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act of Congress, of which action the Circuit Court of the United States has concurrent jurisdiction with the District Court, without regard to the amount sued for. A receiver of a national bank might, accordingly, sue either in the Cir. cuit or District Court of the United States within the district in which the national bank was situated. The law stood in this way until it was restrained by an act of Congress passed July 12, 1882, by which it was provided “that the jurisdiction for suits hereafter brought by or against any association established under any law providing for national banking associations, except suits between them and the United States, or its officers and agents, shall be the same as, and not other than, the jurisdiction for suits by or against banks not organized under any law of the United States, which do or might do banking business where such national banking association may be doing business when such suits may be begun; and all laws and parts of laws of the United States inconsistent with this proviso be, and the same are hereby, repealed.”: The purpose of this statute was to put

, national banks in the same situation as State banks, for the purposes of suing and being sued. Under its operation, a court of the United States will ordinarily have no jurisdiction of an action between a national bank and a citizen of a State within which the national bank is situated. A receiver of a national bank, for the general purposes of his rights of action, stands on the footing of the bank itself; and where jurisdiction would attach in case the bank were suing or being

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1 Price v. Abbott, 17 Fed. Rep. 508; • Frelinghuysen u. Baldwin, 12 Fed. Armstrong v. Ettlesohn, 36 Fed. Rep. Rep. 395. 209;Frelinghuysen v. Baldwin, 12 Fed. • Act Cong. July 12, 1882, proviso Rep. 395. See also Platt v. Beach, 2 to $ 4; 22 U. S. Stat. at Large, Ben.(U.S.) 303; 8. c. 1 Nat. Bank Cas. ch. 290, Ø 4; Supp. to Rev. Stats. 182; Stanton v. Wilkeson, 8 Ben.(U.S.) U.S. (2d ed.), p. 354,8 4, proviso. See 357; Kennedy v. Gibson, 8 Wall. (U.S.) the modfied statute, infra, in this 498; 8. c. 1 Nat. Bank Cas. 17; Bank section. 9. Kennedy, 17 Wall. (U.S.) 19; 8. C. 1 • Hendee v. Connecticut &c. R. Co., Nat. Bank Cas. 87; United States v. 26 Fed. Rep. 677; 3. c. 23 Blatchf. Hartwell, 6 Wall. (U. S.) 385; Arm- (U.S.) 451. strong v. Trautman, 36 Fed. Rep. 275.

sued, the same jurisdiction will attach in case the receiver is suing or being sued. But where Federal jurisdiction depends upon citizenship, the general rule is that it is governed by the personal domicile of the receiver, and not by that of the corporation of whose assets he is receiver. The act of July 12, 1882, was subsequently re-enacted, in a modified forın, as follows: “That all national banking associations established under the laws of the United States shall, for the purposes of all actions by or against them, real, personal, or mixed, and all suits in equity, be deemed citizens of the States in which they are respectively located. And in such cases the Circuit and District Courts shall not have jurisdiction other than such as they would have in cases between individual citizens of the same State. The provisions of this section shall not be held to affect the jurisdiction of the courts of the United States in cases commenced by the United States or by direction of any officer thereof, or cases for winding up the affairs of any such bank." :

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§ 7271. Statute Forbidding Transfers after Insolvency. The National Bank Act provides that "all transfers of the

· Argument in Hendee v. Connecticut &c. R. Co., supra. That a receiver of a national bank represents the rights of the bank for the purposes of bringing and defending actions,see Bank v. Kennedy, 17 Wall. (U. S.) 19; 8. C. 1 Nat. Bank Cas. 87; Bank of Bethel v. Pahquioque Bank, 14 Wall. (U. 8.) 383; 8. C. 1 Nat. Bank Cas. 77.

· Ante, 8 6985. It was held by Mr. District Judge Wheeler, in 1886, that the effect of the Act of 1882, in connection with the other applicatory statutes, as they then stood, was to leave the State courts with jurisdiction arising out of the ability of such a receiver to sue and be sued, where the other party to the action was a citizen of the same State with the national bank, but without power over

purely administrative proceedings, taken or to be taken by the receiver, who is an officer of the United States, and who proceeds under the laws of the United States. By more or less specious reasoning, it was therefore held that the receiver of a national bank, in Vermont, might maintain an action in the Circuit Court of the United States against a railroad company, which was, for the purposes of Federal jurisdiction, a citizen of the State of Vermont, to restrain such company from prosecuting an action in Canada to determine the title to certain bonds which had been pledged to the national bank. Hendee *. Connecticut &c. R. Co., 26 Fed. Rep. 677; 8. C. 23 Blatchf. (U. S.) 451.

• Act of Cong. Aug. 13, 1888, 9 4; 25 U.S. Stat, at Large, 433.

notes, bonds, bills of exchange, or other evidences of debt owing to any national banking association, or of deposits to its credits; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of

money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void.” ? The “act of insolvency,mentioned in this section, is an act which would be an act of insolvency on the part of an individual banker,– that is, the closing of the doors, refusing to pay depositors on demand, refusal to go on in the due course of business, to transact its business as a bank and discharge its liabilities to its creditors.? The return of an execution nulla bona is sufficient evidence of such insolvency. The word " insolvency," as here used, is synonymous with the same word in the late bankrupt act. It means present inability to pay in the ordinary course of business. For the purposes of this statute, it is only necessary that insolvency should be in the contemplation of the bank making the transfer: the party receiving the transfer need not know of such insolvency, or contemplate that the transfer is made with the view of its happening.

