Deitrick v. Greaney - 309 U.S. 190 (1940)
U.S. Supreme Court
Deitrick v. Greaney, 309 U.S. 190 (1940)
Deitrick v. Greaney
Argued January 10, 1940
Decided February 12, 1940
309 U.S. 190
1. A receiver of a national bank, representing creditors, may compel payment of a promissory note knowingly given to the bank by one of its directors as a substitute for shares of its own stock illegally purchased and retained by the bank, the note having been delivered upon the understanding that it was not to be paid, and that the bank was to retain its interest in the stock. P. 309 U. S. 196.
The purpose of the National Bank Act in prohibiting the purchase by a bank of its own stock is to prevent impairment of its capital resources and consequent injury to creditors in the event of insolvency. The provisions requiring periodic examinations and reports are designed to insure prompt discovery of violations of the Act, and prompt remedial action by the Comptroller. These purposes would be defeated, and the command of the statute nullified, if a director or officer, or any other by his connivance, could place in the bank's portfolio his obligation, good on its face, as a substitute for its stock illegally acquired, and if he remained free to set up that the obligation was, in effect, fictitious, intended only to aid in the accomplishment of the injury at which the statute is aimed.
2. It is immaterial that the bank's officers were participants in the illegal transaction, and that the receiver has not shown that creditors were deceived or specifically injured as the result of the illegal contract. Rankin v. City National Bank, 208 U. S. 541, and Deitrick v. Standard Surety Co., 303 U. S. 471, distinguished. P. 309 U. S. 198.
3. Judicial determination of the legal consequences of acts condemned by the National Bank Act involves decision of a federal question. P. 309 U. S. 200.
103 F.2d 83 reversed.
Certiorari, 308 U.S. 535, to review a judgment which reversed in part a judgment recovered in a suit by the Receiver to collect an assessment upon shares of an insolvent national bank, and to collect a promissory note found among its assets.