The morning call., 1893-07-19
SUSPENDEDBANKS
Attorney=General Hart's
Two Decisions.
INFORMATION FOR OFFICERS.
Much Preliminary Work to Be Done
Before the Pacific and Peoples
Home Can Resume.

Attorney General Hart completed inter-
esting opinions late yesterday afternoon III
reference to the two suspended banks, the
Pacific and the PEOPLES Home.
"rhey are preliminary decisions ne
explained to CALL reporter, giving the
bank officials information on subjects they
desire. in order to enable them to get in
shane to reopen business in the event of
nv final decision allowing them to do so. l
shall certainly give them the right to re-
sume business if l can. as l desire to as
sist.all banks in the present crisis as much
as possible, with a due consideration TO
the interests Of depositors."
Appended is the decision relating to the
Pacific Bank:
ATTORNEY GENERALS OFFICE,
STATE or CALIFORNIA. (
SAN FRANCISCO, July Is, 1o93.)
In the matter OF the Pacific Bank.
The report OF the Bank Commissioners SHOWS
that about 81, ,64S,o00 OF the banks assets are
doubtful. i lie banks officials desire TO sho"
fnat many OF these assets are good A speclal
stockholders meeting has also been caHed ior
The 25th inst. on this account l nave oeter-
mined 10 give no further consideration 10 the
matter of the Pacific Bank until alter the
stockholders meeting.
The question has been asked by the officers
of rhe bank "What should be done in n case
where a deposition owes the bank and Is willing
10 have his deposit applied 10 the indebed-
ness?" Section $40, c. c. p, provides:
when cross-demauds have existed between
persons under such cIrcum stances that, II one had
brought an action against the other. counter
claim could have been set up, the two demands
shall be deemed compensated. 80 Tar as they equal
each other and neither can be deprived of the
benefit thereof by the assignment or death OF the
other.
This action allows deposit TO be applied on
an Indebtedness, II the bank Is solvent. and the
bank under consideration has been so declared
10 BE- by The Commissioners. L should Ike 10
see this course pursued so tar as 1t can be be
fore the 25th inst. so that q new statement OF
The condition OF the bank may be made. In the
meantime it is the duty of the officers OF Tue
bank to receive all money which debtors OF Inc
bunk desire To paw in and preserve IL until Ii Is
finally determined what course shall be taken
with reference 10 the bank.
AS some of the assets of the Peoples Home
Savings Ban% have been guaranteed by the
Pacific Bank l shall render a hnal decision re-
gardiGg these banks al the same time.
In connection with the Pacific Bank the ques-
tion also arises whether SAID bank Is savings
pauk under the law oil 1862 or commercial
bank.
This complicates the matter still more and 10
Investigate il thoroughly VIII require further
'''' WIN. II. Ii. HART, Attorney General
To the Pacific Bank and Board OF Bank Com
mssioners.
The decision as to the Peoples Home
Savings Bank is as follows:
In the matter OF the Peoples Home Savings
Bank.
Tie report of the honorable, the Bank Com
miSsiouers. dated 18Th inst, as 10 The actual
condition of said bank. was handed to me on
July Il, 1898, at 1926 T.. NJ 1t shows that
within The meaning of the bansiDg laws OF this
state said bank is solvent and able TO pay all
depOsitors in fun, the only question being the
lime required within which the credits OF the
institution can be collected without jeOpardiZ-
Ing their value.
So far as my examination into the question
OF savings banks has gone it shows that no
State III tie American Union has laws similar
10 ours upon The subject There are no decs-
lens directly i'll point IN this Stale III regard
thel etO, but in tie different states three lines
OF authorities exist as TO the relation OF savings
banks 10 their deposltorS. VIZ: First agent
aud principal; second, debtor aud creditor
third, trustee for depoSitOrs.
To determine whether savings banks organ
Het under he laws OF California come within
The line OF any OF these rulings Will require at
examination of many authorities, aud the stat
uies OF several States upon Which the decisions
referred 10 are based. L an at present OF ths
opinion that savings banks 10 this Stale and
their ielatlOn 10 depOsitors do not come within
any OF, he liBes of authorities designated, buI
that this question must be governed entirely
by the laws or this State pertaining to saving
banks organized since tie adoption OF tht
codes (scctionS 011 10 519, both inclusive,
e.. have found no statutes iii other States
similar TO these sectlous which strengthen!
my belief that the decisions of courts III othe
States do not establish rule to be followed II
TINS Stale. III Is due 10 The bank under discus
sion, as well as 10 all savings banks in tht
State that, before arriving at a final decision,
give this matter full and careful consideration
l am unable TO do this now. nor do | expect tC
be BILE TO prepare my opinion before the 10tl
prox. During the next two weeks shall give
the question careful study, and no harm car
result from the delay, as L have advised the
bank officials TO collect a sufficient sum o.
money to resume business at an early dav
There are other complications affecting the
stockholders but not the depOsitors.
have been asked by the officers OF the bank
u, where deposltor owes the bank and is will
ing 10 have his deposit applied on the indebt-
edness. they have the right 10 apply such de.
posit on the Indebtedness. Section 440, Code
OF civil Procedure, provides:
When cross-cemands have existed between per
sons under such circumstances that, If one a d
brought an action against the other, q counter
claim could have been set up, the two demands
snail be deemed compensated, so far as they
equal each other, and neither can be deprived OF
the benefit thereof by the assignmeut or death OF
the other.
This section allows such course to be taken
when the bank is solvent. The bank being
solvent, no possible Injury TO depositors can
arise from such action, and advise that it be
done.
Under the law the officers of the bank can
sell the 1857 shares of The capital stock of the
bank now owned by II, or any part thereof, in
order 10 make the capital intact as per the
book statement OF the capital, and so far as
this Office Is concerned l direct that such ac-
ton be taken.
In closing L will say that II the bank can
make sufficient collections within reasonable
Tine 10 resume business 1t should do so. Re
spectfuly
MM. II. II. HART, Attorney General.
To Peoples Home Savings Bank
Copies of these decis ions will be sent to
the Bank Commissioners and the officers
OF the two suspended banks this morning,
Neither Frank '. nor 4. Ii. Mcdonald Jr.
could give any information yesterday in
reference to the future course of the Pa.
cific. The directors have failed to agree
upon any Of the propositions submitted by
DR.. r. II. Mcdonald. General Wiley is
still in possession of the bank and actively
engaged in checking UP assets His work
will not be completed orSeveral weeks.
The directors OF the Peoples Home Bank
will meet tniS afternOon and discnes nj 10 ~ .