The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1868-11-03
TIE BlSK OF THE STATE C-iSE.
Notes of Argument by Hon. Isaac W.
Hayne, Counsel for Respondents.
The State er rel Attorne sGereral Us. Bank OF the
Statc-Manddmus.

| SCatc-MQnu0Wuss
The facts stated in the return being admit
ted by the relator, and issue being taken Oh
the conclusions of law, Mr. Hayne SAID that
the rule should be dischargcd-1. Becaus, the
act to close the operations of the Bank OF the
State, uuder which Governor Scott made his
demand for the delivery to himself of tho assets
and profits of tho Bank, is unconstitutional
and void.
The bank in 1872 was chartered by the State,
and made body corporate, capab:c OF SUNG
and being sued, of contracting and Delng con-
tracted with, and it continues Its corporate
existence to the present time, shorn: 1t Is truo,
since 1865. of some Of its powers; but still
corporate body with these capabilities unlm-
paired. Until 1865, it was, by its chartor,
bank of issue, discount and deposit, dlnerlng
from tho other banking institutions o. the
State only in the fact that the State was the
sole stockholder. AS bank OF ISSUE from
time 10 time its notes were thrown Ito crcu-
lation, for which the corporation became
debtor, deposits were received for whlcn the
,orroration b came liable, and III the course
| of business various other contracts we're en-
tered into, binding upon the corporation. A
largo amount of this indebtedness remains un,
paid. Among the largest OF the debts incurred
| by the bank was that contracted I'D oDedlcnce
| to the command of the Legislature, undcr the
provisions of the act Of 1888, 'for rebuilding
| t;,e City of Charleston" BY this act the
bank was directed to take charge OF fund
proposed to bo raised by the sale OF certain
bonds known as fire loan bonds, the SAD
fund becoming q part OF the capital q 4 tnc
sumo the entire Indebtedness of the State ior
the bonds issued-that is the corporation was
| offered by the State as guarantee, anu re-
ouired to provide for tho punctual payment
| Of interest and for the ultimate redemption
| of the principal. The bonds issued were, IN
form, made payable to the Pank OF G,unr .mo
State, we're signed for the state by the Cover
nor and countersigned by tho Coniplro.ci-
| General, and endorsed and guaranteed ~ the
President of the bank. in the name OF SAD IN
| stitution. This contract on the part OF the
bank flor guarantee is certainly contract);
| which has subsisted for thirty years, was not
only directed and approved, at the time, by the
Legislature, but during oil this tune, year T W
year, it has been sanctioned by that Doa!. ino
| larger part of the Indebtedness thus contfae-
ted has been paid by the bank, but a consld-
erabIe amount is past due end unpaid. INC
State. tLe obleor on the flce OF the bond, has
failed to pay, and the bank, tho guarantor, ilas
| had its liability to suit on these bonds liked,
since the first of July last. Ii the bank Is SUP
ject to suit, it must be debtor, and the parry
able to sue must be q creditor. These BOND.
holders, then. who hold bonds endorsed anu
guaranteed by the bank, and the ilre loan
Stockholders, whose scrip IS counterslSncd D.?
the President OF tho bank are amonS tho larS-
est of the ere litors of the bank. do not speak
now of any lien either erupon capital or prohts, Oh
the effect of such lien. l simply call atteil-
ton to the fact that Ire fire loan bondho!ders
and fire loan stockholders are creditors or tho
CORP oration, the former having at this mo-
mcnt good cause Of action against said Cor
poration for the whole amount OF tho debt.
The ba,k, as result OF the disasters oil the
war became inSolvcnt. 1t has been notorlOusly
insolvcut since May, 1865, but is possessed OF
assets to q considerable amount. The PRESIDENT
aud Directors OF the Bank OF tho State OF South
Carolina hold these assets i'll possession, ahd
unoucstionaLly the legal title vests in them.
They disclalm, however, all personal interest
in said assets, and being rs corporation ir-
solvent, the bank itself has no interest.
The President and Directors arc advised
that they hold these assets In trust fJr tho
creditors oil the bank, OF which various class
cs have been enumera' cd, TO wit: hillholdcrs,
who arc unqucstionably creditors, and who
certainly, up to this time, have not rcnounced
their claim on these asSeSts. On the contrary,
u case is still pending, instituted by billhod-
ers Tor the very purpose OF enforcing their
claims. Next dcposltors, who are in no other
Wise provided for; then general creditors (ot
whom there are some), on account OF work and
'.ast, though not Least" bondholdcrs, claiming
under tho contract of guaranleee. =.
The act under which Gov. Scott makes his
demand, requires him to take these assets out
Of the possession Of the President and D!-
rectors who hold said assets " for and on be-
hal" of creditors into his own possession, he
to hold "for and Oh behalf of the Stato." The
assets are by said act directed to bo sold and
the proceeds placed in the treasury
Of the State" subject s'to tho order
of tho Governor" The act makes no pro-
vision for creditors, save q portion OF
one class, the billholdcrs. These are author
lied to fund their bills aild receive bonds OF the
canuot intend that the Governor should hold
| the assets for this class of credit )rs. AS to
every other class of creditors, whether de-
positors general contractors: or those contract
ing under guarantee, they are neither named
or alladed to in tho act 10 inter trust for
creditors in such a transfer, Is not only
wholly gratutous, but docs violence TO the
| obvious intent and meaning OF the act, when
| construed as wholo. Governor Scott, un-
der the act, is, in one scasc. trustee, but
he is a trustee not for tie clctl!ors or the cor
poration but for the state, the corporator. tAc
sole stockholdcr, in this case the c'-dep;ol
with the corporation. The act s1y4 !'!": ~ Is
to take possession 'fcr and III D2..ait VI the
State The assets aro L-.L ut .hs president
anu directors .li S'i"h VI VIZ StN,''
tors. and these arc required to be taken by the
Governor ''ior aud in behalf o. the Stale.
They are TO be taken "lor the State" to bc
placed in the treasury OF the State, and to
be subject to "the order OF the Governor
OF tho State" If it can be called implication
at all, rather than an express provision, the
| proceeds of the sale of the banks assets taken
'for and in behalf of the State" and to be de-
Dositcd in the ''treasury OF the State" subject
''to the order OF The Governor OF the State,
by il evtable implication, are to be held for the
use of the State.
IF this be the true construction of the act, it
manifestly impairs tho obligation of the bank 8
contracts with its creditors by taking away the
assets of an insolvent bank, Which belong
solely to the creditors. Judge Huger, in pro-
nouncins the opinion OF the Court OF Appeals
in this State. in regard to this very bank, says
"The capital of the bank is vested in the
President and Directors, as trustees, and call
not, legally or morally, te diverted to any
other purpose than payment of tie debts OF
tue bank, not even by the State" Bills ads. the
State: 2 McCord's L. r. 10 ana 20.
But does it vary the case, ii the act be con-
strued US constituting Governor Scott, as Gov
ernor, or the State of South Carolina. Instead
of the president aid Directors of the Bank, )
trustee for the creditors? The act still would
impair tho obligation OF the contracts OF The
bank with its creditors. "1hc Bank of the
State OF Arkansas was banking institution,
formed on the model OF The Bank OF the State
of South Carolina. For the most part, the
charters are tue same. They are identical in
the matter OF the State being the sole stock
holder IN both. The case OF CurTan VS.. The
State or Arkansas and the Bank OF the State OF