SMITH, P. J.
The Citizens’ Stock Bank of Slater and the Bank of H. S. Mills of Kansas City, were each incorporated banking associations organized under the statutes of this State.
On April 3, 1894, the former, which, for convenience we shall hereafter refer to as the Stock Bank, was indebted to the latter, which we shall hereafter refer to as the Mills Bank, in the sum of twenty-five thousand dollars, evidenced by two notes, one for twelve and the other for thirteen thousand dollars; on said day and year the Stock Bank executed to the said defendant its two promissory notes for twelve and thirteen thousand dollars, and respectively due sixty and ninety days after the date thereof. Each of said notes were secured by certain collateral notes described in a collateral agreement thereto attached; defendant wrote a waiver of demand and protest on said principal notes an,d indorsed the same in blank to the Mills Bank, which thereupon cancelled and delivered to the Stock Bank the two notes held by it, as already stated, for a like amount. In September, 1894, while the Mills Bank held the said two notes of the defendant and the collateral described in tiie agreements attached, by the consent of the defendant, the payee and indorser of said notes, certain of the said collaterals were released and others substituted in their stead.
On December 17, 1894, the Stock Bank being insolvent, made, under the statutes, a general assignment by deed to the plaintiff for the benefit of its creditors; at the date of said assignment by said Stock Bank, defendant had on deposit with it, as appeared from its books of account, the sum of $4,370.94; on December 24, 1894, there was due on said notes of defendant to the Stock Bank, which were then held by the Mills Bank, after allowing all credits for the amounts collected by the latter on said collaterals, the sum of $21,700, [205]*205and on that day the defendant gave her note for said last-named amount to the Mills Bank, securing the same by a hypothecation of a certain number of the certificates of shares of the stock of said Mills Bank, held by her, and for which the said Mills Bank delivered to her the said notes, and uncollected collaterals which she had previously indorsed and delivered to-it. The defendant, after the reinvestiture in her as aforesaid of the title to the said notes of the Stock Bank and the col-laterals thereto belonging, collected on the latter an amount sufficient to discharge the said notes together with an overplus of $4,430.57.
This action was brought by the plaintiff assignee of the Stock Bank against the defendant to recover of her the said overplus so collected and in her hands. The defendant in her answer pleads as a set-off and counterclaim to the plaintiff’s demand, the amount of her deposit with said Stock Bank at the time of the said assignment. There was a trial which resulted in judgment for the plaintiff and from which defendant appealed.
The statute (section 323, Kevised Statutes) relating to assignments for the benefit of creditors provides that- every voluntary assignment of lands, tenements, goods, chattels and credits made by a debtor shall be for the benefit of all the creditors of the assignee in proportion to their respective claims. In other provisions the assignee is declared to be a trustee for the benefit of creditors of his assignor, one of whose duties is to prosecute actions for property, et cetera. And in still others it is made his further duty, as soon as practicable after the assignment, to pay over to the creditors whose demands have been allowed as much as the means on hand will permit. . It is clear that the intention of this statute is to provide for the ratable distribution of the assets of the assignor among his general creditors, and to allow any preferences among them would be to frustrate such intention. Kortjohn v. Bank, 63 Mo. App. 166.
[206]*206It is the well-settled doctrine in this State that an assignee for the benefit of creditors, takes the assigned estate subject to all equities existing with respect thereto at the time of the assignment. Homer v. Bank, 140 Mo. 225; Green v. Conrad, 114 Mo. 651; Huse v. Ames, 104 Mo. 98. The status of both the debtors and creditors of the assignor became fixed by the assignment, in trust for the latter. Huss v. Ames, 104 Mo. 91; St. George v. Branch, 120 Mo. 226; Storts v. George, 150 Mo. 1; Homer v. Bank, 140 Mo. 225; Stephens v. Schuchmann, 32 Mo. App. 333; Chipman v. Bank, 120 Pa. St. 86. And whether or not under the statute (section 4487, Revised Statutes) the right of sehoff exists between an assignee of an insolvent and a debtor in favor of the latter or vice versa, depends upon whether or not at the time of the assignment there existed a mutual indebtedness between the insolvent and the debtor, that is to say, such as would have entitled the insolvent to. an action against the debtor, and the debtor to an action against the insolvent. Frowein v. Calvird, 75 Mo. App. 567; Weiss v. Wahl, 5 Mo. App. 408; McCuin v. Frazier, 38 Mo. App. 63. It follows from this that where no right of set-off exists when an assignment by an insolvent for the benefit of creditors is made, it can not arise afterwards in favor of one indebted to the insolvent estate who is also a creditor. Fera v. Wickham, 135 N. Y. 223, and cases there cited; Ogden v. Cowley, 2 Johns. 274; Dickson v. Evans, 6 T. R. 57; Gluck & Becker on Receivers, 400-1; Beach on Receivers, see. 703; High on Receivers, sec. 249; 22 Am. and Eng. Ency. Law (1 Ed.), 310. The application of this rule is illustrated in great variety of adjudications, some of which are referred to in the brief of the plaintiff’s counsel. This rule is necessary to secure equality among general creditors and prevent preferences. It is consistent with the spirit and intention of the statute.
