#### S. A. DUPREE v. D. P. HARRELL, Liquidating Agent of the BANK OF PENDER, and GURNEY P. HOOD, Commissioner of Banks for the STATE OF NORTH CAROLINA.

(Filed 10 January, 1934.)

Banks and Banking H e — Under facts of this case plaintiff held not entitled to preference in assets of insolvent bank.

A depositor drew a check in the bank’s favor for a part of his deposit and instructed an officer of the bank to buy Liberty Bonds with the proceeds. Several days later the bank sent a cashier’s check for the amount with an order for the bonds to a broker. The bank closed its doors because of insolvency on the day the broker received the cashier’s check, and the broker returned the check which was credited to the depositor’s account by-the liquidating agent. Meld, the depositor was not entitled to a preference for the amount of his check to the bank.

Civil action-, before Devin, J., 26 April, 1933. From PbNdeb.

The pertinent facts are substantially as follows: The plaintiff had on deposit with the Bank of Pender on 2 January, 1932, as a checking account, the sum of $3,156.75. On that date Dupree drew a check against said deposit in words and figures as follows: “Burgaw, N. C., 2 January, 1932. The Bank of Pender 66-321. Pay to the order of Bank of Pender $2,000 two thousand dollars, for $2,000 L. B., S. A. Dupree.” Said S. A. Dupree caused said check to be presented to said bank on 2 January, 1932, during regular banking hours, and O. C. Branch, president of the bank, was instructed to purchase Liberty Bonds with the proceeds of said check. It was the custom of said bank to purchase bonds for its customers when requested to do so. The Bank of Pender held said check until 6 January, 1932, and on said date charged the same to the account of S. A. Dupree. After said check had been charged to his account Dupree then had a balance on deposit of $1,127.41. On 6 January, 1932, the Bank of Pender issued its cashier’s check for the sum of $2,000, payable to F. E. Nolting and Company, and transmitted the check together with an order for $2,000 of Liberty Bonds, to be shipped to S. A. Dupree. The Bank of Pender did not open for business on 7 January, 1932, and has since been in the hands of the State Commissioner of Banks. Nolting and Company received the check and order for bonds on 7 January, 1932, and after learning that the Bank of Pender had failed, returned the check and canceled the order. When the cashier’s check reached the Bank of Pender authorities employed by the State Commissioner of Banks, were making an audit of the condition of the bank and the auditors credited said cashier’s check to the account of S. A. Dupree after said bank had been closed and its business suspended. *596At tbe time tbe bank suspended business it bad on band in its vaults and on deposit tbe sum of $16,245.35, and at all times from 2 January, 1932, to 7 January, 1932, inclusive, bad on band in cash in excess of tbe amount necessary for tbe purchase of tbe bonds.

Upon tbe foregoing facts tbe trial judge found as a matter of law that tbe sum of $2,000 sued on in tbis action was a special deposit for a specific purpose in tbe Bank of Pender at tbe time of tbe closing of said bank on 6 January, 1932, and said sum was further declared to be a lien upon tbe assets of tbe bank, and tbe Commissioner of Banks ordered to pay said sum in full before making payment to unsecured creditors.

From judgment so signed tbe defendant appealed.

Clifton L. Moore for plaintiff.

B. O. J ohnson for defendant.

BbogdeN, J.

Tbe only question of law is whether tbe facts create a preference.

Tbe plaintiff insists that tbe facts disclose that be bad on checking account $3,156.75, and that be was anxious to purchase $2,000 worth of Liberty Bonds with tbis money. Thereupon be went to tbe bank and drew a check on bis account, payable to tbe bank, for tbe sum of $2,000, and presented tbe check to an official of tbe bank, who agreed to use tbe proceeds of same, to wit, tbe sum of $2,000, for tbe sole and exclusive purpose of purchasing Liberty Bonds. Therefore, tbe plaintiff says that in legal effect be presented bis check- at tbe window, received $2,000 in cash, and redeposited tbe money in tbe bank as a special deposit for the sole purpose of buying Liberty Bonds, and hence be is entitled to a preference. Tbe identical contention was made in Blakey v. Brinson, 286 U. S., 254, 76 L. Ed., 1089, and it was intimated that such position found support in tbe authorities and “might afford a basis for tbe inference that respondent no longer content with tbe role of creditor, bad sought to establish a trust fund.”

Upon tbe other band tbe defendant insists that tbe plaintiff bad $3,156.75 in tbe bank and was desirous of using a portion of said fund for tbe purpose of purchasing Liberty Bonds; that while be drew a check p>ayable to tbe bank and presented it to another official of tbe bank that tbis transaction was in effect a mere shifting of credit in tbe bank affecting tbe identical sum of money then to tbe credit of tbe plaintiff, and that no act was done which separated tbe $2,000 from tbe mass of tbe deposit, and that in truth tbe giving of tbe check, under tbe circumstances, disclosed by tbe record was merely an incident of using funds in tbe bank to buy Liberty Bonds, and that no new money whatever went into the bank to swell its assets.

*597Altbougb there is wide divergence among the textwriters and courts of last resort in interpreting the law of preference, the view taken by the defendant is in accord with the former pronouncement of the court upon the subject. Parker v. Trust Co., 202 N. C., 230, 162 S. E., 564; Williams v. Hood, 204 N. C., 140; In re Bank of Pender, 204 N. C., 143; Flack v. Hood, 204 N. C., 337; 82 A. L. R., 46, et seq. The plaintiff is entitled to judgment but not to a preference.

Modified and affirmed.