The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1876-12-19
!. DOLLAR SAYINGS BANK.
~ II 81 'ttss tyiEt
A DECISION AGAINsTTHE sPECiAg
sse DEPOaIToRs. 81,

ssa DEPOsIToRs.!z
sssss:. 80. -. I. s-s, ti5sIss ~
JUDGE HUGHES THINKS THAT THOSE WHO
DEPOSITED UNDER THE RESOLUTION OF
THE BOARD OF DIRECTORS GUARANTEE
ING SAFETY TO THE MONEY NOT EN-
TITLED TO BE CONSIDERED PREFERRED
CREDIToTs2THE CASE STATED AND THE
REASONS FOR THE j JUDGES OPINIONS. 4
.'':tsni g3is,ai ~ - ..t:..itI .tgs15s sanl.,'i
! In the United States District Courtsyes-
terday Judge Hughes delivered his decision
in re The Mutual; Building Fund and Dol
lar Savings Bank-eS. pGrts John Beatty, j,
He said: This savings bank suspended pay
ments over its counter on the 23d of Septen-
Der, 1871 memorable day among bank
ers. Its managers, in the belief that the
failure would be temporary, invited, few
days after. new deposits by means OF and
as described in the following advertisement,
which they published in the Richmond
newspaper: ~ ;,lt. Il ;zt.'.l.s, :. 4
DoLLAR sAylEes BAxK-Thls bank win resume'
:" Resolysd, That this bank resume business on
deposits In trust to new account, pIedeinE the bank
to use these deposits only in payment of checks
collect and realize from the loans and securities to
pay pro rata fnstalments on its present indebted
ness until the wbele shall be liquidated the same
paid. '''e JOHN E. BossIEUx, President.
Thomas S. ATmistead, Cashier.
Deposits to an inconsiderable amount
were made under this call by few men
one of whom was this petitioner-but the
bank very soon found itself unable to so
on, and closed its doors. In February,
1874, proceedings were taken against it by
creditors, and it was duly adjudicated an
involuntary bankrupt by this Court.
There is no evidence that
"'r -: THE NEW DEPOSITS
were marked and kept separate as special
deposits and the fact seems to be that they
were received over the counter in the same
manner as general deposits are received.
The advertisement itself virtually an
nounced that the new deposits would be
treated as common fund as to the neWFde-
positors, and not treated as special separate
deposits, except as against the old de-
positors.
A dividend has been declared and paid,
without prejudice to the claim OF the petit
toner, John Beatty, and the other deposit
ors under the advertisement of October 3,
1873, to be paid in full. according to the
tenor OF the advertisement, as preferred
creditors.
It is claimed on the part OF the petitioner
that his deposit under the advertisement OF
the Sd Of October was special deposit, and
that the advertisement was contract which
this Court is bound e1 'eQuo ct bono to spe-
officially execute as court OF equity.
I do not concur in either OF :.
THESE PROPOSITIONS: ]
/. The deposit Of the petitioner was not
special deposit; for it is only where the
special money or thing deposited is received
by the bank to be kept to itself and returned
in corpore on demand that the deposit can
be claimed to be special. True, the adyer-'
tisement held out that the tank would re-
ceive Especial separate deposits" but cali
ing q thing what it is not does not make 1t
what it is not. .}.,T7' -
9. It is claimed for the petitioner that he
has higher equity than the former deposit
| tors OF the bank created by the advertise
ment of the Sd of October. do not think
80. The former depositors made their de-
posits on precisely the same terms IN all es-
sential respects (save one) as those on which
the petitioner made his deposit, those terms
being implied in their case, while in his
they were expressed.
In the exceptional respect to which al
Iude the case Of the petitioner is weaker In
point OF equity than that of the former de-
positors. - .-...Ur.
The contract under the advertisement was
virtually that all
THE OLD RESOURCES
OF the bank, as well as the new deposits,
would be first used for paying the checks OF
the new depositors. The bank proposed to
go on with its banking business, and the
new deposits were of course intended in
the regular course of that banking business
to be used fer the purpose OF making new
discounts.
AS the new deposits were to be loaned
out for this purpose, the checks OF the new
depositors would have to be paid III whole
or in part from the moneys taken in on
notes already discounted, and which would
be falling due, so that the operation OF the
new arrangement would be as follows Let
the old deposits be known as Glass D. They
had been loaned out in discouuting old
paper, which we shall call Class Z. Let the
new deposits be known as Class B. They
were to be loaned out in discounting new
paper. UL
The advertisement OF October Sd was vir-
tually promise to use
THE FUNDS COLLECTED
on maturing paper OF Class X in paying the
checks of the new depositors Of Class B.
that is to say, the contract required money
| belonging e1 equo ct bono to Class d to be
paid to Glass B. I think such contract, SO
far as it was to operate in that way, was
ultra uires. The bank had no power to
make it, and the contract when made was
contrary to equity, and so far as it had the
unjust operation described ought not to be
enforced in equity.
| But even il it were a contract free from
the two objections Of being illegal and con-
trary to equity, and were such a contract as
court Of equity dealing with solvent par
ties should specifically execute, still this
court, as court OF bankruptcy, would be
unable to decree specific performance.
In its nature this court has little to 90
with the specific execution OF contracts. IL
has to deal with bankrupts who have broken
all contracts, and are unable to perform any
OF them. It Is q court whose primary duty
is the distribution OF assets gathered from
the wreck OF the estates OF 6ankrupts VINO
themselves have already rifed them OF every
resource available for the execution Of con-
tracts. - s.i {4t.s Il r.
THE POLICY OF THE Law
under which the Court acts is to avoid pre-
ferences, and divide the assets pro rata,
share and share alike, among creditors.
The business Of the Court in this case is to
distribute assets under the terms Of the law
which, except in favor Of liens, requires a
pro rata distribution.
II the new deposits which have been
sDoken OF had in fact been special de-
posts, duly ear-marked and set aside and
| held as such, the bank would have been
simple bailee Of them,, and would have
been obliged to return them In kind. But