BANKS AND BANKING - TRUSTS - SPECIAL DEPOSITS - AGREEMENT BETWEEN DEPOSITOR AND BANK

During a period of widespread bank failures, plaintiff corporation ceased depositing its funds with the defendant bank. To maintain the public's impression that the plaintiff was a regular customer of the bank, an agreement was entered into by the bank and the plaintiff whereby the bank was appointed "agent" of the plaintiff to collect and remit promptly money due plaintiff. Branch offices of the plaintiff deposited money under this agreement to be transmitted to the plaintiff. When the bank failed with some of this money still in its hands, plaintiff sought to be allowed a preferred claim.

Held, the deposit was a special one and a preferred claim should be allowed. Union Electric Light & Power Co. v. Cherokee National Bank of St. Louis, (C. C. A. 8th, 1938) 94 F. (2d) 517.