
    180 La. 1003
    DAUGHERTY v. CANAL BANK & TRUST CO.
    No. 33005.
    Supreme Court of Louisiana.
    Oct. 29, 1934.
    Dissenting Opinion Nov. 16, 1934.
    Rehearing Denied Jan. 7, 1935.
    
      See, also, 151 So. 431.
    Dufour, St. Paul, Levy & Miceli and Norton L. Wisdom, all of New Orleans, for relator.
    Rownd & Warner, of Hammond, for respondent.
    Miller, Bloch & Martin, of New Orleans, amici curise.
   HIGGINS, Justice.'

This is a suit by a cestui que trust, to recover from the trustee, a bank which is now in liquidation, the sum of $1,665.22, representing income derived from the trust estate.

The defendant admits that it acted as trustee for the plaintiff and collected the amount in question as'income from the trust estate and deposited it to the credit of plaintiff, pri- or to March 1, 1933, in the trust department of the bank, but denies that it can legally pay the plaintiff’s claim in full, because the funds were commingled with the bank’s general funds in' the vault, and because the proclamations issued by the Governor of the state of Louisiana, and the President of the United States, as well as. the orders of the New Orleans Clearing House Association and the state hanking department, prohibited defendant from paying to its depositors and creditors more than 5 per cent, of the balance due, as of March 1, 1933.

There was judgment in favor of the plaintiff as prayed for, against the bank and the liquidator in charge, ordering the immediate payment and delivery of the funds of the plaintiff; and further ordering a legal mortgage in favor of the plaintiff on all of the property and assets of the bank, in the event the money was not paid within five days.

Defendant appealed, and the Court of Appeal for the First Circuit set aside that portion of the judgment granting the mortgage in favor of the plaintiff, but affirmed it in all other respects. 154 So. 681.

Defendant then applied to this court for a writ of certiorari, which was granted, and the case is now before us for review.

The Court of Appeal refused to recognize and accept the statement of the assistant trust officer of the bank contained in an agreed stipulation of facts to the effect that, while the bank kept a separate account of the money which was credited to plaintiff, the funds in question were not segregated but commingled with the other funds of the bank, on the grounds: (1) That defendant had failed to make such a plea; and (2) that article 9 of the answer and article 6 of the agreed statement of facts contained an admission that on March 1, 1933, the identical sum of money claimed was in the hands of the bank, and therefore overcame the effect of what the witness would have sworn to, if called. In short, the court treated the case as if there had not been any commingling of the funds.

Article 9 of the answer and articles 6 and 21 of the agreed statement of facts read, respectively, as follows: '

“Art. 9. Respondent admits that at the time of the termination of said trust agreement on April 18,1933, there was in its hands the sum of $1,665.22, representing income from the principal of said trust, which amount respondent collected and deposited to the credit of petitioner prior to March 1,1933, but except as herein admitted respondent denies the remaining allegations of the Ninth Article of the petition.”

“Art. 6. That on March 1, 1933, there was in the hands of Oanal Bank & Trust Company the sum of $1,665.22, representing .income from the principal of said trust, which amount respondent collected and deposited to the credit of petitioner prior to March 1, 1933.”

“Art. 21. It is further agreed that if Mi'. Junket, Assifetant Trust Officer of the Canal Bank & Trust Company, were present and sworn as a witness in this cause, he would testify that:

“The sum of $1,665.22, the subject matter of this suit, was not carried by the Canal Bank & Trust Company as a part of its assets, and that if paid out to Mrs. Daugherty by said bank at this time, such payment would not operate to discharge as a whole or in part any indebtedness as distinguished from any Trust, or other fiduciary duty of said Canal Bank & Trust Company. And that the said Junket would also testify that the funds in question were not segregated and were commingled with other funds of the Canal Bank & Trust Company; that the Trust Department of the Candi Bank & Trust Company kept a separate account of the said funds, and that all checks drawn in payment of the fund were signed by the Trust Officer of the Canal Bank & Trust Company.”

The introductory paragraph of the stipulation is couched in this language:

“It is stipulated and agreed by and between the plaintiff and the defendant that the following facts shall be considered as having been proved, without the necessity of offering formal proof thereof.”

