The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1848-11-29
important Financial Decision.
North American Trust and Banking Company.

SUPREME CouRr.Tn Eqmty.-David Leavitt. re-
Company, Us Richard M. Blatchford, James B. Murray
John Horsley Palmer, ct al.
The bill in this cause filed by Mr.. Leavitt, as
receiver, in April 1872 to set aside assignment Of
Eecurtiee, made by the North American Trust and
Banking Company in November, ls4O to secure debt
due by that company to Msssrs Palmer, Makillop,
Dent & Co bankers in London.
The cause was heard pleadings and proofs at the
general of the Supreme Court held in this city
In September last by Justices McCoun, Hurlbut and
Edwards, and was decided on the 18th of November,
instant.
The unanimous opinion of the Court was delivered
by Mr. Justice Edwards, and is as foows:-
By the Court-EDwARDs, Tins RECEIVER OF THE
North AMERICAN TRusr AND BANNING COMPANY asks
the aid Of this Court, setting In equity, to set aside
and declare void forty-eight promssory notes, made
dent and cashier in the sum of 900 each with in
terest payable twelve months after date; and also to
set aside agreement trust deed, executed under
the zeal of the company, and signed by its president
nd cashier, whereby the company assigned certain
BONDS , ana rho In h hs 10 sssIrs the
claims relief is, that the notes and deed made
and executed in violation Of the laws of this State aud
void. The statutes which he mai My relies
applicable to moneyed corporations only. The first
question then to be considered is whether the North
ISOLATION organized under the act to authorize the bu
sness of banking passed April 49, 1888, corpora
ton within the letter and spirit of the statutory prov
The numerous decisions which have been made in
reference to banking associations have established
beyond doubt that the company in question was a
corporation. Warner Us Beers, IS Wend 1903; The
People The Assessors of Watertowu, l Hill, GIG;
The Supervisors of Niagara The People, ID 504;
Clifford ps Livirgton, DEMO. 3s0) This not
disputed the argument But 1t was commended that
it was not corporation, In acceptation Of the
term, and within the the spirit and meaning of all the
general laws applicable to moneyed corporations.
In the case of Warner Us Beers which was the first
adjudicated the subject it held, and the
same doctrine was realirmed in the of Clifford
Livingston that banking associations under the act Of
1888, although corporations such within the
provision requiring the assent Of two
any body polite or corporate The reason given for
the decision was, that the general banking law did
not secure exclusive privilege to any particular class
Of citizens, which might not be enjoyed in the
manner by all others. In other words that banking
associations were not monopolies-and that it to
Institutions Of that character that the
restriction was intended to apply This decision
tablishes the principle that banking associations
not corporations within the meaning of the fuudamen-
tai law Of the State The question the arises whether
they such within the meaning Of its general statu-
The acts which are invoked by the plaintiff in sup
port Of his claim to the relief sought first that
which declares that at shall not be lawful for the d.
rectors Of moneyed corporation to apply any por-
ton Of the funds Of their corporation, except surplus
profits directly indirectly to the purchase Of shares
ofits own stockn Il r. S. $50, 81 sub, s, ed) Aud
second that which declares that emo conveyance as
agnment or transfer, nor any payment made, judg-
such corporation when iusolvent or in contemplation
OF insovency with the intent to give preference to
company, shall be valid in law ar s. 7oi 10. edS
These statutes passed before the act OF 1885,
ana II ID on the part of the defendants that
they DO not apply to corporations that
act because In the first place the legislature at the
time Of the passage of the general law intend
ed to crate legal existence which wolld not be q
corporation and believed that 1t had done so-and that
therefore it could not have intended that the general
law applicable to moneyed corporations should apply to
banking associations and in the second place because
there are some provisions in the act of 1885,
the general law in moneyed corporations
and that upon The principle that erpresso
ezclnso ueris. the correct legal Inference is that
mt NH rcd in tha tof
were not intended to apply to associations under
In reference to the first ground although It IS fun
dameptal rule that every Law must be construed
cordDg to the intention Of the makers still that In
than to ascertain what they in to do
and not for the purpose Of what they
done; or to apply the principle 10 this case
look to the intention of the legislature to ascertain
what powers have been given to banking associations
legislature cannot govern in ascertaiung what shall
be the legal effect OF such powers neither il 1t to be
retorted to for the purpose Of sscertanng what the
proper legal name and description of association
possessing the powers granted. When the question
before the Court the Correction of Errors there
was no doubt ~ to the extent Of the powers
by banking associations; the only question to
which class of legal exstenoes bodies with powers
properly belonged The court decided that they we're
corporations that is that the thing which the egs
lature intended 10 create and did create was
ing to the correct legal construction, corporation
Now, the legislature which passed the general laws
In reference to moneyed corporations intended that
in that description The legislature that passed the
act Of 1888 did not by any provsou in that act ex
OF the general laws II intended then that those
laws should be applicable to banking associations IT,
according 20 correct legal interpretation, they come
within the meaning Of moneyed corporations.
As to the second ground taken BY the defendants,
there is doubt that the general principles stated
those principles, It appear that the provisions
contained in the act Of 1855 far inconsistent
clear intention to exclude banking associations from
its operation There is nothing In the act of 1888
tent with the general reference to
by mopeyed corporations the principle laid down then
subject but it Is commended that the section Of the
general Law which forbds the purchase of shares of
ts Swn stock y I1nsysd corporation was int ndsd
which declares that " if any portion Of the original
capital ofany banking association shall be withdrawn
for any purpose whatever while any debts of the
association remain unsatsded dividends or PROFITS
on the shares of the capital stock of the association
shall thereafter be made until the deficit capital
shall be made good and If it shall appear that any
such dividends have been made, It shall the duty
of the chancellor to make the necessary orders and
DEGREES for closing the affairs of the association "
Claws 1898, page 252 S2S) This provision is not in.
eralaw which prohibits the purchase Of shares Of its
own stock by moneyed corporation the contrary,
~ not strictly in reference to the same subject
matter and seems to have bee int to provide
against mischief of different character one law
was intended TO prevent the purchase, by moneyed
It's surplus fundsthe other intended to prsve Mt
dividend By be hiking association after any portion
OF It's capital stock should be withdrawn and while
any Of the debts Of the association remsined unsatis
fsd.
But to all doubt upon the subject Il seems to
that 1t s settled by authority that the
Law In reference to moneyed corporations apply
to banking associations. In the of Warner ps
Beers It is true that It held that banking
tfons we're not corporations within the spirit and
meaning Of the constitution But in all other respects,
when the question has arisen they have been held to
be corporations. In the Of The People u.s. The
Assessors Of tho village of wstertown decided
by the Supreme court that they moueyed corpo-
rations within che meaning of the statute which de-
oares that moneged corporations, deriving an income
from the capital otherwise shall liable taxa
ton. Il II. S. 4i4, LIST ed) In the case of The
Supervisors of Niagara The People a similar doc
trne laid down by the Court for the Correction Of
Errors In the mstter of the Bank of Dansvills %
Hin, 5T0) in which application made for the