Opinion of the Court:

235 U.S.

of the Oklahoma Trust Company through a sale by the latter company to it on January 3, 1910. Composing these assets was the sum of $25,357.63, carried as a deposit by the Oklahoma Trust Company, and other sums, being credit balances of the Oklahoma Trust Company in other banks, cash paid to the Alamo State Bank and used by it to pay the indebtedness of the Oklahoma Trust Company or its depositors.

The assets of the Alamo State Bank were sold to the Union State Bank by the Banking Board acting under the authority of an order of the District Court of Muskogee County. The Union State Bank assumed in consideration thereof the payment of the depositors of the Alamo State Bank.

On December 18, 1909, the complainant herein brought suit against the Oklahoma Trust Company and others to establish his right to the paving bonds or their proceeds. The suit was numbered 1239. A receiver was appointe who was directed to demand and receive from the Oklahoma Trust Company the proceeds of the paving bonds and from all persons who might have them. The receiver duly qualified. On August 6, 1910, subsequent to the sale by the Oklahoma Trust Company of its assets to the Alamo State Bank, the complainant filed a motion against the latter bank for the purpose of obtaining an order for contempt and peremptorily requiring it to immediately pay and turn over to the receiver the proceeds of the bonds received by it.

The Banking Board subsequently appointed counsel to appear in that suit for the purpose of defeating the recovery by the complainant. In that suit all of the defenses herein pleaded were set up. The Union State Bank also appeared in that suit and aided in its defense. The final decree in that case adjudged, among other things, that the complainant became entitled to the proceeds of the paving bonds and the Oklahoma Trust Com

pany was ordered forthwith to deliver their proceeds to him.

The Oklahoma Trust Company and the Alamo State Bank were banking institutions under the laws of the State and subject to the banking laws and paid in accordance with such laws assessments to the Banking Board, including certain emergency assessments for the purpose of creating and maintaining a depositors' guaranty fund as provided by law. And it is alleged that the depositors of the Oklahoma Trust Company, except complainant, were paid or caused to be paid by the Alamo State Bank and that this was accomplished by the use of the proceeds of the paving bonds obtained by the Alamo State Bank. That the latter bank received not less than $65,000 of the proceeds of the bonds as a part of the consideration of the assumption of the payment of the depositors of the Oklahoma Trust Company: "that the State, and, through it, said depositors, had a lien on all of the assets of said Oklahoma Trust Company to secure the payment of said depositors; and that, to the extent that the proceeds of said paving bonds were so used, your orator is subrogated to said lien, and, moreover, since said depositors were entitled to resort to the depositors' guaranty fund in the hands of said State Banking Board, and this was averted by said use of the proceeds of said paving bonds, a trust fund to which your orator was entitled, he is subrogated to that extent to the rights of said depositors against said guaranty fund, as it exists and shall exist, and against said State Banking Board."

The facts of the case are set out in the opinion of the court and need not be further stated, and the grounds of decision and the relief granted are expressed in the decree hereinafter set out.

The case of complainant is, indeed, sufficiently though generally stated in a letter which his counsel addressed to the Banking Board. It is as follows:

235 U.S.

Opinion of the Court.

"Dallas, Texas, July 26, 1910.

"State Banking Board, Guthrie, Oklahoma.

"State Banking Board, Oklahoma City, Oklahoma. "Gentlemen: Under contracts of January 5, and June 14, 1909, and transfer of December 9, 1909, my client, W. S. Farish, had a lien for more than $180,000 on certain paving bonds issued to P. J. McNerney and The McNerney Company, of Muskogee, and on the proceeds of such paving bonds, when sold. In the latter part of the year a considerable amount of such bonds were turned over to the Oklahoma Trust Company, which was engaged in the banking business at Muskogee, with its depositors guaranteed under your state law, and that company afterwards sold these bonds and used the proceeds in paying its depositors. The amount thus used, and to which my client was entitled, was $88,002.31.

