Central National Bank v. Richland National Bank. ant is liable thereon as a surety. The answer says that if the plaintiff have any claim against him it is only on his liability as surety, but this supposition or possibility does not refer to the judgment pleaded, for the defendant denies that there was such a judgment, by denying any knowledge of its execution or any information sufficient to form a belief as to its existence. Perry v. Chester, 12 Abb. Pr. (N. S.) 131; Bathgate v. Haskin, 59 N. Y. 533. The demurrer should be sustained with costs, with leave to amend within twenty days upon payment of costs. No amendment should be permitted, however, which includes in a counter-claim sums paid for alleged usurious interest, both before and after the commencement of the two years specified by the statute, but they may be separately stated, so that the question of law may be clearly settled. There was no appeal, and the defendant amended his answer. CENTRAL NATIONAL BANK V. RICHLAND NATIONAL BANK. (52 Howard, 136.) Attachments against National banks. An attachment cannot be issued from a State court against a National bank before final judgment, whether such bank be located in this State or not. OTION to vacate an attachment granted in an action in the Supreme Court of New York by the Central National Bank against the Richland National Bank, of Mansfield, Ohio, and under which, the property of the latter in New York was attached. C. A. Davison, for plaintiff. B. F. Lee, for defendant. BARRETT, J. An attachment is not always essential to the acquisition of jurisdiction in a suit against a foreign corporation. Such jurisdiction is acquired in several ways. 1st. In all cases by the personal service of the summons, within this State, upon its president, secretary or treasurer. 2d. If the cause of action arose in this State, by such service upon (in addition to the three officers Central National Bank v. Richland National Bank. named) any other of the corporation, its cashier, or a director, or managing agent thereof. 3d. By such service upon any one of such persons when the corporation has property within this State. 4th. By the publication of the summons in either one of two cases (a) when the cause of action has arisen in this State; (b) when the corporation has property within this State. Code, §§ 134, 135. These provisions are apparently decisive of this motion, because it is only where jurisdiction cannot be acquired without resort to an attachment that the power of Congress to inhibit, or rather to postpone, the use until final judgment of such a provisional remedy seems to be at all questionable The Court of Appeals did not deny this power in Cooke v. The State National Bank of Boston, 52 N. Y. 96 (ante, p. 698). It merely decided that it is not competent for Congress to deprive the State courts of jurisdiction in all actions against National banks, nor to restrict such jurisdiction to the Federal courts. The Supreme Court of the United States, however, in The Farmers and Mechanics' Bank of Buffalo v. Dearing, ante, p. 117, asserted a power in Congress wide enough to deprive us of all jurisdiction over such corporations. "The State can exercise no control over them," says Mr. Justice SWAYNE, "nor in anywise affect their operation, except in so far as Congress may see proper to permit.” Be that as it may, the decisions are unanimous as to the power to relieve National banks from the garnishee process. Crocker v. Marine National Bank, 101 Mass. 240 (ante, p. 575); Chesapeake Bank v. First National Bank, 40 Md. 269 (ante, p. 531); Cadle v. Tracey, 11 Blatchf. 102 (ante, p. 230). The power to create, as was said in the Farmers and Mechanics' Bank of Buffalo v. Dearing, ubi supra, carries with it the power to preserve; and if Congress is of the opinion that the usefulness of these institutions is likely to be impaired by the tying up of their funds in distant States, pending a litigation, protection therefrom is a reasonable exercise of such power to preserve. This was conceded in Southwick v. The National Bank of Memphis, 7 Hun, 96 (ante, p. 789). The question in that case was whether the power had been exercised by section 57 of the act of 1864, as amended by section 2 of chap. 269 of the laws of Congress of 1873; and it was held, owing to the peculiar and somewhat obscure phraseology of the act, that the intention was merely to inhibit attachments against such corporations when located within Central National Bank v. Richland National Bank. our own jurisdiction. All question as to the intention of Congress, however, was set at rest by the Revised Statutes of 1874, sections 5242, 5198, as corrected in the appendix. As if to meet the construction thus placed upon the words "such action or proceedings" in the connection in which they are found in the amendment of 1873, the prohibitory clause is removed from its old connection and transferred to section 5242, in which no particular class of suits is previously designated. Then the word "such" is omitted, and now the provision reads as follows: "No attachment, injunction or execution shall be issued against any such association or its property before final judgment in any suit, action or proceeding in any State, county or municipal court." This clearly meets the suggestion of the presiding justice in the Southwick Case, that the prohibition "is not extended to any suit, action or proceeding, but to any such suit, action or proceeding." It is peculiarly fitting that the plaintiff, itself a National bank, should