No attachment can issue from a circuit court of the United
States, in an action against a national bank before final judgment
in the cause, and if such an attachment is made on mesne process
and is then dissolved by means of a bond with sureties conditioned
to pay to plaintiff the judgment which he may recover, given in
accordance with provisions of the law of the state in which the
action is brought, the bond is void, and the sureties are under no
liability to plaintiff.
The assets of a national bank having been illegally seized under
a writ of attachment on mesne process, and a bond with sureties
having been given to dissolve the attachment, which bond was
invalid by reason of the illegality of the attachment, and the
sureties having received into their possession assets of the bank
to indemnify them against loss, and the bank having passed into the
hands of a receiver appointed by the Comptroller of the Currency, a
bill in equity may be maintained by the receiver to discharge the
sureties and to compel them to transfer their collateral to
him.
The Court stated the case as follows:
All of these cases involve the same general question, and they
may properly be considered and decided together. From the records,
it appears that the Pacific National Bank of Boston was an
association for carrying on the business of banking, organized
under the National Bank Act. On the 20th of November, 1881, it
became embarrassed, and was placed in charge of a bank examiner, in
whose control it remained until March 18, 1882, when its doors were
opened for business with the consent of the Comptroller of the
Currency.
Page 124 U. S. 722
By statute, in Massachusetts, civil actions are begun by
original writ, which
"may be framed either to attach the goods or estate of the
defendant, and, for want thereof, to take his body, or it may be by
original summons, with or without an order to attach the goods or
estate."
Mass.Pub.Stat. 1882, c. 161, §§ 13, 14.
"All real and personal estate liable to be taken on execution .
. . may be attached upon the original writ in any action in which
debt or damages are recoverable, and may be held as security to
satisfy such judgment as the plaintiff may recover."
§ 38.
"A person or corporation whose goods or estate are attached on
mesne process in a civil action may at any time before final
judgment, dissolve such attachment by giving bond with sufficient
sureties, . . . with condition to pay to the plaintiff the amount,
if any, that he may recover within thirty days after the final
judgment in such action."
§ 122.
At the time the bank resumed business, it was indebted to George
Mixter in the sum of $15,000; to Henry M. Whitney also in the sum
of $15,000; to Daniel L. Demmon in the sum of $25,000, and to
Calvin B. Prescott in the sum of $5,000.
On the 24th of March, 1881, Mixter and Prescott each began a
suit against the bank in the Circuit Court of the United States for
the District of Massachusetts by writ directing an attachment to
recover the amounts due them respectively. Demmon also began a suit
in the same court and in the same way on the 28th of March to
recover the amount due him, and Whitney another on the 28th of
April upon the claim in his favor. At the time these suits were
begun, the bank had money on deposit to its credit in the Maverick
National Bank and in the Howard National Bank, and the necessary
steps were taken to subject these deposits to the attachments which
were issued in the several suits.
The bank arranged with Lewis Coleman and John Shepard to become
its sureties upon bonds to dissolve attachments in any actions that
might be brought against it, and placed in their hands a
certificate of deposit in the Maverick National Bank for $100,000,
to be held as their protection against all liabilities which should
be thus incurred. This certificate was
Page 124 U. S. 723
afterwards exchanged for $121,000 of the bonds of the Nantasket
Company, $20,000 of the bonds of the Toledo, Delphos and Burlington
Railroad Company, and $15,000 of the bonds of the Lebanon Springs
Railroad Company.
Immediately after each of the attachments in the above actions
had been made, the bank executed a bond to the plaintiff in a penal
sum suited to the amount of the claim, with Coleman and Shepard as
its sureties, reciting the attachment and that the bank "desires to
dissolve said attachment according to law," and conditioned to be
void
"if the Pacific National Bank of Boston shall, within thirty
days after the final judgment in the aforesaid action, pay to the
plaintiff therein named the amount, if any, which he shall recover
in such action."
