The morning call., 1893-08-15
1T MAY RESUME.
Attorney-General Harris
Opinion.
PACIFIC BANKS AFFAIRS.
Stockholders Meet, but Defer Action
Until After the Legal Tangles
Are Decided.

yesterday afternoon to consider the latest
opinion rendered by Attorney-G General
Hart. Those present represented nearly
all of the stock held. The Attorney General
and NJ. A. Dorm of counsel for the sus-
ceediEgs began by the reading OF the
opinion.
1t is voluminous document. As a pre-
lude it sets forth the history of the bank,
the laws governing its organization and
the manner in which it is classified as a
savings bank. Numerous authorities are
quoted to show that the Pacific Bank must
be regarded as savings bank within the
meaning OF the laws creating it.
Continuing on this subject the opinion
says:
From this il Is evident that the deposjtors OF
a bank such as is under consideration have a
sta utory equitable lien upon fine capilal stock
and assets Of The corporation Ia preference 10
the stockholders. This Is IA valid lien-as much
SO as vendors lien would be. which is a statu-
tory lien upon specific property.
The depO>itOrs in a savings bank under the
laws OF the State of California are The beneficial
owners of the entire corporate estate TO the eX-
tent of their claims and earnings. The legal
title of this estate is III the corporation as an
entity, aud full powers OF management are
vested In the corporate officers and agents, but
the affairs OF The corporation must be managed
in The interest OF the depOsitors and not In the
I'M crest OF The shareholders, when her is any
conflict between The two. The rights of The
depOsiIors III this State are of a twofOld charac-
ter. While the corporation is solvent and in
operation the depositors may be regarded
solely in the light OF preferred creditors OF the
corporation. They are something different
from ordinary creditors. They are In reality
joint benefciaries of the corporate estate and
have an equitable enforceable lien Il! on the en-
tire assets OF the CORPORATION for repayment to
them OF their deposits aud earnings, in the
manner prescribed by law and by the bylaws OF
the bank.
the stockholders and has a lien against all OF
the assets of the bank. Each deposltor has i
lien upon the whole OF The assets of the bank as
security Tor his deposit, aud depoSi tor cam OF
by attachments or other proceeding acquire
priority superiority of lien over any other
deposition, aud has no right I" bring and main
tain an attachment suit against lhe assets of the
bank IN order To acquire preference over other
deposltors.
Then the Acknowledgement goes on to
tell why. in his opinion, deDositors in
savings bank cannot attach the assets of
the bank. AS 10 whether the Pacific Bank
is cnpartnershp, he says:
After the f.,nk closed its doors many persons
gave me their views on the question of the
liabIlny OF Its stockholders. Some claimed
that the racine Bank had always been CO.
partnership, on The theory that the act OF 1862
under which it was organized, with The amend
mrntS thereto, Is unconstitutional. They base
theii opinion upon the decision OF the Surreme
Court in The case of French Va. Teschmaker. 24
Cal. 5lS. THIS question should b fully con
sidrled by the s. Ockholders Of the bank before
they determine to abandon The business OF the
bank. There Is considerable force TO the
proposition that II the law under WHICH tue
Corporation was created is uGconst tHtl0ha'.
the >iEuers OF the articles of incoi porallon and
their successors can he held as copartnrrs SO
far the depo>itOrS are concerned. 1hlS,
however, is a question for the courts 10 detrr-
mine, and l do not care to give my impressions
upOn the subject at the present time.
In reference TO the liability of stock
holders the opinion reads:
Some of the stockholders OF the bank claim
that the act under which the bank was organ
Zed releases The stockholders of the bank Fl ON
ny llabili y beyond the capital paid i'll. My
opinion Is that II any part OF the act can be so
construed il is in violation Of The constitution
and void. l am also OF the opinion that II
partnership does not exist among the stock
holders the amendments to the constitution
nd the reserved iIghl IN the sovereign people
10 amend the chareIs OF corporal ions would
have the effect of making the stockholders In
divldually liable for their pro rata share OF the
liabilities OF lie bank as 10 all deposits made
since The adoption of the present constitution,
and that an action could be maintained for that
purpose 10 recover the same In primary suit
without reference TO the assets or the ban
Kennedy vs. California Savings Bank, 81 Cal,
49,
After referring to the various reports and
communications received from the Bank
Commissioners Mr.. Hart suggests that the
bank should resume business and con-
cIudes az follows:
have no doubt as 10 the ability Of the bank
to resume business II the stockholders VIII
work barmoniousy together to effect that end.
AS they are personally responsible . the de-
positois, they would as well make up the de
fcIcncy now. Or within a reasonable time, as to
allow the assets of The bank TO be sacrificed,
and then be compelled TO make up still larger
deficiency. Ii. however, the stockholders have
abandoned |
should like 10 know 1t at their earliest cOuven-
fence.
When the report had been read the ma
jority of the Stockholders agreed that the
opinion was satisfactory and favorable to
the resumption Of business. Upon the ad-
vice Of the attorneys present, however,
they agreed TO postpone definite action
until the various propositions now pending
in the courts are disposed of. 1t was
therefore decided to hold another meet
ing next Friday. when all parties inter-
ested in the affairs of the bank will be
present.
THE PEOPLES BANK.