notes, and bonds, as collaterals on the indebtedness of the New York Iron Company to us, viz.: [Specifying them.] The above securities are given upon the following conditions: We agreeing to release the New York Company from all liabilities to us, either as indorsers or principals, provided the secretary of the said company wishes us to do so, and giving us notice to that effect in writing." It was held that this did not constitute the secretary, in any way, an arbitrator, but the option was the option of the company, which could be legally made either by itself or by anyone acting as its representative, and consequently that it could be made by the receiver of its assets after its insolvency.1 § 7256. Distribution not Made to Creditors of Creditors. For reasons already stated,' after a receiver of an insolvent insurance company has been appointed under a statute, and the company has been enjoined from the further prosecution. of its business, its funds in the hands of the receiver are not subject to garnishment by creditors of its creditors, called "trustee process" in Massachusetts." Such process will not run against the corporation, because it has been enjoined from paying its debts; nor against the receiver, because the property which he holds has been intrusted to and deposited with him, not by the acts of the public, but by authority of law; and the law allows no person, so holding funds, to be charged by such process, except executors, administrators, and assignees under the insolvent acts. It was suggested that, if the creditor of the creditor could, by any form of remedy, have the property of the corporation applied to the payment of the debt due him from one of its creditors, it could only be by petition in equity in the case in which the receivers were appointed. On this suggestion, such a petition was subse 1 Phoenix Iron Co. v. New York Wrought Iron Railroad Chair Co., 27 N. J. L. 484. * Ante, § 6933. Columbian Book Co. v. De Golyer, 115 Mass. 67. Gray, C. J., in Columbian Book Co. v. De Golyer, supra; citing Colby v. Coates, 6 Cush. (Mass.) 558; Thayer v. Tyler, 5 Allen (Mass.), 94. Columbian Book Co. v. De Golyer, supra. quently presented and denied. The court reasoned that the property of the corporation is intrusted to the receiver, by the authority of the law, for the purpose of distribution among the creditors of the corporation, and not among the creditors of those creditors; and that, for the court to undertake to determine, as incidental to the administration of the estate of the corporation, the validity and equity of the claims of every creditor of a creditor of the corporation, would unreasonably embarrass and delay the distribution of the estate, and the settlement of the accounts of the receivers. It is believed that these objections are not sufficient to warrant the establishment of a rule of exclusion which practically cuts off all remedy of the creditor of the creditor; and there are certainly many cases in which they would have no application at all. 1 Com. v. Hide & Leather Ins. Co., 119 Mass. 155. In a case involving the question of priorities in the distribution of the assets of an insolvent life insurance company in the hands of a receiver, a number of claims were set up for preferences which were severally disallowed, and the court held that the holders of claims for death losses, and the assignees of such claims who stood on the same footing as the original holders, were entitled to be paid first, and that the balance remaining in the hands of the receiver was to be divided pro rata among all the other creditors. One who had subscribed for stock on the formation of the company and had paid his subscription, who never had received any stock, but had allowed his money to remain for several years in the hands of the company, became thereby a general creditor of the com pany, and was not entitled to any preference. Those who advanced money to pay for losses incurred on particular policies, and who appeared on the books of the company as credited with so much money to be applied toward the payment of losses incurred on the particular policies, did not, for that reason, stand on a footing different from that of general creditors, and were hence not to be preferred. Judgment creditors were not to be preferred over general creditors, for the reason that they had acquired no lien upon the assets of the company in the hands of the receiver by the recovery of their judgments. But it was not held that, if the lien of a judgment had attached to such assets before it went into the hands of a receiver, the judgment would not be preferred. Kitchen. Conklin, 51 How. Pr. (N. Y.) 308. 5769 CHAPTER CLXXV. RECEIVERS OF NATIONAL BANKS. SECTION 7263. Cases in which courts will ap point receivers. 7264. Appointment of receiver by Comptroller of the Currency under Revised Statutes of the United States. 7265. Circumstances under which Comptroller may appoint receiver under Act of 1876. 7266. Action of Comptroller in appointing receiver conclusive upon debtors. 7267. Evidence of his appointment. 7268. Effect of appointment on rights of action by and against bank. 7269. Effect of judgments against national banks in the hands of receivers. 7270. Right of action of receiver in Federal courts. 7271. Statute forbidding transfers after insolvency. 7272. Fraudulent preferences under this statute. 72 3. Further of this statute. 7274. Statute prohibits attachments after insolvency. 7275. Further of attachments against national banks. 7276. Continued: Attempted distinction in cases where bank not insolvent. 7277. This distinction repudiated. 