submit, in matters of detail intended for the common benefit of such institutions, to the will of the law-making power under which it was created and is operated. There is nothing in rule 34 which can affect the result. Formerly that rule required proof, where the summons had been served by publication, of the issuing of an attachment, etc. It may be a question whether this did not require more in actions against foreign corporations than did sections 134 and 135 of the Code above cited, and whether in such cases, and to that extent, the rule was not in conflict with such actions. But at all events the rule has been amended, and, as it now reads, such proof is only required "if the case be one in which an attachment may be issued." This, as we have seen, is not such a case. The motion to vacate the attachment must, therefore, be granted, with $10 costs. Seeley v. The New York Exchange National Bank. SEELEY V. THE NEW YORK EXCHANGE NATIONAL BANK.* Reduction of capital stock. Where a National bank reduces its capital stock it cannot retain as a surplus fund, or for other purposes, the whole or any portion of the money which it receives for the stock which is retired. AN HOESEN, J. Section 5143 of the Revised Statutes of the United States provides that a National banking association may reduce its capital stock. The principal question in this case is, whether a National bank may, after reducing the amount of its capital stock, retain as a surplus, or for other purposes, the whole or any portion of the money which it received for the stock that is retired? The defendant reduced its capital stock from $500,000 to $300,000. What is to become of the $200,000 which was subscribed and paid for the stock that has been called in? Must it be paid to the stockholders who surrender the retiring stock, or may it be retained by the bank? A certificate of stock is merely the evidence of an interest in dividends as they are declared, and of a right to a pro rata distribution of the effects of the corporation on hand at the expiration of the charter. Angell and Ames on Corporations (8th ed.), § 560. If the defendant had determined to discontinue business and wind up its affairs, there is no doubt that the shareholders would be entitled to a distribution of whatever assets of the corporation might remain after its debts had been paid. If, instead of surrendering all its corporate powers, a corporation, by reducing its capital, relinquishes a portion of them, it seems to me that the shareholders may properly claim a distribution of the money which the corporate body has no longer the right to use as capital. The abandonment by a corporation of all its corporate rights gives the stockholders a right to the distribution of all the net assets; why should not an abandonment of a portion of those rights give the stockholders a right of distribution pro tanto? Of course, if the capital stock has been impaired, the amount to be returned to the stockholders must be diminished. *This case is not otherwise reported. Seeley v. The New York Exchange National Bank. It is said that the capital of the defendant has not been impaired, but that the directors deem it advantageous to retain as a surplus one-half of the amount which was subscribed and paid for the stock which has been called in. The reason assigned is not, in my opinion, any justification for withholding from the plaintiff his share of the money that was-paid in exchange for the stock that is retired. That money was paid as capital, and if it be not required for the payment of debts, it has accomplished the end for which it was subscribed, and it ought to be returned to the shareholders. The bank has gone out of existence as a corporation with a capital of $500,000. Under a modified charter it commences a new life, with a capital of $300,000. So far as the $200,000 of reduced stock is concerned, the corporation must be considered as having surrendered its charter and wound up its business. This being so, there is no doubt of the duty it owes to the stockholders who own the retired stock. The able counsel for the defendant insists that it is discretionary with the directors either to return the money to the shareholders, or to retain it as a surplus; and that by retaining it the bank does the plaintiff no injury, inasmuch as his shares will increase in market value as they diminish in number, and as he will own one two-hundredth part of the new capital stock just as he owned one two-hundredth part of the old capital stock. It is true that his proportion of the capital stock will relatively be as great as before the reduction, but it is altogether a matter of conjecture as to the future market value of a share of the reduced stock. The return of the retired capital to the shareholders is not, however, a subject for the exercise of a director's discretion. If the retired capital be a liability of the corporation in favor of the shareholders who give up the stock that is called in, the payment of that debt cannot be in any man's discretion. Payment cannot be deferred because the directors believe it for a creditor's advantage to keep him out of his money. Where a dividend has once been declared, the directors cannot afterward refuse to pay it because they have determined to establish a surplus fund with a view to benefit the corporation and its stockholders. The dividend, when declared, becomes a debt, and connot thenceforth be disposed of without the consent of him who is entitled to it. Beers v. Bridgeport Spring Co., 2 Weekly Digest, 8. |