As we have seen, public funds rightfully deposited in a bank are not entitled to a priority,1 but if the deposit was made contrary to law a trust results against the bank,2 and this trust creates a priority upon the funds of the bank.3 If, however, the bank allows public funds to be appropriated to a purpose which it knows is illegal it becomes a constructive trustee,4 and the public is entitled to a priority for the amount of the money misappropriated.5 Taxes due from the bank have been held to be entitled to priority.6

88 Fed. R 375; City Bank v. Black-more, 75 Fed. R. 771. If a bank cancels its debt to one person by-giving another credit, how does the transaction differ from one where a man takes money out of the bank and gives it to another to pay his debt and that other thereupon deposits it in the bank? Even the case of Nonotuck Silk Co. v. Flanders, 87 Wis. 237, admits this to be the case. Other courts confine the priority to the cash on hand where there has been a mingling. Compare Merchants' Nat. Bank v. School District, 94 Fed. R. 705; State v. Foster, 5 Wyo. 199; National Bank v. Lattimer, 67 Fed. R. 27.

14In re Johnson, 103 Mich. 199; Wallace v. Stone, 107 Mich. 190.

1 See Sec. 340, ante, note 5.

2 San Diego Co. v. Cal. Nat. Bank,

52 Fed. R. 59. This decision by an accomplished lawyer is one of the best upon this subject State v. Thum, 55 Pac. R. 858. Compare State v. Midland Sav. Bank, 71 N. W. R. 1011.

3 See cases cited in last note. But Merchants' Nat. Bank v. School Dist, 94 Fed. R 705, confines the priority to the bank's cash. And see Stevens v. Williams, 91 Wis. 58.

4 This is to be understood, according to some cases, if the bank misappropriates to itself the money, thereby increasing its assets. But if some one else than the bank receives the money the public has only the claim of a general creditor. See Beard v. Independent Dist, 88 Fed. R 375. This rule attempts to make a distinction where none exists.

Sec. 346. Liens Upon Particular Funds

As we have heretofore noticed, liens existing at the time of insolvency upon particular assets of the bank are not affected by the insolvency.1 So where the bank has not fraudulently drawn a check or draft upon a particular fund which the parties agreed or understood should be payable out of a particular fund, the check operates as an assignment of a portion of the fund corresponding to the check or draft,2 and the holder of it has a priority as to that particular fund.3 Any other lienholder is entitled to insist upon his lien against the bank or its creditors or representative.4