On December 22, 1930, the Citizens' Bank Trust Company of Yazoo City, being insolvent, was taken over by appellant for liquidation under our banking laws. The liquidation was proceeding in the chancery court of that county, as required by statute (Code 1930, section 3817). Appellees intervened in that cause by petition and set up their claim against the bank in the sum of nine hundred thirty-nine dollars and eighty-nine cents, which they alleged was a special deposit and a trust fund for which, under the law, they were entitled to payment in full as against other unsecured creditors. The petition was answered *Page 108 by appellant, and its material allegations denied. The cause was tried on the pleadings and on evidence, resulting in a decree granting the prayer of the appellees' petition. From that decree appellant prosecutes this appeal.
Appellee L. Freeman Little is the owner of Willowdale plantation in Yazoo county. The plantation was leased for the year 1930 to appellee J.R. Broadaway, who got his necessary "furnish" for the plantation from W.W. Nevins. The cotton raised on the plantation was sold at various times during the year through the Staple Cotton Cooperative Association of Greenwood. The cotton association, acting under instructions of appellees and Nevins, mailed the checks for the various lots of cotton sold by it to the Citizens' Bank Trust Company of Yazoo City. The checks were made payable to "L. Freeman Little; J.R. Broadaway, and W.W. Nevins." There were several of these checks, inasmuch as there were several lots of the cotton sold at different times by the cotton association. Acting under authority expressly given it by appellees and Nevins, the Citizens' Bank Trust Company indorsed these checks of the cotton association "with the names of all three payees" and credited the amounts to "J.R. Broadaway Rent Account." These checks were forwarded by the Citizens' Bank Trust Company to its correspondents, and the proceeds of their collection went into the Citizens' Bank Trust Company in the manner stated.
At the time appellant took charge of the Citizens' Bank Trust Company there was in the "J.R. Broadaway Rent Account" the sum of nine hundred thirty-nine dollars and eighty-nine cents. Appellee Little asserted his preference claim against the assets of the bank in the sum of six hundred dollars, which he alleged was the amount of rent due him for the plantation for the year 1930, and appellee Broadaway set up a like claim for *Page 109 the balance, three hundred thirty-nine dollars and eighty-nine cents.
For two or three years prior to 1930 this same arrangement had been made by appellees for the handling of the plantation. J.P. Bennett was vice-president of the Citizens' Bank Trust Company. He testified, and we understand the evidence was undisputed, that the bank would receive from the cotton association its checks representing the proceeds of the sale of cotton raised by Broadaway on Little's plantation; that by agreement of all the parties this money would be held by the bank, and, when all the cotton had been sold and the proceeds in, the bank would remit to Little the rent for the plantation for the year, after paying his taxes, and the balance would be turned over to Broadaway. The arrangement meant that neither one of the interested parties could check out his share of the deposit. On the contrary, the bank was commissioned by all the parties to dispose of it in the manner above stated.
The question is whether or not this fund so deposited and handled became a special deposit and a trust fund for the payment of which appellees are entitled to a preference out of the assets of the bank. The chancellor so held, but we think his holding was erroneous for the following reasons: A deposit is presumed to be general unless expressly made special or specific. Where the bank had a right to mingle the funds deposited with its general assets, it is a general deposit and not a special one. A special deposit does not enter into the general funds of the bank "and form a part of its disposable capital;" it is kept separate and is to be specifically returned. This is true, even though the money deposited may be trust funds put with the bank on condition that it would pay a certain sum to the cestui during life, in the absence of evidence to show that it was the bank's duty by express agreement or clearly implied to keep the *Page 110 funds and their investment separate. 1 Morse on Banks Banking (6 Ed.), sections 186 and 205, and case notes.
However, it appears unnecessary to refer to authorities elsewhere to sustain appellant's position. The cases of Billingsley v. Pollock, 69 Miss. 759, 13 So. 828, 30 Am. St. Rep. 585; Love v. Federal Land Bank, 157 Miss. 52, 127 So. 720; and Love, Supt. of Banks, v. Fulton Iron Works, 162 Miss. 890,140 So. 528, although not directly in point on their facts, lay down principles which sustain appellant's contention.
Appellees, to sustain their contention, rely on Armour-Cudahy Packing Co. v. First National Bank, 69 Miss. 700, 11 So. 28; Sawyers v. Conner, 114 Miss. 363, 75 So. 131, L.R.A. 1918A, 61, Ann. Cas. 1918B, 388; and Love v. Meridian Grain Elevator Co.,162 Miss. 773, 139 So. 857. In the Armour-Cudahy case the deposit was made by its agent Lamon in the bank with the distinct understanding that it belonged to the packing company, and that the bank should promptly remit the funds to it. Opposite the deposit on Lamon's passbook was the word "meat;" this was to indicate that the deposit was the proceeds of the sale of meat by the company. The court held that the deposit was a trust fund; that under the facts the bank had no right to commingle it with its general assets; that it held the deposit for a definite and specific purpose, and could appropriate it to no other.
In the Sawyers case the depositor refused to permit the proceeds of a check to be deposited either to her checking account or her savings account, but informed the cashier of the bank that the deposit was for the purpose of paying a contractor for building a house, whereupon the cashier gave her a special receipt bearing the words "S.P. Dept." The court held that the deposit was charged with a trust in favor of the contractor, and that the bank did not get title to the proceeds of the deposit. *Page 111
In the Meridian Grain Elevator Company case there was printed on the draft that it was a cash item and was not to be treated as a deposit, and that the funds obtained through its collection should not be accounted for to the drawer or commingled with other funds of the collecting bank. The court held that thereby the bank had notice that the drawer did not intend that the draft or proceeds thereof should be handled by the bank, except as drawer's agent, and that such agency should continue from the time the bank received the draft for collection until the money was paid to the drawer.
There was no evidence either directly or circumstantially tending to show that it was understood that the Citizens' Bank Trust Company would hold these funds in trust — that they were not to be commingled with the general assets of the bank. On the contrary, the evidence shows that the bank held the funds as a mere debtor. The result of these views is that the decree of the lower court is reversed, and a decree is entered here for the appellant.
Reversed, and decree here.