The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1899-11-12

an Agent for the DepOsitOrs-Each
One Is Entitled to His Proper
ton of the Assets of the
Bank.
That a deposit in an insolvent savings
bank cannot be offset against debt due
the institution was the burden of de-
cision filed yesterday In district court by
Judge Brill in denying the petition for Off
sets of Grace L. Smell and Ed Fallon
against the Savings Bank of St. Paul.
The memorandum in the Fallon case
covers the point, which, according to
Judge Brill, had never been raised before
in district court.
In the memorandum, after referring to
the laws under which the Savings Bank
of ST. Paul was organized, the court says:
Edward Fanon, the petitioner, had on
deposit IN the Savings BANK OIL St Pau,
upon JuIy 4, 1898, Lne uaIe upon winch the
bank suspended business, the sum or
$ob9ZZ. AL that Time the bank ned
note of said petitioner Tor The sum OF
$40, which note mas PASSED INTO the
handS OF the receiver. ramon asks 10
have sumclent amount appIIed from the
deposit TO pay the note mat the note
thereupon De DENY ereu 10 MN.
1t seems to be wen SeCtIed, and is not
disputed IN this case InaC the rule or set
on IN force in tbs state ana in some otn-
er states, in OrQnary cases OF insolvency,
does not apply TO savings Institutions. A
savings bank is an Incorporated agency
for the purpose of receiving ana investing
FUNDS for the benefit OF others. 1t has no
beneIiclaI interest in the property 1t holds,
but Is simply trustee. The bank is not
the debtor or the depos-tor, but his agent.
The depoSitors are The owners OF the
funds. They are, In fact, the bank and
each depOSiIOr is entitled to mis- share of
the property remaining after the payment
OF the debts, and to mat only. Neither
the bank nor the other depoSitors a any
time owe him anything more than his just
proportion OF the assets held by the bank
Morse in his work on banks and bank
Ing, second volume, section 652, concisely
states the rule in regard to offset in cases
OF savings banks, and the reason for it,
as follows: r,
There seems to be no doubt that prior
to the law of 1878, above quoted this bank
was a savings institution pure and sim
pie. But it Is claimed on behalf of the
petitioner that under the law of 1873 the
nature of the institution and the rela-
lions of the; deDositOrs to it were so
changed that, it ceased to be distinctively
savings institution and that therefore
the ordinary rule of SetOff applies. Con-
words capital stock and stockholders
in the law of 1878 1t will be observed
that the stock provided for in that law
did not possess the incidents Of stock or
dinarly, nor, did the holders have the
usual rights of stockholders in ordinary
commercial corporations. The stock did
not represent the assets of the institu-
ton. The holders OF stock had no power
TO eject the trustees, and had no voice in
the management of the institution
The stockholders simply invested their
money IN the Institution. The money IN
the :depositors ana the holders were to
receive a contingent share Of the profits.
The institution was Still a savings bank
ly,0Sf.
tons as. before, except that the money
paid In on the stock could be employed
as the trustees saw fit. and the profits
above al certain amount were to be paid
by the trustees to the holders of the
stock. The relation. of the depoSltors to
the bank was not changed, except that
they were entitled to the profits. to a
certain amount only. The nature of their
deposits was not changed. nor was their
relation to each other changed. The bank
was still their agent or trustee and
said is that. after the issuance of the
stock the bank, while operated for the
primary benefiEs6f depositors. was not to
be operated for their exclusive benefit.
other beneficiar1es. whose rights were
subordinate to theirs, being introduced.
But the fact that the trust cast on the
bank was enlarged and that holders of
stock We're also made contingent bene-
ficiaries. did not take the case out Of the
principle upon which setoff is disallowed
in case of savings institutions. While
funds Of the depositors and the holders
of the stock, and not Of the corporation
The stock having been lost the funds
now are the funds of the depositors
The so-called commercial deposits were
equally trust money with the savings de-
posts: Both went fntossone fund The
! only difference betweehs1he two, If that
is difference. is that theebank permitted
the commercial deposits to be withdrawn
with more facility than tie others But
it is to, be assumed that the bank re-
ceived them under the law, and the law
makes no distinction among depositors
and 1t would seem that the commercial
depositor was entitled to interest on his
deposit. upon the same conditions as the
Per a ae 81 1877 Unless unless he waived it.
which attempted to give the stockholders
power to elect trustees. is special legis-
Iation and clearly. unconstitutional.
There We're only two banks in existence
to which this law could apply, and the
class could not. be enlarged. The stock
in this bank, which was one of the banks
| to which the law applied. only existed by
virtue of a special law. The act could
not have been more obnoxious to the
constitutional limitation if 1T had desig-
mated these two banks by name