We believe our learned brothers of the Court of Appeal erred in stating that defendant did not plead that the funds were commingled, because in paragraph 10 of the answer we find the following:

“Respondent admits that in the Agreement of April 18,1933, whereby the trust agreement of February 16, 1924, was terminated, it was stipulated, without prejudice to the rights of either petitioner or respondent, that all of petitioner’s right to sue for and recover the said funds or such part thereof as she might be entitled to receive were reserved. Respondent further admits that respondent refused to pay over the full amount of said funds on deposit to the credit of petitioner, except 5% of said amount for the reason that as the result of the action of the State Banking Department of Louisiana and of the President of the United States closing all banks, respondent was prohibited and prevented from paying over to its depositors and creditors more than 5% of the balance due them as of March 1, 1933. Respondent offered to pay petitioner 5% of the amount aforesaid, or the sum of $83.26, which amount petitioner was unwilling to accept. Except as herein admitted, respondent denies the remaining allegations of the Tenth Article of the petition.”

It is our opinion that defendant was entitled to introduce evidence tending to show that, on account of the manner in which the trust funds had been handled, the relation between the plaintiff as beneficiary and defendant as trustee had been changed from owner and trustee, or agent, to that of creditor and debtor, or depositor, as far as the liquidation of the bank was concerned, and that plaintiff was not entitled to any preference on the commingled funds claimed.

Furthermore, the agreed statement of facts was introduced in evidence without any objection by the counsel for the plaintiff, and therefore would have the effect of enlarging the pleadings so as to admit evidence that the funds had been commingled with the bank’s general funds.

Is there a conflict between the admissions of article 9 of the answer and paragraphs 6 and 21 of the agreed statement of facts? There is not any language in article 9 of the answer and paragraph 6 of the stipulation of facts which is inconsistent with the statement of the trust officer contained in article 21 of the stipulation that the funds had been commingled with the bank’s general funds. While it is true, it is stated that the money in question was not carried as a part of the assets of the bank on its statement, and that payment thereof to plaintiff would only discharge the fiduciary duty of the bank and not operate as an extinguishment of any indebtedness by the bank to her; this means that, as between the bank and plaintiff, the bank was powerless to change the relation from trustee to that of debtor. However, it does not follow that, in a contest between innocent third persons, the depositors and creditors of the liquidating bank, and the plaintiff, the actions of the defendant in permitting the funds to be commingled would not then place the plaintiff in the category of a creditor or depositor.

It is our opinion that the statement of the trust officer was admissible in evidence under the pleadings, and was not inconsistent with any admission contained in the defendant’s answer. In the absence of countervailing proof, we conclude that the defendant has shown that, while a separate and distinct account was kept of the funds in the trust department of the bank to the credit of the plaintiff and subject to withdrawal at any time through the trust officer, the money or funds were commingled with the bank’s general funds in its vault.

The question then arises whether or not the plaintiff is entitled under these circumstances to be paid in full or to be treated as a creditor or depositor of the bank and paid pro rata with the other depositors, by the liquidator.

In the case of Young v. Teutonia Bank & Trust Co., 134 La. 879, 64 So. 806, the bank was appointed as tutor of the minor, under Act No. 45 of 1902, and was vested with the custody and administration of his property. The bank in its capacity as a trust company received for account of the minor the sum of $2,696.64, and opened an account for the minor, showing the relation between them, and agreeing to pay 5 per cent, interest on the money. The minor’s money was commingled with the general funds of the bank. The bank became insolvent, and in opposing the account it was contended, in behalf of the minor, that his funds should have been kept separate and apart from the bank’s funds as a separate deposit and as a trust fund, and that therefore the minor was entitled to payment by preference. The opposition to the account was overruled, and this court on pages 889, 890 of 134 La., 64 So. 806, 809, said:

“The said act [Act No. 45 of 1902] assumes that the bank will keep accounts with minors, interdicts, etc., but provides that the same shall not be counted among the assets or liabilities of the bank in making the statements required by law.

“The act does not provide for a special deposit of the funds of the minor, interdict, etc., or the keeping of such funds separate and apart from the general fund of the bank. ⅜ ⅜ ⅝

“There is in this state no such thing as an equitable lien on money, movables, or other property. With^ us a lien or privilege is stricti juris, and must be expressly created by law.

“The contention of the opponent is that the money of the minor was wrongfully mingled with the funds of the bank, aiid the minor, therefore, continued to be owner; and that the only legal effect of the mingling of the funds of the minor with the moneys of the bank was to substitute for the trust fund received and mingled a like amount to be taken out of the common fund.

