Cook County National Bank v. United States - 107 U.S. 445 (1883)
U.S. Supreme Court
Cook County National Bank v. United States, 107 U.S. 445 (1883)
Cook County National Bank v. United States
Decided April 9, 1883
107 U.S. 445
Section 3466 of the Revised Statutes, infra, p. 107 U. S. 447, which, in certain cases therein mentioned, gives to the United States priority of payment of debts due to it, does not apply to its demands against an insolvent national hank.
This is an appeal from a decree of the circuit court overruling a general demurrer to a bill filed by the United States against the Cook County National Bank of Chicago, Ill., and Augustus H. Burley, its receiver. The facts, as stated in the bill, are briefly as follows:
Previously to 1872, the bank was formed under the acts of Congress authorizing the organization of national banks, and was designated as a depositary of moneys of the United States. In January, 1875, it became insolvent, and suspended business. In February following, Burley was appointed by the Comptroller of the Currency its receiver, and he immediately entered upon the discharge of his duties.
At the time of its suspension, the bank had on deposit "of postal funds" $24,900, and of "money order funds" $14,634, which are respectively designated on its books by those names. These moneys had been deposited with the bank by John McArthur, a deputy postmaster at Chicago.
The Treasury Department at the time held United States bonds, placed with it by the bank, to the amount of $150,000 par value, as security for all public moneys which might be deposited with the bank. These bonds were afterwards sold for $174,544.52. Of the proceeds, $155,305.47 were appropriated to pay the amount then on deposit with the bank to the credit of the Treasurer of the United States. Of the balance remaining, $11.803.98 were applied on the "postal funds," and $7,435.07 on the "money order " funds, leaving still due on account of those two funds $20,344.95.
In addition to these bonds, there were at the time in the Treasury Department United States bonds to the amount of $100,000 par value, deposited by the bank to secure its notes issued for circulation. When in 1875 the bank failed to pay these notes, the Comptroller of the Currency declared the bonds
forfeited to the United States. A part of them have been sold, and it is the intention of the Treasury Department to sell the remainder, and apply the proceeds to pay the notes in circulation, and reimburse the United States for sums already advanced for that purpose. The proceeds of all the bonds, when sold, will be sufficient to redeem the notes, reimburse the United States in full for their advances, and leave a balance exceeding $30,000, more than sufficient to pay the debts due by the bank to the United States for postal funds and money order funds deposited by the deputy postmaster at Chicago.
The Treasury Department, in addition to the bonds to secure the circulation of the notes, has a sum exceeding $30,000 belonging to the bank, collected from bills receivable and debts due to it; but its liabilities notwithstanding greatly exceed its assets.
Upon these facts the question arose whether the claim of the United States for moneys deposited by the deputy postmaster is a preferred debt or not, and the officers of the United States are in doubt as to their duty on the subject -- that is, whether they should reserve from the funds in the Treasury Department belonging to the bank a sufficient amount to pay the debt for postal funds and money order funds due to the United States, or whether they should distribute the said moneys pro rata to all the creditors of the bank, including the United States.
The bill prays that an account be taken of the amount due to the United States by the bank for moneys so deposited with it by the deputy postmaster, and that a decree be entered directing the disposition of the funds belonging to the bank in the control of the Treasury Department.
The defendants treated the bill as filed to obtain a decree adjudging to the United States a priority in the payment of their demand against the bank for the balance due on the postal and money order funds, and interposed a general demurrer to it. The court, taking a similar view of the bill, overruled the demurrer. The defendants thereupon elected to stand by their demurrer, and as they at the same time admitted that the bank had a sufficient amount to pay the whole of the principal and interest due to the United States for the funds deposited
by the deputy postmaster as postal funds, and as money order funds, the court ordered that the amount thus due should be paid in full out of the assets of the bank. From this decree the appeal was taken.