dissenting.
I dissent. The essential facts involved, I think, are these: Sherberg contracted with Essert for the construction of two dwelling houses on his land. At the suggestion of Essert, Sherberg applied for a $15,000 loan from defendant bank, where Essert did business, to complete the construction of one of the houses. Sherberg contacted Smoot, the president of defendant bank, told him that Essert was his contractor and had a house under construction and wanted a loan, as he testified, for the purpose of making future payments to be applied on the indebtedness that would be incurred therein,but nothing was said as to the agreement. On September 22, 1947, Essert and Sherberg went to the bank together when the loan was closed. Smoot handed a cashier’s check for the amount of the loan to Sherberg and Sherberg handed it to Essert saying, “This should be enough money to pretty nearly complete the house, shouldn’t it?” and Essert answered, “That will bring it pretty close.” Then the two men left the bank together. On their way out Essert stopped in the lobby and, to the knowledge of Sherberg, deposited the check in the bank in his general account, which included moneys received from other operations as well as from Sherberg. The bank promptly applied $10,000 of the amount so deposited to payment of a note of Essert’s which it held. When Essert learned of the application, he at first objected and the bank offered to retransfer the money, but he then withdrew his objection and consented to its application to partial payment of his indebtedness. A few weeks later Sherberg learned of the application of the money to payment of Essert’s note and made inquiry of the bank president regarding it, but made no demand for the money or for its restoration to Essert’s account then or at any other time; on the contrary, on November 3, 1947, he paid off this note in full and told Mr. Smoot *415that, “I was going to try to work things out with Essert so I wouldn’t have to take the whole thing to an attorney.” Smoot offered to make him another loan if he wished and, after two days’ consideration, Sherberg went back to the bank where Mr. Smoot, as he had promised, let him have $10,000 on his unsecured note, “because there was ten thousand short that had been offset.” Sherberg testified that he told him that it was to be put on construction, and said, “this time you are not going to get your hands on it. I am going to pay these items, myself.” In the brief of counsel for plaintiff in error, much is said as to the fact that Essert deposited the money to the account of his personally-owned corporation, while the money was applied to payment of his individual note. It seems hardly necessary to say that Essert is the only person who could raise objection to the application on that ground, even had that matter been included in the specification of points, which it was not.
Among the numerous reasons why I cannot concur in the majority opinion are the following:
First: The main premise of the opinion is that Sherberg was deceived by the bank by reason of its failure to inform him of Essert’s indebtedness to it, and that thereby he was induced to permit the fifteen thousand dollar check to be desposited in Essert’s account. Outside the fact that this conclusion was a mere surmise without any basis of evidence whatever, it in effect holds a banker to an obligation violative of the fundamental principles of ethical banking by making it his duty to inform a borrower at the bank of the financial condition of one of its depositors of which it has acquired knowledge through its banking operations.
Second: If I understand the import of the opinion, it is that the deposit of the $15,000 treasurer’s check constituted a trust fund and therefore was in the nature of a deposit for a special purpose, and was not a general deposit. As to that holding I would briefly note:
*416(a) That the money was, with the knowledge and consent of Sherberg, deposited in Essert’s general account. “Money deposited with a bank for a particular purpose, but, with the depositor’s consent, commingled with other funds is a general deposit.” 5 Michie, Banks and Banking, permanent edition, p. 643, §335. “In the absence of an agreement and proof to the contrary, a deposit is presumed to be general rather than special.” 7 Am. Jur., p. 294, §419. “A fiduciary may, as a general rule, deposit trust funds in a bank as a general deposit, and the fact that funds so deposited are trust funds does not itself make the deposit a special one, even though the bank knows the character of the funds deposited.” 7 Am. Jur., p. 295, §421.
(b) In any event, to establish such a trust or special deposit, a definite and specific trust agreement must be clearly established to which either the bank is a party or the trusteeship of which it has accepted. As said in Boettcher v. Colorado Nat. Bank, 15 Colo. 16, 24 Pac. 582, cited in the majority opinion, “Appellee could only be made liable in equity, as trustee, by the allegation and proof of a contract creating a trust to which it was a party, or which, after due notice of its trusteeship, it failed to repudiate. * * * A deposit is not special unless made so by agreement or directions of the depositor, or by such circumstances as being inclosed in a box, or other matter indicative of intent not to make a general deposit, or unless made in a particular capacity which indicates such intent.” As said in American Surety Co. v. Bank of Italy, 63 Calif. App. 149, 218 Pac. 466: “A banker is not required to go ‘snooping’ about to learn from what source his depositors obtain the moneys which they deposit in his bank. His duties as a depositary of moneys are fulfilled if he keeps and handles the moneys deposited with him according to the requirements of the depositor or the conditions upon which the deposit is made, and these requirements or conditions, if they impose something beyond his usual or ordinary *417obligations in the matter of the handling of deposits of money, must be brought home to him by instructions by the depositor or an agreement between him and the depositor so clear or so unambiguous and unequivocal as to leave no room for a reasonable doubt as to their meaning and scope.” Here, there was no announced specific or particular purpose, but only a most vague and indefinite one. There was not even a statement that the proceeds of this check were to be used for the payment of bills incurred or to be incurred in connection with the building of either of the houses for the building of which Essert had contracted. The sole evidence as to any agreement was plaintiffs own testimony that he said to Essert, “this is for the finishing of the construction on the house.” The bank knew nothing about the actual contract between Essert and Sherberg, as the testimony conclusively discloses, and the trial court knew nothing about it, as for some reason Sherberg’s counsel objected to its being admitted in evidence. Whether under that agreement Sherberg was obligated to pay Essert a specified sum plus extras, and Essert to assume obligation for all bills, or whether by means of the loan Essert was to make payment of bills as agent for Sherberg, the bank did not know and we do not know.