“Whatever support these propositions may find in cases decided in other jurisdictions, they are contrary to our well-settled jurisprudence, based on tbe provisions of the Civil Code. * ⅞ *

“This opposition was properly dismissed by the judge a quo. ⅜ * * ”

In the case of Young v. Teutonia Bank & Trust Co., 135 La. 66-69, 64 So. 984, 985, it was said:

“ * ⅜ * The right of a principal to recover property in the hands of his defaulting agent is limited to those cases where there has been a deposit in kind, or where the identity of the thing is fully established; mismanagement or failure to pay over money received gives no privilege upon the ijroperty of an agent. Whatley v. Austin, 1 Rob. 21; Longbottom’s Ex’rs v. Babcock, 9 La. 50; Matthews, Finley & Co. v. Their Creditors, 10 La. Ann. 342; Succession of Stone, 31 La. Ann. 311; Clason & Co. v. City of New Orleans, 46 La. Ann. 1, 14 So. 306; State ex rel. Girardey v. Southern Bank, 33 La. Ann. 957; In re La. Sav. Bank & Safe Dep. Co. in Liq., 40 La. Ann. 514, 4 So. 301; Civ. Code, arts. 2926, 2940, 2944, 2963, 3222.”

There have been a number of decisions interpreting article 3222, R. C. C., which deals with deposits in kind. It has been uniformly held that, in order for the principal to recover his property deposited with the defaulting agent or trustee, he must identify it. If it can be properly identified, then, of course, the principal is entitled to secure the return of his property in preference to other creditors of the defaulting agent or trustee, on the ground of ownership thereof. But, where there has been a commingling of the thing deposited by the defaulting agent or trustee so that its identity has been destroyed, the principal is then treated as a creditor of the defaulting agent’s estate and shares pro rata with his other creditors. Longbottom’s Executors v. Babcock, 9 La. 50; Succession of Stone, 31 La. Ann. 314; In re Louisiana Savings Bank & Safe Deposit Co., 40 La. Ann. 514, 4 So. 301; Succession of Boisblanc, 32 La. Ann. 109; Clay v. His Creditors, 9 Mart. (O. S.) 519.

In the recent case of Tropical Printing Co., Inc., v. Union Title Guarantee Co., Inc., 157 So. 534, 539, we had occasion to review the jurisprudence on this subject. In that case, the defaulting trustee first deposited the trust funds in its own bank account, but later transferred them to a special or separate trust account in the bank. In deciding that the funds had not lost their identity, we said:

“We concur in the opinion that there is no difference, as far as the corporation’s claim •of ownership of these funds is concerned, between the funds that were deposited directly into the trustee account and the funds that were first deposited into the corporation’s bank account and afterwards transferred to the trustee account, where the funds belonged. An agent who receives money to be deposited for his principal in a separate bank account, so labeled that it can be identified as belonging to his principal, cannot acquire or affect the ownership of the money, or of the deposit, by first depositing the money into his, the agent’s, bank account, and after-wards transferring the same amount of money into a deposit so labeled that it can be identified as belonging to the principal. The principal’s right in such a case is not merely a lien on the fund, or on the deposit, but is ownership of it. The agent in such a case is not the debtor but the trustee of the princi--pal; and the relation of principal and agent cannot be converted into that of creditor and debtor, by the agent’s unauthorized act' of temporarily converting to his own use money deposited with him for delivery to his principal, and afterwards deposited by the agent for account of his principal. McDonogh v. Delassus, 10 Rob. 481. If the principal can identify his property or its proceeds in the hands of his agent, the principal is entitled to it. L’Hommedieu v. Penny’s Executors, 6 La. 599; Whatley v. Austin, 1 Rob. 21 (obiter) ; Stetson, Avery & Co. v. Gurney, 17 La. 162; Bloodworth v. Jacobs, 2 La. Ann. 24; Beatty v. McCleod, 11 La. Ann. 76.

“The receivers contend that the fund on deposit in the trustee account lost its identity, as the property of the note holders fpr whose account it was deposited, and became mingled with the funds of the insolvent corporation, by the corporation’s borrowing and lending" a part of the fund, and afterwards depositing other money in the trustee account to cover the deficit. But we do not see why that should affect the title to the fund on deposit in the so-called trustee account. The important fact is that no money belonging to the corporation, or to be expended for the corporation or for any one except the note holders who owned the money in the trustee account, was ever deposited in that account, or mingled with the funds in that account.”

