The defendant Meade County Bank was a corporation doing a banking business in the city of Sturgis, Meade county, S. D., from prior to the year 1903 down to December 26, 1911. On this date the defendant Wingfield, as public examiner of this 'State, took charge of said bank, and has since remained in charge thereof. Early in the year 1903 an arrangement was entered into by and between plaintiff and one H. E. Perkins, then the cashier oil defendant bank, under which arrangement Perkins, or else the defendant bank, was tO' purchase county warrants for plaintiff. From' the month, of June, 1903, down until the time when the public examiner took charge of defendant bank, *103•the plaintiff had, at -divers 'times, forwarded large sums of money to the said' Perkins, and had received from' said' Perkins- at different times large amounts of warrants. The plaintiff had .also, from time to time, returned1 warrants to said. Perkins for the purpose of collection. The collection of -such .warrants was reported to plaintiff, sometimes cash being remitted, but more often the proceeds of the warrants -being retained -for the purchase, of other warrants. All moneys remitted 'by .the plaintiff were remitted by checks or drafts payable to Perkins. All warrants returned for collection were indorsed by plaintiff as payable to .the order of Perkins. It is the contention of the plaintiff that the transactions had were between himself upon the one part and the Meade -County Bank upon-the other; -that, inasmuch as the bank received 'these funds for the sole purpose ¡of investment in a designated class of investments, the same became a trust fund; .and that, for the balance of said fund remaining in the .hands of .the hank, the plaintiff is. entitled- to a preference as against the common creditors of said bank. It is for .the purpose of establishing such preferential claim to something over $4,000 that this action was brought. The defendants’ position was that the bank .had no contractual relations whatsoever with the plaintiff; that such relations existed solely ¡between plaintiff and Perkins; and that, therefore, any claim which the plaintiff may have i's against Perkins. Trial wa-s bad before the court without a jury. Findings and conclusions were entered in favor of defendants, and upon them there was rendered a judgment, dismissing the said action. From such judgment and an order denying a new trial this appeal was taken.
(1) We-have given most -careful study,, not only, to the evidence as it appears condensed in the.printed record herein, but also to it as it appears in the- original settled record, which has been forwarded to and-filed in this court; and, -after such study of the evidence, we are clearly of the view that the trial court rightfully found the arrangement. entered into to have been between the plaintiff and the -said Parkins, and not between the plaintiff and the bank,- though, without question, most, if not -all, of.the warrants purchased by Perkins for.plaintiff were procured by-Perkins^ of the bank, and the bank- knew. that. Perkins was purchasing- warrants for plaintiff.. It would be impossible for ps,.-*104within the bounds of an'opinion of ordinary length, to review fully the evidence received herein, and such a review could serve no useful purpose.
We are 'satisfied1 that, up- to the spring of 1911, the transactions had were solely between plaintiff and Perkins. The last transaction, to which the bank was in no> respect a party except' as' it acted for Perkins, was the collection of a lot of warrants, amounting to $992.36', which were collected and credited to Perkins’ bank account on October 26, 1910, and appear on plaintiff’s book under date of October 28, 1910. Upon this date, ’ according to plaintiff’s account, the correctness of which is not questioned, there was due plaintiff for moneys sent Perkins, 'and moneys collected by Perkins from, warrants, the sum of $2,754.44 over the amount of plaintiff’s money that had been used in pun abase of warrants. After this time, Perkins wrote several letters, in which he either assured plaintiff that be already had procured, or was about to procure, warrants to send to him; but lie never did sent any moire warrants to plaintiff unless it was two small amounts received by plaintiff from some source after the failure of the bank.
In tire spring of 1911, one Ladd succeeded Perkins as cashier of the bank. In the summer of 1911 Perkins made a trip to California,. While hie 'was gone the bank received some warrants forwarded by plaintiff for collection. Whether the letter inclosing such warrants was addressed to- Perkins or bo the bank does not appear. At .this time the ¡bank’s books showed no credit in favor of plaintiff, because, as before noted, all moneys received from him by Perkins, either through remittances or through collection of warrants, bad 'been credited to Perkins. Thle bank collected the amount due on these warrants, $719.54, and, instead of remitting this amount, retained the same fox the avowed1 purpose of purchasing warrants for plaintiff. In their letter reporting this' collection they said:
“We can furnish you warrants for the $7x9.54 which you now have anid will make 'a report toi }"0u in a short time in regard to the matter, and it may he that we can get enough more so' that it will be necessary to call upon you for additional funds.”
