(after stating the facts). It is first sought to uphold the decree on the ground that the matter is res judicata. In making- this contention, counsel rely upon the decision of the bankruptcy court sustaining the conclusion of the referee in denying the petition of the trustee in bankruptcy to require the Bank of Portia to pay over the money in controversy to the trustee as the property of the bankrupt estate.
The court of bankruptcy may, by summary proceedings, compel a person who is in possession of the property of the bankrupt, but who claims no adverse title thereto, to restore such property to the trustee. On the other hand, where the party in possession of the property asserts an adverse claim thereto, the bankruptcy court cannot act. summarily and .make an order .to return it. to the trustee, without the formality of litigation. In such cases there must be a suit brought in the .proper forum by the trustee in bankruptcy against the adverse claimant to adjudicate his claim of title to .the property. Collier on Bankruptcy, 12 ed. vol. 1, pp. 523-529; Hiscock v. Varick Bank of New York, 206 U. S. 28; Frank v. Vollkommer, 205 U. S. 521; Babbitt v. Dutcher, 216 U. S. 102, and Harris v. First National Bank of Mt. Pleasant, 216 U. S. 382.
Having denied the plea of res judicata of the defendant, we are brought to a consideration of the casé on its merits. It is a general rule that funds deposited in the bank for a special purpose known to the bank cannot be withheld from that purpose to the end that they may be set-off by the bank against a debt due. it from the depositor. In other words, while it is true that a general deposit by a merchant of money in a -bank creates the relation of debtor and creditor, and aiithorizes the bank to use the money as its own, such resuit does not obtain when the deposit is made for a special purpose; as, for example, to be paid to creditors. Wagner v. Citizens’ Bank, etc., Co., 122 Tenn. 164, 19 A. & E. Ann. Cas. 483, and cases cited; Van Zandt v. Hanover Nat. Bank, 149 Fed. 127; Bank of United States v. Macalester, 9 Penn. St. 475; National Bank v. Insurance Co., 104 U. S. 54; Reyes v. Dumont, 130 U. S. 354; and Union Stock Yards Bank v. Gillespie, 137 U. S. 411.
. Tested by this rule, we think that the learned chancellor erred in finding in favor of the defendant in this case. We recited the substance of the testimony in our statement of facts, and do not deem it' necessary, to repeat it here. A preponderance. of the evidence'shows that the money was deposited in'the bank by A. L,. Pick-ens as a trust fund to be used by Z. C. Wimberley .as; M's trustee in paying off all of •his creditors pro'. '.rata;. This is testified to not only by Pickens himself, but by his wife and Z. C. Wimberley. They are corroborated; by tbe fact that a new bank book was given to Pickens at1 the time-the agreement was entered into, and this book was marked “New Account.” This .indicates'that the new account was different from the old one.
It is true that the agreement under which they operated was conditioned upon its acceptance by the other creditors of A. L. Pickens sufficient in number and amount of indebtedness to prevent his being forced into bankruptcy. It does not make any difference, however, that the formal consent of all these creditors was never obtained. The evidence shows that the parties operated under it from the time it was drawn up and signed, by a part of the creditors. The bank so understood it, and on this account the money thereafter deposited by Pick-ens in the Bank of Portia constituted a trust fund to be applied ratably towards the payment of all his debts, and the bank had no right to apply the funds towards the payment of a past due note which Pickens owed it.
It follows that the decree will be reversed, and the cause remanded, with directions to grant the prayer of the complaint, and for further proceedings in accordance with the principles of equity and not inconsistent with this opinion.