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family,(11) and in helping her to make her property are full.(23) So when she has no power by statute productive he is but discharging this duty,(12) and is to trade, but with his consent is in a business which presumedly amply compensated with the home and he conducts,(24) it is his business; (25) the right of support she allows him.(13) Moreover, as one's talents his creditors against a business which he conducts and capacity to labor are not property, (14) and as can be questioned only when by statute she can therefore no debtor can be made to work for his credi-trade alone.(26) When he has been using her proptors, (15) a husband who is entitled to his wife's ser- erty in his business, her rights are at best those of a vices, may give them to her even against his cred creditor.(27) In some cases where a wife has itors,(16) and may likewise give her his own amassed a fortune through the efforts of her huslabor,(17) but not his accumulations.(18)
band, it has been held that a court of equity would 8. Apparent or Pretended Agency.- A husband in favor of his creditors make some apportionmay thus as his wife's agent manage her property ment (28) — treat the husband and wife as it were or business without acquiring any rights in said as partners.(29) Whether the business is the husproperty or business, or subjecting it to the claims band's or the wife's is simply a question of fact, (30) of his creditors. (19) But while apparently her agent the burden of proof being generally on the wife to and pretending to act in that capacity, he may be show that the business was hers. (31) So whether conducting a business of his own under her name there is fraud is a question of fact.(32) simply for the purpose of evading his creditors,(20) or 4. Illustrations. Thus where a husband with his he may be using her property as a gift to him (21) or team did a great deal of work on his wife's propas a loan; (22) in such cases the business is his and the erty, and his creditors attempted to sell the crop remedies of his creditors against the assets thereof for his debts, the court held that he could give to
her the labor of himself and his beasts, and that (11) Cooper v. Ham, 49 Ind. 393, 416; Com, v. Fletcher, 6 Bush, 171, 172; Gage y. Dauchy, 34 N. Y. 293, 297; Abbey
the accretions to her property continued hers and v. Deyo, 44 N. Y. 343, 346.
could not be touched by his creditors.(33) Where a (12) Cooper v. Ham, 49 Ind. 393, 416.
manufacturer of large experience failed, and then (18) McIntyre v. Knowlton, 6 Allen, 565, 566.
started up again with his wife's money and in her (14) Cases cited infra nn, 15, 16.
name, and made a fortune, the court allowed her her (15) Abbey v. Deyo, 44 N. Y. 343, 347; Rush v. Vought, 55 Penn. St. 437, 445; Hodges v. Cobb, 8 Rich. 50, 56.
money and interest, but held the remaining profits (16) Peterson v. Mulford, 36 N. J. L. '481, 487 ; Hoyt v.
liable for his debts.(34) Where while the wife's White, 46 N. H. 45, 47 ; ante $ 65. He cannot give her earnings belonged to her husband, he consented that money already earned by her, ante & 65.
she should trade in her own name, but took part (17) Miller v. Peck, 18 W. Va. 75, 99; infra n, 19. himself in the business, the business was held his,
(18) Isham v. Shafer, 60 Barb. 317, 331; Rush v. Vought, and therefore liable for his debts.(35) 55 Penn. St. 437, 445; Holdship v. Patterson; 7 Watts, 547. 5. Statutes. — In some States there are statutes (19) Aldridge v. Muirhead, 201 U. S. 397, 399; Voorhes
expressly referring to this subject.(36) v. Bonesteel, 16 Wall. 16, 31; Lewis v. Johns, 24 Cal. 98,
DAVID STEWART. 103; Coon v. Rigden, 4 Col. 275, 287, 288; Martinez v. Ward, 19 Fla, 175, 188, 189; Keller v. Mayer, 55 Ga. 406,
BALTIMORE, MD. 409; Wells v. Smith, 54 id. 262, 264; Olsen v. Kern, 10 III.
