Slater v. North Carolina Bank & Trust Co.

Adams, J.

It is admitted that the Central Investment Corporation is the beneficial owner of the funds deposited in the bank in the name *777 of C. H. Slater ancl Company, and in view of this admission the appellants argue that the transaction between the depositor and the bank resulted in the creation of a trust which entitles the beneficial owner to precedence in payment. The argument is predicated on the theory of equitable ownership arising from the bank’s knowledge of the fact that the funds deposited in the name of C. H. Slater and Company were free from the banker’s right of legal or equitable set-off against 0. IT. Slater. The appellants cite several cases in support of the principle that a banker’s lien or right of set-off while ordinarily attaching to deposited funds cannot be permitted to prevail against the equity of the beneficial OAvner of which the bank has notice, either actual or constructive.

Nal. Bank v. Life Ins. Co., 104 U. S., 54 , 26 L. Ed., 693 ;

Union Stock Yards National Bank v. Gillespie, 137 U. S., 411 , 34 L. Ed., 724 ;

United States v. Butterworth-Judson Corporation, 267 U. S., 387 , 69 L. Ed., 672 ;

Arnold v. San Ramon Valley Bank, 194 Pac., 1012, 13 . A. L. R., 320, and annotation;

Agard v. People's Nat. Bank, 169 Minn., 438 , 50 A. L. R., 629, and annotation. Conceding the principle, A\re do not perceive its application to the agreed facts. The question of set-off or banker’s liens is not presented by the appeal. When the deposits Avere made, general receipts or tickets were issued by the bank; there Avas no agreement that the deposits should be segregated from the general funds; and it is agreed that they remained subject to Avithdrawal by the depositor. The mere fact of beneficial or equitable ownership confers upon the Central Investment Corporation no right of precedence or preference in the distribution of assets in the hands of the Commissioner of Banks.

The appellants take the alternative position that the depositor of the funds is a preferred creditor of the bank an'd is therefore entitled to priority over the general creditors of the bank. Applying the principle stated in all the recent decisions dealing Avith the qiAestion of claims which have preference in the liquidation of an insolvent bank, Ave are of opinion that the appellants’ position cannot be maintained on the theory of a segregated trust fund or of a statutory preference.

Williams v. Hood, Comr., 204 N. C., 140 ;

Flack v. Hood, Comr., ibid., 337;

Parker v. Trust Co., 202 N. C., 230 ;

Bank v. Corporation Commission, 201 N. C., 381 ;

Hicks v. Corporation Commission, ibid., 819;

Corporation Commission v. Trust Co., 193 N. C., 696 . Judgment Affirmed.