Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1872-09-17

OF the capital stock, is not conclusive upon
the creditor, for all persons were certainly
authorized to look to the charter as show
ing The obligations OF the State-at the
amount Of the actual subscription Of the
State, in order to ascertain and fix the
amount Of the capital stock pledged 10
creditors. The creditor mightweIl say to
himself, If the State has not as yet put in
the five million she viii do 50, and In case
OF failure to make good the loss TO the
creditor, the amount of the capital stock is
the amount the stockholders have subscri-
bed in conformity with the charter aud not
the amount they have paid In on the sub
scription. This is the dictate Of common
sense. Is In accordance with the strictest
morals, and is the settled Law. Of the land.
See Angel and Ames on corporations, chap.
Is. = sar
Were It Otherwise, the creditors of cor
poration might be subject to the grossest
fraud. The capital stock Of the Bank OF
Tennessee is fixed by its original charter at
five millions of dollars, and no repeal or
modification Of its charter in that respect
has been shown to the court. This sum
therefore must be the basis of the decree
for the account, which Is asked by the State
aud the creditors. The State engaged as a
stockholder to make up that sum for bank
ing operations, and to indemnify all credi-
tors, be they note holders or depositors,
against loss by reason of the deficiency of
the funds pledged. .Izla wsr 'stset
II the State has failed to supply that
sum, and the effects of the Bank be INSULT
cient to pay the creditors of the Bank, in
al ID he MI ina "a IN ho
they have the right and are entitled to have
the deficiency supplied to save them from
loss.
The cross bill further raises the question
as to the validity Of what is called the war
bonds, issued by the State, bearing eight
per cent, by act of 1861 authorizing their
issue, and requiring the President and Di-
rectors to buy these bonds. They were pur-
chased by the Bank with the notes of the
Bank, and remain within its vanlts. 1t Is
clear from the face of the act Of 1861, that
the bonds can never be enforced against
the State. The Constitution of the United
States forbids it, and we are bound by the
Constitution. A further question arises:
these bonds being worthless, and the State
through its officers buy them, with the as
sent and direction of the State, having
taken the assets or means Of the Bank
and purchased these involved bonds, can
the State re made liable to creditors for
such applications Of its funds? This Is
question of great magnitude, which will
not determine on demurrer. Leaving the
State to respond to the bill, let proof be
ia ken when all the facts may appear, and
the court of the last resort viii then be en-
ia he ID ~ l,n
well as the creditors upon all those impor-
tant questions.
Then on general principles well settled,
Judge Story says: "The stock and other
property of a private corporation is
deemed trust fund for the payment Of the
debts of the corporation, so that the creditors
have lien, or right of priority of payment
to any of the stockholders Of the corpora
ton. - So the stock Of our corpo-
rated Bank is deemed trust fund for the
payment of all the debts Of the corporation,
and no stockholders can enable himself to
any share of such capital stock until all
debts are paid. See Story Eq. Jur. Sect.
1 ,252. ~
This principle is settled after the fullest
consideration by the Supreme Court of the
United States, in the case Of Currin VS. Arkan-
sas, which was g. case of an incorporated
Bank, in which the State of Arkansas was
the owner of all the stock. The Supreme
Court declared in that case, that the acts of
the Legislators OF the State, undertaking to
dispose of the stock and effects of the Bank
without payment ofits debts, was uncon-
stitutional and paid. See Is Howard 304.
So the Supreme Court of Tennessee in
the case of Mari vs. Bank Of West Tsnnes-
see, recognised the same principle as the
law of Tennessee.
In regard to the questions raised in the
cross bill, touching tie validity OF the Deed
Of Trust, made TO the Trustee, and direct
ing one million and one half of the assets Of
the Bank to be paid over TO the school
fund. That question has been adjudged on
demurrer by Chancellor Otis in the original
cause, and what ever my opiuion might be
on this question it is res judicata as far as the
court in this case is concerned. The case
on this point is gone to the
Supreme Court where the law will be finally
settled declaring the rights of the parties.
The cross bill further prays for declsr-
atory decree, against the State for the
amount of liability which may be estab-
lshed against the State, in its charter as
ssockholder in this Incorporated institution
to the extent of its liability prescribed by
the charter and as debtor TO the Bank.
This is objected 10 by the Attorney General
with much force and bearing, on the ground
that it is a direct attempt under the guise
of cross bill, to hold the State responsible
for debt by suit regularly prosecuted, and
by decree without authority of law. 1t is
argued that the State can not be sued. 1t
is true that the State being a sovereign
power can not be sued without its consent
given in some form. This is well settled.
See Bristow Z, Commonwealth Bank of
Kentucky; II Peters 259; Story Eq. Plead.
sec. 50. But its consent TO be sued can be
given not only by express provision in all
cases, but it can be given in any given
case, which the State may desire
to have tried, according to the rules of law.
The Code, sec. 2S07, gives general suthori-
ty to sue the State in all cases. So the au-
thority may be given when the suit is di-
rected by the State against persons, and the
justice of the case necessarily involves q
cross bill. L. is contended by the COM
plainants in the Cross Il that the State is
liable to be sued under sec. 2807 of the
Code, and that the section in the Revised
Statutes of 1865, purportiug to repeal the
section 2807, is not law, because it was not
enacted In conformity with forms required
by the Constitution. /. That 1t was re-
jected on a previous day Of the session at
which it was passed, and could not be
taken up and enacted at the same session.
2. That the Revised Statutes purporting tc
repeal sec. 2807 of the Code was put on as
an amendment to the general appropriation
bill on its third and last reading, and there
fore was of no validity, as the Consti-
tuition declares that no bill shall
become a law until 1t shall have
been read and passed on three different
days in each House. This provision of the
constitution was discussed at some length
ia the case of Furgeson VS. the Miners and
Manufactures Bank by the Supreme
Court of Tennessee in 1856.
In that case a bank charter was created
by reference to a previous enactment. This
was done by way of an amendment to q
bill on It's last reading. An act to incorpo-
rate manufacturing company brought into
existence bank charter By reference to an
other charter, without disclosing the fact.
The court say that the Intention of the
provision of the constitution that no bill
should become law until it should be read
and passed on three different days in each
House, was to insure full consideration aud
mature ion, and that no bill should
be hastily passed.
The passage of this bill under the cir
cumstances has the appearance Of an inva-
sion of the constitution. 1t is certain that