United States Nat. Bank of Centralia v. City of Centralia

(after stating the facts as above). [1, 2] The Centralia Bank, in permitting the proceeds of the bonds to be placed to its credit in the Seattle Bank, violated the plain provisions of the law. It had no right to use the money, or to commingle it with its own funds, or to place it to its credit in another bank. Nat. Bank v. School District No. 8, 94 Fed. 705 , 36 C. C. A. 432 ; Board of Com’rs v. Strawn, 157 Fed. 49 , 84 C. C. A. 553 , 15 L. R. A. (N. S.) 1100. The law impresses a trust upon funds so misapplied, and to the extent that the said money, or any portion thereof, either in its original or a substituted form, can be traced into the funds which came into the possession of the receiver, the appellee is entitled to a preference .over the general creditors. Titlow v. McCormick, 236 Fed. 209 , - C. C. A.-; Schuyler v. Littlefield, 232 U. S. 707 , 34 Sup. Ct. 466, 58 L. Fd. 806; Brennan v. Tillinghast, 201 Fed. 609 , 120 C. C. A. 37 ; Board of Com’rs v. Strawn, 157 Fed. 49 , 84 C. C. A. 553 , 15 L. R. A. (N. S.) 1100; In re Brown, 193 Fed. 24 , 113 C. C. A. 348 ; Spokane County v. First Nat. Bank, 68 Fed. 979 , 16 C. C. A. 81 ; In re See, 209 Fed. 172 , 126 C. C. A. 120 .

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