receiver, they are to be regarded as justifying the appointment of one in cases where the Comptroller is not authorized to appoint. Wright v. Merchants' Nat. Bank, 1 Flippin, 568. Visitation in law is the act of a superior or superintending officer, who visits a corporation to examine into its manner of conducting business, and to enforce an observance of its laws or regulations. It means inspection, superintendence, direction, regulation. This section does not prohibit the service upon the officers of a national bank of compulsory State process to obtain the names of its depositors with a view to assessing them for the purposes of taxation. First Nat. Bank v. Hughes, 6 Fed. 737. Neither does it prevent a bona fide stockholder from examining its books, accounts, loans, etc., in order to determine the value of his stock. Harkness v. Guthrie (Utah), 75 Pac. 624.

“ All

SECT. 5242. [Illegal Preference of Creditors]. transfers of the notes, bonds, bills of exchange, or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void. No attachment, injunction, or execution shall be issued against such association or its property before final judgment in any suit, action, or proceeding in any State, county, or municipal court."

See note to § 5236; Armstrong v. Scott, 36 Fed. 63, 65; Citizens' Bank v. Dowd, 35 Id. 340, 342; Wright v. Merchants' Bank, 3 Cent. L. J. 351; National Shoe & L. Bank v. Mechanics' Nat. Bank, 89 N. Y. 467; Venango Nat. Bank v. Taylor, 56 Penn. St. 14; Stewart v. Nåt. Union Bank, 2 Abb. U. S. 424; Hayden v. Chemical Nat. Bank, 80 Fed. 587; Ballard v. Burton, 64 Vt. 387, 392. The meaning of this section is not different from the meaning of St. June 3, 1864, ch. 106, § 52, from which it was taken. National Security Bank v. Butler, 129 U. S. 223. The latter part prohibiting attachment is not repealed by § 4 of St. 1882 (ante, note to § 5133). Raynor v. Pacific Bank, 93 N. Y. 371.

This provision applies to solvent national banks; the Act of July 12, 1882, stated under § 5133, supra, did not repeal the earlier statutes prohibiting attachments against such banks, and merely prescribes the forum for suits by or against them. Van Reed v. People's Nat. Bank, 173 N. Y. 314; Searles Bros. v. Smith Grain Co., 80 Miss. 688.

These prohibitions are constitutional, and apply to suits in either the Federal or the State courts. Willard Manuf. Co. v. Merchants' Nat. Bank, 130 N. C. 609; Dennis v. First Nat. Bank, 127 Cal. 453.

Insolvency is such a condition of affairs that the firm or concern is unable to meet its obligations as they mature in the usual course of business. An act of insolvency takes place when this state of affairs is demonstrated, and the firm or concern has actually failed to meet some of its obligations. Roberts v. Hill, 24 Fed. 571. A bank is in contemplation of insolvency when it becomes reasonably apparent to its officers that it will presently be unable to meet its obligations and will be obliged to suspend its ordinary operations. Id. "Insolvency" as used in this section means the same as it does in the bankruptcy act. If the bank is in contemplation of insolvency it is not necessary that the party to whom the transfer is made should be aware of it. Case v. Citizens' Bank, 2 Woods,

23. "Insolvency," as here used, means such an act as would be an act of insolvency on the part of an individual banker. Irons v. Manufacturers' Nat. Bank, 6 Biss. 301. A bank commits an act of insolvency simply by refusing to pay its obligations. Market Bank v. Pacific Bank, 30 Hun, 50.

In Roberts v. Hill, 23 Blatch. 191; 23 Fed. 311, which was a receiver's bill to set aside a pledge of a promissory note made by the officers of a national bank to the defendant's intestate to secure a deposit, Wheeler, J., said: “The right to have the pledge set aside and recover the note or its proceeds depends entirely upon Rev. Stats. § 5242. There is no question about the validity of the deposit, nor but that the pledge would be good to secure it at common law. . . . What would be an act of insolvency is not defined, but would be the failure to redeem the circulating notes according to § 5226, as that is the only thing which would authorize the Comptroller of the Currency, before the Act of June 30, 1876, stated under § 5220, supra, to take possession of a national bank and appoint a receiver."

