Court Opinion

ID: 3238538
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:12:27.39065+00
Date Added: 2024-06-11T07:40:29.138606
License: Public Domain

The first principle referred to in the opinion is supported by our case of First Nat. Bank v. Hall, 119 Ala. 64,24 So. 526. But that opinion held that, under section 5242 of the Revised Statutes, now section 91, USCA vol. 12, the transaction constituted an unlawful preference, and was therefore ineffectual as a payment by virtue of such statute. The report of that case does not show whether the officers of the bank knew of its insolvency, but assumed that the payment was in contemplation of insolvency, and cited Nat. Security Bank v. Butler, 129 U.S. 223, 9 S. Ct. 281, 32 L. Ed. 682. But in that case, when the transaction occurred, the directors had held a meeting and voted to go into liquidation. Whereas, in the case of McDonald v. Chemical Nat. Bank, 174 U.S. 610, 19 S. Ct. 787,43 L. Ed. 1106, payments made a few days before closing were held not to violate the statute, though the bank was insolvent, because it had continued to transact business in the regular way, and discloses no intention nor expectation on the part of its officers presently to suspend business. It is further said that, though the bank afterwards turns out to be insolvent, that does not suffice to show a violation of the statute. For there is often the hope that by continuing the ordinary business affairs they may take a favorable turn and thus suspension of business be avoided.
In this case the bank continued in business for four days, and nothing shows that it was not the fair expectation of its officers, when this transaction occurred, to continue in business for an indefinite period. So that it is not controlled by the United States statute to which the Hall Case refers.
We also observe that no contention has been made in this case that said statute is controlling. We think that the principles referred to in our opinion have been correctly applied.
Application for rehearing is denied.
ANDERSON, C. J., and GARDNER and BOULDIN, JJ., concur. *Page 420