Source: https://caselaw.findlaw.com/us-supreme-court/300/255.html
Timestamp: 2019-04-23 19:31:48+00:00

Document:
Messrs. George P. Barse and John F. Anderson, both of Washington, D.C ., for petitioner.
Mr. Leland Walker, of Somerset, Pa., for respondent.
January 21, 1932, the bank's cashier, without her consent, sold four Liberty bonds ($100 each), belonging to Mrs. Rauch and held by it for safekeeping, to the Lohrs. The purchase price was charged to their deposit account.
Petitioner maintans that the bank's assets were not increased through sale of the bonds; that nothing arose therefrom which in original or changed form can be traced into the hands of the receiver.
Obviously nothing of value was added to the bank's property. Nothing new came into its treasury. A credit entry against an outstanding obligation represented the only possible benefit. Its total liabilities were not reduced since a new obligation arose to pay to the owner the value of the bonds. [300 U.S. 255 , 257] Here it is accepted doctrine that when a claim is made for preference against funds held by the receiver of a national bank the burden is upon the claimant to establish his title; he must definitely trace something of value which belonged to him, or the avails therefrom, into the receiver's possession. Schuyler v. Littlefield, 232 U.S. 707, 713 ; Texas & Pacific Railway Co. v. Pottorff, Receiver, 291 U.S. 245, 261 , 420. Also, a mere showing that the bank wrongly used property of another in discharging its indebtedness does not suffice to establish a preferred claim against the receiver.
Accordingly, we must hold that the courts below were in error and reverse the challenged judgment.
The applicable legal principles were much discussed in Blakey, Receiver, v. Brinson, 286 U.S. 254, 82 A.L.R. 1288; Texas & Pacific Railway Co. v. Pottorff, Receiver, supra; Jennings, Receiver, et al. v. United States Fidelity & Guaranty Co., 294 U.S. 216, 99 A.L.R. 1248; Old Company's Lehigh, Inc., v. Meeker, Receiver, et al., 294 U.S. 227 ; Adams, Receiver, v. Champion, Trustee in Bankruptcy, 294 U.S. 231 ; and Farmers' National Bank of Burlington, Kansas, et al. v. Pribble (C.C.A.) 15 F.(2d) 175, 176.
Respondent was not entitled to a preference. His right to participation as a general creditor is conceded.
The cause must go back to the District Court, with directions to proceed in accordance with this opinion.

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