Dissenting from Opinioii and Affirming Judgment on Other Grounds. — I am not able to agree with the views which seem to be entertained by the Chief Justice with reference to this case. The facts of the case are quite simple; indeed, the evidence is very brief. In order, therefore, to make clear the conclusion I reach on the question of the trust relation sought to be established, I will quote at length from the evidence of the cashier of the appellant bank (and his evidence is not disputed and covers the whole 'transaction). After the formal questions and answers his testimony is as follows: \
“Q. What took place there between you and Mr. Crammer? A. Mr. Cramer came to me and said that he had shipped out about $4;000 to Ketchum to Thomas Reed and it had feft him a little short, and that he had a shipment on the road and *227needed a little money until bis shipment came in. Q. Haw much of a shipment did he state? A. He said it was on the road at that time and would— Q. How much of a shipment? A. $5,000. Q. And did he say in what form? A. He said it was a shipment of currency. Q. What did he state he would do ? A. He said that if I would let him have some money he would return it in currency when his shipment came in. Q. And did you let him have the currency? A. Yes, sir. Q. How much did you let him have? A. $2,500. Q. And when did you see him again? A. I do not think it was until the 31st of August. Q. When did you call at the defendant’s bank, if at all, after the 25th? A. On August 29th. Q. And whom did you meet there? A. Mr. Cutts, Mr. Cramer was not there. Q. And what took place? A. I asked him if he could return the $2,500 and he said that he could not, that the shipment had not arrived, but he thought it would be in on the evening train. Q. What position did he hold with that bank? A. He was the assistant cashier, I believe. Q. When next did you go again, if at all? A. The next day I called at the bank again. Q. And who did you see ? A. I saw Mr. Cutts again. Q. And what took place on that occasion? A. He told me that the shipment had not come yet, but he was sure that it would be in on the 30th on the train. Q. And did you go there again, if at all? A. On the 31st. Q. And who did you see? A. I went in to see Cutts and I asked if Cramer was there— Q. And what else did you say? A. I asked for Cramer and he was out and I waited two or three hours for him and finally came and went back into the back room, and I asked him if I could see him a few minutes, and he said, ‘Yes, sir, in a few minutes,’ and he never came back out at all.”
On cross-examination the same witness testified that after making this loan to Cramer he did not communicate with Cramer or the Idaho State Bank or have any word from them until the 31st day of August, the day on which the Idaho State Bank failed. He also testified on cross-examination:
‘‘Q. When were you to receive this money back? A. It was to be returned as soon as the shipment of money came in. *228Q. Was it to be brought down to yon the next day? A. I do not think so. I do not think there was any arrangement of that kind. Q. There was no arrangement of that kind made at the time when he got the money and told yon he had a shipment coming in that would be there on.the 25th or 26th? A. No, sir, I do not think so.”
In other words, the witness admits that there was no definite understanding as to just when and how the payment should be made, whether it should be brought down to the bank by Cramer or an officer of the bank in currency, or whether it should be sent to the bank by remittance in the ordinary and due course of banking business, or an officer of the Bellevue Bank was to call at the Idaho State Bank and get the money. I recite the foregoing for the purpose only of illustrating the fact that this was an ordinary loan made by the Bellevue State Bank to the Idaho -State Bank, and that it was made under no other or different arrangements or conditions from any other ordinary loan. It is admitted by all parties that this was in fact a mere loan from the one bank to the other and that the relation of debtor and creditor immediately arose. (Leapheart v. Commercial Bank, 45 S. C. 563, 55 Am. St. 800, 23 S. E. 939, 33 L. R. A. 700; Mutual Acc. Assn. v. Jacobs, 141 Ill. 261, 33 Am. St. 302, 31 N. E. 414, 16 L. R. A. 516.) It is contended, however, that in some fictitious and imaginary way the relation of debtor and creditor, which is clearly established, was subsequently and after the money was all paid out and expended by the Idaho State Bank converted into a trust relation, and that the Idaho State Bank, after it had expended this money, became a trustee for the Bellevue State Bank, its cestui que trust. I am wholly unable to agree with this contention, and shall briefly state my reasons for my disagreement.
