In support of tbe demurrer to tbe first paragraph of tbe answer, it is claimed, that, under tbe agreement between tbe bank and tbe officers of tbe state, tbe bonds of tbe state *641were beld in trust for two purposes: first, to secure the outstanding circulation of the bank; and secondly, for the application of the accruing interest, on the bonds to the discharge of the purchase money due the state, if it could be so applied without injury to the bill holders; that this agreement created an express trust to subserve the above purposes, and that if the bank which created the trust has converted or withdrawn the state bonds — the trust property — and deposited treasury notes in lieu thereof, the lien which attached to the bonds will, by operation qf law, attach also to the fund into which the bonds were converted; and that, as the trust for the benefit of the holders of the circulating notes has been completely fulfilled, that in favor of the state on the balance of the substituted fund is valid, and must be enforced. We are free to confess that this seems to be a correct view of the nature and effect of the agreement, and the principles of law applicable to it. Indeed, by its express language, the bank covenanted and agreed that the bonds deposited with the comptroller should remain as security for its then existing circulation, and moreover, in case it did not pay the installments when they became due^ — - the circulation being secure — the treasurer was authorized to retain for the use of the state, and in payment of such unpaid installments, the amount thereof out of the interest money falling due upon any bond belonging to the bank, in the possession of the state treasurer. It is very manifest that this trust in favor of the state was not intended to interfere in any manner with the operation of the banking law, so far as the security of the bill holders was concerned, but the bank, by the agreement, relinquished the right to withdraw its securities deposited with the comptroller, which the banking law gave it. That the bank might relinquish this right .to exchange securities, is a proposition which probably no one would controvert or contest. And that it did so by this agreement, until the purpose of the trust w;as fulfilled, seems to us very *642clear. Having improperly withdrawn the bonds, in violation of its agreement, it cannot be allowed to say that the fund substituted by its own act, or by the act of itself and the trustee, is discharged of the trust which attached to the bonds, or to the interest falling due upon them. Upon this point, the remarks of Mr. Justice Stoet, as found in section 1258, Eq. Jur., are strictly applicable. “ Whenever,” says he, “ the property of a party has been wrongfully misapplied, or a trust fund has been wrongfully converted into another species of property, if its identity can be traced, it will be held, in its new form, liable to the rights of the original owner, or cestui que trust. The general proposition, which is maintained both at law and equity upon this subject, is, that if any property, in its original state and form, is covered with a trust in favor of a principal, no change of that state and form can divest it of such trust, or give the agent or trustee converting it, or those who represent him in right (not being bona fide purchasers for a valuable consideration without notice), any more valid claim in respect to it, than they respectively had before such change.” Now, as we have already said, the bank, by its agreement, expressly fastened upon the bonds deposited with the comptroller a trust in favor of the state. It agreed that the accruing interest on the bonds might be applied to the payment of the unpaid purchase money whenever it made default, providing it could be so applied with safety to the bill holders. The fact that the property covered with the trust has been changed by the bank in violation of the agreement, does not divest it of the trust. To say that, notwithstanding this trust, the bank still retained the right to withdraw at any time the bonds by virtue of the provisions of the general banking law, seems to us clearly inadmissible.

But it is claimed by the counsel for the relator, that this question is entirely disposed of by the decision in State ex rel. Marshall et al. v. Rusk, 21 Wis. 212. But this, we think, is a *643misapprehension of the extent of that decision. The point, that, under this agreement, the bonds were held charged with a trust of a two-fold character, both to secure its existing outstanding circulation, and also for the application of the accruing interest on the bonds to the discharge of the purchase money due the state, is one which was not suggested by counsel on the argument of that case, and certainly did not occur to the court while examining the cause. That case, we think, was rightly decided upon the questions argued by counsel and considered by the court. A question which was entirely overlooked by counsel, and which was not even'considered by the court, cap hardly be said to have been settled by the decision. We do not intend to call in question the correctness of the decision in the above case. Upon the points covered by it, we think it is sound. But the view which we have been considering of the nature' and effect of the agreement made by the bank, has for the first time been presented.

It results from these views that the demurrer must be sustained.

By the Court. — Demurrer sustained.