Preference. Intent. - An intent to give a preference is presumed when a payment is made to a creditor by a bank whose officers know of its insolvency, and therefore know that it cannot pay all its creditors in full. This intent is not rebutted by showing that the debtor has also another motive, as an expectation of pecuniary or other benefit to himself; or by postponing the failure of the bank. Roberts v. Hill, supra, overruling 23 Fed. 311. In order to create a preference it must be given to secure or pay a pre-existing debt, and the giving of a security to a person who loans money to the bank knowing it to be in an embarrassed condition is not a preference over other creditors. Casey v. Credit Mobilier, 2 Woods, 77. As to preferences, see further Security Bank v. Price, 22 Fed. 697.

This section does not apply to a transfer of property by way of security for a loan then obtained, from which all

creditors presumptively receive a benefit, even though the transfer was to be security for an antecedent debt, in which case the creditor, if he acted in good faith, could retain it as security for his last advances. Stapylton v. Stockton, 91 Fed. 326, 330.

Payments made in the ordinary course of business by a national bank to a creditor, who receives them innocently, are not void, if the association at the time had become so insolvent that its debts were greatly in excess of its assets, and its officers knew, or should have known, the fact, and that probably at no very distant time it would be obliged to suspend. First Nat. Bank v. Hall, 119 Ala. 64; Hayden v. Chemical Nat. Bank, 84 Fed. 874; which case also see as to when title passes, in remittances sent by mail. The fact that certain notes were put into a transferee's hands for payment by him, and he, instead of paying them, wrongfully kept them, will not be sufficient to set aside the transfer of such notes. Alabama Ry. Co. v. Austin, 94 Fed. 897, 901. See, generally, Merrill v. National Bank, 173 U. S. 131, 139; McDonald v. Chemical Nat. Bank, 174 Id. 610. As to set-offs, see Mercer

v. Dyer, 15 Mont. 317; First Nat. Bank v. Turner, 154 Ind. 456; Newport v. Mudgett, 18 Wash. 271. That an assignee's remedy for fraud is at law, see Farmers & M. Bank v. Hall, 120 Ala. 14.

The transfer or payment, in order to be void, must be made after the commission of an act of insolvency, or in contemplation thereof, and with a view of giving a preference to one creditor over another, or with a view to prevent the application of the assets as provided by law. If the directors of a bank have voted to close it and go into liquidation, any transfer of its assets thereafter to a creditor, whereby he secures a preference, is presumed to be made with an intent to prefer him. National Security Bank v. Price, 22 Fed. 697. With respect to unrecorded transfers of the shares, no registry being required by statute, the failure to record is not evidence of fraud; and

such a transfer will take precedence over a subsequent attachment in behalf of a creditor without notice. Continental Nat. Bank v. Elliott Nat. Bank, 7 Fed. 369; Scott v. Pequonnock Nat. Bank, 15 Id. 494. Where a bank cashier was also an executor, and in the latter capacity bought accepted bills of exchange which he deposited in the bank in a box belonging to the estate, the bills were held not to be assets of the bank upon its subsequent failure, and their transfer was not invalidated by this section. Tuttle v. Frelinghuysen, 38 N. J. Eq. 12. It is sufficient under this section to invalidate a transfer of assets that is made in contemplation of insolvency, with a view to prevent their application in the manner prescribed in this chapter, or with a view to the preference of one creditor over another, and it is not necessary to such invalidity that there should be any knowledge or suspicion on the part of the creditor that the debtor is insolvent or contemplates insolvency. National Security Bank v. Butler, 129 U. S. 223.

Back payments by the bank are valid when it is not shown that they were made in contemplation of insolvency, or to prevent the application of the bank's assets as required by the statutes. Hayes v. Beardsley, 136 N. Y. 299. The phrases "evidence of debt" and "assets of the bank" do not include renewal notes held by a national bank, when the original notes have not been returned. Decatur Nat. Bank v. Johnston, 97 Ala. 655.

A general lien does not arise upon securities accidentally in the possession of a bank, or not in its possession in the course of its business as such, or when the particular mode of dealing is inconsistent with such a lien. Yardley v. Philler, 167 U. S. 345, 359. The bank has clearly no equitable lien on the shares of one of its stockholders who has not delivered them to it, but who, being indebted to it, agreed that they should be treated as collateral. Buffalo German Ins. Co. v. Third Nat. Bank 162 N. Y. 163; Smith v. First Nat. Bank, 115 Ga. 608.