At the time of the assignment in the present case the defendant was a creditor but not a debtor of the insolvent bank.
[207]*207No question as to the right of set-off at the time of the assignment can properly arise in the ease. The defendant, after the assignment, acquired collateral securities in which the insolvent bank and its assignee had an equitable interest. She collected on these collaterals more than enough to discharge her debts. She now claims the right to apply this excess to the satisfaction of her claim against the insolvent bank .for the deposit she had with it at the time of the assignment. As the right of set-off for which defendant contends arose after the assignment, and as there, was not at the time of such assignment any mutual indebtedness existing between her and 'the said insolvent, it is plain that according to principles to which we have just adverted, it can not be recognized. The recognition of any such right would be to establish a preference in favor of the defendant over the other general creditors which would prevent the ratable distribution of the assets of the insolvent bank among them, which would be contrary to the intention of the statute. The general creditors were entitled, through the assignee, to recover the amount collected by her on the collaterals in excess of her debt, and to have the same ratably distributed among them. Having had her claim on account of her deposit allowed as she did, she was only entitled to share pari passu with them.
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SMITH, P. J.
The Citizens’ Stock Bank of Slater and the Bank of H. S. Mills of Kansas City, were each incorporated banking associations organized under the statutes of this State.
On April 3, 1894, the former, which, for convenience we shall hereafter refer to as the Stock Bank, was indebted to the latter, which we shall hereafter refer to as the Mills Bank, in the sum of twenty-five thousand dollars, evidenced by two notes, one for twelve and the other for thirteen thousand dollars; on said day and year the Stock Bank executed to the said defendant its two promissory notes for twelve and thirteen thousand dollars, and respectively due sixty and ninety days after the date thereof. Each of said notes were secured by certain collateral notes described in a collateral agreement thereto attached; defendant wrote a waiver of demand and protest on said principal notes an,d indorsed the same in blank to the Mills Bank, which thereupon cancelled and delivered to the Stock Bank the two notes held by it, as already stated, for a like amount. In September, 1894, while the Mills Bank held the said two notes of the defendant and the collateral described in tiie agreements attached, by the consent of the defendant, the payee and indorser of said notes, certain of the said collaterals were released and others substituted in their stead.
On December 17, 1894, the Stock Bank being insolvent, made, under the statutes, a general assignment by deed to the plaintiff for the benefit of its creditors; at the date of said assignment by said Stock Bank, defendant had on deposit with it, as appeared from its books of account, the sum of $4,370.94; on December 24, 1894, there was due on said notes of defendant to the Stock Bank, which were then held by the Mills Bank, after allowing all credits for the amounts collected by the latter on said collaterals, the sum of $21,700, [205]*205and on that day the defendant gave her note for said last-named amount to the Mills Bank, securing the same by a hypothecation of a certain number of the certificates of shares of the stock of said Mills Bank, held by her, and for which the said Mills Bank delivered to her the said notes, and uncollected collaterals which she had previously indorsed and delivered to-it. The defendant, after the reinvestiture in her as aforesaid of the title to the said notes of the Stock Bank and the col-laterals thereto belonging, collected on the latter an amount sufficient to discharge the said notes together with an overplus of $4,430.57.
This action was brought by the plaintiff assignee of the Stock Bank against the defendant to recover of her the said overplus so collected and in her hands. The defendant in her answer pleads as a set-off and counterclaim to the plaintiff’s demand, the amount of her deposit with said Stock Bank at the time of the said assignment. There was a trial which resulted in judgment for the plaintiff and from which defendant appealed.
The statute (section 323, Kevised Statutes) relating to assignments for the benefit of creditors provides that- every voluntary assignment of lands, tenements, goods, chattels and credits made by a debtor shall be for the benefit of all the creditors of the assignee in proportion to their respective claims. In other provisions the assignee is declared to be a trustee for the benefit of creditors of his assignor, one of whose duties is to prosecute actions for property, et cetera. And in still others it is made his further duty, as soon as practicable after the assignment, to pay over to the creditors whose demands have been allowed as much as the means on hand will permit. . It is clear that the intention of this statute is to provide for the ratable distribution of the assets of the assignor among his general creditors, and to allow any preferences among them would be to frustrate such intention. Kortjohn v. Bank, 63 Mo. App. 166.
