Evansville National Bank v. Metropolitan National Bank. The writ of habeas corpus is discharged, and a warrant will issue to the marshal, under section 33 of the act of September 24th, 1789 (1 U. S. Stat. at Large, 91), for the removal of the prisoner to the Northern District of New York. EVANSVILLE NATIONAL BANK V. METROPOLITAN NATIONAL BANK. (2 Bissell, 527.) National banks have no lien on their own stock. The by-laws of a National bank provided that no transfer of the stock should be made by any shareholder who was indebted to the bank, and this provision was also included in the certificates of stock. Held invalid, and that a transfer of stock by a shareholder while indebted to the bank was good.* (Circuit Court, Seventh Circuit, District of Indiana.) A PPEAL from the District Court. Action by the Evansville National Bank to recover two hundred shares of its capital stock. Said bank was organized under the act of 1864. One of its articles of association provided that the directors might prohibit the transfer of stock without their consent, and in pursuance thereof the directors, by by-law, prohibited the transfer of shares of stock without their consent by any shareholder who was indebted to the bank, and this provision was incorporated in the certificates of stock. After the adoption of such by-law, Watt, Crane & Co. became the owners of two hundred shares of stock which, while they were indebted to the bank, they transferred to the defendants to secure money loaned them. The firm of Watt, Crane & Co. becoming bankrupt, the Evansville National Bank brought this action to recover the said stock. The District Court decided for the defendant. Asa Inglehart, for plaintiff. Hendricks, Hord & Hendricks, for defendant. *This case was appealed to the Supreme Court, and affirmed by a divided court, and consequently no opinion was given. See Bullard v. Bank, ante, p. 93. Evansville National Bank v. Metropolitan National Bank. DRUMMOND, J. The only question in the case is whether this by-law was valid under the law of June 3d, 1864. The 8th section of that act authorizes the board of directors to make by-laws, but declares they must not be inconsistent with its provisions. The 35th section declares that no association shall make any loans, or discount on the security of the shares of its own capital stock, nor be the purchaser or holder of any such shares, unless to prevent loss on a debt previously contracted in good faith. The counsel for the plaintiff, in the able argument he has presented, claims that the operation of the by-law upon the shares of stock, because of the indebtedness of Watts, Crane & Co., and their transfer to the Metropolitan Bank, without the consent of the board of directors, was not a loan or discount made on the security of the shares, that there must be a distinct assignment or hypothecation of the stock as security for a loan or discount made, and some authorities have been cited which seem to sustain that principle. But if a by-law declares, in substance and effect, that for all loans or discounts made to the shareholder a lien shall exist against his stock, the result would be the same as if there were a separate transaction and security given in each case. The shareholder always has the credit on the security of his stock, and thus the very object is accomplished which the 35th section sought to prevent, the absorption of the shares into the assets of the bank. And it will be observed that the law only allows the stock to be taken by the bank as security, or purchased or held to avoid loss on a debt previously contracted in good faith, and even then the stock is to be retained by the bank only a limited time. An extended examination of the authorities cited by counsel is unnecessary, because in the case of the First National Bank of South Bend v. Lanier, recently decided by the Supreme Court of the United States, 11 Wall. 369 (ante, p. 70), the question involved here is discussed by that court, and a principle established that is decisive of this case. In that case the bank had made a by-law, declaring that the stock of the bank should be transferable only on its books, subject to the provision of the 36th section of the act of 1863 (12 U. S Statutes at Large, 675) (by which a shareholder was prevented from transferring his stock when he owed the bank). The bank sought to avail itself of this by-law, notwithstanding the repeal of the 36th section, by the act of 1864, and the court held that that could not be done. This was in effect deciding Collins v. Chicago. that no such by-law could be in force under the provisions of the act of 1864. The language of the court is : "Congress evidently intended, by leaving out of the law of 1864 the 36th section of the act of 1863, to relieve the holders of bank shares from the restrictions imposed' by that section. The policy on the subject was changed, and the directors of banking associations were in effect' notified that thereafter they must deal with their shareholders as they dealt with other people. As the restrictions 'fell, so did that part of the by-law relating to the subject fall' with them." The decree of the District Court is affirmed. COLLINS V. CHICAGO. (4 Bissell, 472.) State Taxation of National banks. The capital stock of a National