Conklin v. The Second National Bank.

bank on the same footing with other customers. Besides, how could the capital of the bank be kept available for active use, if the shareholder, who had pledged his stock for borrowed money, should be unable to meet his obligation? To the extent of the debt, the capital would be withdrawn, and it is hardly possible that this could be the case for any length of time were the debt secured outside of the stock." The learned justice answers the argument of the plaintiff's counsel: That deposits are neither loans nor discounts, and comes to the conclusion that they are loans within both the letter and spirit of the section, whether interest was agreed to be paid thereon or not. The question in the present case is not, upon principle, distinguishable from The Bank of South Bend v. Lanier (ante, p. 70). In the present case the plaintiff's assignor, who was a private banker, and the defendant, were the agents of each other for the collection of paper belonging to one against parties in the vicinity of the other, and for paying checks drawn upon the other presented by holders thereof. The course of business was that each credited the other in account for the money collected upon paper sent for collection, and charged such checks drawn upon the other as were paid. These accounts were, from time to time, settled, and any balance due paid by the debtor party. The money collected upon paper remitted for that purpose. when credited in account by a banker, with the consent of the party owning the paper, becomes, to all intents and purposes, a deposit, and comes directly within the rule settled in The Bank v. Lanier. Besides, the construction put upon the section in that case, and the reasons assigned therefor, lead necessarily to the conclusion that all agreements by a stockholder, providing that the bank shall have a lien upon his stock for any liability thereafter created by him to the bank, are within section 35 of the act, and void. That the bank can only acquire an interest in its stock by an absolute purchase, to prevent a loss upon a debt previously contracted in good faith. When the statute has prohibited all express agreements between a bank and its stockholders for a lien in favor of the former upon the stock of the latter, to secure any debts or liabilities of the stockholders to the bank, that no such lien can be created by a mere by-law of the bank is too clear to require discussion. The judgment appealed from must be affirmed with costs. All agreeing, except PECKHAM, J., who does not vote. Judgment affirmed.

First National Bank of Sandy Hill v. Fancher.

FIRST NATIONAL BANK OF SANDY HILL V. FANCHER.

(48 New York, 524.)

Tax on National bank shares - Right of collector to seize property of bank.

A warrant for the collection of a tax assessed to the shareholders on shares of stock in a National bank, directed the collector "to levy the same of the goods and chattels of such persons." Held, that the collector could not thereon seize the property of the bank to pay the tax.

A

CTION by the bank for trespass by the defendant, a collector of taxes of the village of Sandy Hill, in taking possession of the money and property of the bank. The defendant having a warrant to collect a tax assessed on certain residents of Sandy Hill on stock owned by them in the First National Bank of Sandy Hill, and which directed him "to levy the same of the goods and chattels of such persons," demanded payment thereof of defendant, which being refused he seized the property of the bank. All the stockholders assessed had personal property in the village.

L. H. Northrup, for appellant.

U. G. Paris, for respondent.

HUNT, C. The warrant in the hands of the defendant, as collector, directed him to collect the amounts specified from the persons named, and "to levy the same of the goods and chattels of such persons." Assuming the regularity of the assessment, that the property was subject to the assessment made, and that the bank held the funds with which the tax should have been paid, the defendant is not justified. By his warrant, if necessary to obtain. payment, he was authorized to levy upon the goods of the persons named. No other authority was confided to him. This authority is special and exceptional. It must be pursued according to its terms. Allen Brothers were the first persons named in the assessment-roll given in evidence. Their property was assessed at $10,000, and a tax of sixteen dollars was imposed upon the same. This tax the collector was authorized and directed to collect by a levy and sale of the goods and chattels of the Messrs. Allen, if this

Cooke v. The State National Bank of Boston.

sum should not be voluntarily paid. But he had no authority to levy upon the goods of another person to make this sum. His authority did not reach to that extent. He probably had no authority to make such a levy and sale, even with the consent of such other person. His authority was limited to two precise acts; first, to receive a voluntary payment; second, if such payment was not made, to levy upon and sell the goods of the persons named in the tax list. If the Sandy Hill Bank had undertaken to pay these taxes, there was probably a way in which the performance of their engagement could have been enforced, if payment could not have been otherwise obtained. But it is too clear for argument, that a tax collector could not enforce such an agreement by a seizure and sale of the property of the bank.

The assessment upon the shares of a National bank was for a tax imposed by authority of the State of New York. It was made in the autumn of the year 1865, and by virtue of the statute of the State of New York, passed in that year. Laws 1865, ch. 97, § 10, p. 172. It has been expressly adjudged by the Supreme Court of the United States (Van Allen v. The Assessors, 3 Wall. 573 [ante, p. 1]), that this statute was invalid, and that a tax imposed under its authority could not be enforced. The City of Utica v. Churchill, 33 N. Y. 161, holding the contrary doctrine, was reversed by the case of Van Allen v. The Assessors. The tax sought to be enforced in this case was not therefore legally imposed. The judgment must be affirmed, with costs.

