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500 MASSACHUSETTS SUPREME JUDICIAL COURT, 1889. Richards v. Attleborough National Bank.

order to close its affairs, it is necessarily implied that the respective rights, not only of the creditors and debtors of the bank, but of the stockholders, are to be determined as of the time when it commences. Indeed were the stock as such to continue transferable, serious embarrassments would arise. Where stock is sold in the ordinary course of business, and so transferred, it is not important to the purchase whether the bank has or has not claims against the stockholder so transferring stock. But when the bank is in liquidation, and when all to which the stockholder is entitled is his proportion of the assets, the claims which the bank may hold against him are a proper offset to those which he may hold against it by virtue of his ownership of stock. He cannot therefore place another in the position of a stockholder, even if he may invest him with such rights as he himself equitably may have. Again, the responsibilities of a stockholder in a National bank are serious. Section 5151 provides:

"The shareholders of every National banking association shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts and engagements of such association, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares.

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When any banking association shall have gone into liquidation under the provisions of section 5220, this liability may be enforced by any creditor of the association by bill in equity in the nature of a creditors' bill. Richmond v. Irons, 121 U. S. 27, 54; ante 211.

While the transfer of the stock in a National bank, honestly made while the bank is in operation, will substitute the transferee for the original stockholder, relieving the latter from his responsibilities, and imposing them on the purchaser, it has often been held that if such transfer were made to an irresponsible person, with a view of avoiding liability, and with knowledge that the bank was in failing circumstances, it was a fraud, and the party thus transferring would be held to all the obligations of a stockholder. Bank v. Case, 99 U. S. 628; 2 Nat. Bank Cas. 25; Bowden v. Johnson, 107 id. 251; ante 55. When a bank is in liquidation the liability of the stockholder for the debts of the corporation has been fixed. If there is a debt due from the bank, he cannot transfer his liability to pay that debt to any one else, so as to affect the creditor

People v. Fonda.

or subject him, in seeking such remedies as he may have against the stockholders, to any examination beyond the list of those who were so when the liquidation commenced. No further debts can be contracted thereafter, nor any transactions made except such as result by implication from the duty of closing up its affairs. While the embarrassments that would arise from holding the stock of a bank transferable after it has once gone into liquidation are manifest, no reason incidental thereto exists why it should so continue. In the case at bar, when the transfer of stock on which defendant relies took place, the affairs of the bank had been nearly closed; one hundred and fifty-eight per cent had been paid on the stock, and only a relatively small sum remained to be divided. As the right to elect directors was in our view confined to those who were stockholders when the liquidation commenced, and as only such could be elected, it follows that there was no valid election of a new board of directors (three of those chosen being ineligible), and therefore no valid revocation of the submission to arbitration of the plaintiff's claim.

By the terms of the report there should be judgment on the award.

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State courts have no jurisdiction of the offense of embezzlement of the funds of a National bank.

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The Attorney-General, for the people.

Edwin F. Conely, Orris P. Coffinberry and Chamberlain & Guise, for defendant and appellant.

SHERWOOD, J. The complaint against the respondent in this case is criminal, and was made by Charles W. Cond, president of

People v. Fonda.

the Farmers' National Bank of Constantine, in behalf of the bank, for the larceny and embezzlement of its funds, while the respondent was engaged in its employment as clerk or servant. The Farmers' National Bank of Constantine, at the time the alleged crime was committed, was "an incorporated banking institution, organized and existing under the laws of the United States providing for the creation of National banking associations."

The information against respondent contains nine counts, upon two of which (the third and fourth) he was tried and convicted of the offense stated therein, in the St. Joseph circuit, at the last October term, and was, upon such conviction, sentenced to imprisonment at Jackson for the period of three years and six months. The case is now before us for review in error. The counts upon which the conviction was had will be found in the margin.*

*Third count. And the said prosecuting attorney, who prosecutes as aforesaid, further gives the said court here to understand and be informed that Charles W. Fonda, late of the township of Constantine, in the county of St. Joseph aforesaid, on the 25th day of January, A. D. 1881, at the village of Constantine, in the county aforesaid, being then and there a servant and clerk of the Farmers' National Bank of Constantine, Michigan, an incorporated banking institution, organized and existing under the laws of the United States providing for the creation of National banking associations,' and not being then and there an apprentice, nor other person under the age of sixteen years, did, by virtue of his said employment, then and there, and while he was a servant and clerk as aforesaid, receive and take into his possession certain money, to a large amount, to the amount of $2,000, and of the value of $2,000, of the property of the said Farmers' National Bank of Constantine, Michigan, and which said money came to the possession of the said Charles W. Fonda by virtue of said employment; and the said money then and there fraudulently and feloniously did embezzle and convert to his own use, without the consent of the said Farmers' National Bank of Constantine, Michigan, his said employer; and the said Charles W. Fonda then and there, in manner and form aforesaid, the said money, the property of the said Farmers' National Bank of Constantine, Michigan, his said employer, from the said Farmers' National Bank of Constantine, Michigan, feloniously did steal, take and carry away, against the form of the statute in such case made and provided, and against the peace and dignity of the people of the State of Michigan.

