Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1883-02-22

N this State had received construction in other
states where the Courts had been called upon to no.
~ anu pass upon proceedings Of this character.
- eoae commissioners added OF their own motion
s;anG osner PROVISIONS which made the law more
oiiulng. That Is, they provided that the acinowl-
eusilent and the inventory and the recording were
neeessaIy. u had been decided in New York and
Solis vtheI states that that was simply directory
put the Code Commissioners saw fit to make it
otheENise IN this State. This instrument was exc
cnied IN the manner pointed out in the statute Il
Is gcoi upon It's face There is nothing that affects
its validity far as the matter OF form is concerned
~ was acknowledged according to law by the officers
OF the bank, and recorded within the proper
tihie, ana the proper inventory was filed. Now,
then, the instrument being
VOID BY REASON OF THE IRREGULARITY
OF the proceedings of the meeting that authorized
it, could that instrument be revived? Could it be
brought into life by the action of the Board Of 0i
rectors Of the Odd Fellows Savings and Commercial
Bank had on the I'd day Of June, 1873, not in the
form 10 which the original instrument was drawn
w and executed? 1t strikes me it could not have
that legal effect for this reason II this instru-
ment had simply been one required by a
statute providing that a party could make
ali assignment, and not saying that il
should be recorded. not saying that it should
be acknowledged, and bot making these matters
necessary in order TO make il a valid instrument,
why, then, such 4 ratification as was made on the
I'd Of June, 1879, would be sufficient but il you
take ii in that view and say that il was sufficient
what result would follow Here is an instrument
that is acknowledged and recorded and is void.
Now, certainly any means adopted for the ratifca-
ton OF that instrument must be of hi n order,
and must be as complete in every respect and in
every particular which the statute makes necessary
20 its validity, IN order that the ratification should
be sufficient | cannot see how it is possible that
the law can be complied with in any other way. /
think therefore, that the ratification that is claimed
OF the ID of June, 1879, insufficient and that
the instrument nom the beginning to the present
time was void and invalid.
THE QUESTION OF FRAUD.
So far as it sffects this case l might possibly end
the discussion Of this matter at this point for il the
instrument was invalid we would simply go into an
accounting according to the rights OF these parties
but az this case may 90 further and as it is neces
sarY TO decide all Of the questions in it. it is neces
sary OF course that / should pass on
the question whether or not there was
fraud in the execution of this assignment
This is 4 delicate question 10 handle A question of
that kind involves intent Sometimes the question
is purely of fact and then again il is a matter
of law and fact mixed, and then it may be simply a
question OF law. But 1t is always delicate qaes-
ton to handle, to determine whether or not men Of
character and of standing in a business community
have been guilty Of acts which may be considered
as fraudulent. AS have said, it is delicate ques
ton to handle, and one that the Court is always un
willing to decide against party who is charged With
fraud, unless it is a matter Of duty. Still when the
Court comes 10 consider the law under which these
proceedings were taken, and that it must be upheld
in the strictest sense; that these proceedings
where the parties to it ought to be, for the benefit
OF the creditors closely watched There modes
provided by law under which party's property, if
he is in insolyeut circumstances, especially ii IL
bank, may be taken charge of by the officers whose
duty it is to administer the assets and all the prop
ery Of the insoyent and distribute il for the benefit
Of the creditors. Questions Of
WHAT CONSTITUTE FRAUD
What is evidence of fraud in this class OF cases
have arisen in many OF the States and whilst there
no absolute rule the decisions refer 70 cases where
The assignee was an improper person, for the rea-
son that he had not sufficient capacity
that he was insolveHt, that he was clerk CT
the assignOT, or that he was close re alton and
was therefore not well suited to take charge Of ho
affairs-all of these kind of circumstances which
men in the ordinary relations OF life recognize as
operating upon the judgment TO whether or not
trust would be carefully, honestly and properly
administered. There is then another class of facts
relating TO the amount assigned, and also in relation
to whether or not the asignor appears to have re.
tanned any control over the property In order Il,
understand the position of the assignee in this case
on the 2lst OF September, 1878, and 20 scrutipizn
his acts on that occasion and subseduentlv IL l.
necessary to go back to that date and see what he
knew then about the bank, and What was the con
diion Of the bank, and what were his duties II ia
claimed here by the counsel for the plaintiff and for
the Peoples Savings Bank that this institution was
INJURED BY ITS FORMER PRESIDENT,
Mr. Poorman, and that If this bank was really in
Solvent al Jue Tune lab the assignment made
that 1t was due to him. Mr.. Poorman seems to have
been the President Of the odd Fellows Savings and
Commercial Bank for some length of time, but he
went out Of Office some four or five months before
this assignment was made. Mr.. Smith then took
charge OF the bank. My recollection is that
Mr. Smith was Director before be be-
came President. But that is immateriaI.
