United States v. Taintor.

the prosecution, and the indictment in each count charges an intent to injure and defraud the association. The question presented, therefore, is as to the effect produced upon the words, "embezzle, abstract, or willfully misapply," by the addition of the words "with the intent to injure or defraud the association."

In considering this phraseology, it will be noticed that, while the word "embezzle," and perhaps, also, the word "abstract," refers to acts done for the benefit of the actor as against the bank, the word "misapply" covers acts having no relation to the pecuniary profit or advantage of the doer thereof. A design to make criminal acts done without reference to personal advantage is thus clearly disclosed, and it appears that the intention of the statute was to cover cases of unlawful dealings with the funds of the bank by its officers, although without a corrupt motive. This intention, manifested by the insertion of an emphatic and significant term in the commencement of the section, it cannot be supposed was intended to be defeated by the subsequent use of the words "with intent to injure or defraud." Nor can such effect be given these words without treating the word "injure" as synonymous with "defraud," and as referring to a misapplication for the benefit of the doer. But, if the signification of the word "defraud" be limited to a malicious dealing with property for the personal advantage of the doer. and it is always to be so limited the word "injure" is not of such limited application, and was doubtless inserted to cover cases of misapplication causing injury to the association without benefit to the offender. The guilty intent required by the statute would, therefore, still exist, although it be shown that no personal pccuniary benefit was anticipated by the defendant, and the requirement of the statute is fulfilled by proof of general guilty intent involved in the act knowingly committed.

The phrase "intent to injure or defraud" is the same one used in indictments for forgery. There it refers to a general guilty intent, and such indictments are held conclusively proved when the act is proved to have been knowingly committed. The phrase should be considered to have the same meaning in the statute, and to be proved in the same way. Nor does this construction render the words nugatory. On the contary, they are given precisely the same effect which they are held to have in indictments where their presence has been considered to be necessary. A similar effect has been given to this same phrase in other statutes. Thus Lord Ch.

Chemical National Bank v. Bailey.

J. TINDAL has observed, that, "where a statute directs that, to complete an offense, it must have been done with intent to injure or defraud any person, there is no occasion that any malice or illwill should subsist against the person whose property is so destroyed. It is a malicious act in contemplation of law, when a man willfully does that which is illegal, and which, in its necessary consequences, must injure his neighbor." 5 C. & P. 266, note; Russ. on Crimes, 575; Com. v. Snelling, 15 Pick. 340. It is, indeed, true, that this construction of the statute under consideration imputes to the legislature the policy of making some acts criminal which may not have been before classed as crimes; and if, as it seems to be here suggested, the moral sense of the business community has become so blunted that such acts as this defendant is conceded to have committed have come to be considered "innocent or even praiseworthy," the urgent need of the adoption of such a policy affords good ground for supposing that its adoption was intended by the statute.

Our opinion, therefore, is, that no error was committed in rejecting the evidence offered by the defense upon the trial of this cause ; and the motion for a new trial must, accordingly, be denied.

CHEMICAL NATIONAL BANK V. BAILEY.

(12 Blatchford, 480.)

Interest on claims against insolvent banks — Demand not necessary by a depositor. Where a National bank is declared in default by the Comptroller of the Currency, and a receiver is appointed, and a sufficient fund is realized from its assets to pay all claims against it and leave a surplus, the Comptroller should allow interest on the claims, during the period of administration, before appropriating the surplus to the stockholders of the bank.

An action of assumpsit to recover such interest will not lie against the Comptroller of the Currency or the receiver of the bank, but will lie against the bank.

Where a bank has, by reason of its own default, been placed in the hands of a receiver, a demand of payment by a depositor is no longer a necessary condition precedent to a right of action for the deposit; and the deposit bears interest from the time of such default. *

(Circuit Court, Second Circuit, Southern District of New York.)

*See National Bank of the Commonwealth v. Mechanics' National Bank, ante, p. 133.

W

Chemical National Bank v. Bailey.

WALLACE, J. It is stated by counsel that these actions are brought to determine whether, when the Comptroller of the Currency has declared a National bank in default, and appointed a receiver uuder the provisions of the act under which such banks are organized, and a sufficient fund is realized from the assets to pay all claims against the bank and leave a surplus, the Comptroller should, or should not, allow interest on the claims during the period of administration, before appropriating the surplus to the stockholders of the bank. It is to be assumed from this statement that the claims in question were due and payable when the Comptroller took control of the affairs of the bank. If they were not, of course no interest should be allowed upon them, except from such time as they may have become due, unless they were for demands conditioned for the payment of interest.