"Fourth count. And the said prosecuting attorney, who prosecutes as aforesaid, further gives the said court here to understand and be informed that Charles W. Fonda. late of the township of Constantine, in the county of St. Joseph aforesaid, on the 4th day of December, A. D. 1880, at the village of Constantine, in the county aforesaid, being then and there a servant and clerk of the Farmers' National Bank of Constantine, Michigan, an incorporated banking institution, organized and existing under the laws of the United States providing for the creation of National banking associations,' and not being then and there an apprentice, nor other person under the age of sixteen years, did, by virtue of his said employment, then and there, and while he was a servant and clerk as aforesaid, receive and take into his possession certain money to a large amount, to the amount of $1,000, and of the value of $1,000, of the property of the said Farmers' National Bank of Constantine, Michigan, and which said money came to the possession of the said Charles W. Fonda by virtue of said employment; and the said money then and there fraudulently and feloniously did embezzle and convert to his own use, without the consent of the said Farmers' National Bank of Constantine,

People v. Fonda.

The statute under which the conviction was had at the circuit reads as follows:

"If any officer, agent, clerk or servant of any incorporated company, or of any city, township, incorporated town or village, school district or other public or municipal corporation; or if any clerk, agent or servant of any private persons, or of a copartnership, except apprentices and other persons under the age of sixteen years — shall embezzle, or fraudulently dispose of, or convert to his own use, or shall take or secrete with intent to embezzle and to convert to his own use without the consent of his employer or master, any money or other property of another, which shall have come to his possession, or shall be under his charge by virtue of such office or employment, he shall be deemed by so doing to have committed the crime of larceny." How. Stat., § 9151.

The statute was passed by the Legislature prior to the National banking system, and could not therefore have special reference to the National legislation creating that system, however clearly the crime of the respondent may be described in the statute. R. S. 1838, p. 630, § 27; id. 1846, p. 666, § 29. At the time the alleged act of embezzlement was committed the respondent was in the bank, and in its service as clerk.

The question raised in this case is: The Federal government having declared the act charged against this respondent a criminal offense, and provided for the apprehension, trial and conviction of the offender under its laws, had the State court any jurisdiction, concurrent or otherwise, to deal with the respondent under the State statute making the same act criminal, and providing for its punishment? The learned counsel for the respondent claim that the jurisdiction of the Federal court in the case is complete and exclusive; that the offense charged in the information is for the violation of a Federal law, and that the punishment therefor has become fixed and established, and the whole subject has been covered by the legislation of Congress.

The Constitution of the United States provides as follows:

"This Constitution, and the laws of the United States which shall be made in pursuance thereof, and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every State shall be bound thereby, any thing in the ConstituMichigan, his said employer; and the said Charles W. Fonda then and there, in manner and form aforesaid, the said money, the property of the said Farmers' National Bank of Constantine, Michigan, feloniously did steal, take and carry away, against the form of the statute in such case made and provided, and against the peace and dignity of the people of the State of Michigan."

People v. Fonda.

tion or laws of any State to the contrary notwithstanding." Const. U. S., art. 6.

The statute passed by Congress punishing the offense charged in the information is as follows:

"Every president, director, cashier, teller, clerk or agent of any association, who embezzles, abstracts or willfully misapplies any of the moneys, funds or credits of the association; or who, without authority from the directors, issues or puts in circulation any of the notes of the association, or who, without such authority, issues or puts forth any certificate of deposit, draws any order or bill of exchange, makes any acceptance, signs any note, bond, draft, bill of exchange, mortgage, judgment or decree; or who makes any false entry in any book, report or statement of the association, with intent, in either case, to injure or defraud the association or any other company, body politic or corporate, or any individual person, or to deceive any officer of the association, or any agent appointed to examine the affairs of any such association; and every person who, with like intent, aids or abets any officer, clerk or agent in any violation of this section — shall be deemed guilty of a misdemeanor, and shall be imprisoned not less than five years, nor more than ten."

An examination of this statute, I think, must convince any one. that the offense described in this information is clearly defined therein, and falls within the scope of the act, and within the jurisdiction of the Federal court, and if that jurisdiction is exclusive in the case, but little remains to be said if it is, the conviction cannot be maintained.

Is the jurisdiction concurrent with that of the State is the only remaining question. Section 711 of chapter. 12 of the Revised Statutes of the United States provides that

"The jurisdiction vested in the courts of the United States in the cases and proceedings hereinafter mentioned shall be exclusive of the courts of the several States. First, of all crimes and offenses cognizable under the authority of the United States."

The other clauses of the section need not be given, as none of them relate to criminal jurisdiction. Congress by law created the National banking system, and provided for their internal workings, and prescribed a punishment for the offenses charged against the respondent. U. S. R. S., tit. 62.

It seems to me, clearly the case is one falling within the paragraph of section 711 above quoted, and that by the Federal law itself the jurisdiction of the State is expressly excluded. Chancellor Kent, in his Commentaries, in concluding his discussion of the matter, says: "In judicial matters the concurrent jurisdiction

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