It is a well-established rule of law that where one parts with the possession of his property by reason of fraud practiced by the one who procures the property, upon discovering the fraud he may rescind the contract and pursue his property and recover the same, unless it has passed into the hands of an innocent purchaser. (Corn etc. Bank v. Solicitors’ Loan *229& Trust Co., 188 Pa. 330, 68 Am. St. 872, 41 Atl. 536; Farber v. Stephens, 35 Fed. 17.) Strictly speaking, the right to pursue property in such cases rests upon the doctrine of rescission of contracts rather than that of trust and trustee. (1 Perry on Trusts, see. 166.) The principle upon which the recovery is allowed is the same both at law and in equity. The misrepresentation or fraud which entitles the party to rescind the contract and pursue the property must consist in some fact material to the contract or of something that goes to the essence of the contract itself. (1 Perry on Trusts, sec. 174.)
Courts of equity are constituted for the purpose of doing substantial justice between the parties, but this must be administered under some recognized system and standard, for the reason that individuals in the same society differ in their views of absolute right and justice and of moral standards as well. This principle is tersely enunciated by Perry on Trusts, at see. 173, where he says:
“There are in every community two classes of rights, — perfect rights, qnd imperfect rights. Perfect rights are those that may be enforced, or for the breach of which damages may be recovered; imperfect rights are those which are conceded to every man, but which cannot be enforced by human tribunals, and for the breach of which no damages can be recovered. Thus every man has a right to the utmost good faith, and the most perfect frankness and truthfulness in all the transactions of business; but courts of justice would be utterly powerless to enforce such a standard of morality. They would have neither the time nor the means of investigating the innumerable arts of buyers and sellers. And so courts have been obliged to lay down certain practical rules and limitations upon the subject of misrepresentation. ’ ’
No court of equity would undertake to interfere with and rescind the transactions of men simply because there has been a breach of the moral or ethical standard generally recognized by men, or because someone has promised to do a certain thing or meet an obligation or transact certain business, and fias failed to do so, either at the time or in the manner represented. *230If courts were to undertake this thing, they would be overwhelmed and swamped with business. Every ease of this kind must be considered in the light of its own peculiar facts and circumstances and be decided on such clear and .unmistakable principles of equity as are generally recognized and conceded to be both civilly and morally binding on men in their dealings with each other. It is never equity or justice to restore a negligent person, or one who has failed to exercise reasonable care and precaution, to a right at the expense of innocent third parties.
Now, turning to the undisputed facts of this transaction, let us inquire as to whether the transaction bears any of the earmarks of a trust, and if not, whether there was any such fraud practiced as went to the essence and consideration of the contract so as to convert the transaction into a constructive trust. In the first place, the parties dealt at arms’-length. They sustained no confidential relation toward each other. The Bellevue State Bank was not a depositor of the Idaho State Bank and was not dealing with the bank upon the same theory that a depositor deals with a bank. The Bellevue State Bank was notified at the time Cramer procured this loan that the Idaho State Bank was short of funds, and that Cramer considered it necessary and essential that he procure this sum of $2,500 in order to continue to do business and meet the current demands on the bank. The loan was made upon the promise of Cramer that the bank would repay the sum within a day or two, or upon the Idaho State Bank receiving a sum of $5,000 in currency which was then supposed to be on the way from someivhere not disclosed. In the meanwhile the officers of the bank making the loan had notice that the money was to be immediately expended in meeting the demands of the bank. This money was not delivered to Cramer for the purpose of being applied to the use and benefit of the Bellevue State Bank, but rather to be used and applied as the money and property of the Idaho State Bank. It is said, however, that the fraud and deception in this case consisted in the representation of Cramer that he had a $5,000 shipment of currency on the way that would reach Hailey on that day or *231the following day, and that this loan should be paid out of that sum. Let us see if this was the essential ingredient of the contract and the moving consideration for the loan. If the officers, of the Bellevue bank would not take Cramer’s promise that he would repay this loan or would not tru¿t his word of mouth, then certainly they would have no more reason to trust his representation that he had a shipment of currency on the way, out of which he would make the payment. If he had made a naked promise, as he did, on which he received this loan, without giving any security or even any evidence of the indebtedness, it might be said that there was no other tangible proof he could have then offered to show that he meant what he said. If they could not rely on his promise to pay, then why rely on