In Andrew v. Waterville Sav. Bank, 205 Ia. 888, 219 N.W. 53, one in the business of buying and selling livestock, in a general course of business shipped stock in the name of his bank which, at his direction, drew on the consignee and credited his deposit with the amount of the draft. The bank knew that the particular purpose in the mind of the shipper was to protect his outstanding checks for purchases of stock, yet this was held to be a general and not a special account, since it was customarily used for other purposes, as well as for payment of stock purchased. So, in the situation before us, the deposit was in Essert’s general account, with Sherberg’s approval, and there was no suggestion that the account was to be used only for payment of bills in connection *418with the construction of one of Sherberg’s houses. In Gray v. Elliott, 36 Wyo. 361, 255 Pac. 593, it was held that the fact that the bank knew that a note left with it for collection by an administrator belonged to him in his capacity as such did not make the bank a trustee of the proceeds or constitute the fund a special deposit. The court said, “The mere fact that a depositor makes a deposit in a fiduciary rather than individual capacity, does not make the deposit a special one. 3 R.C.L. 518. The question is not what relation he or his fund bears to some third party [in this case Sherberg], but rather whether a trust relation has been created between the bank and the depositor in connection with the fund.” Further, a valid trust requires designation of the beneficiaries and of their interests. Here, neither the bank nor the court had any knowledge either of the beneficiaries or the amounts severally due them, nor was any way shown by which either could have been safely ascertained by the bank.
(c) Even though a bank has knowledge of intent that a deposit shall be for a special purpose, yet where a general deposit of money is in fact made, the bank cannot be held to the obligation of a deposit for a special purpose in the absence of agreement by the bank so to accept it or of holding it under circumstances to imply such an agreement. “And it has been held that a bank may apply a special deposit to another purpose where it accepted the deposit with knowledge of the special purpose but without agreement so to apply it.” 9 C.J.S., p. 630, §303; Boettcher v. Colorado Nat. Bank, supra, as hereinbefore quoted. In the case before us there was no agreement whatever with the bank, even as to deposit of the money there. As Essert left the bank, he stopped and, in the presence of Sherberg and with his approval, deposited the money in his general account where he kept other funds, and there is nothing disclosed by the record to indicate any knowledge of Smoot that it was *419to be deposited in his bank much less of any intent that the deposit was to be for a special purpose.
(d) Deposit having been made by Essert with the consent of Sherberg, plainly the bank was answerable to Essert for the funds; he consented to the application of part of the money to pay his note at the bank, and he is not even made a party to this action. If Essert failed to carry out the purpose for which the money was paid to him by Sherberg and violated any agreement when he consented to the use of that money for payment of his own note, then Sherberg’s proper action, it would seem, was primarily against him and not against the bank. There was, I think, no privity between Sherberg and the bank.
(e) It is clear that the bank rightfully came into possession of the money. Such being the case, someone entitled to it must make demand by check or otherwise before the holding by the bank became wrongful. Essert made no demand; he consented to the bank’s use of the money. No materialman or laborer made demand by presenting a check against the fund, and Sherberg himself never made demand upon the bank. On- the contrary, when he learned that part of the money had been used to pay Essert’s note, he voluntarily made other arrangements with the bank for obtaining the money he needed, instead of asking them to replace the money which had been applied on Essert’s note.
Third: Even assuming that Sherberg might have had a claim against the bank by virtue of its application of the money other than to payment of bills incurred in the construction of the house, Sherberg waived that claim when with full knowledge of the application of the money, he paid his note in full; told the banker he was going to try to work things out with Essert, and accepted the proposal of the bank to make him a loan for a like amount to that which had been set off by his unsecured note to enable him so to work it out.
The majority opinion is certainly a boon to home *420builders. Hereafter, there need be no worry about lien-able claims; all that is necessary is to pay the contractor in full and tell the bank with which he does business that the money paid him is for building a house, and the whole responsibility then devolves upon the bank.
Mr. Justice Jackson concurs in this dissenting opinion.