' Act Cong. June 3, 1864, ch. 105, • Wheelock v. Kost, 77 Ill. 296; 8. C. $52; 13 U. S. Stat, at Large, p. 115; 1 Nat. Bank Cas. 406. Rev. Stat. U. S., & 5242.

• Case v. Citizens' Bank, 2 Woods ' Irons v. Manufacturers' Nat. (U. S.), 23; 8. C. 1 Nat. Bank Cas. Bank, 6 Biss. (U. S.) 301; 8. c. 1 Nat. 276; Roberts v. Hill, 24 Fed. Rep. Bank Cas. 203, 207, per Blodgett, J. 571; citing and following Wager v. For a case exhibiting acts of insol- Hall, 16 Wall. (U. S.) 584, 599; Venvency by a national bank which re- nard 2. McConnell, 11 Allen (Mass.), quired the vacation of an attachment 555; Thompson v. Thompson, 4 Cush. under another clause of this sec- (Mass.) 127. tion, --see Market Nat. Bank v. Case v. Citizens' Bank, 2 Woods Pacific Nat. Bank, 30 Hun (N. Y.), (U. S.), 23; 6. C. 1 Nat. Bank Cas. 60; 6. C. 3 Nat. Bank Cas. 672.

276.

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8 7272. Fraudulent Preferences under This Statute. To render a transfer void under this section, it must have been made either with a view to prevent the application of the assets in the manner prescribed by the National Bank Act, or with the view to the preference of one creditor over another.' The preference” mentioned in the statute is a preference given to an existing creditor for a pre-existing debt, and does not refer to a case where one makes a loan to bank and receives a concurrent transfer of property as security therefor. When, therefore, a national bank, being embarrassed, receives a loan of money, or other valuable material aid, from a person who knows its embarrassed state, on condition that the party making the loan or giving the aid shall be secured therefor, and the security is accordingly given by pledging a part of the assets of the bank, - this is not giving him a preference

over other creditors, within the meaning of this section. But where such a bank, being embarrassed, received a loan of money upon depositing with a certain commercial firm a portion of its assets as security, - it was held that the fact that one of the members of the firm was president of the bank did not render the transaction illegal; and that the bank could not escape liability for the loan upon the ground that the president had no authority to effect it, where it appeared that it was effected with the knowledge of the directors, and that the money was used by the bank. It has been reasoned that if the officers of such a bank pledge a note to secure a depositor who has been allowing the bank to use his money,

1 Casey v. Oredit Mobilier, 2 Woods 3 Ibid. The court held that a (U. S.), 77; 8. c. 1 Nat. Bank Cas. national bank, which enters into a 285. Substantially to the same effect, contract not authorized by its char. see Armstrong v. Chemical Nat. Bank, ter, cannot repudiate the contract, 41 Fed. Rep. 234. Analogous cases and at the same time retain the fruits under the late bankrupt law are: of it. Ibid. See ante, $ 6016. For Tiffany v. Lucas, 15 Wall. (U. S.) special instances of unlawful transfers 410; Cook v. Tullis, 18 Wall. (U. S.) under this section, see Tuttle v. Fre332; Clark Iselin, 21 Wail. lingbuysen, 38 N. J. Eq. 12; 8. c. 3 (U. S.) 360.

Nat. Bank Cas. 576; National Secur• Casey v. Credit Mobilier, 2 Woods rity Bank v. Butler, 129 U. S. 223 ; (U. S.), 77: 8. c. 1 Nat. Bank Cas. 8. c. 3 Nat. Bank Cas. 320; affirming 285.

8. c. 22 Fed. Rep. 697.

but who is apprehensive of losing it, and they, at the time of making the pledge to the depositor, realize that the bank is approaching failure, and make the pledge to keep the note out of the assets to be distributed, the pledge will be void; but that if they make it to avert the threatened failure, and with the expectation that it will enable them to do so, by retaining the use of the deposit to pay other depositors, the transaction will be valid under the statute. The plain distinction is between transferring assets in the expectation of a failure and to defeat the ratable distribution intended by the statute, and the using of the assets to avert a threatened failure." While this reasoning seems sound, yet on a rehearing of the case, the conclusion of the court was different, and the transfer was held fraudulent and was set aside. On the rehearing, the view was taken that a transfer is presumptively fraudulent when the affairs of the bank reach such a crisis that it becomes reasonably apparent to its officers that it will presently be unable to meet its obligations, and will be obliged to sus. pend its ordinary operations. And it was held that the intent to give a preference is presumed when a payment is made to a creditor at the time when the officers of the bank know of its insolvency, and that it cannot pay all its creditors in full; and, moreover, that the motive of giving the preference is immaterial, and that it will be void under the statute, even where it is made for the mere purpose of postponing failure,' - a conclusion which is believed to be unsound.

· Roberts v. Hill, 23 Fed. Rep. 311, ,

pends before receiving the avails of per Wheeler, J.

it, the depositor may rescind the ; Ibid.

transaction for fraud, and recover the * Roberts v. Hill, 24 Fed. Rep. 571. avails of it from the collecting agent.

Ibid. Notwithstanding this stat- Craigie v. Smith, 14 Abb. N. Cas. ute, it has been held in the Superior (N. Y.) 409. But this draws the inCourt of Buffalo, New York, that quiry away from the statute, and into where one deposits a draft with a the question of the right to follow national bank for collection, and the trust funds deposited with a person or bank at the time is insolvent, and the corporation who afterwards becomes Lank sends it to an agent for collec- insolvent, - a question already contion, who collects it, and the bank sus- sidered : ante, 97084, et seg.

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