The herald., 1893-08-03
NO PREFERRED CITY BANK CLAIMS
Judge Shaw Delivers an I'm
portant Opinion.
The Creditors Apparently All Stand
on an Equality.
The claim OF Trust Funds Left With
the Bank Not 5ustafned-The
Important Psints of
the Decision.

Judge Shaw yesterday passed upon
some OF the matters connected with the
troubles of the City bank in accordance
with an opinion handed down in the
case of Mrs. Margaret E. Miller vs.. the
City Bank.
]. B. Neville. Hermann Kohl and A.
M. Shields had each presented applica-
tions to the court asking that their re-
spective claims be deelar ed preferred
claims versus the City Bank, to be paid
in priority to the general creditors.
The claim in each case was that the
money which it was alleged the bank
received never became its property. but
was held by it in trust and was mingled
by it with it's other property, and in
that condition went into ths hands Of
Receiver Brodtbeck.
The court in discussing the questions
involved says that as there will proba-
bly, be other causes involving the
same questions, he has given the mat
ter very thorough consideration.
He says the rule OF equity has been
largely extended in modern times, and
yet it still remains necessary that a
fund or property on account of which q
lien or priority ia claimed to exist, be
traced into the estate upon which the
charge is sought to be made.
Referring to the special applications
In the case before him, the court says !:
I'm the caee OF petitioner Kohl, it ap-
pears that he, on the 18th of June, left
with the City bank for collection draft
on q bank in Omaha; that the City bank
on the same day forwarded the draft TO
the First National bank OF San Francis.
co with the directions to credit the pro-
ceedS to the City bank. The City bank
was at that time in debt to the First
National bank on general account, and
the First National bank on the 10th Of
June credited the amount OF said draft
to the City bank, and the same went to
reduce the amount of said indebtedness.
On Che goth the City bank closed its
doors, and on the 2lst receiver was
appointed. 1t thus appears that the
draft Of the petitioner. Kohl, never
entered into or became any part Of the
assets which have gone into the hands
OF the receiver, bat, on the contrary, 1t
wss used by the City bank to pay pa rt
OF its debt 70 the First National bank
OF San Francisco. 1t therefore fellows
that the petitioner can have no priority
over other creditors on accout OF said
draft.
In regard to the petition of Shields. I
am of the opinion from the evidence
that before the bank closed its doors,
its amount OF the collection in deposit
had been properly credited to the gen.
eral account of said Shields subject to
check, and that the relation of said
bank to said Shields was not that of q
trustee, but ef debtor.
In regard, to the claim of Neville it
appears that the check left by him with
the bank fpr collection en- the Sd day Of
InnA waa- -dalizarsa With the nnderstsnd-
ing that it would not become subject tc
check, nor be credited as a general de.
posit until Che said bank had made col.
lection of the sprocssds. The City bank
forwarded tho check to the Hanover Ma
tional bank of New York for collection
and the Hanover bank ON the 14th oi
June collected the same and informed
the City bank OF the fact by mail. This
information was received by the City
bank June 10th, and the amount was
then credited to the account of Neville.
1t appears also that prior TO the deliv-
cry of said check for collection. Neville
was customer OF the bank, and had a
sum of money there on deposit. From
this it is clear that the proceeds of said
cheek when collected became general
deposit in the hands of the bank, eub-
ject to check by the petitioner. The
relation, therefore, between them was
that of debtor and creditor. and not
trustee and beneficiary, and hence there
can be no charge upon the general as
sets. It is. therefore, ordered that the
petition of each of the petitioners be
denied"