The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1898-05-20
BANKING LAW EXPLAINED
SUPREME COURT PASSES ON IT'S
VARIOUS INTRICACIES
ZumbrOta Bank Case Brings Ont an
Important Ruling ON Some In
vOlved POints-Street Railway
and Hastings & Dakota Roads
Receiver Win Some Appeal Cases
Rue's Indictment Stands.

In a decision handed down yesterday
the supreme court passes on a number
OF disputed points in the existing laws
covering banking organizations.
The case is that of Heman H. Palmer
plaintiff, VS.. Bank of Zumbrota, defend
ant; Il. p. Thatcher, Intervening appel
liant; Rev. o. Hanson ct al, interven-
ors; Creditors, appellants, VS.. E. r.
Garfield ct al, defendants; Sid B. Bar
teau ct al, respondents.
The court holds that:
i: Banks organized under CHI. SO, g. S.
1S1S, had before the passage of 145 laws
1920, the charter powers Of banks of Issue,
whether they issued any circulating notes
2. In SO far as CHI. 1853. G. D. 1885, attempts
to give authority to amend articles of in
corporation IN other respects than by ex-
Iatlon II IS unconstitutional and void, be-
cause no subject except such extension is
expressed IN the title of the act.
o: sec 10 OF art. 3, of the constitution re-
CURES that law for the organization of
Parks OF issue shall be passed by two
Lnlrqs vote CT the legislature; held, CHI. II,
q, L; 1881. which attempts to amend sec.
tutlonai provision and is void, because 1t
was not passed by such a two-thirds vote.
"a ' he'd. said sec 10. as Originally enact
amending the articles of Incorporation.
b. but as the statute is silent as to the
manner IN which the amendment shall be
mace, the same formalities are required
with reference to the execution filing AMI
publication of the amendment as are re-
CURED with reference to the original ar
tlcles or incorporation.
o. Where In amending the articles of in
eCrpoTatlon the requirements as to these
pcrnaEties were not compiled but the
aIienument was voted for by the stockho,d
erS, the increased stock was issued. and
ned by the new stockholders until the
Eank 6elng inso.vent. an action was com
chanfer 70 70 aGPp nns, receiver for it under
10 creditors who have become such on the
ialtn or the new stock, the holders of it
are estopIed to deny It's validity.
=. creditors are presumed to have trust
81 the pank on the faith OF the increase OF
was voted. o'- mel cast
such before such vote, the new st,ckboi de- g
are not estopped, unless there is In favor
81 o. cfeuit6rs some special equity which ere
e eaes S S1 estoppel On the facts in this
case nel9, there Is no such equity.
y. Held, as against such creditors tbe
f oiueis Vi tne new stock who received it
from from the bank in lieu of claims which they
formerly held as creditors of the b nix are
entitled to receive and stand as creditors
not stockholders
TO- The receiver appointed in such an
action has no authority to allow or dlsallow
claims of creditors and where he allowed
same and paid dividend thereon, and dis
allowed others, the court may allow the lat
ter and order the same dividend to be first
paid on them out of the fund derived from
the stockholders double liability and or
der the distribution OF the balance OF that
fund to all the creditors pro rata.
IL. The order for judgment construed, and
held. not to provide that creditors who
failed to intervene and exhibit their claim,
should receive dividend, held error.
H. Where the purchaser of a number of
the claims Of creditors owed no fiduciary
relation to the bank and paid price which
was not SO Inadequate as to shock the con-
science, held he is entitled to dividend
the full face of the claims.
10. Held, the stockholders double liabil-
ity is an unliquidated demand, and is an
action under chapter rs to enforce it. inter
est should under section 1904, General
Statutes 1894, be allowed on the amount Of
the double liability from the time of fling
the decision in the court DeIow, but not be-
fore.
IA. Held the amounts which the new
stockholders, standing as creditors, may col
lect from the old stockholders on their
double liability, should be applied as far as
necessary, in payment CT the amount fer
which such new stockholders liable to
the creditors who became such on the faith
of the increase Of the stock. The manner of
determining the extent Of this liability
stated Order modified