The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1893-10-21
DepOsitOrs Will Not Be Permitted TO
Pay Debts of Others by Giving
Checks Against Balances.
SOME POSSIBLE EXCEPTIONS
The Privilege May Be Granted
When Debtors Are InsOlvent.
Proposed Financial Legislation That
Will, if Adopted, Largely Increase
the Circulation.
Special to the indianapolis Journal.

WASHINGTON, Oct. 20.-An interesting
and important decision is being prepared at
the office of the Controller of the Currency
1t Is of a question propounded by the re-
ceiver for well known national bank in
Indiana The receiver wanted to know
some time ago whether he could liquidate
the affairs Of the bank under what is
known among bankers as the double liza
bility or offset plan. This is to permit
depositor in the bank to pay the obligation
Of a debtor by giving a check against his
balance in the bank The receiver believed
that he could close up the affairs of the
bank in just one-half the time If he per-
mitted those who had balances to their
credit to go to those who had notes paya-
BILE in the bank and arrange to take up the
latter by giving checks against their credit.
This proposition is one OF the highest i'm
portance in every community where ma
tional bank has suspended payment, and
especially where national banks are in the
hands Of receivers The decision Of the de-
partment be anticipated by the Journal
correspondent although the formal decis-
ion will not be made for some time yet,
careful syllabus Of the law, rules and pre-
cedents of the office, and decisions of the
Supreme Court of the United States and
will be of vast Importance to all interested.
This proposition has been made to the Con-
troller of Currency a great many times
since the establishment of the national
banking system, and while exceptions have
been made and offsets have been permitted
in closing the affairs of suspended national
banks, in this instance refusal is made. The
exceptions have been where the maker Of
note proved to be worthless and the in
dorSer a creditor of the bank. Under
these circumstances the indorser was per-
mitted to take up the makers note with
his own check, which, of course, had the
effect of reducing both the liability and the
assets of the bank; Where the maker was
good and the obligation collectable
directly from the principal, the indorser
was not permitted to take up the note with
a check against his account in the
suspended bank. The exception was made
simply to secure the note and as favor to
the indorser.
the institution will pay every depositor in
full, and it is found that to permit offsets
against the banks paper by liquda-
ton of the banks obligations might
rections. Representations might be
made to uniformed depositors that they
paid at all would have to be out of their
money long period of time, in order to in
duce them to take up the paper owned by
the bank In ali cases where there is the
legations in full it is found that it would be
gross injustice and that 1t would be throw
ing down the bars to collision to permit
offsets of this character, as those depositors
who were fortunate enough to take up the
obligations of the bank by checks against
their own accounts would be paid in full,
and those who were unable to make this
transfer would have to stand the shortage
of the bank. In other words, where there
the depostors would be paid in full by
turning their credit to individuals whose
paper they had taken up. and others who
looked to the bank would not receive par
yalue from their accounts.