As the evidence in the instant case shows that the money belonging to the plaintiff was intermingled with the bank’s general funds, it is impossible to identify or distinguish her money from the other deposits, and, consequently, we are powerless to return it to her, and she must assert her claim as a creditor in the account of the liquidator.

Do the provisions of Act No. 107 of 1920, which allow parties to enter into trust agreements, change the law on this subject? It is contended by the plaintiff that it was the duty of the bank to keep the trust funds deposited in its name as trustee in an incorporated bank of this state separate and apart from its own funds, and that the trustee or bank, by breaching the trust agreement and in violating the statute, in failing to keep the funds separate and apart, cannot deprive plaintiff of the right to the return of her money in full. It is further stated that the liquidator of the insolvent bank is in no better position to do so than the bank itself. Defendant counters by saying that the act does not require a bank acting as trustee to keep the income derived from the corpus of the trust it administers separate and apart from the general funds of the bank.

■Assuming that the act requires the bank as trustee to keep the trust funds separate from its own, and that it failed to do so, a view most favorable to the plaintiff, we do not believe that the legal situation is changed, because the statute does not make any provision for a lien- or privilege in favor of the beneficiary of the trust against the assets of the defaulting trustee, in preference to the other creditors of the trustee’s estate. The act simply provides that, if the trustee does not faithfully discharge his duties, he is subject to summary removal.

The situation where the trustee violates the provisions of the statute in failing to keep a separate and distinct account of the trust funds, in a chartered bank of the state, is comparable to the failure of the agent or trustee, in violation of the trust agreement, to keep the thing deposited separate and apart from his own estate, so that it can be distinguished and identified. In the latter instance or case, courts have uniformly held that a mere breach of duty on the part of the trustee does not create a lien or privilege in favor of the beneficiary of the trust so as to give him a preference over the other creditors of the trust estate.

In the case of the Succession of Boisblanc, 32 La. Ann. 109, 112, the court said:

“The unfaithful or imprudent agent may so deal with the property of the principal as to subject it to the rights of his creditors or other innocent third persons: he may make the tracing and identification of it, and the proof of ownership difficult, even impossible: he may illegally convert it to his own uses, and subject himself to criminal prosecution, under the statute, for embezzlement or breach of trust with respect to it; but he cannot, as against his principal, make it his own, nor can he transmit it to his succession by will, or áb intestate.”

It might be well to point out at this time that the controversy here is really between the general creditors or depositors of the bank, represented by the liquidator, and’ the plaintiff, who claims to be entitled to a preference, and not a contest between the plaintiff and the bank, as trustee. The bank, on March 1, 1933, and thereafter, was in a state of unliquidity, and unable to pay its obligations in full.

Privileges are stricti juris in Louisiana, and can only be allowed when plainly proved by statute. Article 3185, R. C. C.; Landry v. Blanchard, 16 La. Ann. 173; Boylan’s Detective Agency & Protective Police v. Brown & Co., 157 La. 332, 102 So. 417; Cottam & Co. v. O’Shee Bros. Coffee Co., 2 La. App. 427; Succession of Williams, 7 La. App. 465; Harrison v. Faulk, 2 La. 92; Hagan v. Sompeyrac, 3 La. 154; Union Bank v. Slidell, 11 La. 23; Grant v. Fiol, 17 La. 158; Shreveport National Bank v. Maples, 119 La. 41, 43 So. 905.

Act No. 107 of 1920 does not create a privilege on trust funds which have been commingled with the money of the defaulting trustee, in favor of the beneficiary of the trust, and therefore does not change the jurisprudence on this subject.