7278. Further of such attachments. 7279. Actions by receiver to collect debts. 7280. In whose name action brought by receiver. 7281. Power of receiver to compromise debts. 7282. Whether receiver succeeds to larger rights of action than the corporation possesses. 7283. His right of action against the directors. 7284. His right of action against shareholders. 7285. Necessity of assessment. 7286. Determination of Comptroller in assessing the shareholders conclusive. 7287. Parties in equity. 7288. When the action should be at law and when in equity. 7289. Pleading in such actions. 7290. Accruing of interest against stockholders. 7291. Mode of enforcing contribution and securing equality among the stockholders. 7292. Creditor's bill to enforce individual liability of stockhold ers. 7293. Receiver takes assets cum onere. 7294. Must respect valid liens and pledges. 7295. Must restore trust funds. 7296. Must restore money subscribed on scheme to increase capital which has failed. 7297. Must restore money deposited to be loaned to the president of the bank. 7298. What rights of set-off exist against receiver. 7299. The question how viewed on principle. SECTION 7300. The question how viewed by other courts. 7301. The same subject continued. 7302. Continued. 7303. Waiver of right of set-off. 7304. Voluntary liquidation of national banks. 7305. When stockholders may elect agent to wind up. 7306. Receiver authorized to purchase property in which bank has equities. 7307. Notice to present claims to receiver. 7308. Proof of claims by creditors. 7309. Dividends by Comptroller in liquidation. 7310. What claims entitled to distribution. 7311. Priorities among creditors in such distribution. 7312. When United States not a preferred creditor. 7313. Fees and expenses of the winding up and receivership. 7314. Creditors entitled to interest. 7315. Redemption of circulating notes. SECTION 7316. Enjoining proceedings by Comptroller and receiver. 7317. Actions against national banks after commencement of liquidation. 7318. Defenses available to the receiver against actions. 7319. State courts no control over receiver. 7320. Jurisdiction of State courts of actions by and against such receivers. 7321. No relief against the United States in actions against the Comptroller or receiver. 7322. What actions lie against the comptroller. 7323. Effect of receiver being substituted as defendant. 7324. Payment of State taxes. 7325. Actions against receiver for taxes. 7326. Sales by such receivers. 7327. Replevin of property in custody of receiver. 7328. Effect of appointment upon the statute of limitations. § 7262. Power of Courts to Appoint Receivers of National Banks.—The act of Congress known as the National Banking Act provides for the winding up of national banks under the direction of the Comptroller of the Currency, who appoints a receiver for that purpose.' The view has been frequently taken by the courts that these provisions are not exclusive, and were not intended to put it out of the power of the courts to appoint receivers upon a judgment creditor's bill, or even upon a bill filed by a stockholder; and this jurisdiction has been exercised by State courts. A creditor's 1 Rev. Stat. U. S., § 5226, et seq. Wright v. Merchants' Bank, 1 Flipp. (U.S.) 568; s. c. 1 Nat. Bank Cas. 321; Irons v. Manufacturers' Nat. Bank, 6 Biss. (U. S.) 301; s. c. 1 Nat. Bank Cas. 303. 3 bill will lie, in the Circuit Court of the United States, for the appointment of a receiver for such a bank.' It has been held that, until a Federal court acts, neither law nor comity requires a State court to suspend its equitable jurisdiction to reach the assets of such a bank and to enforce its own final process against the same. The pendency of a bill brought by a stockholder in a Federal court to which the judgment creditor has not been made a party, will not therefore oust the State court of its power to appoint a receiver, nor make the exercise of such power a violation of comity. § 7263. Cases in Which Courts will Appoint Receivers. Coming now to cases in which the courts will appoint a receiver of a national bank, we find that it was held proper to appoint a receiver, under a bill in equity by a judgment creditor, which alleged that his judgment was for moneys deposited with the bank; that the bank had gone into voluntary liquidation; that it had withdrawn its bonds which had been deposited with the Treasurer of the United States; that its officers had fraudulently applied the funds of the bank to the payment of persons other than the complainant; and that there was no property of the bank subject to seizure on execution. In another such case the bill set forth, in substance, that the complainant had recently obtained a judgment for $10,000 against the defendant, a national bank, in a State court; that the complainant was unable to obtain payment of the same; that the bank had closed its doors, discontinued its business, and was insolvent; that, in contemplation of insolvency, it had transferred all its assets to one creditor, a correspondent bank in the city of New York, which was also a large stockholder in the defendant national bank; that 1 Wright v. Merchants' Nat. Bank, 1 Flipp. (U. S.) 568; 3 Cent. L. J. 351; 1 Nat. Bank Cas. 321. • Merchants' &c. Nat. Bank v. Trustees, 63 Ga. 549; s. c. 2 Nat. Bank Cas. 220. The United States District Court, as a court of bankruptcy, under the late bankruptcy act, had no jurisdiction to wind up an insolvent national bank. Re Manufacturers' Nat. Bank, 5 Biss. (U. S.) 499; s. c. 1 Nat. Bank Cas. 192. • Irons v. Manufacturers' Nat. Bank, 6 Biss. (U. S.) 301; s. c. 1 Nat. Bank Cas. 203. |