holds the trust property, it is his duty to conserve and protect it as far as possible until new trustees can be appointed.

No formal action for the appointment of new trustees is necessary. The cestuis que trustent may by notice and motion apply to the court for the appointment thereof; or the Commissioner of Banking may himself, upon notice, move for their appointment. To do so would become his duty under the statute, if the cestuis que trustent unreasonably delayed to make application, for he is charged with the obligation of winding up the trust business of the insolvent corporation. In the present case the complaints may be considered petitions or motions addressed to the court for the purpose of securing the appointment of new trustees. Form is not the essence of the matter."

A superintendent of banking in taking possession of a trust company under the New York law has all the powers of a receiver. Though the trust company continues to exist as a legal entity, it cannot exercise its powers as a corporation."%

§ 152. Identifying of Trust Fund or its Proceeds Necessary in Equity. There is a great difference in holding, that a bank or trust company may be held as trustee, while it is still carrying on business as a solvent. institution and giving to a trust fund a preference right in the distribution of the assets of an insolvent institution. There are abundant cases where a fund has been declared a trust fund, where there was no discussion of its being traced. For example, where taxpayers pay directly to a bank authorized to issue receipts therefor"

534. Lafayette Trust Co. v. Biggs (1915), 213 N. Y. 280.

6.

Page County v. Rose (1906), 130 Iowa 296, 106 N. W. 744, 5 L. R. A. (N. S.) 886, 8 Am. Cas. 114.

and it makes no difference that the bank, knowing the character of a deposit forbidding it to be treated otherwise than as a special deposit, mingles it with its general funds.2

But the principle, that there must be identification of a fund of a trust character, in its original or altered form, is shown by presumptions of law, as well as by plain deductions from fact. Thus it was said, in a case3 where a tax collector deposited his collections in a bank that failed that: "The bank received it (the money) as a trust fund nolens volens, and the principles of equity relating to trusts fully apply to it. It is a leading principle of equity jurisprudence that 'whenever a duty rests upon an individual, in the absence of all evidence to the contrary, it shall be presumed that he intended to do right rather than wrong.' * **It must, therefore, be presumed so far as it may, that the bank as trustee preserved the trust fund until all its other estate was exhausted, and that the trust moneys, so far as possible are represented in the remaining assets of the bank." If the facts permit the conclusion, that the cash assets of a failing bank are augmented by the trust fund, to that extent it will be recognized in the distribution as a preference claim.*

Where a bank within a few days of closing its door received a special deposit of $1,500 and turned over in cash to the receiver $1,152.66, the court said: "The

2. State v. Thum (1898), 6 Idaho 323, 55 Pac. 858; First Nat. Bank v. Bunting (1900), 7 Idaho 27, 59 Pac. 929; State v. Midland State Bank (1897), 52 Neb. 1, 71 N. W. 1011, 66 Am. St. Rep. 484.

3. Fogg v. Bank of Friar's Point (1902), 80 Miss. 750, 32 So. 285.

4. Independent District v. King (1890), 80 Iowa 500, 45 N. W. 908; State v. Bank of Commerce (1898), 54 Neb. 725, 75 N. W. 28; Beard v. Independent District (1898), 88 Fed. 375, 31 C. C. A. 562; Richardson v. New Orleans Debenture R. Co. (1900), 102 Fed. 780, 42 C. C. A. 619, 52 L. R. A. 67.

legal presumption is that this belonged to the trust fund. The evidence proved that the fund had been encroached upon to some extent, but the law does not presume fraud or wrong-doing beyond what is established by the proof."5

§ 153. Same Applied to a Trust Company. The dual nature of a statutory trust company, that is to say as an ordinary business corporation in one aspect, and a trustee in another aspect, tends to enhance opportunity for confusing its relation to deposits made over its counters. As perceived above, so far as it remains a going concern it may obligate itself in almost any transaction as a trustee, just as any bank may, but whether outside of the preferences given by the law of its organization, this trustee capacity may accompany the transaction in insolvency is that of which I am to inquire.

A recent decision by New York Appellate Division is quite instructive on the point of power in a trust company to make itself liable as a trustee in equity. The case shows that by manipulation, a third party by aid of its officers contrived to have money represented by a check payable to the company, passed to his individual account. It was said that: "The transaction, so far as the (trust company) was concerned in it, was negotiated and consummated by officers acting within the scope of their authority," but its "clear purpose was to provide a fund for the purchase of certain shares of stock, which fund or the shares were at all times to be held by the Carnegie Trust Co. for the benefit of others." "Under these circumstances a trust was created." The Court saw noth

5. Woodhouse v. Crandall (1902), 197 Ill. 104, 64 N. E. 292, 58 L. R. A. 385.

6. Madison Trust Co. v. Carnegie Trust Co. (1915), 167 N. Y. App. Div. 4, 152 N. Y. Supp. 517.

ing in "the fact that on receipt of the checks they were at once indorsed away, so that the proceeds went directly to Cummins."

In a still more recent New York case,' an account was kept with a depositor in what was called "the trust ledger." Upon the initiation of the account, the trust company in writing said "we accept the trust." The account, however, was drawn on as an ordinary account, but not by an ordinary check and from time to time it was replenished, as it became low, by additional deposits. The trust company for its services was to receive a large commission. The court said: "It might well be that in a contest between the plaintiff and the trust company, where the character of the account was an issue, the trust company would be estopped from denying that this was a trust account."

It was also held in a Connecticut cases that whether a trust was established and continued by a trust company as to a collection made by it depended upon how it treated the fund.

"The agent (trust company) would change the relation to that of debtor and creditor were it to mingle the funds collected with its own funds; credit the collections to the sending bank under its arrangement with it to make remittances at specified times. If, on the other hand, it held the funds collected, intending under its agreement to make immediate remittance, and for a very brief period for business convenience. Keeping the fund set apart or on special deposit for its principal, the trust would continue, and on failure of the agent pending

7.

Le Baudy v. Carnegie Trust Co., 154 N. Y. Supp. 900, 908.

8. Lippitt v. Thames Loan & Trust Co. (1914), 88 Conn. 185, 90 Atl. 369.

transmission of the funds, the principal would be entitled to them." It is then declared that: "Whether or not the fund can be traced is as it seems to us, evidence of the existence or non-existence of this (trust) relation," and "whatever the ground of recovery adopted, the claimant to the fund must assume the burden of proving the existence of this trust relation."

As showing that such existence may be proved by the mere swelling of assets in the hands of a receiver, it was said that, if insolvency overtook the company and it nevertheless collected and held the proceeds they were impressed with a trust.

In Pennsylvania" it was said of a rule of court, that: Where a person occupying a fiduciary relation, such as a receiver, deposits money with a trust company, it must be kept separate and earmarked, the observance of such a rule would create a trust relation, but this would not apply where arrangement was made for the deposits to draw interest, and then declaration was made that though there were a trust in this case it would be a trust in equity, where the fund would have to be traced and the facts showed this could not be done..

This court allowed a bank to recover from the assignee of a trust company $2,000 paid to it on its check as a mere accommodation the day before it closed its doors, where the package of money as it was turned over to the trust company still remained in its vaults unused. It was said that: "Under the facts, the package of money is impressed with a trust; the title never passed from plaintiff, because the possession was obtained by a plainly implied misrepresentation." This case it is per

9. Commonwealth v. City Safe. D. & S. Co. (1907), 218 Pa. 50, 66 Atl. 995.