, and that the relation between the bankrupts and the plaintiff at the time of the bankruptcy was simply the relation of debtor and creditor. It does not appear that the identical money collected on the notes was kept by the bankrupts separate and. distinct from their other money, and in that shape came into the hands of the assignee. We need not, therefore, consider what would have been the rights of the parties had this been shown. It is next claimed that the draft drawn by the bankrupts for $413.16 on the Second National Bank, where they had at the time $2,000 on deposit, and which draft was protested, amounted to an equitable assignment of that amount in favor of the plaintiff, and that this equity should be judicially recognized and enforced as against the assignee. If it were assumed or conceded that under any circumstances such a draft can amount to an equitable assignment in favor of the payee of that amount of the drawers’ funds in the hands of the drawee, such a principle can not be applied where it would contravene the purpose of the bankrupt act. The plaintiffs, as the holders of the draft drawn by the bankrupts, were simply creditors like other draft-holders, and it would scarcely do to say that when private bankers become insolvent, holders of their bills shall, to the extent of funds in the hands of1 the drawee, be entitled, as against other creditors, to priority. Affirmed.