Action brought by a citizen of New York, in a State court of New York, against a National bank located in Boston. Held, (1) that the court was not ousted of jurisdiction by section 57 of the National Currency Act (12 Stat. at Large, 99), that statute being permissive and not mandatory as to the courts in which a National bank may be sued; and, semble, that Congress

Cooke v. The State National Bank of Boston.

had not the power to deprive State courts of jurisdiction in such cases; (2) that the defendant was a citizen of Massachusetts, within the meaning of the acts relating to the removal of causes to the Federal courts; (3) that the joinder in the action as defendants, of the drawers of the check, would not deprive the bank of the right to alone apply for a removal of the case to the Federal court, the causes of action being distinct and only properly joined by virtue of a State statute; (4) by a divided court, that the cause could not be removed by the bank into the Federal court, under the act of Congress of March 2, 1867, as, being a corporation, it could not make the affidavit required by the act. (See note, p. 714.)

In an action by a bona fide holder of a check drawn on defendant, a National bank, and certified by its cashier, held, that the defendant was liable, although the drawer had no funds in the bank when the check was certified.

A

PPEAL from a judgment of the Supreme Court, at General Term, in the First Department, affirming a judgment in favor of the plaintiff, entered upon a verdict. S. C., 50 Barb. 339; 1 Lans. 494.

The action was upon a check, drawn by the defendants, Mellen, Ward & Carter, under their firm name of Mellen, Ward & Co., upon the defendant, the State National Bank of Boston, and certified by its cashier. At the commencement of the suit, the plaintiff was a citizen and resident of the State of New York, and a member of the firm of Jay Cooke & Co., of the city of New York, and had been such member for a year previous, and was so at the time of the trial.

The defendant, the bank, was a duly organized National bank, under the National Bank Act of June 3, 1864, and carried on business in the city of Boston, Mass., and not elsewhere. The defendants, Mellen, Ward & Carter, were, at the time of the transaction in question, money brokers in Boston, under the firm name of Mellen, Ward & Co. They did not appear in the action.

The check, upon which the action was brought, was drawn by Mellen, Ward & Co. upon the State National Bank of Boston, dated Boston, February 28, 1867, payable to Gould or bearer, for $125,000. Across the face of the check was written, "Good, C. H. Smith, Cash." C. H. Smith was then the cashier of said bank. The check was indorsed as follows:

"Pay Jay Cooke & Co., or order,

"AND. J. LOUD, Cas.

"Pay to the order of Pitt Cooke, without recourse to Jay Cooke & Co." Andrew J. Loud was then the cashier of the Second National Bank, Boston.

Cooke v. The State National Bank of Boston.

The check, with this writing across the face of it, was delivered by Ward, Mellen & Co. to the Second National Bank, together with $15,000 in bills, on the day of its date, in payment of a draft by Jay Cooke & Co., on said Mellen, Ward & Co., for $140,050, dated February 27, 1867, drawn against a remittance of $100,000 in gold certificates, which were sent at the same time to the Second National Bank, to be delivered to Mellen, Ward & Co. on their payment of the draft. The bank, on receiving the check and bills, delivered the gold certificates to Mellen, Ward & Co.

The check was received by the Second National Bank, near the close of business hours, and at the suggestion of Mellen, Ward & Co. it was kept back, and not sent to the clearing house on that day. Mellen, Ward & Co. were not depositors in the State National Bank, and had no funds in the bank at the time. The next day (March 2) the check was presented for payment, through the clearing house, and payment refused.

On the 21st of November, 1866, about three months prior to the receipt of the check by the Second National Bank, a meeting of the banks in Boston was held at the clearing house, to consider the sub. ject of receiving certified checks, instead of bills, in payment. Both the Second National Bank and the State National were represented at this meeting. A resolution was adopted in substance, that the associated banks approved adopting a custom of receiving certified checks, "provided that the directors of each bank, so certifying, shall first have passed a vote agreeing that their respective banks shall be bound by such act of certification." Of the banks present, all except three voted in favor of the resolution. The State National was one of the three voting in the negative. The Second National voted in the affirmative. The action of the president of the bank, in voting in the negative, was reported to the board of directors, at its first meeting afterward and was approved by the directors. On the 5th of December, 1866, a circular was sent by. the manager of the clearing house to all the banks in Boston, members of the clearing house association, and among others, to the Second National Bank, containing the names of the banks which had voted to authorize their officers to certify checks under the resolution, and notifying the banks who intended to enter into the arrangement, to inform the manager of the clearing house, "in order that the banks may receive an early notice of the same." The State National Bank did not enter into the arrangement.