The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-06-08
Supreme COurt-General Term.

BANKING OPERATIONS THE EIGHTH AVENUE BANK.
Ei,oardP CO'Ole Receusr Of the Eighth Ar<se Bank
John v. 0ridleyRoosEvEIr 1.-The ma ding and endorse
ment Of The note sued on admitted but Is said that
no value was received; that by a. arrangement among
The directors Of the bank Of who the defendant was
the instrument never int nded to be considered q
"vad promssory note, IN the hands Of any person
for any purpose whaeven On this statement of the do
inquiry natur' arises for what purpose was
the note given, If, IT. every event, tbs promise or obi
cation to be of no validity The case shows
scrbers to the Eighth Avenue Bank, of which the
capital -cas SS0 900, and his proporton, as ex-
pressed in the articles of association $4,000 He, too,
with lis eleven associates, the hrst directors As
soon 4 eco paid up the bank organized and COM
bupess Their purchase of securities to deposit
with the mixing DEPARTMENT, to the amount OF aC
Indirectly credit and Of the credit Of supposed
bona e paid up secured capital Instead however, OF
paying up the original associates and directors gave ne
nocs the deficiency each for $780, dated january
1854 payable In six months with interest," 10 some other
Director and pterchangcaby endorsed by the payees"
At the time, also, certificate OF the COR
responding number of shares OF stock was hled up
and signed by the President and Cashier in favor OF
each director, although not actually cut out from the
certificate book The notes not only delivered TO the
cashier formally discounted the books Of the bank
and proceeds carried TO the respective credit OF the
makers; who thereupon drew their checks, which were
received cah in OF the stock AMI carried into
the stock ledger and transfer book showng that each or
directors held such shares.o When these notes fe
due, which Of six months afterwards, they
were renewed for another six months by the direo
tors, a board, for themselves individually, "omit
ting the endorsers, but paying tie FIRST six months int
rest In three months the bank exploded receiver was
appointed, and suits were brought 10y him, Of which
the present Is one, the several notes so given.
And the defence now IS not as against ether
stockholders merely, but as against bore re
understanding among tie directors themselves, all
this was to be mere formnore properly speaking mere
ham-hat rights should be acquired by the bank IN
unless the directors should elect their
notes and take certificate, Of the stock and that tn stock
having become worthless probably by the very acts OF
rather TO return it, and with II TO repudiaie the written
engagements Of which is said to have formed the cons
deTaion Can such defence, either in law or morals be
listened tor Can director in other words, be permitted
TO say that he agreed with board Of tustees-
himself being one--hat If there should be gain
receive it, and if loss, the creditors and
general stockholders should bear it? X will be said per-
haps that such was not the agreement In words was
not but what, would ask the distinction In sub
stance? The whole board gave TO each Of its component
members the right Of election" for six months and then
again for six months more to take or not to take the stock
and pay not TO pay The note. What moneyed man.
with such an option would choose loss or refuse gain
To Illustrate the position more strongly take the case Of
two guardians of the estate of minor. They
agree each on his own account, ~ith both as
trustees, to speculate in cotton with tho funds
Of their ward, giving notes for the respective
amounts after the fashion of the arrangement alleged
have been made in this instance purporpg cir face
to be for vaue received bat with verbal understanding
that il the speculation turned out bad they to
be allowed to elect not to pay Would be any answer,
in suit by the substituted successor OF taesc fhless
guardians say that they had "cleced to nully their
written oblgaon9 Whatever may be the force OF these
apaloges thing is clearihat there considera-
ton for the note which The defendant gave It affected
compliance with the and enabled the defendant and
his eleven associates officially to report under OATH that
the whole Of their "ceracd stock paid In
invested" (section or &C, Of lS40 aud to take the
chance Of profit their shares without the
risk OF loss. Eu this is not ALL the printed states
that when the defendant Gri1ey paid the interest The
original at its maturity, he did the Of
the cas- her 'that 1t would come back to him on the max
ing Of dividend to the stockholders Here then when
the second note given determination by that
very act Of the defendants election TO take the stock and
10 become absolutely bound for the The direc
tors II Is fur ther con nted had right to discount their
notes in payment of their subscriptions The
is that the provision referred 10 q r. 5s3) had
ference the free banks which expressly authorized
10 business securities instead cash. and
unlike the old chartered Institutions required before
ssrng obtaining circulation, 10 protect the in
voluntary holders Of their bills by proper deposit with
the Bank Department OF the State public stocks p
vate mortgages And II the taking OF the note had
been prohibited would II DO eg mate satisfaction TO the
law to dny recovery upon H. anu thus, instead Of punish
ing TO the doer and that at the expense OF
the innocent and injured creditors The principle
this subject is expressed In that section OF the statute OF
moneyed "corporHtions," which, while prohibiting dis
TO directors hey ond certain amount very proper
y adds the proviso that sccuor taken for such
loan discount shall be held invaid". Il X. >. $50
Judgment for plaintiff affirmed, with costs.