Evening star., 1933-07-09
Test of Roads Commissions
Right to Priority Will
Be Reargued.
DECISIONS REVERSED
IN TWO OTHER CASES
Favored Status Denied for City
Funds Collected by Bank and for
Deposits to Pay Mortgage Coupons.
Special Dispatch to The Star.

SpcCIdl bISpdlCH u Inc Slar.
ANNAPOLIS, Md, July 8-The con-
st1tutlonality of the emergency banking
act passed by the Legislature was up-
held, and the decision of the lower court
IN the case affirmed by decision hand
ed down by the Court of Appeals yes
teroay
The case OF testing the :ight of the
State Roads Commission % enjoy the
same priority in the payment of its de-
poslts as the general State treasury was
ordered reargued
The lower court was rev8S,d in two
cases. In one of these the lover court
ruled that when bank had been named
an agency for the collection of taxes by
the city and had on hand funds so COL
lected. those funds enjoyed a priority
and should be paid to the city The
Court Of Appeals reversed this decision.
Special Status Denied.
In giving the opinion, the appellate
court said:
The contention on behalf OF the city
is that this form of contract with the
collecting bank extends the trust rela-
ton of the collection agents beyond and
after remittance by the checks. but even
If this should be correct, it would not
answer the question to be decided as
this court sees it. Whatever the legal
relation may be, this did not cause the
holding of the funds apart from the
bank funds. on the contrary, the express
arrangement of the parties was that the
bank collections should be placed among
those funds to be drawn upon by the
banks own checks That being true,
then whether the liability of the bank
to the city for so much money was that
of trustee or that of debtor, it follows
from the decision in the case of Ching
her VS. Thompson that the funds are
subject to the restraint upon which
Withdrawals imposed by the emergency
act. and that the city is not entitled to
their release.
Another case was one in which IL
was claimed that funds deposited with
a bank for the payment Of coupons
under mortgage enjoyed priority
and might be paid by bank not open
100 per cent. The lower court ruled
that such funds did enjoy priority.
The Court of Appeals reversed the
lower court In this case.
Two points decided by the Court OF
Appeals in the decisions were OF spe-
cial interest to deDositors in banks
which were in the hands of receivers
before the emergency banking act was
passed.
Decision Is Upheld.
The emergency banking act provided
that all checks for taxes received by
Baltimore City prior to 5 pm, Febru-
ary %. should be paid to the city in
full by the banks on which they were
drawn. Judges Eugene ODunne, Eli
Frank and Charles P. Stein, before
whom the constitutionality of various
aspects of the emergency banking act
was argued by a large number OF
lawyers, held that this part Of the
emergency act was unconstitutional.
They denied the city the right to collect
this sum. The decision Of the Court
of Appeals upheld this decision as it
upheld the decisions of the lower court
on other aspects of the bank act.
In the lower court it was argued
that funds which had been collected
by a receiver for a bank and which
had been deposited in a bank which
was closed at the time of the bank
holiday should be paid prior to other
claims. The emergency banking act
had made such a provision.
One of the banks in receivership.
the Chesapeake Bank, was about to
pay a dividend to its creditors when
the banks were closed for the bank
holiday The lower court held that
these funds did not enjoy priority
and should not be paid. The decision
of the Court of Appeals today upheld
this decision.