Mr. Herron's Argument for Armstrong. date of its failure $110,000, which came to the hands of respondent as its receiver. We claim that under the circumstances thus detailed complainant is entitled to a charge on the funds in the Fidelity Bank for the amount of its claim. The Fidelity Bank having received complainant's paper upon trust to collect the same and remit the proceeds, might collect it in many ways. If, for example, the paper were the check of one of its customers, on his account, it would simply charge the check to his account, and thereupon the proceeds would be a part of the cash in its hands, not actually distinguished, but entirely capable of being so by taking out that amount of money. So if being indebted to a correspondent it paid its debt with complainant's paper. At the time it did so it collected that paper, at least as against complainant, and complainant had a right to assert that it had that amount of cash in its treasury. That being so, there was no lawful way of getting it out except by paying it to complainant, and the rule of Knatchbull v. Hallett, 13 Ch. D. 696, that drafts will always be applied to that which may lawfully be drawn out, applies, and the complainant's money in both the foregoing cases was in the Fidelity Bank at the time of its failure, and came to the defendant as a trustee for complainant. Peak v. Ellicott, 30 Kansas, 156; People v. Rochester City Bank, 96 N. Y. 32; McLeod v. Evans, 66 Wisconsin, 401. Upon the authorities cited and for the reasons given we submit that the decree of the Circuit Court, so far as it denied complainant the relief sought in the bill, should be reversed, and that a decree should be rendered in this court requiring respondent to pay to complainant the amount of its claims in full, with interest and costs Mr. John W. Herron for Armstrong, receiver. I claim that from the manner in which it was sent and received, being sent for credit, and being at the time charged to the Fidelity National, and being credited by the Fidelity as it was received, that amounted, as between the two banks, to a collection. The paper became the property of the Fidelity Mr. Herron's Argument for Armstrong. with the endorsement on it of the Commercial, which endorsement enabled the Fidelity to hold the Commercial for repayment, if it was not paid and properly protested. I, however, regard this as in the present case immaterial. It was certainly collected, when the payer of it paid it to the bank which held it, which bank had received it from the Fidelity for collection. And if such payment was made before the failure of the Fidelity, as was the case as to almost all the paper in question, it was a collection of the paper by the Fidelity. The report of the master gives a list of the paper so paid; and the dates of payment. The last statement of account was forwarded by the Fidelity on June 11th, and included all items received to June 8th, inclusive. The first credits not included in that statement and remitted for were made June 9th, and other collections were made on each succeeding day until the 20th, the day preceding the closing of the bank. The collection by the correspondent banks was a collection by the Fidelity Bank. The collecting bank was the agent of the Fidelity, and not of the Commercial. And, therefore, these payments are to be regarded precisely as if on those days these sums had been paid directly to the Fidelity Bank. They had all been credited to the Commercial Bank before the failure; they had been charged before the failure to the corresponding banks, and credited by the corresponding banks to the Fidelity National. No notice of the payment was necessary or usual. If this paper had been collected by the Fidelity prior to its failure, and the Fidelity had become the debtor to the Commercial for the amount, it is contrary to the intent of the banking act to pay this one creditor in full, in advance of other creditors. See Reeves v. State Bank of Ohio, 8 Ohio St. 465; Hoover v. Wise, 91 U. S. 308; Bank of Crown Point v. Bank of Richmond, 76 Indiana, 561; Butchers' & Drovers' Bank v. Hubbell, 117 N. Y. 384. Admitting that the paper was sent for collection merely, and that until the collection was made the relation of principal and agent existed, that relation did not continue after the collection of the paper and the credit of the proceeds in account on the books of the several parties. Smedes v. Utica Opinion of the Court. Bank, 20 Johns. 372; Jockuch v. Towsey, 51 Texas, 129; Marine Bank v. Fulton Bank, 2 Wall. 252; People v. Rochester City Bank, 93 N. Y. 582; Marine Bank v. Rushmore, 28 Illinois, 463; Tinkham v. Duckworth, 31 Illinois, 519; Planters Bank v. Union Bank, 16 Wall. 483; In re Bank of Madison, 5 Bissell, 515; Manufacturers' Bank v. Continental Bank, 148 Mass. 553; Freeman's Bank v. Nat. Tube Works Co., 151 Mass. 413. MR. JUSTICE BREWER, after stating the case, delivered the opinion of the court. We agree with the Circuit Judge that the relation created between the banks as to uncollected paper was that of principal and agent, and that the mere fact that a subagent of the Fidelity Bank had collected the money due on such paper, was not a mingling of those collections with the general funds of the Fidelity, and did not operate to relieve them from the trust obligation created by the agency of the Fidelity, or create any difficulty in specifically tracing them. As to such paper, the transaction may be described thus: The plaintiff handed it to the Fidelity, the Fidelity