AT sill events he took charge OF the bank
several months before it made this assignment. At
the time that he took charge, the property of the
bank consisted Of real estate and money loaned etc.
and it must be presumed that Mr.. Smith made him.
self acquainted with the financial condition of the
bank. It appears, from the statements that had
been filed before he went into Office President,
that the assets the LIST OF july, 1877, and
on the LIST of January, 1879, exceeded the
dep0sitoTs accounts and other liabilities and that
the bank was considered az solvent In the month
OF July, 1873, Mr.. Smith was called upon to file,
under the Bank Commissioners Act, his statement
OF the condition of that bank. In doing
so, he was required TO give tina financial
He made out this statement and took an oath,
which is attached to the instrument to the effect
that lie had personal knowledge of the matters con-
tanned in the statement. Them according to this
statement,
THE BANK WAS SOLVENT.
He presented this statement to the Bank Commits.
sioners, and the bank allowed to proceed with
its business. Now, Mr. Smith must be presumed 60
have known that il this bank was not SOL
vent at thst time, that it would have been the
duty OF Ine BANK u lunstlOnCrSSnQ ne must have
acted the theory that they performed their duty
that it would have been the duty of the Bank Com.
missicners to have taken certain proceedings pro-
vided for in the act, which would necessarily
have resulted in placing the bank in such a condi.
ton that its property could not have been attached
and could not have been dissiUated, and the Bank
Commissioners under the direction Of the creditors
would have disposed cf the assets of the bank
Then, in view Of that law he makes this statement
which he sends to be Bank Commissioners, and AYERS
in it that thebauh is solvent This was the condi-
ton OF the bank on the Both day Of june 1878, I'M
mediatey after this a dividend Is declared, there
being then in the blpk-on the 30th day Of June,
lS78-some S24 0C0 in each, money on hand Ee
declares a dividend then Of some So 200 Now,
this dividend went to the Stockholders and
the depositoTs. Mr.. Smith must have known
that the law did not allow him. II that bank was in
solvent to declare dividend, and particularly not
to pay a dividend TO the stockholders. The law
sp cidy makes all Of the property and securities Of
the bank fret security to the depositors and Of
terwards to the stockholders. Then he knew, il he
believed this bank at that time insoyent, that
he
WAS VIOLATING HIS DUTY
AS Presi ent Of the bank in allowing this dividend
to be declared, because it contrary to the int r
ests of the bank, and it paid among the stock
holders who not entitled TO it, against the
depositors. But am disposed TO take the statement
as being true He made this statement under oath,
and j must conclude that he believed that the
bank was solvent at that time. Now, the bank
the question arises, what was there to change bis
opinion Some Of the earlier decisions held that ii
lie as.lo4 IS ~ 8. lie iiLigu .LGt lie vas not III
solvent, but solvent that that would void the
assignment. think that class of decisions is not
the law now, but that his belief can be considered
only in determining whether or not there is any
fraud. That fact has no legal effect as to voiding
the assignment but it is simply considered for the
purpose Of determining whether or not there was
fraud. Then have a bank, in the Opini II Of
its President considered to have been solvent
in the month Of July. Now what does the
proof show as to the transactions Of that bank and
its condition up the 2lst OF September 1875 that
should have led Mr. Smith to believe that the bank
insoyentI 1t appears that on the 2ist Of Sep
tember he was notified that there was a very
SMALL AMOUNT OF MONEY IN THE BANK.
At the time the statement made by him to the
Bank Commissioners there was only S24 S54 "a in
the bank, and dividend OF go 600 was declared
out Of that. That taken from the amount of money
in the bank, provided no other funds came in
would have left the bank with only about 81, SOC
cash on hand, and that would have been the cond
ton to which the officers of the bank would
July, when the dividend was declared
| by them That dividend was paid. Now, on the
2lst OF September following there was six ssven
thousand dollars IN the bank. Mr, Smith was in
formed by one OF the employees that unless more
money was provided be would leave the bank
Smith theregpon, 50 far as | Judge from the
/ evidence, seems TO have or his own motion, anC
without any consultation with the majority Of the
Directors, come e the conclusion that the bsnk
ought to make an assignment It is very clear from
the evidence that the aiority OF the Directors had
never been consulted about this matter In fact il
il very apparent from what said at the meeting
that was held the night Of the 2lst of September