[206]*206It is the well-settled doctrine in this State that an assignee for the benefit of creditors, takes the assigned estate subject to all equities existing with respect thereto at the time of the assignment. Homer v. Bank, 140 Mo. 225; Green v. Conrad, 114 Mo. 651; Huse v. Ames, 104 Mo. 98. The status of both the debtors and creditors of the assignor became fixed by the assignment, in trust for the latter. Huss v. Ames, 104 Mo. 91; St. George v. Branch, 120 Mo. 226; Storts v. George, 150 Mo. 1; Homer v. Bank, 140 Mo. 225; Stephens v. Schuchmann, 32 Mo. App. 333; Chipman v. Bank, 120 Pa. St. 86. And whether or not under the statute (section 4487, Revised Statutes) the right of sehoff exists between an assignee of an insolvent and a debtor in favor of the latter or vice versa, depends upon whether or not at the time of the assignment there existed a mutual indebtedness between the insolvent and the debtor, that is to say, such as would have entitled the insolvent to. an action against the debtor, and the debtor to an action against the insolvent. Frowein v. Calvird, 75 Mo. App. 567; Weiss v. Wahl, 5 Mo. App. 408; McCuin v. Frazier, 38 Mo. App. 63. It follows from this that where no right of set-off exists when an assignment by an insolvent for the benefit of creditors is made, it can not arise afterwards in favor of one indebted to the insolvent estate who is also a creditor. Fera v. Wickham, 135 N. Y. 223, and cases there cited; Ogden v. Cowley, 2 Johns. 274; Dickson v. Evans, 6 T. R. 57; Gluck & Becker on Receivers, 400-1; Beach on Receivers, see. 703; High on Receivers, sec. 249; 22 Am. and Eng. Ency. Law (1 Ed.), 310. The application of this rule is illustrated in great variety of adjudications, some of which are referred to in the brief of the plaintiff’s counsel. This rule is necessary to secure equality among general creditors and prevent preferences. It is consistent with the spirit and intention of the statute.
At the time of the assignment in the present case the defendant was a creditor but not a debtor of the insolvent bank.
[207]*207No question as to the right of set-off at the time of the assignment can properly arise in the ease. The defendant, after the assignment, acquired collateral securities in which the insolvent bank and its assignee had an equitable interest. She collected on these collaterals more than enough to discharge her debts. She now claims the right to apply this excess to the satisfaction of her claim against the insolvent bank .for the deposit she had with it at the time of the assignment. As the right of set-off for which defendant contends arose after the assignment, and as there, was not at the time of such assignment any mutual indebtedness existing between her and 'the said insolvent, it is plain that according to principles to which we have just adverted, it can not be recognized. The recognition of any such right would be to establish a preference in favor of the defendant over the other general creditors which would prevent the ratable distribution of the assets of the insolvent bank among them, which would be contrary to the intention of the statute. The general creditors were entitled, through the assignee, to recover the amount collected by her on the collaterals in excess of her debt, and to have the same ratably distributed among them. Having had her claim on account of her deposit allowed as she did, she was only entitled to share pari passu with them.
The court, at the instance of the plaintiff, told the jury in substance that if the defendant, for value received, indorsed and delivered to the Mills Bank the two notes, one for $12,000 and the other for $13,000, and turned over to it said collaterals without an agreement that said notes should be held as her property, then it became the real owner thereof and any redelivery of them thereafter to defendant did not entitle her to the excess of said collaterals over the amount required to pay • off said notes, the interest thereon and the reasonable expenses ■of collecting same. Those given for the defendant were but the converse of those given for the plaintiff. They, in effect, declared that if it was agreed that the said notes were to re[208]*208main the property of defendant and were turned over to the Mills Bank as a matter of convenience to her, then she had the right to collect the collateral and make the application of the proceeds to the payment of her notes and the deposit due her. The rule embodied in these instructions was properly applicable under the pleadings and evidence in the case.
The defendant complains of the action of the court in refusing an instruction requested by her which was to the effect that if on Thanksgiving Day in 1894 the cashier of the Stock Bank agreed with defendant that she should hold the notes for any and all indebtedness due her from said bank, that then she was entitled to the set-off claimed by her. It will be remembered that this Thanksgiving agreement was made while the Mills Bank was the legal owner of and in possession of the two notes and the collaterals. The defendant was not, as the jury found, the legal owner of the notes and collaterals. The collaterals pledged were not in her possession at the time of the agreement, and, therefore, such pledge was invalid. Vanstone v. Goodwin, 42 Mo. App. 39; Staples v. Simpson, 60 Mo. App. 73; Conrad v. Fisher, 37 Mo. App. 352; Casey v. Cavaroc, 96 U. S. 467. The Stock Bank could not make to the defendant a valid pledge of collaterals which were in the possession as owner of neither, but in that of the Mills Bank. The possession is the very essence of a pledge; without which it is ineffectual. The refusal of this instruction did not harm defendant because the jury found from the evidence, under proper instructions, that the two notes and collateral were at the time of the “Thanksgiving agreement the property of the Mills Bank and that the same were not held by that bank as a mere matter of convenience to her and as her property.” Had this instruction been given it is plain that the result could not have been different.
Defendant, as far as we are able to discover, has assigned no sufficient reason why the judgment should be disturbed, and accordingly it will be. affirmed.
All concur.