In settlement of an adverse balance on the day's clearings, D bank gave to plaintiff a draft on its metropolitan correspondent. D bank then became insolvent, and on presentment the drawee refused to pay, though D bank had sufficient funds on deposit to cover the draft. The receiver allowed plaintiff's claim as a general one. There was no indication that D knew it was insolvent at the time it issued the draft. Plaintiff then brought suit against the receiver to establish a preferred claim. Held, that the issuance of the draft created a trust fund, and plaintiff bank was entitled to a preferred claim in the closed bank's assets. First Nat. Bank of Milaca v. Benson, (Minn. 1934) 255 N. W. 482.
BANKS AND BANKING--COLLECTIONS OF OUT-OF-TOWN ITEMS--PRIORITIES ON INSOLVENCY OF CORRESPONDENT BANK,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol33/iss8/10