Source: https://www.law.cornell.edu/supremecourt/text/309/517
Timestamp: 2019-11-12 10:20:16
Document Index: 666611820

Matched Legal Cases: ['§ 45', '§ 90', '§ 90', '§ 45', '§ 5153', '§ 90', '§ 45', '§ 61', '§ 101', '§ 9', '§ 759', '§ 192', '§ 771', '§ 162']

INLAND WATERWAYS CORPORATION et al. v. YOUNG. | US Law | LII / Legal Information Institute
309 U.S. 517 (60 S.Ct. 646, 84 L.Ed. 901)
The question before us is whether a national bank may pledge assets to secure deposits of funds made by governmental agencies, even though they may not be 'public money' within the scope of § 45 of the National Banking Act, 13 Stat. 99, 113, 12 U.S.C. 90, 12 U.S.C.A. § 90.
The Pottorff case held that a national bank was without authority to pledge its assets as security for private deposits. In the absence of specific authority to make such pledges, the general policy of the Act and principles of sound banking practice were drawn upon to establish the prohibition. To allow the withdrawal of assets of the bank from general availability would impair the bank's liquidity—its ability to meet unexpected demands by depositors—and thereby restrict the national banking system as a reliable instrument of national finance. In the Sneeden case the banking standards relied upon in the Pottorff case were applied likewise to deny to national banks power to pledge their assets as security for deposits by state and local governmental agencies except where permission is given by the Act of June 25, 1930, 46 Stat. 809, 12 U.S.C. 90, 12 U.S.C.A. § 90.2
By § 45 of the Act, Congress specifically commanded the Secretary of the Treasury to exact security for 'public monies' deposited by him in national banks. R.S. § 5153, 12 U.S.C. 90, 12 U.S.C.A. § 90. We read this as an exaction of duty from the Secretary as to monies subject to his control, see Cook County Nat. Bank v. United States, 107 U.S. 445, 449, 2 S.Ct. 561, 564, 27 L.Ed. 537, and not as a limitation upon the power of the bank to give security when it may be required by other Government officers and agencies charged with the custody of federal funds. Placing § 45 in the setting of its history, we do not think it should be read in a niggardly spirit, as though it expressed a gingerly departure from public policy. On the contrary, it is a manifestation of historic national practice, which is to be given scope consonant with the reason for its development. Compare Keifer & Keifer v. R.F.C., 306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784. By a series of specific statutory commands, Congress has recognized the power of national banks to give security for deposits of a governmental nature by laying upon various agencies, charged with the custoody of such funds, a duty to exact collateral. See § 61 of the Bankruptcy Act, 30 Stat. 562, 11 U.S.C.A. § 101; § 9 of the Postal Savings Act, 36 Stat. 816, 39 U.S.C.A. § 759; and Acts relating to Insolvent Bank Funds, 39 Stat. 121, 12 U.S.C.A. § 192; Porto Rican Funds, 39 Stat. 951; Government Obligations, 40 Stat. 291, 31 U.S.C.A. § 771, and Indian Monies, 40 Stat. 591, 25 U.S.C.A. § 162. With one exception all these special statutory requirements pertain to funds held by the Government for the benefit of others. It is difficult to suppose that what Congress has commanded with respect to funds held by its agencies in an immediate fiduciary capacity, it would deem a violation of law if done with respect to funds beneficially owned by the United States itself. What may be inimical to the private aspects of the national banking system, and therefore ultra vires, has no such relevance to the public aspect of national banks, and to the enforcement of the public interest by those charged with primary responsibility for its guardianship.
WOODRING, Secretary of War, et al. v. WARDELL.