Horne

Plaintiffs maintained a commercial cheeking account with the Ocean Park branch of the Marine Bank of Santa Monica. On December 18, 1931, the bank was taken over by Edward Bainey, as Superintendent of Banks. Plaintiffs recovered judgment against defendant for $4,000, plus interest, payable as a preferred claim out of the bank’s assets. Defendant appeals on the ground that plaintiffs are not entitled to have their claim paid on a trust or preferential basis.

Bespondent Horne had been informed by the branch bank manager in December of 1928 that the latter had a loan made by one Isabella Brown, secured by a lien on certain premises on Montana Avenue in Santa Monica, and that the loan, bearing eight per cent interest, was a suitable investment for Horne. The latter looked at and approved the property and agreed to purchase the loan. He then drew a check on his account in the bank payable to the latter, dated December 3, 1928, and delivered it to the bank, and it was charged to his account December 11, 1928. Bespondent believed he was purchasing the Brown loan and did not inspect the documents relating to the transaction, merely leaving them with the branch for collection as payments…