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

his book would prove his circulation to be
Sol 1873, and yet the proof shows S143, $50
of circulation not taken up actually re-
ported.
But take his own showing. He
says he ought still to have $4,000 in
bonds, now his circulation is S143,3
actually reported and fled. The difference
is $20,360 against circulation, even if he
had the I23 bonds Besides the proof
shows large amounts in other States and in
the hands of individuals in Tennessee NOS
reported. The. circulation not taken up
must be at least 100000.
Again the books of the Exchange Bank
show no deposit of bonds after the LIST Of
January, 1858, and yet if Mr.. Spence had
these bonds at that time he did not draw
the interest on them. This is strange, when
he was at that time in distress about his
circulation.
But finally what is conclusive, Mr..
! Spence did not claim to have lost any
bonds until the Legislative Committee was
organized. TIE dispositions of Cunning.
ham, Douglas, johnson and Morton
all concur in the statement, that when
pressed to settle his account with the Bank
| of Tennessee, he claimed TO have ontsids
means, but did not pretend that he had
more than ninety-two or ninety bonds
on deposit, and never pretended that he had
lost any bonds. This is conclusive The
bonds were not lost, but the question still
recurs, how is it that the bonds have all
been withdrawn, leaving innocent note
holders to suffer to the extent of 100000.
1t can only be accounted for by the loose
manner in which business was done at the
troll . Of A l. l..
disregard of duty in matter of great pub
lie interest, would be difficult to find in the
records of official delinquencies than was
shown by the Comptroller in burning the
circulation of these banks without counting
it, and delivering up the bonds for the
amount claimed by the bankers to be
burnt. But it is argued that by the Bank
of Tennessee holds the Al bonds bought
of the Exchange Bank in August, 1857,
and the SO bonds which came into its pos.
session upon a final settlement with Spence,
in trust, and that they or their proceeds
constitute fund which noteholders can
have applied to che payment of their notes.
Hence, 1t is important to understand pre-
cisely the facts in reference to these bonds
before an intelligent application of the law
can be made.
The forty-one bonds were bought from
Spence, and by his order the Comptroller
delivered them to the bank, and there is
nothing in the record that shows that at
that time, August 1857, the Exchange
Bank was in a falling condition. Spence
was frequently taking Rp his bonds by re-
turning his circulation, which was right
and proper, under the free banking law,
and there is nothing in the record that
leads TO the belief that the bank, at that
time, had any knowledge that the
transaction was anything but
strictly legitimate one, and in fact
so far as / can see, this transaction was
fair and the bonds taken up by return of
circulation end thereby ceased to be trust
funds, which might be sold to the bank or
any one else. The ninety-three bonds were
the last of the capital which had been de-
posted with the Comptroller az security
for the note-holders. The deposition of
Mr.. Morton shows that Spence claimed to
have less than 100000 of circulation.
perhaps $4,000, and when notified that
the Bank of Tennessee held more of the
notes of the Exchange Bank than he
claimed to have in circulation, he said he
would go home and look into it. He after
II,
that the Exchange Bank had out $l64, 900.
The Bank of Tennessee continued to re-
ceiye the circulation of the Exchange
Bank until it had taken up $l24,-
600. Up to this time, as proved by
Cave johnson, Morton and Cunningham,
Spence claimed only ninety-three bonds
in his box. The bank pushed him for a
settlement and he brought personal security,
h. fol-
for "very short time" as proved by Mr..
Morton. The $l24,00 was taken up, and
with it the ninety bonds we're with
drawn, and Mr.. Carney relieved himselfby
a sale to the bank of the ninety-three
bonds. The settlement in which Carney
was taken as personal security, was on the
18th of May, 1858, and the Exchange Bank
failed on the 18th of May. This was a race
of diligence, and doubtless regarded by the
Bank of Tennessee as a fair one, but it had !
the advantage in having more information
than other note-holders; it knew exactly
how many bonds the Exchange Bank had
on deposit and it knew they were not equal
to the circulation, and that somebody must
suffer, and all this information it got by
being trustee for all the note-holders.
Now was the Bank of Tennessee in
condition TO purchase this trust fund
say trust fund, for / can COME TO no other
conclusion than that the taking OF personal
security for very short time was simply
the means of reaching the ninety~three
bonds on hand.
think upon well settled principles these
ninety-three bonds were a trust fund, and
that the Bank of Tennessee was not IN con.
dition to deprive the other note holders of
all rights by appropriating them to ITSELF
There is nothing better settled than that
information acquired by one acting in a
fidueiary capacity in reference TO the bust
ness of his trust, cannot be turned to
account against those for whom he acts
This doctrine applies to executors and
guardians, attorneys and agents generally.
See the authorities collected in the note 10
Fox as. Mackuth, in the first volume of
leading cases in equity, las.
The same authorities cOnclusively settle
the doctrine that persons acting in a fdu-
ciary capacity will not be allowed to specu-
late in the trust fund to the detriment of
the ceStG,i cue trust.
Assignees of bankrupt and commits
sioners in bankruptcy, cannot in any case
purchase the property of the bankrupt, nor
can they buy an interest in his estate.
Vesey, 625 10 Vesey, 3S1.
So when an act of Parliament empowz
cred Rector with the consent of the
Bishop, who was patron of the living to
raise money by annuity for building new
Rectory House, the plan and accounts of
which were to be approved by the Bishop.
The Bishop advanced the necessary money
and obtained a grant Of the annuity
charged on the living. The Bishop being
placed in the position of a trustee to pro-
tect the interest of the Rectory, it was held
by Lord Langdale, NJ. R., that he could
not become the purchaser of the annuity;
and that the transaction, although there
was no unfairness in it could not
stand, because it was clear vi
olation of those rules wlSch have been
established for the defense of those whose
interests and property have been commit.
ted to the protection of persons placed in
fduciary situation. See Greenlaw va. King
8, Bear 40, vol. leading cases in equity !
1856
Looking to the whole act creating the
free banks and the act amendatory thereof,
it Is manifest the Legislature intended
an equal or pro rata distribution of the
funds in case of loss, and the Bank of Ten
nessee was the trustee for the preservation
of the fund Pv the lav the rorotez. of ibo