Per Curiam:

The material facts are not in dispute, and, briefly summarized, are substantially as follows: On or about July 3, 1920, appellants consigned forty-six head of steers to the Ward Commission Company, a corporation located and engaged in the live stock commission business at Sioux City, Iowa, for sale upon the market, with directions to remit the net proceeds derived therefrom to the Hudson State Bank of Hudson, South Dakota, the point at which the shipment originated. The steers were sold to one Birmingham for $7,561.25, who gave his check for that amount to the Ward Commission Company, payable to its order. The Ward Commission Company, on July 6, deposited the check in the appellee bank to the credit of its general account. On July 3 the Commission Company drew a check, payable to the Hudson State Bank, for $7,452.11, the proceeds of the sale, less commissions, yardage, and freight, and forwarded the same by mail to the payee as directed by appellants. July 4 was Sunday, and Monday was observed as a legal holiday. The check of the Ward Commission Company, which was received by the Hudson State Bank in due course of mail, was presented to appellee on July 7 for payment. Payment was refused by the bank upon the ground that there were not sufficient funds in the bank to the credit of the drawer to pay the same. The books of appellee on said date showed a tentative balance of something in excess of $10,000, but it is claimed by the bank that the balance was made up-in large part, at least -of checks that had been deposited in the bank by the Ward Commission Company and sent out for collection, but which had not yet been paid. W. M. Ward, the president of the Ward Commission Company, was indebted to appellee upon a note for $3,000, upon which there was a balance due of $2,500, and the Ward Commission Company was indebted to the bank upon a note for $4,000, upon which there was a balance due of $2,313.67. Sometime before the Sometime before the

close of business on July 7 the bank charged the account of the Ward Commission Company with $4,897.41, the amount due on the notes, and issued a cashier's check to itself for $2,338.03, the balance then. remaining in the account. The cashier's check was still held by appellee at the time of the trial.

It is not claimed by appellee that the beneficial owner of a fund deposited in a bank by a factor or commission merchant to his own credit may not maintain an action in equity against the bank to impress a trust on such fund, and to recover the same from the bank, if it has acquired no equitable right thereto without notice of the claim of such beneficial owner, or that, if any portion of the proceeds of the sale of the steers in question is now in the possession of the appellee bank, appellants are not entitled to a decree in their favor for whatever amount the evidence shows remains therein; but it is contended by appellee that the Birmingham check was received by it and credited to the general account of the Ward Commission Company, without knowledge or notice. of appellant's claim thereto or ownership thereof, and that same was fully paid out and dissipated on July 6 upon checks drawn by the Ward Commission Company, and pre

sented for payment and paid in the usual course of business, and that if, upon any theory, any portion of such deposit was in the possession of the bank on July 7, and applied by it to the payment of the indebtedness of either W. M. Ward or the Ward Commission Company, it was so applied in good faith, for a valuable consideration, uable consideration, and without notice of any claim or right of appellants thereto, and that, therefore, the bank is not liable.

The law is well settled that the title to property consigned to a factor or commission merchant for sale remains in the consignor, and that such factor or com- Factor-title to mission merchant property conholds the proceeds signed to. derived from the sale of such property in a fiduciary or trust capacity,

Trust-suit to establish-funds deposited in bank.

and that its character is not changed by being placed to his credit in the bank (Union Stockyards Nat. Bank v. Gillespie, 137 U. S. 411, 34 L. ed. 724, 11 Sup. Ct. Rep. 118; Central Nat. Bank v. Connecticut Mut. L. Ins. Co. 104 U. S. 54, 26 L. ed. 693); that the owner may maintain an action in equity against a bank to impress a trust upon any portion of the funds deposited therein by such factor or commission merchant to his own credit and remaining in said bank, unless it has acquired an equitable right thereto without notice of the true claims of the owner (Smith v. Des Moines Nat. Bank, 107 Iowa, 620, 78 N. W. 238; Packer v. Crary, 121 Iowa, 388, 96 N. W. 870; Shotwell v. Sioux Falls Sav. Bank, 34 S. D. 109, L.R.A. 1915A, 715, 147 N. W. 288; Fidelity & D. Co. v. Rankin, 33 Okla. 7, 124 Pac. 71; Union Stockyards Nat. Bank v. Gillespie, supra; Central Nat. Bank v. Connecticut Mut. L. Ins. Co. supra; Clemmer v. Drovers' Nat. Bank, 157 Ill. 206, 41 N. E. 728; Hewitt v. Hayes, 205 Mass. 356, 137 Am. St. Rep. 448, 91 N. E. 332); that a bank may appropriate a general deposit of a debtor to the discharge of Bank-right to a mutual indebtedposit in satisfac- ness (Smith v. Santion of indebted- born State Bank, 147 Iowa, 640, 30 L.R.A. (N.S.) 517, 140 Am. St. Rep. 336, 126 N. W. 779); that a cestui que trust cannot recover trust funds which were deposited in a bank by the trustee in his own name, and which, without notice of its trust character, the bank impress on bank has applied to the payment of a matured indebtedness, surrendering to the trustee the evidence of the indebtedness (Smith v. Des Moines Nat. Bank, supra; Kimmel v. Bean, 68 Kan. 598, 64 L.R.A. 785, 104 Am. St. Rep. 415, 75 Pac. 1118); conversely, that the owner may main