Was the bank prohibited from paying the funds claimed to the plaintiff as a result of the various proclamations issued in connection with what was generally termed the “Banking Holiday”? On March 1, 1933, the Governor of Louisiana, by proclamation, declared March 2, 3, and 4, 1933, banking holidays throughout the state, and ordered that banking business be suspended on those days. On the same day, the New Orleans Clearing House Association, by a resolution, with the consent and approval of the Governor, suspended payment of bank demand obligations. On March 2, 1933, the New Orleans Clearing House Association, by resolution and with the consent and approval of the Governor, restricted the payment of deposits in excess of 5 per cent, of the balance, at the close of business on March 1,1933. On March 3d the bank opened on a 5 per cent, restricted basis, paying its depositors and creditors accordingly. The Clearing House Association, by further resolution, again suspended payment of demand obligations on March 4 and 6, 1933. On March 6,1933, the President of the United States declared a national banking holiday. closing all banks in tbe United States, including tbe defendant bank, wbicb was a member of tbe Federal Reserve System. On tbe same day, tbe Clearing House Association, with tbe approval of tbe Governor, suspended tbe payment of demand obligations from March 6tb to March 9th. On March 9th tbe President of tbe United States, under tbe laws of tbe United States and an Act of Congress of March 9, 1933 (12 USCA § 201 et seq.), closed all banks for an indefinite period of time, but authorized tbe Secretary of tbe Treasury to grant licenses to such banks as' be might determine were in tbe proper condition to reopen.

Defendant bank was never granted a license to reopen for normal banking functions. On March 19,1933, the Treasury Department promulgated Regulation No. 27, which provided that:

“Any State Banking Institution which is a member of the Federal Reserve System and wbicb is not licensed by tbe Secretary of tbe Treasury to reopen for tbe performance of usual banking functions, may, with tbe approval of tbe appropriate State authority having immediate supervision of such banking institution, permit withdrawals by depositors and make payments to creditors of such percentage of tbe amounts due them (not exceeding 5%) as it may determine, provided that when or before the time of such withdrawal or payment it shall set aside and make available for such purposes a fund for the benefit of and sufficient to pay all depositors and creditors the percentage so determined.”

Prior to March 1, 1933, the bank collected the sum in question as income from the principal of the trust, and deposited it to the credit of the plaintiff in the trust department, but permitted the money to be commingled with the bank’s general funds in the vault.

On April 18, 1933, plaintiff demanded the money from the defendaht bank, and the bank tendered her 5 per cent, of the deposit, or $83.26, which she refused to accept.

From the authorities and reasons which we have previously given, the plaintiff, subsequent to March 1, 1933, could not have identified her money from the funds of the other depositors and creditors of the bank, as all of these funds were intermingled in the vault, and therefore she could not demand payment in full of her claim when there was insufficient funds to pay the depositors and creditors of the bank. In short, the action of the trustee in permitting the funds to be commingled changed plaintiff’s legal status from that of the owner of the funds to that of a depositor or creditor of the bank. Having been placed in the category of a depositor or a creditor of the bank, the officers of that institution were prohibited under the specific provisions of Regulation 27 from paying her in full. The plain purpose of the Treasury Regulations, as well as the various proclamations issued by the President of the United States and the Governor of the state, and resolutions of the Clearing House Association, were to prevent those who had deposits subject to withdrawal on demand from immediately withdrawing their funds from the bank and to hold the affairs of banking institutions in difficulty, status quo, in order that the rights of all parties, concerned might be preserved and asserted in a more orderly manner. If it had not been for these regulations and proclamations, there would have been a run on the bank, with the result that the depositors who first presented themselves would have been paid in full, and, after the bank’s exchequer had been depleted, the remaining depositors would, in all likelihood, have sustained a total loss.

It is our opinion that the bank officials properly refused to honor plaintiff’s demand for payment in full, and that the regulations of the Treasury Department with reference to trust and other fiduciary funds were not applicable, because the plaintiff was unable to identify the funds held for her account under the trust agreement, and therefore became a creditor or depositor of the bank.

Plaintiff is entitled to a judgment recognizing her as an ordinary creditor of the bank for the sum of $1,665.22, without interest, less the liquidating dividend of $525.80 previously paid her, the balance ($1,139.42), to be paid her in due course of liquidation, according to law.

Plaintiff’s claim to a legal mortgage on the defendant’s assets is asserted under articles 3315 and 3355, R. C. C., on the ground that the defendant’s representatives inter-meddled in her estate while she was a minor. The Court of Appeal properly held that plaintiff had failed to show that defendant was an intermeddler and that she also failed to preserve her alleged mortgage by recording a sworn statement in the mortgage office.

