Davis v. Elmira Savings Bank
161 U.S. 275 (1896)

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U.S. Supreme Court

Davis v. Elmira Savings Bank, 161 U.S. 275 (1896)

Davis v. Elmira Savings Bank

No. 415

Argued January 13-14, 1896

Decided March 2, 1896

161 U.S. 275

Syllabus

Section 130 of chapter 689 of the laws of New York of 1892, providing for the payment by the receiver of an insolvent bank, in the first place, of deposits in the bank by savings banks, when applied to an insolvent national bank, is in conflict with § 5236 of the Revised Statutes of the United States, directing the Comptroller of the Currency to make ratable dividends of the money paid over to him by such receiver, on all claims proved to his satisfaction or adjudicated in a court of competent jurisdiction, and is therefore void when attempted to be applied to a national bank.

Page 161 U. S. 276

In March, 1893, the Elmira National Bank, a banking association organized under the laws of the United States and doing business in the State of New York, suspended payment, and the Comptroller of the Currency of the United States appointed Charles Davis, plaintiff in error, the receiver thereof. The Elmira Savings Bank, which was incorporated under the laws of the State of New York, from November, 1890, kept a deposit account with the Elmira National Bank, and at the time of the appointment of the receiver of the latter corporation, there was to the credit of this account of the savings bank the sum of $42,704.67. The opening of the deposit account by the savings bank was sanctioned by the general banking laws of the State of New York as expressed in sections 118 and 119 of chapter 689 of the laws of 1892, which were as follows:

2 Laws of 1892, p. 1898, c. 689.

"§ 118. AVAILABLE FUND FOR CURRENT EXPENSES, HOW LOANED. -- The trustees of every such corporation shall as soon as practicable invest the moneys deposited with them in the securities authorized by this article; but for the purpose of meeting current payments and expenses in excess of the receipts, there may be kept an available fund not exceeding ten percentum of the whole amount of deposits with such corporation, on hand or deposit in any bank in this state organized under any law of this state or of the United States, or with any trust company incorporated by any law of the state, but the sum so deposited in any one bank or trust company shall not exceed twenty-five percentum of the paid-up capital and surplus of any such bank or company. . . ."

Ib.

"§ 119. TEMPORARY DEPOSITS. -- Every such corporation may also deposit temporarily in the banks or trust companies specified in the last section the excess of current daily receipts over the payments until such time as the same can be judiciously invested in the securities required by this article."

In the process of liquidating the affairs and realizing the assets of the national bank, all its circulating notes were provided for, and the receiver had on hand in cash for distribution among its creditors a sum exceeding the amount due as aforesaid

Page 161 U. S. 277

to the savings bank. Thereupon the latter demanded of the receiver payment of the sum to the credit of its deposit account in preference to the other creditors of the national bank, basing its demand on a provision of the general banking law of the State of New York, which is as follows:

Ib. 1903.

"§ 130. DEBTS DUE SAVINGS BANKS FROM INSOLVENT BANKS PREFERRED. -- All the property of any bank or trust company which shall become insolvent shall, after providing for the payment of its circulating notes, if it has any, be applied by the trustees, assignees, or receiver thereof in the first place, to the payment in full of any sum or sums of money deposited therewith by any savings bank, but not to an amount exceeding that authorized to be so deposited by the provisions of this chapter, and subject to any other preference provided for in the charter of any such trust company."

The receiver, under the authority of the Comptroller of the Currency of the United States, declined to accede to this demand, predicating his refusal on the provisions of sections 5236 and 5242 of the Revised Statutes of the United States, which are as follows:

"§ 5236. From time to time after full provision has been first made for refunding to the United States any deficiency in redeeming the notes of such association, the Comptroller shall make a ratable dividend of the money so paid over to him by such receiver on all such claims as may have been proved to his satisfaction or adjudicated in a court of competent jurisdiction, and, as the proceeds of the assets of such association are paid over to him, shall make further dividends on all claims previously proved or adjudicated, and the remainder of the proceeds, if any, shall be paid over to the shareholders of such association or their legal representatives in proportion to the stock by them respectively held."

"§ 5242. All transfer 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

Page 161 U. S. 278

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."

In consequence of this refusal, the savings bank brought an action in the supreme court of the State of New York to enforce the payment by preference, which action was resisted by the receiver. Ultimately the case was taken to the Court of Appeals of the State of New York, where the claim of preference asserted by the savings bank was maintained. The case is reported in 142 N.Y. 590. To that judgment the present writ of error is prosecuted.

Page 161 U. S. 283

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