Lamb v. Frank Organ

• Decision Date: 07 October 1922
• Docket Number: 23,965
• Parties: C. H. LAMB, Appellee, v. FRANK ORGAN (MARTIN LADD, substituted) as Receiver of THE PEOPLES STATE BANK OF COFFEYVILLE, Appellant
• Court: Kansas Supreme Court

209 P. 825

112 Kan. 26

C. H. LAMB, Appellee, v. FRANK ORGAN (MARTIN LADD, substituted) as Receiver of THE PEOPLES STATE BANK OF COFFEYVILLE, Appellant

No. 23,965

Supreme Court of Kansas

October 7, 1922

Decided July, 1922.

Appeal from Montgomery district court; JOSEPH W. HOLDREN, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. TRUST FUND--Special Deposit in Bank for Particular Purpose--May Be Followed and Reclaimed. The rule of Secrest v. Ladd, Receiver, ante p. 23, followed and applied, holding that a special deposit placed in a bank for a particular purpose that the bank had misappropriated and used in its general business before it became insolvent is a trust fund which the owner might follow and reclaim from the assets of the bank that had passed into the hands of a receiver.

2. SAME--Title to Special Deposit Never Passed to Bank--Not Set-off Against Trust Fund. As the ownership of the money deposited never passed to the bank or to the receiver or to a third party with whom the plaintiff had a contract, the conditions of which had not been fulfilled, the indebtedness of the third party to the bank could not be set off against the preferential claim of plaintiff to the trust fund.

W. E Ziegler, and A. M. Etchen, both of Coffeyville, for the appellant.

Walter S. Keith, and Harold C. McGugin, both of Coffeyville, for the appellee.

OPINION

JOHNSTON, C. J.:

This action was brought by C. H. Lamb against the receiver of the Peoples State Bank of Coffeyville to recover $ 500 and to have it adjudged to be a trust fund payable in full out of the assets of the insolvent bank in preference to the claims of general creditors. Judgment was given for plaintiff and the deposit was adjudged to be a preferred claim. Defendant appeals.

The case was tried upon agreed facts, in substance that plaintiff deposited in the bank in an escrow account $ 500 to be paid to one Anderson on the fulfillment of a contract between him and plaintiff. The contract, executed on November 23, 1920 was to the effect that Anderson would drill a well for oil or gas on certain premises and plaintiff was to have a one-eighth interest in the lease, and if oil was found should pay one-eighth of the cost of equipping the oil well. It was stipulated that upon the completion of the oil well and the delivery to plaintiff by Anderson of a one-eighth interest in the lease and the disposition of the remaining interests in the lease, the deposit was to be paid to Anderson, but if he failed to perform...