Court Opinion

ID: 9306311
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:17:16.673366+00
Date Added: 2024-06-11T17:13:55.491986
License: Public Domain

Hanfoed, District Judge,
(after stating the facts as above.) The evidence introduced upon the trial was sufficient to have warranted the submission of the case to the jury upon the question whether the bank was in fact the purchaser of the furniture, and liable as the principal debtor and maker of the notes, or a mere'guarantor; but, in my opinion, the special defense pleaded by the receiver is fully sustained by the evidence, and there was no error in the instruction given to return a verdict for the defendants. The bank was fully organized and in operation more than a year before the inception of the indebtedness constituting the consideration for the notes, and it was at that time liable to its depositors and creditors for sums amounting in the aggregate to at least four times the amount of its capital stock; and by section 5202, Rev. St.,1 its powers *737were so limited that it could not become legally bound for any additional sum, either upon an open account or as maker or guarantor of these notes. The section of the statute referred to is not ambiguous, and I find no warrant for the construction of it contended for by counsel for the plaintiffs. I cannot assent to the proposition that congress has, in fixing a limitation of indebtedness, intended to exclude from the computation thereof liabilities upon notes of circulation, accounts for deposits, and for moneys collected, bills of exchange drawn against actual credit, and surplus accumulations belonging to stockholders, and to authorize the incurring of liabilities for other purposes equal to the entire capital, leaving no surplus whatever as a margin for safety or basis for confidence. The plaintiffs insist that the violation of the statute by contracting debts in excess of the limit is not a defense available to the bank or the receiver who represents it. The receiver, however, represents, not only the hank, hut also all of its creditors and the government of the United States as well. If the government can, by any proceeding, enforce this law, the receiver can in this suit apply its provisions for the protection of the innocent depositors. Furthermore, there is no ground for estoppel, even against the bank. Contracts of corporations creating debts in excess of limitations fixed by their charters are void, and such debts are not collectible by law. Crampton v. Zabriskie, 101 U. S. 601; Daviess Co. v. Dickinson, 117 U. S. 657, 6 Sup. Ct. Rep. 897; Litchfield v. Ballou, 114 U. S. 190, 5 Sup. Ct. Rep. 820, and 7 Amer. & Eng. Corp. Cas. 378, note. Business men are presumed to know the financial condition of corporations to whom they give credit, and, if one voluntarily becomes a creditor for an additional amount after a statutory limit ha3 been reached, his position in a court of law is no better than that of one who knowingly becomes a party to an illegal contract. 15 Amer. & Eng. Ena. Law, 1138. Motion for a new trial denied.

Rev. St. §,5203, provides as follows: “No association shall at any time be indebted, or in any way liable, to an amount exceeding the amount of its capital stock at such time actually paid in and remaining undiminished by losses or otherwise, except on demands of the nature following: First, notes of circulation; second, moneys deposited with or collected by the association; third, bills of exchange or drafts drawn against money actually on deposit to the credit of the association, on due thereto; fourth, liabilities to the stockholders of the association for dividends and reserved profits. ”