bank cannot be assessed, as such, by State authority. The only way such stock can be reached is by assessment of the shares of the different stockholders. (Circuit Court, Seventh Circuit, Northern District of Illinois.) DRUMMOND, J. The material facts in this case are that the city caused to be assessed, for the payment of taxes, under the law of Illinois, the stock of the First National Bank of this city, as so much capital in the aggregate, with the intention of having the tax levied on the sum total of the capital stock of the bank. Plaintiff, a non-resident stockholder, has applied to have the assessment set aside as illegal. The assessment is in violation of the acts of Congress authorizing the existence of National banks. The capital stock of the bank, as such, cannot be assessed under State authority. The only way that such stock can be reached is to assess the shares of the different stockholders in the same manner that assessments are made in other cases against property owned by the citizens and inhabitants of the State. In re Manufacturers' National Bank. IN RE MANUFACTURERS' NATIONAL BANK. (5 Bissell, 499.) National banks not subject to the bankrupt act. National banks are not subject to the bankrupt act, and bankruptcy courts have no jurisdiction as against such associations. If insolvent they can be wound up only in the mode provided by the National Banking Act.* (District Court, Northern District of Illinois.) PET ETITION in bankruptcy for a rule on the Manufacturers' National Bank of Chicago, to show cause why it should not be adjudged a bankrupt. The opinion states the case. Harding, McCoy & Pratt, and T. C. Whiteside, for petitioners. Lawrence, Winston, Campbell & Lawrence, and Ayer & Kales, for the bank. BLODGETT, J. On the 15th day of November last Messrs. R. J. Smith & Co. filed in this court their petition setting forth that they are creditors of the Manufacturers' National Bank of this city, for money deposited with said bank in due course of business, and alleging that the said bank had suspended payment on its commercial paper for over fourteen days, and had, when insolvent, made preferential payments, for which acts they prayed that the bank be adjudged bankrupt. Being aware that grave doubts had been expressed by many lawyers and business men as to the application of the bankrupt law to National banks, I directed notice of the application for a rule to show cause to be served on the officers of the bank, and have heard arguments for and against the application. The law now in force for the organization and government of National banks was enacted on the 3d of June, 1864 (13 U. S. Statutes at Large, p. 99), and has been amended by the act of February 4, 1868 (15 id. 34), the act of Feb. 19, 1869 (15 id. 270), *See Irons v. The Manufacturers' National Bank, post. In re Manufacturers' National Bank. the act of July 12, 1870 (16 id. 251), and the act of March 3, 1873 (17 id. 603). Embodied in the original act are very full and ample provisions, for winding up and settling the affairs of these banking associations, mainly through the Federal courts. The fundamental purpose of the act and its amendments was to provide a National currency and insure its prompt redemption, and incidentally, to provide banking or fiscal agencies through which the ordinary financial business of the country could be safely transacted. The leading features of the system were: 1. The security of the circulating notes of those banks by the pledge of Government bonds in the hands of the Treasurer of the United States, and in case of the failure of the bank to redeem its notes, then redemption of those notes by the Government, for which it is to be reimbursed by the proceeds of the bonds deposited and a first lien on all the assets of the bank. 2. The responsibility of the stockholders of the bank to the extent of the par value of the stock held by them respectively, in addition to the amount invested in their shares. 3. The whole system to be under the surveillance of the Comptroller of the Currency, with full powers to examine into the affairs of each bank, and, in cases of non-compliance with the provisions of the law, to appoint a receiver to administer and wind up their affairs. On the 2d day of March, 1867, Congress passed an act to establish a uniform system of bankruptcy throughout the United States; and by the thirty-seventh section of said act it is declared "that the provisions of this act shall apply to all moneyed, business, or commercial corporations and joint-stock companies," and by the third clause of the same section it is declared that "all payments, conveyances, and assignments declared fraudulent and void by this act, when made by a debtor, shall in like manner and to the like extent and with like remedies be fraudulent and void when made by a corporation or company." The forty-eighth section declares that the word "person," when used in this act, shall be held to include and mean "corporation,' and by the ninth clause of the thirty-ninth section it is made an act of bankruptcy for any "banker" to suspend payment of his commercial paper for fourteen days. The bankrupt law is the latest expression of the legislative will, and its general terms and provisions must be held to repeal all pre |