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


Judge Gufld's Opinion ON the Depos
ftOra OF the Bank OF TepnesBeo's Suit
-The state liable for the Full
Amount Pledged by the Bank Char
ter. ~. RS ~
We publish below the opinion Of Judge
Guild in the case Of the cross bill of B. r.
McKinnie ct ais, depositors Of the late
Baak Of Tennessee, filed by them In the
Cass Of the State VS.. the Bank ct ais.
Chancellor East having been Of counsel In
the original cause, was incompetent, and
Judge Guild sat by interchange in the case.
y The case was tried on demurrer TO the
cross bill, and was argued at length, some
two weeks ago, by Judge West II. Hum
phreys on behalf Of the depositors, and At
turney General HeiskeH nor the Bank and
State. The case being of great magnitude
and interest, was held under advisement by
Judge Guild until yesterday, when he de
Gvered the following opinion. The opin-
ion is a lucid exhibition Of the facts and
law involved in the case. 1t viii doubtless
be read with interest by the legal fraternity
throughout the State, as well as by all the
creditors of the Bank: 40 1. ---5
The State of Tennessee ct al VS.. the Bank of
Tennessee ct al. eH
This cause came on to be heard on the
bill and answer, and cross bill Of b. r. Nc
kinnie ct 81. and demurrer to the cross bill.
1t appears by the pleading that in 1887 the
State Of Tennessee chartered banking
corporation with authority to issue notes
and bonds, to receive money on deposit,
deal in bills of exchange and buy and sell
stocks Of the State. 1t appears also that
the President and Directors of the Institu-
ton were required TO be nominated by the
Governor and approved by the Legislature,
and should hold their offices until their
successors were elected and qualified.
1t was provided that the capital of the
bank should be five millions of dollars, that
the school fund should constitute part of
the capital stock, that the surplus revenue
deposited with the State by act of Congress
should also constitute part thereof, and
that the balance should be raised by the
sale of State bonds and the proceeds
placed in the bank as a part of
such capital stock, that the notes
should be receivable for the payment
dues to the State. It was also provided
by the charter, that the faith and credit Of the
State should be pledged for the support of
the Bank, and to supply any deficiency in
the funds specifically pledged, and to give
indemnify for all losses arising from such
deficiency. 1t was also provided, that the
profits arising from the Bank should be
devoted 20 the extent Of 100000 annually
to the support Of Common Schools, and
$1S,000to County Academies, and the bal
auce to be devoted to certain other public
purposes. The charter also provided, that
the Bank should have corporate existence
for thirty years. The cross bill of B. r.
McKinuie and Others charges, that the Bank
was pu- in operation, but that the whole of
capital was not supplied according tothe
obligations of the Charter; that it continued
in existence until the year 1866, when it
was placed in liquidation by an act of the
Legislature; that during its existence, to-
wit: in the years 1S5S-59-60-6l and 1862,
the compliments in CT oss bill, deposited their
money in said Bank at Nashville, and ether
points IN the State, IN conformity with the
chuier Of the Bank, and were
the creditors thereof, at the time the
Legislature put the bank in liquidation.
The cross bill further states that the Legis-
latWe By The act of liquidation passed in
1865, section 1,S29 Of revised statutes, or
dered that the President and Directors of
the Bank should make an assignment ofthe
eff'c of the bank to trustee for the more
sp Y settlement Of it's affairs. That the
trustee should convert the real estate Ofthe
bank into money, collect its debts, and af-
ter paying over one million and half of
dollars for the benefit of the school fund,
as TIE preferred creditor of the bank, he
should distribute the balance Of the fund
pro rata to the remaining iast creditors of
all kinds, excluding all claims and demands
after the Oh Of May, 1861, as absolutely
void; declaring that the notes issued prior
to the 6sh of May, 1851, should be taken in
paymei of debts due the bank, but notes
issued subsequent TO that time should not
be so received.
The sct further provides that the Attor-
ney General of the State should file bill,
if inIhe opinion of the Governor of the
Slate il should be deemed necessary, TO
carry iEto effect the directions of the act,
euj1iniug all creditors from suing the bank,
and mixing all the creditors so far as
known, aud all others unknown,
parts by publication, to the
end that creditors interested therein
may cone in under one decree, and equal
justice be done to ALL The assignment
was in conformity TO the act, and the bill
was filed the ChancerY Court at Nash
vile with the assent and appreciation of
the Governor of the State, in the name OF
the SAFE and Trustee in the deed of as
signme1t, against all the creditors of the
Bank q the PresideLt and Directors OF
the Bark. That bill prays that the deed
of trust he executed, that the creditors of
the bank be made party, that they be en-
Joined from prosecuting suits In any other
cOur'; but be required to prosecute them in
this Court, and that the funds be distribu-
ted according to the directions of the act OF
Assembly. The cOmplainsnts in the cross
bill pray that the deed of trust be set aside as
being subversive of the charter under
which tie money was deposited in the bank;
that an account be decreed as sgainst the
STATE, as the sole stockholder in toe Bank
to the extent of the liabilities as declared in
the charter, and that the effects of the Bank
be distributed in conformity with the char
tsSof tha Bank.
: The demurrer to this cross bill involves
the amount of the subscription by the
State, and its liability to account therefor
as the b isis of the account. The contro-
versy is SOW ia substance and legal effect a
coDlrove 50 between the State as the sole
stockholi r on the one side, and the cred
itors on sle other. The State prays an &C.
count AVID distribution of the assets or eff
feels Of TIE bank, and creditors do the
same. This account of the transactions OF
the bank involves, Of necessity, the ascer
tainmen. of the total aggregate of the eff.
fects of lie bank, and its total aggregate
liabilities. Before the aggregate means OF
the bank can be ascertained and establish
ed, the Amount of the State subscription to
the bank must be ascertained and estab-
lished. Whatever amount the State pledg'
ed itself . pay into the bank, as q stock
holder, IL a amount the Safe must make
good TO ne creditors, if not paid up during
the exis ice Of the bank. The Legisla-
ture dee ed the capital stock If the bank
should he five millions Of dollars. The
State pr scrlbed the funds, out of which
this five millions should be raised and de-
clared, II there was any deficiency Of the
funds, ID - specifically pledged as banking
capital, TIL State should make up that de-
ficiency, and indemnify all creditors
from an uses arising from such deficien-
cy. Tn 1artered stipulation, as well az
the r.: Of the Safe TO sustain the bank,
has u pom the statute book az notice