The equity of the creditors to receive interest on their claims for the time during which they have been precluded from receiving their principal, is obvious. On general principles, and by adjudications in point, their right is clear. Interest is allowed not only on strict legal grounds, where there is a contract for the payment of interest, or by way of damages, where there is a wrongful detention of debt, but upon considerations of equity and natural justice. which always arise where a party is entitled to a payment of money and cannot obtain it, except by resort to a fund, created by operation of law, the distribution of which is attended with delay. It is upon this ground that when, by statute, preference is given to one class of creditors over another in the distribution of an estate, the preference includes interest on the preferred class of claims. In re Shultz, 11 Serg. & Rawle, 182.

There is nothing in the provisions of the act under which this fund is to be distributed in conflict with this general rule. While the Comptroller is not directed by express terms to allow interest to creditors, the act contains no language which in terms or by implication prohibits him from doing so. The 50th section of the act of June 3d, 1864 (13 U. S. Stat. at Large, 115), authorizes him, on becoming satisfied that an association has made default in the payment of any of its circulating notes, to appoint a receiver of its affairs and place him in possession of its assets. The receiver is required to pay over all moneys realized from the assets to the Treasurer of the United States, subject to the order of the Comptroller, and it is the duty of the Comptroller, from time to time,

Chemical National Bank v. Bailey.

to make ratable dividends from such moneys upon "all such claims as may have been proved to his satisfaction, or adjudicated in a court of competent jurisdiction," and to distribute the remaining proceeds among the stockholders. His position in reference to the distribution of the fund confided to him is analogous to that of an assignee of an insolvent estate, or an administrator of the estate of a deceased person. When an insolvent law provides that, after the payment of all debts proved, the assignee shall pay any surplus to the debtor or his legal representatives, the creditors are entitled to interest on their debts during the period of administration, and without regard to the fact whether the debts are those upon contract conditioned for the payment of interest or not. Brown v. Lamb, 6 Metc. 203; Atlas Bank v. Nahant Bank, 3 id. 581. Claims proved to his satisfaction are to be paid by the Comptroller, as debts proved against an insolvent are to be paid by his assignee; and in the one case, as in the other, the interest is an incident of the debt or claim, and to be paid before distribution of the surplus.

Thus far the general question of liability for interest has been considered. It remains to consider other questions presented by the record, which are necessary to the proper determination of these actions in the form in which they have been brought. In each action the complaint counts in assumpsit, and a general demurrer has been interposed, alleging that the complainant does not state sufficient facts to constitute a cause of action. The practice of the courts of this State now prevails in actions at law in this court, and by that practice judgment may be rendered for or against one or more of several defendants.

It is clear that this action cannot be maintained against the receiver or the Comptroller. The receiver has no control over the assets, except to pay their proceeds to the Treasurer of the United States, and would, therefore, not be liable to the plaintiff in any form of action. If an action could be maintained against the Comptroller, it would be one to enforce a proper distribution of the fund, and for this purpose the action of assumpsit is not an appropriate remedy. As against these defendants, therefore, no cause of action is alleged in the complaint, and as to them the demurrer is well taken, and judgment must be ordered in their favor.

As against the defendant, the National Bank of the Common.

Chemical National Bank v. Bailey.

wealth, the demurrer must be overruled. The corporation continues to exist for the purpose of being sued, notwithstanding the Comptroller has intervened pursuant to the provisions of the act under which it was organized; and demands against it can be prosecuted to adjudication in any court of competent jurisdiction. Bank of Bethel v. Pahquioque Bank, 14 Wall. 313.* In such an action interest is recoverable upon all demands originated in contracts conditioned for the payment of interest, and on all demands for money due and unpaid, by way of damages for the non-payment after such demands became due. It is urged, that interest is not recoverable upon debts against the bank, because it has been prevented by law and by superior authority from paying the principal. It is a sufficient answer to this argument to say, that this proposition is not applicable, because the bank, by its own default, subjected itself to the proceedings of the Comptroller, and it does not lie with the bank to assert any exemption from liability by reason of its own acts or defaults.

In one of these cases, a portion of the plaintiff's demand is for a balance due upon deposits made in the ordinary way with the bank, and it does not appear that any demand was made for the amount until a long time after the receiver had taken possession. Ordinarily, an action cannot be maintained by a depositor, against a bank, until a formal demand has been made; and of course, no interest can be recovered except that arising after the demand. The bringing of an action does not amount to a demand, in such cases. Payne v. Gardner, 29 N. Y. 146. But, if the bank, by words or contract, denies the depositor's right to his balance, it becomes presently liable to an action, without formal demand, and interest would be recoverable, as damages. All the facts are set forth in the complaint, which justified and led to the action of the Comptroller. The bank, by its default, initiated proceedings which resulted in a transfer of the moneys of its depositors to a receiver, and thus put it out of its own power to pay its depositors, when called upon to do so. A demand, under such circumstances, would have been an idle ceremony. The bank cannot be permitted to say that the depositor should have made a demand, when, if made, it would have been nugatory and useless. It has been held, that, in cases of insolvency, where a debt is payable on demand, and no special demand is shown, interest is to be computed from the first

Ante, p. 77.