BANKS AND TRUST COMPANIES 443

Provided further that no agent collecting bank shall be liable to the
owner of an item where, in the exercise of ordinary care in the interest of
such owner, it makes or does not make the election above provided or
takes such steps as it may deem necessary in cases (2), (3) and (4) above.

An. Code, 1924, sec. 94. 1929, ch. 454, sec. 94.

119. (Notice of Dishonor of Items Presented by Mail.) In case of
the dishonor of an item duly presented by mail as provided for in the next
preceding section, notice of dishonor of such item to prior parties shall be
sufficient if given with reasonable diligence after such dishonor; and fur-
ther in the event of failure to obtain the return of any such item notice
of dishonor may be given upon a copy or written particulars thereof, and
delay in giving notice of dishonor caused by an attempt with reasonable
diligence to obtain return of such item shall be excused.
See art. 13, sec. 108, et seq.

An. Code, 1924, sec. 95. 1929, ch. 454, sec. 95.

120. (Insolvency and Preferences.) (1) When the drawee or payor, or
any other agent collecting bank shall fail or be closed for business by
State Bank Commission¹ or by action of the board of directors or by other
proper legal action, after an item shall be mailed or otherwise entrusted
to it for collection or payment but before the actual collection or payment
thereof, it shall be the duty of the receiver or other official in charge of
its assets to return such item, if same is in his possession, to the forwarding
or presenting bank with reasonable diligence.

(2) Except in cases where an item or items is treated as dishonored by
non-payment as provided in Section II,² when a drawee or payor bank has
presented to it for payment an item or items drawn upon or payable by
or at such bank, and at the time has on deposit to the credit of the maker
or drawer an amount equal to such item or items, and such drawee or payor
shall fail or close for business as above, after having charged such item or
items to the account of the maker or drawer thereof or otherwise discharged
his liability thereon but without such item or items having been paid or
settled for by the drawee or payor either in money or by an unconditional
credit given on its books or on the books of any other bank, which has
been requested or accepted so as to constitute such drawee or payor or
other bank debtor therefor, the assets of such drawee or payor shall be
impressed with a trust in favor of the owner or owners of such item or items
for the amount thereof, or for the balance payable upon a number of items
which have been exchanged, and such owner or owners shall be entitled to
a preferred claim upon such assets, irrespective of whether the fund
representing such item or items can be traced and identified as part of
such assets or has been intermingled with or converted into other assets of
such failed bank.

(3) Where an agent collecting bank other than the drawee or payor
shall fail or be closed for business as above, after having received in any
form the proceeds of an item or items entrusted to it for collection, but
without such item or items having been paid or remitted for by it either
in money or by an unconditional credit given on its books or on the books
of any other bank which has been requested or accepted so as to constitute
such failed collecting or other bank debtor therefor, the assets of such agent

¹ This way in Act.

² Sec. 118 evidently intended.