TRUSTS -TRACING PRINCIPLES APPLICABLE WHERE FUNDS OF TWO OR MORE CESTUIS ARE WRONGFULLY COMMINGLED
Michigan Law Review
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- 2001In re Possession & Control of the Commissioner of Banks & Real Estate of Independent Trust Corp. Ill. App. Ct.
- 2001In re Possession & Control of the Commissioner of Banks Ill. App. Ct.
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Abstract
Public funds of a school district, of the village of Vassar, and of ten other municipalities were deposited in defendant bank without securing the deposit bond required by statute. After defendant bank had been declared insolvent, the school district intervened and sought to have the amount of its deposit impressed upon the cash assets of the bank as a trust, on the ground that the bank became a trustee ex maleficio. The total of the illegal deposits was greater than the cash on hand and the credits established in solvent correspondent banks at the time the receiver took over the defendant's affairs. Held, preference refused.
The presumption of rightful withdrawal by the trustee from the commingled fund applies only if the commingled fund equals or exceeds the total of all similar trust funds. Intervenor was left with the standing of a mere general creditor of defendant bank. Attorney General ex rel. State Banking Commissioner v. Michigan Savings Bank of Vassar, 278 Mich.
225, 270 N. W. 276 (1936).