The Merchants’ Bank held the two city warrants aggregating $3,133.80 as the agent of the plaintiff to collect and receive the amount due thereon, and all that it did receive it of course held in trust for this plaintiff. It surrendered such warrants to the city treasurer, upon whom they were drawn, and in exchange therefor it ■received two things: First, the city treasurer’s check on the National Broome County Bank for $2,923.94; and, secondly, payment and satisfaction of its own taxes, due from it to the city of Binghamton, to the amount of $209.86.
We may assume, I think, as a settled rule of equity that just so far as the above items or their proceeds were included in the assets of the Merchants’ Bank that passed to the possession or control of this defendant, as its receiver, a trust in favor of the plaintiff may be impressed upon them; and just so far as they or their avails can be identified, so far they still belong to the plaintiff and the receiver must account to it for that amount. (Matter of Cavin v. Gleason, 105 N. Y. 2561 Holmes v. Gilman, 138 id. 376.)
It seems clear, as a matter of fact, that as to the item of $209.86, the bank received nothing from the treasurer except a satisfaction and discharge of its taxes. In other words, it used so much of the plaintiff’s demand against the city to pay its own debt. As to the check of $2,923.94, it had disposed of it some time before the receiver was appointed. But the question is, have any of the avails of that check passed to the receiver, or can they be traced and identified as forming a part of the assets of the bank that did pass to him ? The check, in effect, was presented to the National Broome County Bank for payment. No money was received on it. But such check and ten others, amounting in the aggregate to $3,224.93, were paid by such National Bank as follows: First. By surrendering to the Merchants’ Bank checks drawn upon it to the amount of $2.338.46. Such checks were drawn by its depositors and were debts to that amount existing against the Merchants’ Bank, *213and the practical effect of such exchange was to pay so much of the bank’s debts. Secondly. By transferring to the Merchants’ Bank checks owned by the National Bank drawn upon E. Ross & Sons to the amount of $353.24. Such checks were held by the Merchants’ Bank at the time its doors were closed, and they passed to the receiver as part of its assets. No part of such amount has as yet been collected by the receiver. Lastly, for the balance of such claim against the National Bank of $3,224.93, the Merchants’ Bank received a draft on the National Park Bank of New York for the sum of $533.05.
Now, what of these items, received by the Merchants’ Bank from the National Bank, can be traced into the assets which passed to the receiver? As to the checks drawn against E. Ross & Sons, it is plain that they are a part of such assets, and upon them would seem to be impressed a trust in favor of the plaintiff within the rule above stated. Whatever the receiver collects upon those demands should be accounted for to the plaintiff. As to the item of $2,338.46, thé checks which constituted it were but vouchers in the hands of the Merchants’ Bank of the payment by it so much oE its debts. Each check was charged up against its drawer on the books of the bank, and so much of the bank’s indebtedness to each was thereby discharged. (People v. St. Nicholas Bank, 77 Hun, 159.) But nothing came to the bank that could constitute an asset; nothing was thereby received that could pass to the receiver.
But it is claimed on the part of the plaintiff that, by thus using the city treasurer’s check, which belonged to the plaintiff, to pay its own debts to its depositors, the Merchants’ Bank saved just so much of the cash that was then in its vaults. It appears that it had, at that time, upwards of $3,000 cash on hand, and the claim is that by using this check it saved using that cash, and that, therefore, so much of the cash on hand as equals the amount of the check so used may be fairly said to be the avails or proceeds of such check. I cannot agree with that proposition. Suppose the Merchants’ Bank had received from the National Broome County Bank upon the treasurer’s check $2,338.46 in cash. That money would have belonged to the plaintiff. If subsequently the bank used such money to purchase a security or to discount a note or to pay an overdraft upon it, the security, note or claim which would accrue to the *214bank for such use would be impressed with a trust in favor of the plaintiff; but if it used it merely to pay and discharge its own indebtedness, it received nothing whatever upon which a trust could be impressed. It is important to understand that, as to this item, nothing whatever was brought back to the Merchants’ Bank for the benefit of the plaintiff. No cash was put in its safe. None was set apart or appropriated to the payment of the plaintiff’s claim. It is" not a case where the plaintiff’s funds were mingled with those of the bank, but a case where the plaintiff’s money is plainly traced to the payment of the bank’s debt. If we.should go to the extent of saying that the money in its safe should be impressed with a trust to the extent of the fund so used, it certainly could not he upon the theory that it was the avails or proceeds of such fund, or that it had been produced from it, for plainly such money was not acquired from, and never had any connection whatever with, such fund. And if the rule should be so far extended, there does not seem to be any reason why the trust should not be impressed upon any property belonging to the bank, for not only was its money, but so also were all its assets, relieved from the burden of paying the debts which the plaintiff’s money was used to discharge. The result would be that in all cases where a trustee’s assets are insufficient to pay all its debts, the beneficiaries, no matter how many there were, would have a preference over all other creditors upon all the assets of the insolvent. But such is not the rule. In the distribution a beneficiary is entitled to no preference except so far as he can trace and identify his own fund or the plain avails of it. (People v. Merchants’, etc.,. Bank, 78 N. Y. 269.) To that extent he may justly claim a preference ; beyond that there is no reason apparent to me why he should be given any.
In accordance with this view, so much of the treasurer’s check as was used to pay the various cheeks drawn by its depositors upon the Merchants’ Bank, viz., the sum of $2,338.46, forms no part of the assets which passed to the defendant as receiver, and the plaintiff has no right to be preferred for the same.
As to the draft for $533.05, drawn upon the National Park Bank of New York, it was deposited to the credit of the Merchants’ Bank in the American Exchange Bank, and at once became part of its assets. From the time of such deposit up to the time defendant *215was appointed receiver, the account of the Merchants’ Bank, in the American Exchange Bank, remained intact. It was increased somewhat by additional credits, but in no respect was it diminished. When the receiver was appointed he took such account as part of the bank’s assets. I think we are justified in concluding that the whole amount of such draft formed a part of the account that so passed to the receiver.
The Merchants’ Bank paid to the National Broome County Bank $2,338.46 of its indebtedness as above stated. It paid $301 of this amount with ten checks which belonged to itself, and for the balance, $2,031.46, it used the funds of this plaintiff. The whole amount of the plaintiff’s funds which it then had was $2,923.94, and the balance remaining after such payment was $886.48. For this-amount it received the ciiecks against E. Ross & Sons, $333.42, and the draft on the National Park Bank of New York for $533.05. Such, last two items appear to have been among the assets of the bank, as. already shown, and upon them a trust is impressed in favor of the plaintiff.
My conclusion is that the defendant should pay the plaintiff the sum of $533.05 from the amount received by him from the American Exchange Bank. Also, that he account for and pay over to> the plaintiff all that he collects upon the checks against E. Ross cfc Sons which were received by him as above stated. And that, as to-all the balance of the fund which the Merchants’ Bank held in trust for the plaintiff, the plaintiff is not entitled to any preference thereon, but must share equally with all other creditors in the final distribution of its assets.
No costs are allowed to either party in this proceeding.
All concurred.
Judgment ordered that defendant pay to the plaintiff the sum of $533.05 from the amount received by him from the American Exchange Bank. Also, that he account for and pay over to the plaintiff all that he collects upon the checks against E. Ross & Sons, as stated in the submission; and that as to all the balance of the fund which the Merchants’ Bank held in trust for the plaintiff, the plaintiff is not entitled to any preference, but must share equally with all other creditors in the final distribution of its assets. No> costs to be allowed to either party in this proceeding.