Upon the execution of the bond in each case, the attachment was
dissolved.
After this the bank closed its doors a second time, and on the
22d of May, 1882, a receiver was appointed by the Comptroller of
the Currency in accordance with the provisions of § 5234 of the
Revised Statutes, and at once took possession of its assets and
proceeded to wind up its affairs.
When the receiver was appointed, he found the several suits
which had been commenced still pending. In the cases of Mixter,
Whitney, and Demmon, he appeared, answered for the bank, filed
motions to discharge the attachments and motions to dismiss the
suits. His motions were all overruled, and, his defenses not being
sustained, judgments were rendered against the bank in each of the
cases for the amounts found to be due the several plaintiffs
respectively. For the review of the action of the court in these
cases the writs of error which are now under consideration were
brought.
The suit of Prescott still remains undisposed of in the circuit
court.
Failing in his motions and in his defenses at law, the receiver
filed a bill in equity in the circuit court against the several
attaching creditors, and the sureties on the bonds given to
dissolve the attachments the object of which was to reduce to his
possession the securities which were held by the sureties for their
protection against liability and to restrain the several
attaching
Page 124 U. S. 724
creditors from enforcing the attachment bonds on the ground,
among others, "that the attachments made in said actions were
unauthorized, illegal, and void." This bill was dismissed by the
circuit court, 22 F. 694, and from that decree the appeal which is
now one of the subjects of consideration was taken.
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
In the view we take of the case, the most important question to
be considered is whether an attachment can issue against a national
bank before judgment in a suit begun in the circuit court of the
United States. Section 5242 of the Revised Statutes of the United
States contains this provision:
"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."
The original National Bank Act contained nothing of this kind,
but the prohibition first appeared in the Act of March 3, 1873, c.
269, § 2, 17 Stat. 603, as a new proviso added to § 57 of the Act
of June 3, 1864, c. 106, 13 Stat. 116. That section was originally
as follows:
"That suits, actions, and proceedings against any association
under this act may be had in any circuit, district, or territorial
court of the United States held within the district in which such
association may be established, or in any state, county, or
municipal court in the county or city in which said association is
located having jurisdiction in similar cases,
provided
however
Page 124 U. S. 725
that all proceedings to enjoin the Comptroller under this act
shall be had in a circuit, district, or territorial court of the
United States, held in the district in which the association is
located."
The amending act was as follows:
"That section fifty-seven . . . be amended by adding thereto the
following:"
"
And provided further that no attachment, injunction,
or execution shall be issued against such association, or its
property, before final judgment in any such suit, action, or
proceeding in any state, county, or municipal court."
Section 52 of the original national bank act was as follows:
"That all transfers of the notes, bonds, bills of exchange, and
other evidences of debt owing to any association, or of any
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 with a view to prevent the application
of its assets in the manner prescribed by this act or with a view
to the preference of one creditor to another except the payment of
its circulating notes shall be null and void."
13 Stat. 115.
This was evidently intended to preserve to the United States
that "first and paramount lien upon all the assets of such
association" which was given by § 47 as security for the repayment
of any amount expended by them to redeem the circulating notes over
and above the proceeds of the bonds pledged for that purpose, and
to place all the other creditors on that equality in the
distribution of the assets of an insolvent bank which was clearly
provided for in § 50, where the Comptroller of the Currency is
required to make ratable dividends of the proceeds of the assets of
the association realized by the receiver "on all such claims as may
have been proved to his satisfaction, or adjudicated in a court of
competent jurisdiction."
National Bank v.
Colby, 21 Wall. 609,
88 U. S.
613.
In the Revision of the Statutes, § 52 of the original act and
the amendment of § 57 adopted in 1873, relating to attachments
Page 124 U. S. 726
and injunctions in state courts, were reenacted as § 5242, the
amendment of § 57 being put in the Revision at the end of what had
been the original § 52. As the Revised Statutes were first adopted,
the proviso of § 57, which related specially to proceedings to
enjoin the Comptroller, was reenacted as § 736, but all the rest of
the original section was left out. That omission was, however,
supplied by the act of February 18, 1875, c. 80, 18 Stat. 316, 320,
which reenacted it as part of § 5198, putting it at the end of that
section as it originally stood in the Revision.
