Were the funds in the hands of the Carolina Banking and Trust Company, former guardian of plaintiff guardian’s wards, divested of their character as trust funds, when placed or deposited by said bank in its own vaults, under the circumstances of this case? We think so.
The agreed facts show: “That, when so placed or deposited, the moneys received belonging to one of the estates aforesaid was not kept *385separate and distinct from tbe moneys belonging to tbe other estates aforesaid, or from tbe moneys received by said bank in tbe usual course of its general banking business — all sucb moneys being commingled in tbe vaults of said bank.”
“It is a well settled general rule that a receiver of a bank in wbicb a fund impressed witb a trust was deposited cannot be required to repay it in preference to tbe claims of other creditors, unless tbe trust fund can be identified, or traced into some other specific fund or property. Still it is held that tbe identical money deposited need not be traced into tbe receiver’s bands where tbe funds received by him are in any event increased by tbe amount of tbe deposit, and it has also been held that it will be presumed that enough of tbe money in tbe bank’s possession when it closed its doors, to satisfy sucb fund, belongs to tbe trust; and that, if tbe balance on band is not equal to sucb fund, tbe entire balance will be turned over to tbe beneficiary.” 3 R. C. L., “Banks,” p. 554, sec. 181, in part.
We find tbe following stated in 7 C. J. — Banks and Banking — p. 633, sec. 308(5) : “Witb regard to tbe effect of deposits of trust funds tbe authorities are not in entire accord. According to one view wbicb appears to prevail more generally deposits made by trustees, executors, administrators, assignees, agents, public officers, and other persons who are serving as fiduciaries are usually considered as simply general deposits, and if tbe bank fails to pay them, tbe beneficiaries have no peculiar claims or rights over other creditors, but must share like other creditors; but it has also been held that tbe receipt by a bank of a trust fund, witb tbe knowledge of its trust character, impressed tbe assets of tbe bank, wbicb were increased to that extent, witb a trust for tbe payment of sucb fund.”
In Bank v. Davis, 115 N. C., 226, tbe following principle is laid down: “Plaintiff bank, being ignorant of tbe insolvency of tbe Bank of New Hanover, sent to it items for collection and remittance. New Hanover Bank mingled tbe proceeds of tbe collection witb its own funds, so that tbe specific money received on tbe items so sent by plaintiff bank could not be traced. No mutual account was kept between tbe parties. Before remitting for tbe items so collected New Hanover Bank failed, and there was money enough on band and turned over to tbe receiver to pay tbe plaintiff’s claim; Held, that upon tbe collection of tbe items and tbe mingling of tbe proceeds witb tbe assets of tbe New Hanover Bank, tbe relation of principal and agent, trustee and cestui que trust ceased, and that of principal and debtor arose between tbe parties, and plaintiff became a simple contract creditor witb no preference over other creditors, and it is immaterial, in sucb case, *386whether or not the officers of New Hanover Bank knew that it was insolvent.” (Headnote) Bank v. Davis, 114 N. C., 343.
The record discloses that “the funds in question are amply secured by a bond.”
In Roebuck v. Surety Co., 200 N. C., at p. 202, the following observation is made: “The bank, as guardian, in not investing the funds of its ward, but intermingling it with other funds of its bank, was faithless to the trust reposed in it; and its bondsman, the defendant, must suffer the loss for such faithlessness.”
This Court has adopted the “well settled general rule” set forth in R. 0. L., supra, and the “view which appears to prevail more generally” set forth in C. J., supra.
The plaintiff contends: “It is admitted that, from and after the receipt by the Carolina Banking and Trust Company, as guardian, of the various trust funds set out in the agreed facts until the bank was taken over for purposes of liquidation, there was, in the vaults of the bank, an amount of cash in excess of the aggregate of such trust funds. Upon this admission, it is respectfully submitted that the trust funds have been sufficiently identified or traced into the hands of the defendant as to permit recovery.” We cannot so hold.
