Litchfield enquirer., 1859-07-14

ITrCHFIELD BANK Judge Butler heiu ah auJo"'H ed term of the Superior Court in this place on the Stl inst to hear and determine upon the repor' oi the Receivers of this Bank in reference to the claims presented to them against the Bank. The Receivers reporting the nature and amount of the claims pre- seuted to them and citing the parties to appear and shew cause why the whole any portion of tln m should be allowed The principal claims presented were in favor of the three Connecticut Banks by whom paper had been discounted for the ben' fit of the Litchfield Bank previous to making their r. demption at the Suffolk Bank in Boston. These were inorscd by several of the directors, and with them was deposited circulation of the Bank as col lateral security to larger amount than the loan made by them, which it is supposed would secure them in the event the said notes were not paid at maturity These notes given at GO and 90 days, and before the notes were due the Bank was placed Bank having sold the Litchfeld Bank clains in New York to parties supposed to be good, and the first notes still being unpaid and the second not due The directors sent an equal amount of the New York notes to be discounted collected to take up the former notes given by the Bank, and release Il circulation held by them collateral security for the payment of these notes and this it was supposed would remove an obstacle to the resumption of the -Litchtield Bank The sudden failure of some of the agents of the Litchfeld 6ank in New York to re- deem the general circulation held by brokers there with other causes, brought final injunction on the Bank in November last, and the notes depos ted with the Connecticut Banks, a portion of Which were discounted and the remainder held for collec tion against Van Cleef Smith [the New York par ties.1 were not due, and under the circumstances th.i: payment uncertain. The Connecticut Banks therefore retained ill their vaults most o' the pre- vious notes of the Bank together with these notes left with them and the hypothecated clrcula'i"n' under the impression that the latter belonged to the general circulation of the Bank and came into the first class of claims. The Bank having the largest amount of hypothecated bills surrendered them to the Receivers and took certificate for hypothecat- ed circulation leaving the grade of claim to be de- termncd by the Cout Another Bank disposed Of their circulation to broker, and it was presented unbroken to the Receivers, they being of its source The third disposed of theirs to one of the dipectors of the Bank, who, through friend in New York sold it to the brokers there; this also came pCbSCDElOu ed to be identified by them through the Cashier of the Bank.
 There were, therefore, some general legal qnes- tions involved in common for the several bank claims presented but each Bank had disposed Of its circulation in different manner, which placed tl:em in an aspect less favorable for allowance on that account. The counsel for the Receivers claim
 rfodxu the original debt, and the excess must be rejected as an act of justice to other creditors. That the hy pothecated circulation sold at private sale, and in one instance at much below the selling price of the bills at the time, and without giving any notice to the Bank or its Receivers, and therefore not valid tLat they therefore became responsible for the full amount of the bills lodged with them That under recent decision in another state, they had no right to dispose of the circulation of the Bank while the Bank in the hands of Receivers, and by such disposition by their volition they became responsible for the full amount of such hy pothecated circulation. And lastly if all the above claims were not sufficient to inyalidate their allow ance with the Court, they could only be allowed with other creditors the original debt with interest and must deduct therefrom the money received by them for the sale of the bills to parties who could only be allowed their value. And, therefore, they were bound to release the balance of securities in their hands.
 The counsel for the Banks denied that they had forfeited their several claims by the disposition which they had made by the hypothecated bills, contending that on the failure of the Bank to pay the original notes they had right to sell the circu
 .x1...- lateral security for the payment of the notes. That the bills hypothecated with them should be regard ed as general circulation" and without unfavora ble discrimination being exercised towards tkem that they did not regard notice necessary, as the conditions had not been fulfilled by the borrowers, and therefore the legal sale of hypothccaed crcula ton as understood by Banks fully justified the course they had taken in the matter,
 We do not propose to rccapitulate the arguments of the counsel to do justice to the eminent le gal counsel engaged in the case In the course of the tral many nice legal questions were suggested Tor the consideration of the Court who treated them with great fairness and impartiality for which the learned Judge is distinguished, and sitting AS he does in this case as high court of equity we have great confidence that he will do justice to all part tics interested He adjourned the Court until the last Tuesday in August. when he will deliver his opinion on the several legal controverted questions involved in this complicated casE
 In the meantime the Receivers are endeavorine to collect the notes against the New York parties and should they be successful they will undoubtedly in duce the Ranks to give up their circulation on the pyment of the Van cleef notes and other claims and should this leave sufficient amount of funds