A customer of a bank placed certain funds with the bank for purchase of certain securities. The bank started the purchase of securities as per instructions of the customer. But before the purchase of securities for the entire amount could be completed, the bank failed. The relationship of the customer in this case and the bank is that of

Many times a banker is in the position of a trustee. A trustee is one who holds property for the benefit of a person or beneficiary. The banker is a trustee when a customer deposits his valuables and securities for safe custody. In this case, the customer continues to be the owner and is entitled to the same goods and valuables as he deposited. The banker cannot use the articles kept for safe custody anyway he likes. He cannot return equivalent goods in place of the original one. Here the legal position of a banker as a trustee is quite different from that of debtor and creditor. For example, in the event of bank's liquidation, securities and valuables held by the bank as trustee are not available for distribution to the general creditors. Fund, if any, coming to the hands of the bank as a trustee must also be applied for specific purpose as the trust deed indicates.