his statement about this shipment? But W'hen he told them that he had a shipment of $5,000 currency on the way, they might have asked him for the evidence of that fact. If his statement was true that he did have a shipment on the way, he must have had written evidence either by way of letter or telegram which would have constituted proof that what he said was true. They never even asked for any such evidence or proof; they relied on his word in this respect as much as they did with reference to the promise to pay. I recite this merely for the purpose of showing that they undoubtedly made the loan upon the faith of Cramer’s promise to repay the loan rather than upon the specific representation that he had $5,000 coming. The promise to pay was the real essence of the consideration and contract. The other representation was simply an additional inducement. The subsequent action of the officers of the Bellevue State Bank demonstrates that this was absolutely true, because they never made any demand for the money or took any steps to procure the payment until the 31st, whereas it is proven that Cramer represented that the $5,000 shipment would be received not later than the 26th, the following day after the loan was made. These facts demonstrate conclusively to my mind that this was an ordinary loan, and that it was no more induced upon the representation that Cramer had a shipment of $5,000 in currency coming than it was *232induced upon Ms standing as a banker and business man and his mere promise to pay the debt. No method was pointed out or provided for in that agreement whereby the Bellevue bank should be able to lay hold upon or receive the sum of $2,500 out of this specific shipment in any other mode or manner than by the officers of the Hailey bank bringing it or sending it to the Bellevue bank, and it would evidently have made no difference to the Bellevue bank whether it came out of that shipment or from money received from general depositors. It was a mere trade or commercial transaction.
Another thing in this case which ought to receive serious consideration is the fact that the Bellevue bank at the time of making this loan was placed in possession of such facts by Cramer as to put a reasonably prudent and diligent man on inquiry as to the solvency of the Hailey bank, and this was such notice and information as would have undoubtedly precluded any ordinary business man depositing that sum in the bank at that time on a general deposit. Suppose a general depositor going to the bank had been at the time notified that the bank was so close run for funds that it could not pay out cash over its counter to the sum of $2,500. Does anyone suppose the general depositor would have deposited that money in the bank under those circumstances and with that knowledge and notice? Undoubtedly, he would not have done so. And should a depositor make a deposit under such circumstances, no court of equity would give him a preferred lien on the assets of the bank for that sum on the grounds that the bank was insolvent at the time of making the deposit and that he had no notice. A court of equity would rather charge him with failure to exercise due diligence and impute to him constructive notice that the bank was then insolvent. This court has said in State v. Cramer, 20 Ida. 639, 119 Pac. 30, that “a bank is insolvent when its assets and property are of such character and value that it is unable to meet its demands in the usual and ordinary course of business.” Now, the question arises at once, Did not the Bellevue bank have notice when it made this loan to Cramer that the Idaho State Bank was at the time and the moment prior to the making of the *233loan unable to meet its demands in the usual and ordinary course of business, and that the very reason why it was soliciting the procuring this loan of $2,500 was to run it until the following day? In other words, according to Cramer’s statement and representation at the time of procuring this loan, he needed this much to run him until the following day. The query arises in my mind at once, Is one bank, making a loan to another bank under such circumstances and conditions and representations, to be allowed after the borrowing bank has gone into the hands of a receiver to come in to a court of equity and rescind the contract and have the receiver declared to be the trustee of a constructive trust in favor of the lending bank? If a constructive trust can be established under such circumstances, then I cannot conceive of any ordinary sale and transfer of property upon the promise of the vendee to pay at a certain time and in a given manner that cannot be converted into a constructive trust in every instance where the purchaser fails to make payment at the time or in the manner specified. To adopt such a rule, however, would be disastrous to business affairs, and would render all commercial transactions precarious and uncertain. There is no more reason for allowing one bank making a loan to another to rescind the contract and pursue the assets of the bank under the theory of a constructive trust, than there is for allowing the individual and private citizen under the same state of facts and circumstances to pursue the same remedy. If, however, this remedy were allowed in all such cases in the ordinary business affairs of life, a large percentage of the sales and transfers of personal property and chattels would be the subject of litigation, and that would always be the case where the purchaser failed or was unable to make payment as promised at the time the sale was made.
