The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1897-05-02

the celebrated Citizens Bank case. The
litigation has been pending for a num-
Der of years, and involves questions
interesting to attorneys as well as to
many of Utah's best business men.
Following is the decision in substance:
State of Utah eX rel, A. c. Bishop,
attorney general, plaintiff, VS.. The
Citizens Bank of ogden, a corpora
ton, defendant. Decision.
In this proceeding by the attorney
general on behalf of the State of Utah
against the Citizens Bank of ogden,
corporation, to dissolve the same and
to forfeit and take from it its corporate
rights, privileges and franchises, it is
alleged by the plaintiff that on Dec.
26, 1893, the defendant bank made a
so-called deed of assignment of all its
property both real and personal to C.
NJ Brough, for the benefit Of its credi-
tors: that prior to the time of said
assignment it had so conducted its
affairs through it's officers that the
capital stock and funds of said bank
had been lost to the bank and at said
time it was insolvent and is still in
solvent and unable to carry out the
object of its creation; and that the
defendant bank through its managers,
cashier, president and directors mis-
used the funds of the bank for the
benefit of said officers and against the
interests of said bank and its stock
holders and creditors and that large
loans were made to persons without
adequate security and that the bank
has not exercised its corporate fran
chiseS for more than two years.
Plaintiff asks leave to amend his
complaint TO make it conform to the
proof offered and stricken out, that
the officers of the bank had not given
,1lTwz
by the general Incorporation act. While
/ think the contention of plaintiff is
correct that the banking incorpora-
ton act does not repeal by impilca-
ton, so far as banks are concerned,
provisions of the general incorporation
law which are not antagonistfc TO, and
inconsistent with, the provisions of
the banking act, yet 1 think the mo-
ton to amend had better be denied
The result will be the same according
to the view taken of the allegations
as they now stand in the complaint
and the proof of the same by the evil
dence produced.
There can be no doubt from the eVl-
dence and admissions that the defend
ant bank was insolvent at the time of
the assignment and at the present time
and that il was then and is now unable
TO carry on a banking business. In
fact the defendant disclaims any in
tentiou or desire or ability TO carry on
a banking business. In view OF the
fact that the assignee has been sue
ceeded by a receiver appointed by
this court, it is not easy to perceive
the Importance or necessity to the
state of a proceeding of this kind, nor
of the interest to the bank in so
vigorously resisting the proposed for
fixture. The principal reason for the
contention by both parties seems to
Il
hands Of the receiver shall be turned
back for the corporation to manage /
and dispose of, as the assignment pro- ]
yides may be done, or whether the re-
ceiver shall sell the same and distribute
the process to the shareholders OF the /
corporation The dissolution or not /
of the corporation might erect some
what this question.
The mere insolvency and assignment !
by a bank for the benefit of creditors. |
does not ipso facto work dissolution
o. the corporation and it is conceded /
Joy the defense that II Is within the dls-
erection. whether it should be declared
for these grounds or not; but II Is con-
tended that this discretion should not
be exercised against the bank for the
reason that the receiver appointed by
this court is already engaged in wind
ing up the affairs of the bank.
The mere fact of an assignment ana
insolvency might ordinarily be 1nsuh-
cient to invoke the judicial discretion
in decreeing a forfeiture of corporate
franchises. especially where receiver
is engaged in winding up the corporate
business But since the state has seen
fit to start the proceedings and the
bank by resisting the same has made
It necessary TO go into transactions
long past and which perhaps should
have been complained of long ago. If at
all. have no doubt in holding that the
facts and circumstances brought TO
light in this case are such as 10 invoke
the judicial discretion in decreeing a
forfeiture of the corporate franchises OF
The defendant bank. The evidence dis
closes an Inexcusable lack Of integrity
on the part Of few Of the bank off
GERS and a continued and persistent
neglect of duty on the part Of most Of
TIE other officers. Almost strangers
were placed in charge of the bank
without bonds and were permitted 10
-.2propriate the money of the bank in
large sums to their own use; 10 DO
other Illegal acts without let or hind
rance.
The first cashier during the few days
he held that Office was short in his &C
counts some 5000. This experience
was evidently not remembered 10 the
profit Of the bank. for the next cash
er made use of more than double that
- I
he bank Notwithstanding the law l
provides no officer OF the bank shall |
borrow money from such bank to ex- q
.eed the sum of $4,000 and that no sum t
;hall be loaned 70 any officer OF ne '
,ank unless he furnish securitv in al ! =
east double the amount of the loan T
rade nor for more than the period Of f
he loan made: all these provisions s
we're being constantly violated. Cash I
er .Helfrich had loan by note in Oc- I
ober. 1890, of $4,000 without security c
nd then he was permitted to over q
raw until January 1891. Another v
Iote was taken for the overdraft ac- a
cunt in the sum of 81. 800, and the f
verdrafts of his various accounts was :
ermitted until June. when q new note V
vas taken for the total sum of $3.50, =
ecured by trust deed subject % q
rior mortgage which proved an en- f
ire loss to the bank The president Q
{ the bank in the beginning. was per- s
nitted 20 nay for his stock in part by
ote for So 500 uDon which no security +,
ras given. This was afterwards in k
luded in notes given by Corey Bros. n
opartnership the president Of the "
ank was a member in the total sum of is
yer $4,000 without security. If this fl
alutary provision of the law against II
Dans to bank officers except in GER I
ain limited amount and with double j.
eCurity can be evaded by the officers V
1rming either partnership or corpora 8,
on, which borrow bank money: then =
is nc protection to stockholders nor c-
!, the public and the law can be euded N
y doing indirectly what the law di- to
ectly prohibits.