"Of the amount stated, $63,117.85, or about that amount was thus misapplied in defiance of an injunction of the United States Circuit Court for the Eastern District of Oklahoma made in cause Eq. No. 1239, W. S. Farish v. P. J. McNerney et al., pending at Muskogee, by which injunction the Oklahoma Trust Company was restrained from commingling or confusing the proceeds of said paving bonds with other funds, and was peremptorily required to keep the same separate and apart.

"My client contends that when the trust fund was wrongfully taken and applied to the payment of depositors, who were guaranteed under the State law, he, Farish, became subrogated to the rights of such depositors, and is entitled to resort to the depositors' guaranty fund, and to have you make such assessments as may be necessary to replenish said fund, if it is depleted or from any cause is inadequate to meet this demand.

"If you desire further particulars of the claim, I shall be glad to furnish them, but hardly consider it necessary

at this time, as, if I am correctly informed, you already have full knowledge of the matter.

"Please consider this as a formal demand for payment, and let me have your decision as soon as possible.

"Yours very truly,

(Signed) "A. L. Beatty,

"Attorney for W. S. Farish." No particularization of the allegations of the answer of the Banking Board is necessary except to say in explanation of its attitude that it admitted that the Bank Commissioner took possession on the twenty-fifth of August, 1910, of the Alamo State Bank and of its property and assets and sold and transferred them to the Union State Bank in pursuance of an order of sale of the District Court of Muskogee County, State of Oklahoma. The sale, it is alleged, was in pursuance of an agreement whereby the bank assumed and agreed to pay the deposits owing by the Alamo State Bank amounting to the sum of $450,000, and the Bank Commissioner and the Banking Board agreed to guarantee the solvency of the assets of the Alamo State Bank to the extent and for a sufficient amount to pay all of the deposits assumed by the Union State Bank and to protect it against loss. On August 25, 1910, in pursuance of the agreement the Banking Board advanced to the Union State Bank the sum of $50,000 and has since from time to time advanced to the bank the additional sum of $150,000. These payments were made in the course of the liquidation of the assets of the Alamo State Bank and in discharge of the obligations assumed by it to pay the deposits of the Oklahoma Trust Company.

It is further alleged that under the law the State of Oklahoma, for the benefit of the Depositors' Guaranty Fund, has a first lien on the assets of the Oklahoma Trust Company and the Alamo State Bank for the reimbursement of the sum to the Union State Bank in the payment

Opinion of the Court.

235 U. S.

of the deposits assumed by it. That the lien of the State is superior to any lien claimed by complainant under and by virtue of the assignments of the paving bonds under the contract set forth in the first paragraph of the bill, and the Banking Board has a right under the law to enforce the lien of the State against the assets transferred to the Alamo State Bank by the Oklahoma Trust Company and by the former to the Union State Bank.

The answer of the Union State Bank repeated the allegations of the Banking Board in regard to the transfer to it of the assets of the Alamo State Bank and alleged that its purchase of them was in good faith, for a valuable consideration and without notice of any claim or lien of complainant or his assignor, the Texas Company, and the bank became the owner thereof free from any such claim or lien.

Upon the issues thus formed and upon the proofs presented, the court decreed: (1)-(2) That to secure complainant in the payment of a portion, to-wit, the sums of $16,530.98 and $20,000, with interest thereon at the rate of 6% per annum on the first sum from April 18, 1910, and on the second sum from January 22, 1910, of a certain decree for money rendered by the court in equity cause No. 1239 on September 5, 1911, and costs, complainant, W. S. Farish, has a lien, which is hereby foreclosed against each and all of the defendants, upon those certain notes mentioned in paragraphs IX and X of the original bill of complaint in the cause, and on the proceeds of such of the notes as have been collected. The notes are described. (3) That complainant recover from the Union State Bank the sum of $18,018.58, with interest at 6% per annum from August 25, 1911, the net amount, when paid, to apply as a credit on the decree in equity cause No. 1239. (4) That if the last mentioned amount be not paid within ten days, execution shall issue therefor, and if the defendants, including the Banking Board and the Bank Commissioner