appropriate de

ness.

Trust-right to

deposits.

tice of the claim of the cestui que trust, to the payment of a matured indebtedness of the trustee (Smith v. Des Moines Nat. Bank, supra; Allen v. Puritan Trust Co. 211 Mass. 409, L.R.A.1915C, 518, 97 N. E. 916; Fidelity & D. Co. v. Rankin, 33 Okla. 7, 124 Pac. 71; Clemmer v. Drovers' Nat. Bank, 157 Ill. 206, 41 N. E. 728; Union Stockyards Nat. Bank v. Gillespie, supra); that, if the trust fund be withdrawn by the trustee in the usual course of business,

Bank-action by

so that the same has cestui que trust been entirely dissi- after withpated, an action

drawal of funds.

against the bank cannot be maintained (Hanson v. Roush, 139 Iowa. 58, 116 N. W. 1061; Smith v. Des Moines Nat. Bank, supra; Stilson v. First State Bank, 152 Iowa, 724, 133 N. W. 354; Officer v. Officer, 120 Iowa, 389, 98 Am. St. Rep. 365, 94 N. W. 947; Jones v. Chesebrough, 105 Iowa, 303, 75 N. W. 97; First State Bank v. Oelke, 149 Iowa, 662, 129 N. W. 70); that it will be presumed, where a trustee has deposited trust funds in a bank to his

general credit with -presumption as funds belonging to to withdrawals himself, that with

by trustee.

drawals made by him will be of his own, and not the trust, funds (Theodore Hamm Brewing Co. v. Flagstad, 182 Iowa, 826, 166 N. W. 289; Importers' & T. Nat. Bank v. Peters, 123 N. Y. 272, 25 N. E. 319).

The decision of this case must be rested upon the foregoing general principles. The bank is solvent, and no rights of creditors are involved. First, as to the subject of notice: The evidence shows that the Ward Commission Company is a corporation organized for, and engaged in, the business of buying and selling live stock upon a commission; that it did not carry on the business of buying and selling live stock for itself; that the account kept at the

appellee bank was in the name of the corporation; that it deposited the proceeds of the sale of live stock therein to the credit of its general account, and remitted the net amount due its customers, by checks drawn upon appellee; that the president of the bank at one time owned stock in the corporation; that the names of the customers of the commission company were not customarily disclosed to the bank when deposits were made, but that the bank officers were thoroughly familiar with the business of the commission company and the manner in which it was carried on; and that the funds deposited by it were received from the sale of live stock, and were remitted to the shipper, less charges, by checks drawn upon appellee. The necessary conclusion from all the facts and circumstances is that appellee knew that the only interest

Notice-to bank of interest of commission house.

of the commission company in deposits from the proceeds of the sale of live stock was for commissions, freight, yardage, and other expenses incidental to the handling and disposition of the live stock.

We are of the opinion that the bank was charged with notice of the trust relation of the commission company with its customers, and that the funds deposited, less the items above suggested, belonged to the shipper. It was clearly the duty of the bank to pay all checks drawn by the commission company and presented to it, so long as there were funds to the credit of the drawer for commission mer- that purpose, and so far as the fund in question was withdrawn by the depositor the bank is relieved from liability.

