Nashville union and dispatch. [volume] (Nashville, Tenn.) 1866-1868, 1868-01-03

james VS.. the Bank of the State of Ten
nessee, and several similar cases, wasably
argued and submitted to Special Judge A..
5. Colyar, some weeks since. The cases in
volve the rights of the holders of notes OF
the Exchange Bank against the Bank of
Tennessee, the officers of said bank and
the State Of Tennessee, for the loss of
bonds alleged TO have been distracted from,
or misapplied by the said Bank of Tennes-
see Judge Colyar on Wednesday delivered
The following decision. The case, we
learn, will be carried to the Supreme
Court:
1st. John ;. james VS.. the State of Tennessee
and the Bank of Tennessee.
I'd. John 4. DTomgOole VS.. the State Of Ten
nessee and the Bank of Tennessee.
Sd. Ben. p. Clark vs.. the State Of Tennessee
and the Bank OF Tennessee
4th. A W. Moss vs.. the State Of Tennessee
and the Bank Of Tennessee.
These several bills were all fled on the
18th of October, 1860, and are in substance
the same, each complainant alleging that
ne is the holder Of notes ON Che Exchange
Bank of Tennessee, one of the free
banks created by, or rather organized un-
der the act Of Assembly passed on the 18th
Of February, 1852, entitled &C. an act 10 aus
thorize and regulate the business of bank
ing The holders severally allege THAI VIM.
Spence and JOS. Spence, as associates under
and in pursuance of said act, fled with the
Secretary Of State memorandum of their
association, and commenced the business of
banking at Murfreesboro, upon a casital of
$4,000, which was afterwards increased
under the law to 100000 The provisions
of the act of Assembly aforesaid, are sub
stantially that any person or association of
persons, having at least $4,000 Of capital,
is authorized TO carry on the business of
banking, by first depositing with-or in the
language of the act, legally transferring to
the Comptroller any portion of the pun
lie stocks Of the STATE or bonds of incor-
porated companies Endorsed by the State, or
bonds of the United States. When such
securities were deposited the association
might issue an equal amount of circulating
notes, but as a guarantee to the public that
the law was complied with and the capital
in bonds deposited, the notes were to be
countersigned by the Comptroller. The
act recites that "the Comptroller be-
fore he shall enter upon the discharge of
any of the trusts or duties imposed upon
him by this act, shall enter into bond to
this State, and annually thereafter,
with sufficient sureties to be approved
of by the Governor of this State in such
sum as he shall direct, with condition for
the faithful performance of the trusts and
duties imposed upon him by this act"
II Al
countersign and deliver to such associa-
ton or bank-but was expressly prohibited
from so doing-an amount of circulating
notes exceeding in the aggregate 10 value
the securities so deposited with him, "on
pain of removal from Office and of being
personally liable 10 any note-holder for the
full amount with interest of any note or
notes that may be lost, an account of his
failure 20 comply with the provisions Of
this act"
By the further provisions of the law
upon the failure of the makers of such
notes, countersigned as aforesaid to return
them in lawful money of the United States
and upon their being protested for non,
payment, the Comptroller upon receiving
and filing the protest was to give notice in
writing 10 the makers to pay such notes
with charges, and if they failed 70 pay
the same for ten days, the Comptroller
was to give notice to all the holders of
snch notes, that they would be redeemed
out Of the trust funds in his hands for that
purpose, and he was to apply the trust funds
in his hands 10 the payment of all the
notes pro rata, whether they were protested
or not. Nothing in the act was "to be con-
sideFed as implying any pledge on the part
Of the State for any payment beyond the
proper application of the securities pledged
to the Comptroller" The protest of the
first note created lien upon all the assets
Of the bank for the benefit of all the credi-
tors, and the Legislature reserved the right
TO amend this law, but not so as to interfere
with vested rights.
On the 14th of February 1856, this law
was amended. The important part of this
amendment is embraced in the 18th and
18th sections "a follows: THAT the bonds
required to be deposited with the Comptrol-
Ter, by virtue of this act and the act which
this is intended to amend, shall be placed
upon deposit in the Bank of Tenneasde, and
that no notes shall be countersigned or is.
sued TO any person, bank or association until
this is first done, and that the bonds so
deposited shall be subject to the order of
the Comptroller, only for the purpose of
carrying into effect this act and the act
which this is intended to amend"
The compliments are the holders OF cir
culating notes issued by the Exchange
Bank, and countersigned by the Comp
troller TO the amount of SIS, 900 in the
aggregate, and they seek to hold the State
or the Bank of Tennessee, or both, liable
upon the ground that the State undertook
to see 10 the faithful application of the
stocks OF bonds deposited with the Comp
troller, and afterwards with the Bank Of
Tennessee. They say if they cannot now
be paid, it must be either because the
| Comptroller never received them from the
association, or because the Comptroller did
not deposit them with the Bank of Tenhes-
see, or because, if he deposited them with
the Bank Of Tennessee il has lost them, or
converted them to its own us". And, in
either case it is claimed that the State or
the Bank of Tennessee, or both, are liable
TO them, for il is argued that the Bank of
Tennessee is liable, though the bonds were
never deposited with it.
These acts of Assembly made system
of banking which il would seem afforded
ample protection to the note holders, and
yet, in this case they have suffered to the
amount Of many thousands. How this loss
was sustained and who is responsible for
IL, are matters that, for many years, at.
tracted the attention of the press and the
whole people Of the State, and was the
subject Of a long and labored Legislative
investigation.
The entire proceedings of the Legisla-
tive Committee are before me as evidence.
Before that committee, which was organ
lied in 1858, tae officers and owners of the
Exchange Bank claimed that one hundred
and twenty-three thousand dollars of their
bonds had been lost, and therefore the cir
culation was not redeemed, and this is one
Of the questions now before the court
But il is insisted that whether they we're
lost or not, the State and the Comptroller
are estopped from denying the receipt of
the bonds when the notes were counter
signed and issued, and that the notes be-
ing issued, cuts Of debate as to whether the
bonds were deposited that this would be
30 as to the Comptroller, would not l i'm
agine be questioned and ii this was law
suit against the Comptroller or upon his
bend, there would be bat little difficulty.
The proof 1.-THE case shows that the Comp
troller admitted at one lime that William
Spence, the President Of the Exchange