The fact that the amendment of 1873, in relation to attachments
and injunctions in state courts, was made a part of § 5242 shows
the opinion of the revisors and of Congress that it was germane to
the other provision incorporated in that section and was intended
as an aid to the enforcement of the principal of equality among the
creditors of an insolvent bank. But however that may be, it is
clear to our minds that as it stood originally as part of § 57
after 1873, and as it stands now in the Revised Statutes, it
operates as a prohibition upon all attachments against national
banks under the authority of the state courts. That was evidently
its purpose when first enacted, for then it was part of a section
which, while providing for suits in the courts of the United States
or of the state, as the plaintiff might elect, declared in express
terms that if the suit was begun in a state court, no attachment
should issue until after judgment. The form of its reenactment in
the Revised Statutes does not change its meaning in this
particular. It stands now, as it did originally, as the paramount
law of the land that attachments shall not issue from state courts
against national banks, and writes into all state attachment laws
an exception in favor of national banks. Since the act of 1873, all
the attachment laws of the state must be read as if they contained
a provision in express terms that they were not to apply to suits
against a national bank.
The prohibition does not in express terms refer to attachments
in suits begun in the circuit courts of the United States, but as
by § 915 of the Revised Statutes those courts are not authorized to
issue attachments in common law causes
Page 124 U. S. 727
against the property of a defendant, except as "provided by the
laws of the state in which such court is held for the courts
thereof," it follows that, as by the amendatory act of 1873, now
part of § 5242 of the Revised Statutes, all power of issuing
attachments against national banks before judgment has been
eliminated from state statutes, there cannot be any laws of the
state providing for such a remedy on which the circuit courts may
act. The law in this respect stands precisely as it would if there
were no state law providing for such a remedy in any case. It was
suggested in argument that the prohibition extended only to the use
of the remedy by state courts, and that the remedy itself still
remained to be resorted to in the courts of the United States. But
we do not so understand the law. In our opinion, the effect of the
act of Congress is to deny the state remedy altogether so far as
suits against national banks are concerned, and in this way it
operates as well on the courts of the United States as on those of
the states. Although the provision was evidently made to secure
equality among the general creditors in the division of the
proceeds of the property of an insolvent bank, its operation is by
no means confined to cases of actual or contemplated insolvency.
The remedy is taken away altogether and cannot be used under any
circumstances.
It was further said that if the power of issuing attachments has
been taken away from the state courts, so also is the power of
issuing injunctions. That is true. While the law as it stood
previous to the Act of July 12, 1882, c. 290, § 4, 22 Stat. 163. c/
290, § 4, gave the proper state and federal courts concurrent
jurisdiction in all ordinary suits against national banks, it was
careful to provide that the jurisdiction of the federal courts
should be exclusive when relief by attachment or injunction before
judgment was sought. Until the act of 1882, the federal courts had
ample authority to grant injunctions in proper cases, and all a
person need do to invoke that authority was to bring his suit in
one of those courts. Whether since the act of 1882 this remains so
is a question for the consideration of Congress. Some amendment to
existing legislation may be necessary, but this does not shed any
light on the interpretation of the old
Page 124 U. S. 728
law. The difficulty arises from the change that has been made,
not from the law as it stood originally. We are therefore of
opinion that the attachments in all the suits were illegal and void
because issued without any authority of law.
But it is insisted that notwithstanding this, the bonds are
valid and may be enforced. It is undoubtedly true that the sureties
on a bond of this kind are estopped from setting up, as a defense
to an action for a breach of its condition, any irregularities in
the form of proceeding to obtain an attachment authorized by law
which would warrant its discharge upon a proper application made
therefor. As the purpose of the bond is to dissolve an attachment,
its due execution implies a waiver both by the defendant and his
sureties of all mere irregularities. So too it is no defense that
the property attached did not belong to the defendant, or that it
was exempt, or that the defendant has become bankrupt or is dead.