“The general rule where the bank has completed the collection and mixed the funds with its own is that the bank is no longer a trustee but simply a debtor, and that the owner of the paper cannot claim a preference out of its assets. Some recent cases, however, following the doctrine of Knachbull v. Hallett, L. R., 13, Ch. Div., 696, hold that' the court may separate the trust fund from the general assets of the bank although they reached the hands of the assignee in an indistinguishable mass.” Sayles v. Cox, 32 L. R. A., at p. 719 (note).
This matter is so thoroughly considered in an Alabama decision, that we copy fully from that case, as it follows the rule adopted in this State. In Smith & Co. v. Montgomery, 95 Sou. Rep., p. 292 (209 Ala., p. 100), speaking to the subject: “There are quite a number of cases holding that a principal may subject funds to his lien when the agent commingles the same with his own, or when a bank places the same to the individual credit of the agent, and a few which conform to the appellants’ contention; but the contrary rule, which requires identification and more than tracing the money into a common fund held by a bank or receiver for a number of claimants, has been followed by our court, and is supported by well-reasoned cases in other jurisdictions. This identical question has been recently decided by the Pennsylvania Court, Commonwealth v. Trademen’s Trust Co., 250 Pa., 378, 95 Atl., 577, L. R. A., 1916C, 10, wherein the court after commenting on Knachbull v. Hallet, and other cases, said:
*387'These cases establish the general rule that where a trustee receives money from a cestui que trust and deposits it with his own account, and in his own name, to which account he subsequently adds and withdraws money, the cestui que trust may claim to the extent of his trust fund the lowest amount which was on deposit at any time during the continuance of the trust, regardless of the fact that the funds were commingled and increased or diminished from time to time. This rule is based on the theory that the trustee will not be presumed to have intended to commit a criminal act, and so long as there are funds of his own, though ’mixed with the trust funds, any withdrawal from the account will be considered as a withdrawal of his own money, and not that belonging to the trust, and it is only when the total amount is reduced below the amount of the trust, that this presumption is rebutted, because the circumstances preclude any other possibility. There appears to be no case in Pennsylvania where it has been decided by an appellate court that the above rule is the law of this State, nor is it necessary to decide here the precise question as to whether the trustee is an individual and deposits money in his own bank account. The trustee here is a trust company authorized by statute to receive and handle funds of others and do a general banking business. In the conduct of this business it necessarily handled trust funds belonging to a large number of persons. These funds in the present case were deposited in a general account and in this way it became impossible to say to whom any particular part belonged. The case is distinguishable from that of an individual trustee who mixes the funds of a single cestui que trust with his own account. In such case it can readily be determined whether and to what extent he has appropriated the trust funds to his own use. On the other hand, when a trust company deposits in a common account funds belonging to various persons, it cannot be said that the mere fact of their being on deposit at all times sufficient to meet the claim of any particular customer of the bank entitled that customer to claim it as against other claimants whose money also went into the same account. Claimant could not trace title to any particular part of the deposits and his claim can therefore rise no higher than the claim of others whose money was deposited in the same general fund.’
The present holding is supported in point by the case of Philadelphia National Bank v. Dowd (C. C.), 38 Fed., 172, 2 L. R. A., 480. See, also, Commercial Bank of Baltimore v. Davis, 115 N. C., 226, 20 S. E., 370.”
On rehearing of the above case, it is said: “We can add but little to the above quotation from the Pennsylvania case, which is supported in point by the North Carolina and United States Court of Appeals cases, and is in line with previous utterances of this Court,” etc.
*388General deposit, special deposit and deposit for special purpose, see Corp. Commission v. Trust Co., 193 N. C., 696; Corp. Commission v. Trust Co., 194 N. C., 125; Minnis v. Sharpe, 198 N. C., 369.
We see no error in tbe judgment in regard to tbe two certain notes tbe Carolina Banking and Trust Company bad in its possession. For tbe reasons given, tbe judgment of the court below is
Affirmed.