Case ID: ny-super-ct_49/html/0119-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Sedgwick, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SAMUEL RAYNOR, et al., Appellants, v. THE PACIFIC NATIONAL BANK OF BOSTON, Respondent.
    
      Attachment against national banks.—Insolvency—what implied, by in § 5342, U. 8. Rev. Btat.
    
    The proper construction of §5242, IT. S. Rev. Stat., is that no attachment can be issued against a national banking association or its property after it has committed an act of insolvency, and the word “ insolvency ” therein has its usual and general meaning, viz.: a condition of inability to meet current pecuniary obligations.
    The fact that such a bank had stopped business for several weeks before, and did not do business for several weeks after the attachment was allowed, without clear explanation, raises a presumption of insolvency.
    Before Sedgwick, Ch. J., O’Gorman and Ingraham, JJ.
    
      Decided April 9, 1883.
    Appeal from order granting motion to vacate attachment of property of defendant.
    The motion was made on the ground that the attachment was contrary to the provisions of U. S. Rev. Stat., § 5242, the defendant being a national bank. The motion was. made by the receiver of the property, etc., of the de-, fendant.
    The action is to recover the amount of a certificate of' deposit for $5,0.00 issued by defendant October 6, 1881, payable to the order of one George E. Horne on demand, and assigned to plaintiffs.
    The complaint and the affidavit on which the warrant of, attachment was issued, alleges that the certificate in question was duly presented for payment to the defendant and payment duly demanded, which was refused.
    The warrant of attachment was issued thereafter, viz., on January 9,1882, and on January 10, 1882, the same was' levied upon a balance of $37,000 to the credit of the defendant in the National Park Bank, in New York.
    At the time of issuing the warrant of attachment and of the levy thereunder, the defendant had closed its doors, suspended business, and was then in charge of a national bank examiner, acting under the authority and direction of the comptroller of the currency.
    On May 22, 1882, Linus M. Price was duly appointed receiver of the defendant by the comptroller of the currency, and the said Price duly qualified and entered upon the discharge of his duties.
    Further facts appear in the opinion.
    Thornton, Earl & Kiendl, for appellants.
    —The decision below cannot be upheld on the ground on which the justice puts it, viz., solely on the legal ground that by § 5242, U. S. R. S., no attachment can be granted by a State court against any national bank, solvent or insolvent. In this position he is clearly overruled by the express terms of Robinson v. National Bank of Newberne (81 N. Y. 385), folding that the inhibition applies only to insolvent banks.
    The burden of showing the insolvency of defendant is fupon it; and unless it clearly makes that fact to appear, the attachment must be maintained (Market National Bank of New York v. Pacific National Bank of Boston, Daily Reg., September 30, 1882, Haight, J.).
    The defendant, by the terms of the United States Banking Act, cannot be regarded as insolvent until May 22,1882. That act points out precisely when national banks shall be : regarded as insolvent, and how insolvency shall be shown. We claim, therefore, that it was legally solvent, as to at- ’ taching creditors, until legally declared insolvent for legal , cause, which was on May 22, 1882, when the receiver was appointed, or four months and twelve days after our attachment was levied.
    Vanderpoel, Green & Cuming, Delos McCurdy and Willard Bartlett, for respondent.
    —Aside from the overwhelming proof of actual insolvency, the refusal of the defendant to pay its certificates of deposit on November 19, 1881, was an act of insolvency under § 5242 (Irons v. National Bank, 6 Biss. 301; Brown v. Montgomery, 20 N. Y. 287; Bump Bank. [10 ed.] 33). In Horton v. Pacific Bank (unreported), general term, first department, January, 1883, Brady, J., uses the following language: “The refusal of the defendant to pay the instrument sued upon, viz., a certificate of deposit, on April 19, 1882, assuming that it was presented at that time, as alleged by the plaintiff, was an act of insolvency. It is quite evident from the proofs submitted in this case that the refusal to pay was founded upon inability to comply with the demand. It may be said that the refusal to pay it on presentation was an act of insolvency in itself, under section 5242 of the banking act, if it were necessary to invoke this principle in this case to maintain the order appealed from (Irons v. Manufacturers’ National Bank, 6 Biss. 301; Brown v. Mongomery, 20 N. Y. 287-291); but it is not, because proofs aliunde the refusal are presented.”
   By the Court.—Sedgwick, Ch. J.

—The construction of U. S. Rev. Stat., § 5242, is, that no attachment shall be issued against a national banking association or its property after it has committed an act of insolvency (Robinson v. National Bank of Newberne, 81 N. Y. 385).

The learned counsel for appellants argued that the insolvency referred to in § 5242 was of the kind that was referred to in the other parts of the acts on the same subject, such as allowing circulating notes to go to protest (§§ 5226, 5227-5234), or allowing judgments recovered to remain unpaid for thirty days (act of June 30, 1876), or by the determination of the comptroller of the currency after an examination (§ 5244). A consideration of the character and policy of § 5242 shows that in it, the word insolvency has its usual and general meaning, viz., a condition in which it cannot meet its current pecuniary obligations. In effect, this . was decided by the general term of the supreme court at its term of January, 1883 (MSS. of Judge Brady, citing Irons v. Manufacturers’ National Bank, 6 Biss. 301).

The other claim is, that there was no proof that at the ■ time the attachment was allowed the bank was insolvent. The proof of insolvency was too strong to sustain any supposition that the bank could then have been solvent. The bank had stopped business for several weeks before, and did not do any business for several weeks after the attachment was allowed. Without some clear explanation of these facts, the inference is it must have been unable to - meet its current pecuniary obligations.' The plaintiff himself says in his affidavit, that he is informed that it is in embarrassed circumstances, and is about to or has. already failed, and so believes, after presentation of the certificate of deposit, as to which the action is brought. After a while the bank began business and continued it for some time, until it finally abandoned any attempt to go on. The evidence shows that it resumed business because of its receiving money, which it did not control, and was not entitled to at the time it first stopped or when the attachment was allowed.

The order appealed from should be affirmed, with $10 costs.

O’Gorman and Ingraham, JJ., concurred.