
    
      In re North River Bank.
    
      (Supreme Court, General Term, First Department.
    
    April 17, 1891.)
    Deposits with Insolvent Banks—Recovery.
    Petitioners, upon being assured of the solvency of a bank, deposited their money there, but in the afternoon of the same day the bank closed its doors. An appeal was taken from an order directing the receiver of said bank to pay to petitioners the amount of their said deposit. Held, that the order should have been denied upon the ground that there was no proof that said deposit had not gone into the general funds of the bank and lost its identity before reaching the receiver, and that petitioners had failed to impress a trust upon the same in the receiver’s hands.
    Appeal from special term, New York county.
    Application by Thomas B. Kniffin and another for an order directing the receiver of the North River Bank to pay petitioners the sum of $533.42, deposited in said bank by petitioners on the day of its failure. The receiver of said bank appeals from an order granting said applications.
    Argued before Van Brunt, P. J., and Daniels, J.
    
      Durnin & Hendrick, for appellant. Charles H. Johnson, for respondents.
   Van Brunt, P. J.

The respondents presented a petition to the court setting out the appointment of the appellant as receiver of the North River Bank, a domestic corporation; that they had kept an account in said bank for several years, and that on the 12th of November, 1890, they sent by their book-keeper a note to the president of the bank, and the sum of $533.42, to be deposited in case a favorable answer to said note was received; that by said note inquiry was made as to the truth of certain rumors affecting the solvency of said bank, and the book-keeper, upon being assured of the solvency of the bank, deposited said sum of money between 12:30 and 1 o’clock p. 3f. of that day; that on the same day, at 2:15 p. si., the bank closed its doors, and was insolvent,—and demanded that the court should order a repayment of said sum of money by the receiver. This petition was supported by the affidavits of the book-keeper, wherein he states that the president assured him of the solvency of the bank, and that, relying upon such assurance, he deposited the said sum of money with the bank. The receiver, in opposition to the witness, produced the affidavit of the, president of the bank, denying any recollection of any inquiry by the book-keeper of the petitioner as to the solvency of the bank, and stating that, if he did represent the bank to be solvent, he did so in good faith, without any fraudulent intent. The court granted the motion, and upon the order thereupon entered this appeal is taken.

The court below seems to have granted the motion upon the authority of Craige v. Hadley, 99 N. Y. 131, 1 N. E. Rep. 537. We think that upon an examination of that case it will be seen that, even if for no other reason, the motion should have been denied because one of the elements stated to be essential by that case was absent in the ease at bar. The amount deposited by the petitioner had gone into the general funds of the bank. There is no proof that it ever reached the hands of the receiver, and there is no proof but that it has lost its identity. There is no pretense that any particular $533.42 which came into the hands of the receiver was the $583.42 deposited by the plaintiffs, non constat but that may have, been paid out during the one to two hours that the bank was doing its business. Unless the money can be traced, the petitioners could claim no preference. But beyond this we do not think that preferences of this kind should be established in this summary way. The party should be remitted to his action, upon the trial of which the witnesses could be orally examined and cross-examined, and the truth of this claim should be established in the ordinary way. It is true that the receiver is an officer oí the court, and in the disposition of the funds in his hands is subject to the order of the court; but he also represents the creditors of the corporation, and they should not be deprived of the right of having claims which may seriously affect them established by common-law proof. This summary proceeding has been too often resorted to to establish priorities of claims which would not for a moment stand the test of investigation in open court. We think, therefore, that the order was improperly granted, and should be reversed, with $10 costs and disbursements, and the motion denied, with leave to the petitioners to bring an action to establish the claim made herein.  