(23) Brownell v. Dixon, 37 III. 198, 208; Gage v. Dauchy, App. 578, 582; Langford v. Ghieson, 5 Ill. App. 362; Cnb
34 N. Y. 293, 298. berly v. Scott, 98 Ill. 38, 40; Bongard v. Core, 82 III. 19, 20;
(24) National v. Sprague, 20 N. J. Eq. 13, 25. Bellows v. Rosenthal, 31 Ind. 116, 118; Cooper v. Ham, 49
(25) Wortman v. Price, 47 Ill. 22, 24; Erdman v. Rosenid. 893, 400, citing many cases; Carn v, Royes, 55 Iowa,
thal, 60 Md. 312, 316; Abbey v. Deyo, 44 N. Y. 843, 847; 650 ; Parker v, Bates, 29 Kan. 597 ; Com. v. Fletcher, 6 Bush,
Bucher v. Ream, 68 Penn. St. 421, 426. 171, 172; McIntyre v. Knowlton, 6 Allen, 565, 567; Merrick
(26) Shackleford, 6 Bush, 149, 159. See Wortman v. v. Phewley, 29 Mass. 566; Rankin v. West, 25 Mich. 200;
Price, 47 Il. 22, 24; Alt v. Laforette, 9 Mo. App. 91 ; Pawley Hossfeldt v. Dill, 28 Mion. 469; Hamilton v. Booth, 55 Miss.
v. Vogel, 42 Mo. 291; Lyman v. Place, 26 N. J. Eq. 30; 60; Gloss v. Thomas, 6 Mo. App. 157 ; Abbey v. Dego, 44 N.
National v. Sprague, 20 id. 13, 25; Quidort v. Perqeaux, Y. 343, 846 ; 44 Barb. 382; Owen v. Cawley, 36 N. Y. 600,
18 id. 472, 480; Bucher v. Ream, 68 Penn. St. 421, 426. 604, 605; Smith v. Sweeny, 35 id. 234, 235; Gage v. (27) Wortman v. Price, 47 Ill. 22, 24; Glidden v. Taylor, Dauchy, 34 id. 293, 297, 299; Buckley v. Wells, 33 id. 16 Ohio St. 509, 521; infra nn, 21, 26. 518, 521; Knapp v. Smith, 27 id. 277, 280; Rush v.
(28) Cooper v. Ham, 49 Ind. 893, 416; Com. v. Fletcher, Vought, 55 Pa. St. 437, 445; Holdship v. Patterson, 7 Watts.
6 Bush, 171, 172; Glidden v. Taylor, 16 Ohio St. 509, 520; 547; Hodges v. Cobb, 8 Rich. 50, 56; Webster v. Hildreth,
Feller v. Alden, 23 Wis. 301, 305. 83 Vt. 457, 458; Miller v. Peck, 18 W. Va. 75, 79-97, citing
(29) In Glidden v. Taylor, 16 Ohio St. 509, the wife was many cases; Feller v. Alden, 23 Wis. 301, 304; Boss v. Gom
allowed only her money and legal interest; in National v. ber, 23 id. 284, 286; Dayton v. Walsh, 47 id. 118. But
Sprague, 20 N. J. Eq. 13, the whole was beld liable for the see Penn v. Whiteheads, 12 Gratt. 74, 80; Wilson v. Loomis,
husband's debts; to treat them as partners would be fairer 55 Ill. 352, 354. Compare cases infra n, 28.
when there is really a mingling of goods, etc. (20) See Hurlbut v. Jones, 25 Cal. 225; Wortman v. Price,
(30) Keller v. Mayer, 55 Ga. 406, 409; Knapp v. Smith, 47 II. 22; Brownell v. Dixon, 37 id. 198, 208; Cooper v. Ham
27 N.Y. 277, 280; Abbey v. Deyo, 44 id. 343, 347; of course, 49 Ind. 393, 416; Laing v. Cunningham, 17 Iowa, 510; Na
her capacity to trade is a question of law. tional v. Sprague, 20 N. J. Eq. 13, 25; Knapp v. Smitb, 27 (31) 23 Amer. Law Rep. N. S. 625. N. Y. 277, 280 ; Woodsworth v. Sweet, 51 id. 8; Gage v. (32) Myers v. King, 42 Md. 65, 70. Dauchy, 34 id. 293, 298.
