The lapse of time between the appropriation of the fund by the bank in 1915 in satisfaction of the alleged indebtedness of the Tobacco Production Company, and the appointment of the trustee in bankruptcy in 1919, did not of itself change the *Page 306 status created by the original deposit and agreement, and according to the finding that status has not been changed by any act or omission of the tobacco company. The claim is now made by the bank that Sturges, as cashier, had no authority to accept the fund as a special deposit, and that it was received and held by the bank as a general deposit, so that it was at all times applicable to the payment of any indebtedness of the tobacco company to the bank. This claim is answered by the findings that the president of the bank was consulted and approved of the agreement made by the cashier, and that the fund was treated as a special deposit and dealt with according to the contract for two years before the bank claimed the right to appropriate it.
It is too late for the bank to deny that it received this deposit as a special deposit, to be applied only to the purposes agreed on; and even if it were found, as it is not, that the tobacco company was actually indebted to the bank in June, 1915, the law is well settled that in such cases a bank cannot assert a lien or setoff inconsistent with its special undertaking. 1 Morse on Banks Banking (5th Ed.) § 325, and many cases cited.
In this particular case Mrs. Johns still retained a special property in the fund. It is true that she had received her mortgage bonds, but so long as the entire fund had not been applied to augment her security she had not received the entire consideration agreed for by the terms of the special deposit. And in the meantime the fund was deposited with the bank which was a party to the agreement, and has had the use of the money in its business. That being the situation, it is perfectly clear that the bank had no right to appropriate any part of the fund in satisfaction of a claimed indebtedness of the tobacco company incurred in the ordinary course of its business.
For the same reasons it seems equally clear that the *Page 307 trustee is not entitled to the possession of the fund; at least that he is not entitled to recover it on the allegation of this complaint that it is a credit in favor of the corporation and "a part of the assets of said bankrupt." If the tobacco company were still a going concern it would have no right to the possession of the fund except for the purposes agreed on, nor could its general creditors reach it by garnishment or otherwise. The bankruptcy doubtless put an end to the possibility of using the fund to augment the security of the bonds in the manner agreed. But until the sufficiency of the security described in the mortgage is established, we think the trustee has no right, as against the special depositary of the fund, to recover the balance in Mrs. Johns' absence as assets of the bankrupt. Mrs. Johns was not bound to appear when notified, for this is a purely personal action to recover a debt alleged to be due from the bank to the corporation; and in her absence we think the trustee is not entitled to recover the fund on that theory. If the trustee had intervened and filed a counterclaim in Mrs. Johns' action already pending, the difficulty arising from want of parties would not have stood in the way of a final determination.
In Conklin v. Guaranty Trust Co., 266 F. 361, it was held that a trustee in bankruptcy who sued to recover an alleged general deposit, was not entitled to recover a special deposit in which a third person, not a party to the action, was interested. The case was disposed of on a point of pleading, but necessarily on the ground that the trustee stood in the shoes of the bankrupt.
There is error and the cause is remanded with direction to set aside the judgment for the plaintiff, and for further proceedings not inconsistent with this opinion.
In this opinion the other judges concurred.