In all such cases where there was lawful authority for the
attachment, the simple question is whether the condition of the
bond has been broken -- that is to say whether there has been a
judgment in the action against the defendant for the payment of
money which he has neglected for thirty days afterwards to
make.
In the present case, however, the question is whether the bond
creates a liability when the attachment on which it is predicated
was actually prohibited by law. In other words, whether an illegal
and therefore a void attachment is sufficient to lay the foundation
for a valid bond to secure its formal dissolution. The bond is a
substitute for the attachment, although not affected by all the
contingencies which might have discharged the attachment itself.
Carpenter v. Turrell, 100 Mass. 450, 452;
Tapley v.
Goodsell, 122 Mass. 176, 182. Such being the case, it
necessarily follows that if there was no authority in law for the
attachment, there could be none for taking the bond. If the
attachment itself is illegal and therefore void, so also must be
the bond which takes its place. Objections can be made to an
attachment issued on proper legal authority, which cannot be used
as a defense to a bond taken under the statute for its dissolution;
but if there can be
Page 124 U. S. 729
no lawful attachment, there can be no valid bond for its
dissolution. The case is to be considered as though there was no
law whatever for the seizure of property by attachment before
judgment in any case. As the taking of the property under such
circumstances would be unlawful, so also would be the act of the
magistrate in accepting the bond.
Neither is the bond binding as a common law bond. If the
attachment had been valid and the bond taken had not been in all
respects such as the statute had required, it could nevertheless
have been enforced as a common law bond, because it was executed
for a good consideration, and the object for which it was given had
been accomplished. But here the difficulty is that there was no
lawful attachment, and therefore no lawful authority for taking any
bond whatever. The bond is consequently neither good under the
statute nor at common law, because there is no sufficient
foundation to support it.
Objection is made to the relief which is sought in equity
because if the attachment bonds are void, there is an adequate
remedy at law in the suits that may be brought for their
enforcement. If the suit in equity had been brought by the sureties
to get rid of their obligation, this objection might be good; but
such is not its character. The sureties have in their hands assets
of the banks which the receiver seeks to reduce to his possession
and which they claim the right to hold until they have been fully
indemnified against or discharged from liability on the bonds. The
receiver says there is no liability, because the bonds are invalid,
and to have that question settled once for all, he has brought the
persons interested, creditors as well as sureties, before the court
in order that it may be conclusively adjudicated between them. Such
a suit is clearly cognizable in equity. The sureties are in a sense
stakeholders. They do not claim the securities unless they are
liable on the bonds, and the suit, although not brought by them, is
in the nature of an interpleader to save them "from the vexation of
two proceedings on a matter which may be settled in a single suit."
The decree will bind all alike, and if the sureties are held not to
be liable, it will conclude the creditors from all further
proceedings against them on the bonds, and leave them
Page 124 U. S. 730
free to surrender the securities to the receiver. This will not
affect the judgments that the creditors have recovered any further
than to limit their operation, so far as the receiver and the
sureties on the attachment bonds are concerned, to the adjudication
of the debts as claims entitled to dividends from the proceeds of
the assets of the bank. To that extent certainly the court had
jurisdiction in each of the suits after the insolvency; but as the
attachments were void, the judgments are inoperative as a basis of
recovery upon the bonds.
The judgment in each of the suits at law is affirmed, but
the decree in the suit in equity is reversed, and the cause
remanded with instructions to enter a decree setting aside and
annulling the bonds which were given to dissolve the attachments
and enjoining each and all of the creditors and those claiming
under them from proceeding in any manner to enforce the same
against the sureties and directing the sureties to surrender to the
receiver the securities they hold for their indemnity.