Bank-duty to pay checks of

chant.

balance in the bank to the credit of the commission company at the opening of business on the morning of July 6, was $22,307.12. Deposits were made during the day as follows-$9,055.43 and $6,547.07. A large number of checks drawn by the commission company were paid during the day, so that the balance to its credit at the close of business on July 6 was $1,570.35. A copy of the bank ledger showing the account of the commission company with the bank from July 1 to July 13, 1920, both inclusive, was introduced in evidence by appellant. It shows an entry under the caption "New Balance," on July 6, of $4,964.72. The letters "O D," in capitals, appear on the ledger immediately to the right of the above entry. These letters, the evidence shows, were intended to indicate that the account was overdrawn to that extent. No other evidence was offered upon this point, but it is insisted by appellee that this entry upon the ledger shows conclusively that the proceeds of the sale of the forty-six steers to Birmingham, which are included in the item of $9,055.43, were entirely dissipated on July 6, and that the balance of $1,570.35 is a part of the deposit of $6,547.07 which was made later in the day.

The entry on the bank ledger of the new balance designated as an overdraft was doubtless made for the convenience of the bank, and it might be, if the checks, which vary greatly in amount, were entered upon the ledger in the exact order in which they were presented and paid by the bank, that the whole of the fund represented by the Birmingham check was in fact dissipated; but the court cannot take judicial notice cial notice-bank of the time or order in which the checks were presented and paid, or in which the entries were made upon the book, or of the time when the entries were made, or that they were in fact entered in the strict order of payment. The custom of the bank in this respect is not shown, nor was other evidence introduced for the purpose of showing

Evidence-judi

transaction.

that the checks were in fact entered upon the ledger in the exact order in which they were presented for payment and paid. The overdraft may have been a theoretical one only. How closely, in point of time, the two items were deposited, or just how the checks were handled by the bookkeepers after they had been paid, does not appear. The sheet of the ledger showing the account was identified by the vice president of the bank, who did not make the entries, and who admitted that his testimony was based entirely upon the entries shown above. In the absence of evidence tending to show

Bank-state of account-time

ascertained.

that the checks were entered upon the ledger in the exact order in which they were paid, and that the items deposited were not actually in the bank at the time the last check was paid, we must accept the balance shown at the close of business as conclusive. So far as the record shows, the several checks which made up the credit item of $6,547.07 may have been in the bank, but not entered upon the ledger, at the time the amount of the alleged overdraft was entered thereon. The credit and debit sides of the account varied, of course, during the day; but the balance shown at the opening and closing of business alone shows the true state of the account.

-presumption as

balance.

It will be presumed that the balance of $1,570.35 at the close of business on July 6 to character of was a part of the proceeds of the sale of appellants' steers, which the commission company held in trust for their benefit. The ledger account shows a deposit on July 7 to the credit of the commission company of $11,296.84, and on July 8 of $984.95, and that only a few small items were drawn out by the commission company on that date. follows that the item of $1,570.35 was not dissipated, but was a part of the amount appropriated by the bank to the payment of the notes held by it against W. M. Ward and

It

the Ward Commission Company, or embraced in the cashier's check issued by the bank to itself. Under the rules announced, the bank, having notice of the trust character of the fund, did not have a right to thus appropriate it. Judgment should therefore have been entered in favor of appellants and against the bank for this amount, with interest.

Some contention is made by appellants, upon the authority of Garst v. Canfield, 44 R. I. 220, 116 Atl. 482, and Hungerford v. Curtis, 43 R. I. 124, 12 A.L.R. 1040, 110 Atl. 650, that the court will presume that the deposits made after July 6 were of funds belonging to the commission company, and that they were made for the purpose of replacing the trust funds. This contention is sufficiently answered by the fact that the inference to be drawn from all the testimony is that these deposits were the proceeds received from the sale of live stock consigned to the tion as to recommission compa- placement of ny and sold in the regular course of the commission business, and that the only interest the commission company had therein was such charges as it could rightfully make against its custom

ers.

Trust-presump

trust funds.

It follows that the judgment of the court below must be reversed, and the cause remanded for judgment and decree in harmony with this opinion.

Preston, Ch. J., and Weaver, De Graff, and Stevens, JJ., concur.

A petition for rehearing having been filed, the following Per Curiam response was handed down March 4, 1924 (- Iowa,, 197 N. W. 434):

A petition for rehearing having been filed in this case by appellants, we have again reviewed the record. We now reach the conclusion that the original opinion should be modified to the extent of permitting the appellants to cover $2,338.03, with interest as provided by law.