This case is brought to decide whether a certain fund now in dispute should be administered by John F. Moran, as receiver of the Park Savings Bank, or by S. B. *596Sightler, Jr., as'trustee in bankruptcy of the estate of Samuel T. McDevitt.
It appears that prior to March 1, 1933, the Park Savings Bank, a corporation, was engaged in a general banking business in the city of Washington, D. C., and that Samuel T. McDevitt was one of its depositing customers. At 2 p. m. on that day, the bank being then insolvent, the board of directors passed a resolution suspending and terminating their business as a bank of deposit and restricting the. withdrawal of deposits to 5 per cent, of the amount thereof. At the same time the. directors passed a resolution providing that all deposits thereafter received by the bank were to be segregated and kept apart from the assets of the bank and to be treated as trust or bailee funds, and that such funds might thereafter be withdrawn by the depositors without restriction on -demand.
In accordance with the foregoing instructions so made, the officers and employees of the bank thereupon segregated and kept apart from the assets of the bank all moneys deposited after 2 p. m. March 1, 1933, as trust or bailee funds, allowing depositors of such funds the unrestricted right to withdraw the same on demand.
On March 1, 1933, after 2 o’clock p. m., Samuel T. McDevitt deposited to his credit in the trust or bailee account the sum of $455. The amount of this deposit by Mc-Devitt was credited in the new special “bailee account,” and was entered as a trust account entirely separate and segregated from the former accounts kept by the depositors in the bank.
On July 13, 1933, the appellant, John F. Moran, was appointed and qualified as receiver of the Park Savings Bank by the Comptroller of the Currency.
At the time when the bailee deposit was made by McDevitt, he was indebted to the Park Savings Bank in the sum of $1,376.72, evidenced by a promissory note dated February 17, 1933. The record does not disclose the date of the maturity of this note. On September 13, 1933, McDevitt filed a voluntary petition in bankruptcy, and on September 27, 1933, the appellee, S. B. Sightler, as trustee, thereupon demanded of Moran, receiver, the sum of $455 deposited as aforesaid in the trust or bailee account by McDevitt. This demand was refused by the receiver upon the ground that the amount of the deposit had been credited upon the note which McDevitt at the time of the deposit owed to the bank, and consequently that the fund was not assets of. the bankrupt estate of McDevitt, but had become part of the general assets of the bank, to be administered as such by the receiver.
The issue thus raised was whether the funds so deposited by McDevitt in the special or bailee account under the conditions aforesaid became assets of his bankrupt estate to be administered as such, or whether such funds had become intermingled with the general assets of the Park Savings Bank to be administered as such by the receiver of that bank. This issue was submitted to the referee in bankruptcy, who held- in favor of the trustee of the bankrupt estate, and an order was made that Moran, as receiver of the bank, should certify to the Comptroller of the Currency for payment in due course of administration the finding that Sightler, as trustee of McDevitt, bankrupt, is entitled to and has a claim in the sum of $455 against the receiver, which claim must be paid in cash, not subject to offset, and not by distribution of dividends.
Upon a petition for review of the referee’s order filed by Moran, receiver, the issue was reconsidered by the referee in bankruptcy and his former decision was approved and followed. Thereupon Moran, as receiver, filed a petition in the Supreme Court of the District of Columbia for a review of the order of the referee. The court, upon consideration, held that the amount of the special deposit aforesaid was held in a bailee account in trust for the owner, McDevitt, and that the same could not lawfully be set off against the note liability of McDevitt to the bank, and therefore that the funds held by the receiver as the proceeds of such deposit should be turned over to the trustee in bankruptcy in cash. From this order Moran, as receiver, has appealed to this court.
We think the decision of the lower court is right. On March 1, 1933, when the bank was first declared to be insolvent, the funds now in question had not yet been deposited, for, if they had, no question of set-off such as is involved herein- could have arisen. Afterwards, before McDevitt made the deposit, the bank, by resolution passed by its directors, declared its insolvency and restricted the amount of withdrawals by depositors to 5 per cent, of their credit balances. It may be assumed as a matter of course that under these *597circumstances McDevitt would not have been willing to deposit his funds with the bank knowing that in such case he would be allowed to withdraw only 5 per cent, thereof for current use and would be forced to await the settlement of a bank receivership to recover any balance which might possibly be returned to him thereafter.
In compliance with its stipulation, the bank actually segregated the funds so deposited from the former assets or business of the bank. The deposit therefore was not made as a deposit in the Park Savings Bank as theretofore existing,- but in an agency established by the bank to conduct a new subsidiary business separate and apart from the former business of the bank. The bank therefore did not acquire the ownership of the funds, nor was it invested with any authority over them except for the purpose of keeping them in custody, subject to the order of McDevitt. Accordingly, when Moran became receiver of the bank, he did not acquire a right to seize or appropriate these funds for any purpose without the order or consent of McDevitt. His action therefore in applying the funds to the payment of the promissory note held by the bank was invalid. Under the circumstances, the funds still remained the property of McDevitt and afterwards became assets of his estate in bankruptcy.
The bank is entitled only to the payment pro rata of the indebtedness owing to it by McDevitt from the assets of the bankrupt estate; whereas, if the claim of the receiver be sustained, the Park Savings Bank would secure a preference over the other creditors of McDevitt equal to the amount in question. Such a result would not only be inequitable, but would be a distinct violation of the terms and conditions under which McDevitt intrusted his money to the custody of the bank.
The following authorities by analogy sustain this view: Dakin v. Bayly, 290 U.S. 143, 146, 54 S.Ct. 113, 78 L.Ed. 229, 90 A.L.R. 999; Hanover Nat. Bank v. Suddath, 215 U.S. 110, 30 S.Ct. 58, 54 L.Ed. 115; Western Tie & Timber Co. v. Brown, 196 U.S. 502, 25 S.Ct. 339, 49 L.Ed. 571.
Affirmed.