The authorities cited on this question in the opinion by the Chief Justice are all of them dealing with a different state of facts from that involved in this case. An examination of these authorities will disclose that they are treating questions where a trust relation is shown to have arisen in the first instance and thereafter been violated, or with the law applica*234ble to depositors, or some such state of facts differing entirely from this case.
The nearest approach to this case to be found among the authorities cited is that of Corn Ex. Nat. Bank v. Solicitors Loan & Trust Co., 188 Pa. 330, 68 Am. St. 872, 41 Atl. 536, and that ease differs so widely from this in its facts that a rule of law announced covering those facts cannot be accepted as controlling authority in a case like this. There the trust company called up the bank by telephone and asked for $2,000 in two-dollar bills, and on receiving a favorable reply by phone, the trust company sent its check on the Fourth Street National Bank, where it had funds on deposit sufficient to meet the check, and the bills, done up in packages, were returned to the trust company by the same messenger who delivered the check to the bank. The bills were delivered to the bank but the packages were never opened, and the trust company did not open its doors the following day but made an assignment for the benefit of its creditors, and the Fourth Street National Bank had immediate notice of the failure. The bank that had furnished the $2,000 in bills and received the check therefor on the Fourth Street National Bank immediately presented the check for payment, and the Fourth Street National Bank refused to pay on the ground that it had notice of an assignment for the benefit of creditors. The court allowed the bank to pursue the packages of bills into the hands of the receiver and recover the same on the theory and upon the grounds that there was a total failure of consideration, in that the check given for the bills was wholly worthless and that it would be inequitable under such circumstances to allow the creditors of the bank to have the benefit of this property which still remained intact and had never found its way into the assets of the bank and for which no consideration whatever had passed.
Another important difference between that case and this, and one which alone ought to be sufficient to distinguish the two cases, is that in the Corn Exchange Bank case the bank had no notice of any facts which would put it on inquiry as *235to tbe solvency of the trust company. The very fact that this sum of money was to be in small denominations and that the bank sent its check along in payment therefor would indicate that the bank was securing the money merely for the purpose of making change and that it was well able to pay for the same. In the■ present case, however, the money was wanted in any denomination possible for the purpose alone of carrying on business and meeting its obligations and on the ground that it was short of funds.
I am satisfied that this ease should be decided upon the proposition that no trust relation has been established. It would follow that the other question discussed by the Chief Justice is not essential to the decision of this case. In view, however, of the fact that the majority have deemed it necessary to consider and pass upon the question of pursuing the assets of a bank in eases where a trust has been established, I must here register my dissent from the apparent views enunciated in the majority opinion. This court has decided in State v. Thum, 6 Ida. 323, 55 Pac. 858, First National Bank of Pocatello v. Bunting, 7 Ida. 27, 59 Pac. 929, 1106, State v. Bruce, 17 Ida. 1, 134 Am. St. 245, 102 Pac. 831, that trust funds may be followed into the general assets of the bank, irrespective of the question of identification, and that the trust may be fixed upon the general assets for the return or payment of the trust estate. The eases of State v. Thum and First National Bank of Pocatello v. Bunting both involved the same state of facts, and there the record showed that the trust estate, amounting to some $63,000, had been paid out in the regular course of business, and that only $5,300 was left in the bank at the time it went into the hands of a receiver. The facts in those cases were substantially the same as in State v. Bruce, and the same principle of equity was involved in all these cases. By the decision of the majority of the court in the present case, it is proposed to overrule a uniform line of decisions of this court covering a period of fourteen years, and now return to a rule long since abrogated rather than to continue to follow what seems to me to be the rule of reason *236and justice which has heretofore prevailed in this state. I cannot give my assent to that proposition.
I think the judgment should be affirmed, but desire to place my concurrence specifically upon the ground that no trust relation has been established in this case.