Two things .are clearly shown by this letter: (1) That the bank retained this $719.54 as a trust fund for a special purpose; *105(2) that the bank had no other funds belonging to< plaintiff. That-the bank undertook to purchase warrants for plaintiff with this-money, instead of crediting Perkins therewith and leaving the purchasing of warrants to be done by Perkins upon his return, appears further from the fact -that this money was not credited to . Perkins’ account. Instead of turning this $719.54 over to Perkins, as had been the custom before, the bank issued a demand certificate of deposit in -favor of plaintiff in the sum of $540.04, retaining the same in the bank. From the evidence we think it porch-. able that the -bank, at the same time, set aside for plaintiff a bunch o-f' warrants for the balance, $170.50. O11 October 31, 1911, the bank collected a couple of warrants for plaintiff amounting, to $1,259.78. In reporting this collection the -bank wrote:
“We note what you s-ay in regard to holding the money for the purchase of more warrants in the next thirty days and will, state that we have -already secured $281.32 leaving a balance of $978.46 for further .purchases.”
Again we find the bank, instead of crediting Perkins’ account with any part of this collection, issuing to plaintiff a demand certificate for $978.46, the difference between the $1,259.78 collected and the $281.32 reported invested in warrants. It seems clear to us that the $719.54 -and the $1,259.78, in all $1,979.32, collected anid retained by the bank, became a -trust found for which defendant bank should be holden. After the bank failed, plaintiff received from some source, not clearly disclosed by the evidence, $391.50 of warrants. Whether the credit therefor should be given to the bank or to Perkins remains to> he determined by the trial court.
Defendants contend that, if plaintiff has any claim, it is- but that of an ordinary creditor, and. they cite McCormick H. M. Co. v. Yankton State Bank, 15 S. D. 196, 87 N. W. 974, in support thereof. The opinion therein has no application to- the facts of this case. There the bank retained the money when, treating it asl a trust fund, it should 'have remitted- it. By allowing the bank to-so retain money repeatedly, the plaintiff was- held to have accepted ithe bank as a creditor. Here the retaining of the money by the bank was necessary to the carrying out of the trust assumed.
(21) Defendants- contend that the purchase of warrants by the bank was an act wholly outside of the banking business/ *106If that were a material fact — a matter we express mo view upon -7-yet we are of the opinión that the purchase of warrants is clearly warranted 'by. section 850, C. C.
(3) ¡Defendants-also contend that plaintiff failed, before bringing suit, to make a proper demand under section 13, c. 256, Laws 1911. We find nothing in-such section requiring any demand before suit. A claim was served practically simultaneous to the bringing of this action. We are inclined to think that the bringing of this action should be treated as the presenting of a claim.
(4) Plaintiff is entitled to judgment for $1,979.32, less such warrants, if any, 'which he received' from the bank; and he is entitled to have the amount of such judgment adjudged a preferred claim payable pro rata with other unpaid preferred claims, and out of the moneys on hand in said bank when such bank was taken over by defendant Wingfield, less such sums, if any, that had been- properly paid out of su'ch moneys prior to the commencement of this action. If the sum applicable to the payment of preferred claims should be insufficient to pay plaintiff’s claim in full, the balance should stand as 'an ordinary claim payable pro rata with other ordinary claims from1 funds applicable therefor remaining in the hands of defendant Wingfield at the time of the commencement of this action, or since acquired by him from the assets of the defendant bank. Plano Mfg. Co. v. Auld, 14 S. D. 512, 86 N. W. 21, 86 Am. St. Rep. 769.
The judgment is reversed, and the cause remitted to> the trial court for 'further proceedings in comfdrmity with this opinion. No costs shall be taxe'd in this court.