#### M. L. Runge, Receiver, Appellee, v. D. E. Benton, Appellee; E. McCaffrey, Intervener, Appellant.

*846December 13, 1927.

Rehearing Denied Maroh 17, 1928.

*Salinger, Reynolds & Meyers,*for appellant.

*L. W. Powers,*for plaintiff, appellee.

Albert, J.

— Mrs. E. McCaffrey was the owner-of a-traet of land in Crawford County, on which one Bernhardt was tenant. In the year 1924, Bernhardt sold his corn crop to D. E. Benton, a grain merchant, and in return therefor Benton gave him a cheek m the sum of $1,720, payable to the order - of Mrs. -E.- -McCaffrey and ... - Bernhardt. This check was drawn on a Wall Lake bank, and bore date December 24, 1924. On December 29th, Mrs. McCaffrey and her tenant met, at the Traders Bank in Vail. Bernhardt indorsed the check to Mrs.' McCaffrey, who in turn indorsed it to the Traders Bank, and accepted in return therefor a draft drawn in her favor by the Traders Bank on the First. National Bank of Chicago. The Traders Bank was a private institution, owned and operated by McHenry & See-mann, of Denison, and the cashier in charge was one Lorenzen. On. December 31st following, the cashier was notified by the owners of the bank to close the doors, and on the 6th day of January following, a receiver was appointed. In the intermediate time, Lorenzen was in charge of the bank, and was in the bank attending to some business until the time the receiver was appointed.. ....

On December 31st, Mrs. McCaffrey attempted to cash this draft at a bank in an adjoining town, but they refused' to accept it, because of the conditions existing in the Traders Bank. She then forwarded the draft to Wall Lake for collection, and on presentation of the same at the bank in Chicago on which it was drawn, it was refused payment, for want of funds. *847On December 31st, when Mrs. McCaffrey was refused payment on this draft, she went to Benton, and demanded the money from him. He refused to pay her, and he advised the Wall Lake bank on which this check was drawn to stop payment thereon, which was done; and the check issued by Benton to this landlord and tenant came back into the Traders Bank before the receiver took charge. The receiver sues Benton on this check. He answered, setting up the relations of Mrs. McCaffrey to the check, and asking that she be brought in. She came into the case by way of a petition of intervention, in which she alleges, in substance, the foregoing facts, but in addition, alleges that, prior to the appointment of the receiver, she had a conversation with Lorenzen, the cashier then in charge, and advised him that she did not get her money on the draft, and he told her that, as sóón as the check was returned, he would return it to her, and take back the draft; and she agreed to this. The record is stipulated, ' and sustains the above facts. Benton came into court, and paid in in cash the $1,720, and asked to be relieved from further liability. Under this set of facts, the district court held that the receiver was entitled to this fund, and Mrs. McCaffrey’s petition of intervention was dismissed. Judgment was entered against Benton for the sum of $1,794.38. Both Mrs. McCaffrey arid Benton appeal.

The crux of this ease is whether the receiver or Mrs. Mc-Caffrey was entitled to this fund. The appellee rests his case wholly on our line of decisions that, where one buys a draft-from a bank in the ordinary course of business, and the issuing bank fails before it is presented to the drawee bank for payment, the purchaser of the draft is not a depositor in the bank, and is -only a general claimant. Among these cases are *Andrew v. Chicago, M. & St. P. R. Co.*(Iowa), 211 N. W. 515 (not officially *reported); Leach v. Citizens’ State Bank of Arthur,*203 Iowa 782; *Danbury State Bank v. Leach,*201 Iowa 321; *Leach v. Battle Creek Sav. Bank,*202 Iowa 871; *Leach v. Iowa State Sav. Bank of Manning,*202 Iowa 894; Leach *v. Mechanics Sav. Bank,*202 Iowa 899; *Leach v. Iowa State Sav. Bank of Sioux City,*204 Iowa 497; and numerous other Iowa cases.

The appellee loses sight of two propositions, however .-

(1) All of the cases cited are cases against incorporate banks, and are governed by statute as to payment of creditors. *848Such statute does not apply in a case like the pre~ent;wliçre j~hc bank involved is a private bankS

(2) Each of the cases above and similar cases havw to d~ with the claim by the purchaser of a check or draft in whiCh it is sought to establish a trust relation and to havG preferen~e::as to funds in the hands of the receiver which came to him fr&iñ the bank itself, on his appointment as such receiver.

The case at bar, however, is materially di~erent in other r~-spects from the cases above cited. It is apparent from areading of this record that Mrs. McOaffrey got nothing in return for the check she indorsed and turned into the Traders Bank; or, to put it in a di~erent way, the consideration wholly failed for her turning this check into the bank. Again, we think that, under the admitted facts in the case, what took place between Mrs. McCaffrey and the receiver amounted to a mutual rescission of the contract. The only answer to this by the appellee is that, the bank not being in operation at the time this occurred, Lorenzen had no authority to make any such agreement with her.

It is stipulated that he was the cashier and man in charge of this bank during the time it was in operation, and, as he was the general manager and cashier thereof, we are cited to no authority which would deny to him the right to make such a contract. Since he was in this position, and possessed this power, the presumption is that he continued to exercise this power until there was some evidence that it had been recalled. Miller v. Miller, 4 Ind. App. 128 (30 N. E. 535); Whiting v. Western Stage Co., 20 Iowa 554; Columbus Co. v. Hurford, 1 Neb. 146; Cheshire Provident Inst. v. Fuesner, 63 Neb. 682 (88 N. W. 849).

It may further be said, under th~ stipulated facth; that, when the bank closed, on the 31st day of December, it was iii-solvent; because it is admitted, by reference to the pleadings ii~ the application for the app &intmeiit of a receiver, that, froth and after the 31st day of December, the bank was not paying its depositors and other creditors in the ordinary course Of business. Under our holdings in this state, this is insolvency. If the bank was insolvent at the time this draft was issued, it perpetrated a fraud upon Mrs. McOaffrey by issuing the same; *849and it is a fair inference from the facts that the bank- was- insolvent at the time the draft was issued. *State v. Cadwell,*79 Iowa 432; *Campbell v. Park,*128 Iowa 181; *In re Estate Brigham,*144 Iowa 71. And if the bank was insolvent at the time the draft was issued, the bank would get no title to the check. 7 -Corpus-Juris 604: The fact that the owners of the bank ordered it closed is some evidence that they knew it was insolvent.

We are quite satisfied, under the situation in this case, that the district court erred in this matter, and that Mrs. McCaffrey should have been held to be entitled,to this *fund,*— Reversed.

Evans, C. J., and De Grape, Morling, and Wagner, JJ., concur.