The San Francisco call., 1897-06-25
Montagu's Five Thousand
Dollars Not Part of
the Assets.
It Was Sent to the Bank as a
Special Trust and Not
a Deposit.
Important Opinion by United States
Giro uit Judge Morrow in
the Matter.

United States Circuit Judge Morrow
yesterday rendered an opinion In favor of
the com mplalnants in the suit of Samuel
Montagu g. Co., London bankers against
the Pacific Bank anu others. The opinion
goes on to say:
This is a bill in equity against an insolvent
banking corpora ton to declare trust and to
recover the sum OF $4,000 as special deposit
The facts are these: Samuel Montagu & Co.
cabIed the Pacific Bank in San Francisco June
20, 1898, as follows: "Psy by telegram TO
Puget Sound National Bank, Seattle, Wash,
$4,000 account of William Cochrane. We re-
NIT by cable TO National Bank OF Commerce,
New York, for your account $1,000" The
money was deposited in the National Bank of
Commerce in New York on the same day, but
was never transmitted by the Pacific Bank 10
the Puget Sound National Bank at Seattle,
State OF Washington. On June %, 1898, the
Pacific Bank suspended payment and closed
its doors, and thereafter refused to pay its
depositors or other creditors except in the pro
rata distribution of the property and assets OF
the corporation in the process OF liqu1dation
under the management of the board of direct
ors, in accordance with the laws OF the
ant that the money involved in this trans
action was received by the Pacific Bank tor q
specific purpose, aud not to be checked out or
loaned or otherwise used by the bank; that
the money constituted a trust fund ana did not
become part OF the general assets OF She
bank, and, not having been applied 10 the pur-
returned to the de posItOr
The defendants contend that the money re-
mitted by com plalnants was placed to the &C
count OF the Pacific Bank i'll the National
Bank OF Commerce at New York; that it was
not sent directly to the Pacific Bank, but be-
came a part of the account between the two
banks, and the identity of the deposit was lost,
and that therefore the com piainants should
be admitted to share only with ths otner
creditors in the pro-rata istri button of the
assets of the bank. The National Bank OF Com
merce WAS the correspondent III New York of
the Pacific Bank.
When a demand was afterward made
upon acting President Mcdonald he gave
as a reason for the failure OF his
bank to make payment, that they had
not received the confirmation from the
agent of the bank in New York, but he sd-
mitted that it was customary to make the
dlsburse ment in accordance with The de
rections of the order without waiting for
the agents confirm alton of the deposit.
Judge Morrow continues:
1t is clear from the evidence that the Pacific
Bank had received, through its agent in New
York prior 10 its suspension the deposit in
question tor traDsmittsl TO the Puget Sound
ational Bank, and that it Yas a special de-
posit made for specific purpose and in the
TO be checked out or to be loaned or otherwise
used by the bank in law the bank held it as a
trust fund and not as the assets of the bank.
Consequen tly trust was impressed up
on this $4,000 in favor OF complainant Is and il
does not belong TO the general creditors OF the
bank.
a decree will. therefore, be entered, deolar-
ing that the defendants hold $4,000 in trust
for complainants, and that they recover the
same with COSTS and it is so ordered.