handed it to a subagent,. the subagent collected it and held the specific money in hand to be delivered to the Fidelity; then the failure of the Fidelity came, and the specific money was handed to its receiver. That money never became a part of the general funds of the Fidelity; it was not applied by the subagent in reducing the indebtedness of the Fidelity to it, but it was held as a sum collected, to be paid over to the Fidelity, or to whomsoever might be entitled to it. The Fidelity received the paper as agent, and the endorsement "for collection" was notice that its possession was that of agent and not of owner. In Sweeny v. Easter, 1 Wall. 166, 173, in which there was an endorsement "for collection," Mr. Justice Miller said: "The words 'for collection' evidently had a meaning. That meaning was intended to limit the effect which would have been given to the endorsement without them, and warned the party that, contrary to the purpose of a general or blank endorsement, Opinion of the Court. this was not intended to transfer the ownership of the note or its proceeds." And in White v. National Bank, 102 U. S. 658, 661, where the endorsement was "for account," the same Justice, speaking of the endorsement, said: "It does not purport to transfer the title of the paper, or the ownership of the money when received." The plaintiff, then, as principal, could unquestionably have controlled the paper at any time before its payment, and this control extended to such time as the money was received by its agent, the Fidelity. Butchers' &c. Bank v. Hubbell, 117 N. Y. 384; Manufacturers' Bank v. Continental Bank, 148 Mass. 553; Freeman's Bank v. National Tube Works, 151 Mass. 413; Armstrong v. National Bank of Boyerstown, 14 S. W. Rep. 411, (Court of Appeals of Kentucky); Crown Point National Bank v. Richmond National Bank, 76 Indiana, 561. In those cases the suits were against subagent banks. It is true, that in most of them the collection was made by the subagent after the avowed insolvency of the agent, but that fact, we cannot think, is decisive. If, before the subagent parts with the money or credits it upon an indebtedness of the agent bank to it, the insolvency of the latter is disclosed, it ought not to place the funds which it has collected, and which it knows belong to a third party, in the hands of that insolvent agent or its assignee; and, on the other hand, such insolvent agent has no equity in claiming that this money, which it has not yet received, and which belongs to its principal, should be transferred to and mixed with its general funds in the hands of its assignee, for the benefit of its general creditors, and to the exclusion of the principal for whom it was collected. Whether it be said that such funds are specifically traceable in the possession of the subagent, or that the agent has never reduced those funds to possession, or put itself in a position where it could rightfully claim that it has changed the relation of agent to that of debtor, the result is the same. The Fidelity received this paper as agent. At the time of its insolvency, when its right to continue in business ceased, it had not fully performed its duties as agent and collector; it had not received the moneys collected by its subagent. They Opinion of the Court. were traceable as separate and specific funds, and, therefore, the plaintiff was entitled to have them paid out of the assets in the hands of the receiver, for when he collected them from these subagents he was in fact collecting them as the agent of the principal. No mere book-keeping between the Fidelity and its subagent could change the actual status of the parties or destroy rights which arise out of the real facts of the transaction. We also agree with the Circuit Court, in its conclusions as to those moneys collected by subagents to whom the Fidelity was in debt, and which collections had been credited by the subagents upon the debts of the Fidelity to them, before its insolvency was disclosed, for there the moneys had practically passed into the hands of the Fidelity, the collection had been fully completed. It was not a mere matter of book-keeping between the Fidelity and its agents; it was the same as though the money had actually reached the vaults of the Fidelity. It was a completed transaction between it and its subagents, and nothing was left but the settlement between the Fidelity and the principal-the plaintiff. The conclusions of the Circuit Court were based upon the idea that these collections could not be traced, because they had passed into the general fund of the bank. We think, however, a more satisfactory reason is found in the fact that, by the terms of the arrangement between the plaintiff and the Fidelity, the relation of debtor and creditor was created when the collections were fully made. The agreement was to collect at par, and remit the first, eleventh, and twenty-first of each month. Collections intermediate those dates were, by the custom of banks and the evident understanding of the parties, to be mingled with the general funds of the Fidelity, and used in its business. The fact that the intervals between the dates. for remitting were brief is immaterial. The principle is the same as if the Fidelity was to remit only once every six months. It was the contemplation of the parties, and must be so adjudged according to the ordinary custom of banking, that these collections were not to be placed on special deposit and held until the day for remitting. The very fact that col |