• For the reasons assigned, the judgment of the Court of Appeal, First Circuit, is annulled, avoided, and reversed, in so far as it affirms the judgment of the trial court in favor of the plaintiff and against the Canal Bank & Trust Company, in liquidation, J. S. Brock, state banking examiner, and H. G. Thompson, special agent in charge of the liquidation; and is affirmed, in so far as it rejects the alternate demand of the plaintiff for a mortgage on the assets of the bank; and it is now ordered, adjudged, and decreed that there be judgment herein in favor of Mrs. Sarah C. Daugherty, and against the Canal Bank & Trust Company, in liquidation, J. S. Brock, state banking commissioner, and H. G. Thompson, special agent in charge of the liquidation, recognizing her as an ordinary creditor to the extent of $1,665.22, without interest, subject to a liquidating dividend of $525.S0, and such other liquidating dividends that she might have received pendente lite, payable in due course of liquidation, and according to law.

ODOM, Justice

(dissenting).

I think the court has fallen into error in this case. It has thrown itself out of line with the settled jurisprudence of all the other states, the federal courts, including the United States Supreme Court. It has failed to give effect to the meaning and intent of Act No. 107 of 1020 and section 16, art. 4, of the Constitution of 1921, authorizing the creation of trust estates in this state. The court has based its holding on the principles announced in Young v. Teutonia Bank & Trust Co., 134 La. 879, 64 So. 806, 809, and numerous cases there cited. I find no fault with the rulings made in those cases. But I think those cases have no application here.

The Teutonia Bank Case was decided in 1914. At that time there was no law in Louisiana authorizing the creation of trust estates. In fact, the creation of such estates was prohibited at that time. This court quoted approvingly the following from the opinion of the trial judge’in that case:

“It is repeated here that neither our law nor our jurisprudence recognizes trusts, express or implied.”

The contention there made on behalf of the minor was that its money was wrongfully mingled with the funds of the bank, and that the minor continued to be the owner thereof, and “that the only legal effect of the mingling of the funds of the minor with the moneys of the bank was to substitute for the trust fund received and mingled, a like amount to be taken out of the common fund.” The court evidently recognized that such was the effect under the common law. But the court said:

“Whatever support these propositions may find in cases decided in other jurisdictions, they are contrary to our well-settled jurisprudence, based on the provisions of the Civil Code, as hereinbefore set forth.”

The court then said that in the case of deposits made long before the failure of a bank it was impossible to identify and separate them from the other funds of the bank, and it followed the jurisprudence of this state to the effect that, where such funds could not be identified, the minor was relegated to the position of a general creditor of the bank, and must share the fate of its other creditors.

The bank in that case was appointed tutor ad bona of the minor under Act No. 45 of 1902. But the court was particular to point out that:

“The act does not provide for a special deposit of the funds of the minor, interdict, etc., or the keeping of such funds separate ' and, apwrt from the general fund, of the hank.” (Italics mine.)

Therein lies the main distinction between that case and this one. There the bank was tutor ad bona for the minor under the Act of 1902. Here the bank was trustee for Mrs. Daugherty under Act No. 107 of 1920. There the act under consideration does not provide for any special deposit by the bank of the funds of the minor. Here the act of the Legislature authorizing a bank to become trustee, tinder the express provisions of which this bank (or its predecaessor) was appointed, which trust it accepted and carried out, provides in section 6 that the trustee “shall deposit and keep all trust funds in thevr names [not in the name of the cestui que trust]1 as trustees in an incorporated bank or banks in this State, separate and apart from their individual funds.” (Italics mine.)

Manifestly, the intent and purpose of the Legislature in putting into the trust estate law this last-quoted provision was to dispense with the rigid and most exacting rule which theretofore prevailed under our civil law and our jurisprudencb with reference to the commingling of the funds deposited by trustees in a bank and the rule that, in order to recover such funds from an insolvent bank, by preference over other depositors, it was necessary for the depositor to follow and identify the deposit even to the extent of identifying the specie or currency.

Neither did the Code nor any special act of the Legislature “provide for a special deposit of the funds of minors, interdicts,” etc. But the Legislature of 1920 did provide for a special deposit of trust funds coming into the hands of a trustee appointed under the provisions of that act. Trustee banks are required by that act to deposit trust funds in their names “as trustee” and “separate and apart from their individual funds.”

Under that law, the cestui que trust is not a depositor. The trustee bank itself is the depositor. The trust funds are deposited by it in its name in a special account. Therefore the relationship of creditor and debtor never exists between the cestui que trust and the trustee bank, or any other bank in which such funds are deposited by it, as in the case of ordinary depositors. And just here is where I think my associates have fallen into error.

