The western Democrat. [volume] (Charlotte, N.C.) 1852-1870, 1866-05-29
From the Raleigh Sentinel.
THE BANKS.

| THE 6ANn NO.
Messrs. Editors In a recent number OF your
paper, YOU ex press doubt whether the stock
holders of the Banks can be released from their
Ii.bilitv as sucb by the recent act Of the Legis-
lature passed, among other things for their re-
lief. it is respectfully insisted that they can,
for the following reasons:
| It is we'll established principle OF. law, that
Bank Charter is a contract between tue otate
and the stock holders, which neither party to the
contract can disregard set aside, without the
consent of the other, but which undoubtedly
NAV be rescinded by the consent OF both When,
for instance. corporation tenders surrender
of its charter, the Legislature, as the proper
agent of the State, may accept 1t, and, on the
other hand, if the Legislature proposes such
surrender. and it is accepted, the result in law
is precisey the same the corporation IS dis
solved.
Now, the recent act for the relief of the
Banks provides that they may be wound up
upon certain prescribed terms, the first of which
is. that the stockholders in general meeting,
shall determine to adopt the provisions Of this
Jaw and take the necessary steps to close the
Bank, aud that, and certain other specified stip-
ularions being complied with, the charter of
the Bank is declared to be dissolved, and,
presume, it cannot be denied that upon the
proper observance Of the requirements Of the
law. the corporation is dissolved.
Upon the dissolution of corporation, certain
legal consequences follow,-tbe chief one of
which is the total extinction of all liabilities
| and all rights SO that after such dissolution,
COZ poration can neither sue DOR be sued, can no
longer collect, or be compelled to pay debts,
and a moments consideration of the nature of
corporation must satisfy every one that this
must be SO.
A corporation in the language of the law, is
an ''artihcial being" the creation of law, which
can exist only upop certain conditions.
1t can, during its existence, do and have done
to it certain things, all of wbich must necessarily
cease when it ceases, and upon its dissolution,
so far as its past rights and liabilities as cor
poration are concerned, is just as if it had never
existed hence, in order to avoid one of the
results Of dissolution prior thereto, this act pro-
vides that all the debts due any Bank have to
be ASST gned to a receiver commissioner, who is
authorized to sue in his olon name. But for
this, such dissolution, provided for in the act
to WHICH we refer, would wipe out all debts due
to, as we'll as by, the Banks.
But the debts due by the Banks, as such, are
actually exsinguished upon the proposed disolu-
ton, and the assets are transferred to the COM
missioner the meaLs, the only means of pay
ment of the liabilities of the Banks. The debts
of the Banks, as SUCH are gone extinguished,
because, among other things, there is no one to
be sued. Now, the charters Of most of the Banks
provide that upon their insolvency or inability
to pay, each stakeholder shall be liable in twice
the amount of his stock This is a collateral
liability, and the Bank is the principal debtor,
and the discharge of that is discharge of the
surety. This principle is very clearly established
in late case by our Supreme Court THE case
of Mallory VS.. Mal1ett. There, the stockholders
were liable for the debts of the corporation. Up
on its inability to pay, the corporation ceased,
the Court decide that its debts also ceased, and
the stockholders were collaterally bound, the
extinction of the debt of the principal 1.-THE cor
poraton) was an extinction of the entire liability
and the stockholders were discharged. Now the
validity Of the act under consideration cannot be
affected upon the ground that the discharge of
the stockholders impairs the obligation of con
tract; because, already shown, all contracts
cease upon the dissolution of a corporation, and
that whether such dissolution is the result of leg
isIative intefpostion by limitation of the char
ter. In all cases the consequence is the same,
it matters not how the dissolution is brought
about; the only enquiry being, has it actually
taken place?
If, therefore, it could be urged as valid OBJ
lection to the act under consideration, that the
dissolution ofthe Bank Charters, by discharging
the stockholders, impaired the obligation of CON
tracts, it ght, with equal force, be insisted that
any act of Legislature which authorized or
sanctioned the dissolution of a corporation, would
be void and consequently their charters must be
perpetual, let them vtiate them in the most glar-
ing manner To avoid such consequences, there
We're several acts passed by our Legislature, at
different times, providing against such consc
quences, by continuing the charter for three
years, for the purpose of winding up. But these
acts are understood to be repealed by the recent
act tor the relief of the Banks, and very propery
so, too. The Banks being all insolvent. utterly
unable to pay their debts, it is best that they
shonid close up as soon as practicable, with as
little sacrifice anS loss to the stockholders as DOS
slble by the discharge of the stockholders. they
Will be relieved, and no one will be hurt, but one
class, and that is the spectators, who purchased
Bank notes with the view of ultimately collect
ing them out of the stockholders. For this class
no one has any sympathy; they have acted with
out any for the misortunes of Others and, if thew
loose, they need expect, they deserve, none on
their part. They may collect SMALL very small,
per centage of the bills, through the Commits
sioner; the rest and far the greater part of their
bills they must loose. The sooner these bill-hold-
ers understand this, the better. This is their
fate. Let them be wise and give up all hope of
collecting their Bank bills out of the stockholders
This they will neve- be able to do, and their in
ability to do so, will rejoice the heart of every
good CITIZEN.
ARREST OF FREEDMEN's BUREAU OFFICERS.
The Washington Star. says that the President
has directed Major General Howard to Cause
the arrest of every officer of the bureau in North
Carolina who is engaged or pecuniarily interest.