The San Francisco call., 1895-12-19
His Reply to the California
Safe Deposit and Trust
Company.
QUESTION OF BANKING.
The Attorney Says the Company
Cannot Legally Hold Peoples
Bank Deposits.

T. Carl Spelling yesterday sent to the
directors of the California Safe Deposit
and Trust Company reply to the arsu-
ment of their attorneys that their institu-
tions was empowered to do banking bus
iness and could legitimately buy and hold
the accounts of depositors in the Peoples
Home Savings Bank and collect dividends
thereon. The question is whether or not
the California Bank and Trust Company is
legally banking institution, and Attor-
ney Spelling declares that it is not. His
reply was as follows:
To the Board of Directors Of the Peoples Home
Savings Bank: We should brush aside all mat
ters which have no bearing upon the point in
volved.
The trust company claims that it has taken
unto itself the power to do banking business
in its articles of Incorporation, and because of
the contents of that instrument all inquiry as
10 its right to exercise such powers is excluded.
In passing say that the words quoted from
It's articles in the answer to my first commun-
cation cannot be considered otherwise than in
connection with the statutes OF the State, nor
can its articles be construed to mean that it
may accept deposits otherwise than in trust or
to take assignments OF property otherwise than
in trust which is not banking business at all.
The whole tenor of the reply on the question
of the banking powers of the trust COMPANY is
a claim that its rights and powers are settled
by the contents OF its articles of incorporation
and the construction given them by its attor-
neys. II this claim be allowed, tnen the stat
utes governing and limiting trust companies
and banking corporations should be wiped off
the statute books, because all any one would
have to do in order to DEFY the law-maker would
be to form a corporation for any ordinary pur-
pose-say, for instance groceries-and insert in
the articles apt words to do banking business
1t would then make its capital stock do double
duty-frst, as q trading company; second, as
a bank. The banking department of such a
corporation could then be used as a sort of
money-trap to bolster up the grocery business
and thus all the statutory provisions enacted
to protect the public from unsafe banking
would be set at defiance and abrogated by the
act of individuals.
The law imposes certain liabilities upon
stockholders in ordinary corporations, and
special and peculiar responsibilities upon
stockholders of banking corporations and their
liabilities are In favor of depositors; and the
relation between q deposi.or and bank are
different from that between creditor OF q
trading corporation and that corporation.
But in case of insolvency of such dual corpo-
ration, whose primary purpose is trade, but
whose secondary object is banking, how could
the conflicting claims OF the two classes of
creditors ever be adjusted? The statute re-
quires q bank to have so much capital stock as
bank, and requires it 10 be paid up to GER
tain extent, but makes no such provision for
a trading corporation.
The certificate of the Bank Commissioners
signifies nothing and its production is no argu-
ment, but the weakest kind of subterfuee
The Bank Commissioners act ministerially in
issue license to Incorporated benevolent
society to do a banking bushes, would that
legalize its operations? Within the last ten
DAYS a gentleman holding the Governors COM
mission Police Commissioner was decided
by our Supreme Court 10 have no right as Po-
lice Commissioner.
Under general laws providing for what pur-
poses corporations may be formed, no persons
by merely going through the formality of filing
articles of incorporation acquire any corporate
powers. not authorized by such general
The important ques ton is whether one and
the same corporation can on the original cap-
tai stock, serving its purposes as a trust COM
pany, become also bank by merely filing new
articles II 1t can it can amend from time to
time and become not only bank and trust
company, but an insurance company and
railroad company, for each and all of which
special, peculiar and incompatible provisions
are made.
1t mightfail in one or all of those subse-
quenty usurped enterprises, but the stock
holders who subscribed for stock in a trust.
company could not be reached by those who
had trusted it as bank or built railroad for
IL or suffered losses by fire or death.
Now the question of title of the trust COM
pany to these passbooks, that is side issue
But its attorneys take up the trust end of the
company's business when they come to discuss
the passbook question.
| have seen these assignments presented to
the directors OF the Peoples Home Savings
Bank They are outright assignments for
value and were in the action brought by the
trust company against Winterburn and
Others, alleged to be outright assignments for
value, and the complaint was sworn to.
The plaintiff in that case claimed title to them
as Bank and Trust pany." Besides, it has
had the accounts changed on the books of
this corporation and entered in its own name
as absolute owner. These acts and sworn
statements gre wholly incompatible with
trust, and squarely raise the question of its
rights either as bank or trust company or
as both to purchase and own these open ac-
counts. And upon this question my position
taken in my first communication and sup
ported by ample authorities remains unshaken
and unassailed.
In conclusion, I will say that the law upon
which my demand that the money placed with
the trust company upon ordinary deposit be
withdrawn is conceded in the reply of the ust
companys attorneys to be as insisted also
deny the right OF the trust company to hold in
its own name and right these open accounts or
to receive dividends in that form and style. 1
insist that its claim to them should be judicially
tested by the directors of the Peoples Home
Savings Bank before any more dividends are
paid on them. Very respectfully,
7. c. SPELLING,
Attorney for Depositors and Stockholders.