It is said in the majority opinion that Mrs. Daugherty “could not have identified her money from the funds of the other depositors and creditors of the bank, as all of these funds were intermingled _in the vault, and therefore she could not demand payment in full of her claim when there was insufficient funds to pay the depositors and creditors of the bank.” It is said that she was placed in the category of a depositor or creditor of the bank.

That, I think, is not true as a matter of law as I have pointed out. It is not true as a matter of fact. The trustee bank had possession of, and managed all of, the property belonging to the trust estate, collected the revenues, and deposited them in a special account. Mrs. Daugherty handled neither the ' property nor the revenues from it. She made no deposits. According to the agreed statement of facts, section 21, she could not withdraw the funds deposited on her own check. It was agreed “that all checks drawn in payment of the funds are signed by the trust officer of the Oanal Bank & Trust Company,” and further agreed that the “sum of $1,665.-22, the subject matter of this suit, was not carried by the Canal Bank & Trust Company as a part of its assets.” Money deposited in a bank by an ordinary depositor becomes the property of the bank, is an asset of the bank, but, by virtue of the act of deposit, the bank becomes liable to the depositor to the extent of the amount of the deposit. The relationship of creditor and debtor springs into existence by virtue of the' deposit. Not so in a case like this. Here the bank was trustee by special act under a special law. The amount here involved was collected by it as revenud from the trust estate, and it was deposited in a special account as the law requires. The amount admittedly did not become an asset of the bank. The relationship of creditor and debtor did not arise between Mrs. Daugherty and the bank by virtue of the deposit which the bank made as trustee. The bank owed the duty of delivering the money to her.

This money having been deposited in a special account or a special deposit having been made of it as Act No. 107 of 1920 directs, I think all Mrs. Daugherty had to do was to trace the money into the special account. That is all the act contemplates. It was not necessary that she trace the fund further than this account. No further identification was necessary. I think the rule which prevailed in this jurisdiction as to identification does not apply to funds received by a special trustee appointed under the trust estate law and deposited and kept separate as the law directs.

While, as said in the Teutonia Bank Case, supra, the rules prevailing elsewhere as to 1 identification of such trust funds did not apply in this state at the time that case was decided, I think they do apply now where a trastee bank collects and deposits to its account as trustee (not to its own account) funds such as these.

The following quoted from a case note found in 26 A. L. R. 3, illustrates the rale:

“It is a principle supported by a wealth of authority that the act of a trustee in mingling trust moneys in a mixed bank account does not, of itself, destroy the identity of the trust moneys so as to prevent their reclamation.”

In support of this text there are cited cases from federal courts and courts of last resort from seventeen states of the Union.

In the case of Leach v. Farmers’ Savings Bank of Hamburg, reported at 205 Iowa, 114, 213 N. W. 414, 217 N. W. 437, 56 A. L. R. 801, decided by the Iowa Supreme Court in April, 1927, it was held that a statute requiring banks to keep separate from its funds property received as executor or administrator does not require the bank to keep the identical money received in specie. Many other eases to the same .effect might be cited.

The following quotation is taken from 39 Cyc. p. 536:

“Where a trustee mingles trust money with his own, although the identical pieces of coin or kinds of money cannot be identified, the trust money may be followed and recovered if it can be identified and traced into the general mass of the trustee’s money; and this rale applies to trust money deposited in bank to the individual account of the trustee, and in which his own money is also deposited.”

Also the following from the same volume, page 538:

“Where a trustee so mingles the trust fund or property with his own, or so invests it in property together with his own, that the trust fund or property cannot be separated or the amount of each ascertained, the whole mixed fund or property becoihes subject to the trust, except so far as the trustee may be able to distinguish or separate his own fund or property, the burden of making such distinction or separation being on the trustee or his representative; and this rule applies so long as any portion of the fund or property into which the trust fund or property can be traced remains.”

To the same effect see sections 899 and '900, 65 Corpus Juris, pp. 972 and 973.

Act No. 107 of 1920 makes a- radical change in the old law. It was so intended, because section 8 of that act reads as follows:

“Section 8. Be it further enacted, etc., That the provisions contained in the Revised Civil Code, and the laws of this State relative to substitutions, Eidei Commissa, or trust dispositions’, and the legitime shall not be deemed to apply to, or in any manner affect donations of the character and made in the manner provided by this Act; and all laws, or parts of laws conflicting with the provisions of this Act are repealed insofar as regards the purposes of this Act, but not otherwise.”

I respectfully dissent from the majority opinion.  