(33) Miller y. Peck, 18 W. Va. 95, 102.
(34) Glidden v. Taylor, 16 Ohio St. 509, 520, 521. (21) See Dent v. Slough, 40 Ala. 518; Freeman v. Orrer,
(35) National v. Sprague, 20 N. J. Eq. 13, 25. 5 Duer, 476.
(36) In Porter v. Gomba, 43 Cal. 165, 169; Youngworth (22) Glidden v. Taylor, 16 Ohio St. 509, 520.
v. Jewell, 15 Nev. 45.
CORPORATION DISSOLUTION APPOINTING the required bond, ordered him to take charge and RECEIVER.
possession of the property of said compauy at once,
and to administer the same according to law, subject SUPREME COURT OF VERMONT, JANUARY TERM, 1884,
at all times to the further order and direction of the
court. DEWEY V. ST. ALBANS TRUST Co.*
On November 10, 1883, the receiver preferred his pa
tition to said court, setting forth that on October 4, On petition setting forth that it was believed that defendant
1883, the court ordered that all creditors of said comcompany was insolvent, a receiver was appointed and an injunction was issued restraining the trust company,its December 1, 1883; that under and pursuant to said
pany should present and prove their claims to him by president, treasurer, and other officers, from transacting order, a very large number of the creditors of said comany further business, etc., and from all custody of or interference with its property, until further order. The
pauy had presented their claims with proof thereof,
and that he had reason to believe that all or nearly all charter provided “that in case of the dissolution of said company,” the deposits in favor of minors, insane presented, with proof thereof, within the time limited
outstanding claims against said company would be persons, or married women, should have a preference. It therefor; and further setting forth the provision of did not appear that the company had lost its power to re
said charter above recited, and that a considerable sume its business, or that it was insolvent in fact, but insolvent only in the sense of inability to meet its obliga- with proof, for debts due from said company incurred
number of persons had presented claims, accompavied tions in due course of business. Held, that there was not a dissolution of the corporation, and consequently no class ried women in their own right, and iusisted that said
by deposits in favor of minors, insane persons, and mar. of creditors could be preferred.
claims should be preferred and be satisfied before any ETITION for the appointment of a receiver, brought other debts due from said corporation were paid ; that
by Charles Dewey, inspector of finance, to take he had realized a considerable amount of money from charge of the St. Albans Trust Company. Also a peti- the assets of said company, and expected to realize tion brought by C. W. Rich, the receiver of said com- more therefrom from time to time, and that it was pany, praying that the court might prescribe the order, for the interest of the creditors of said company that proportion, and manner of distribution of the funds of the funds thus realized and to be realized should be the trust company. Heard, September Term, 1883. paid and distributed to and among said creditors acRoyce, Chancellor, held that all the depositors stood cording to their legal rights as soon as reasouably upon terms of perfect equality, that no class of de- might be; that the creditors of said company who positors was entitled to any prefereuce over others, claimed no preference iusisted upon an equal and a and decreed that the funds should be distributed pro ratable payment and distribution of said funds to and rata to the depositors.
among all the creditors thereot; and praying for an Edson, Cross & Start, Farrington & Post, and A. G. order, directing him in the premises, and prescribing Safford, for certain depositors claiming priority.
in what order, proportion, and manner payment and
distribution should be made with reference to the deNoble & Smith and Daniel Roberts, for appellees.
mands for which preference was claimed as aforesaid ROWELL, J. The charter of this trust company, and to the other debts due from said company. granted in 1868, Stat. 1868, No. 157, provides “that in Due uotice of said last-mentioned petition having case of the dissolution of said company, by act of law been given, the same came on to be heard on Decemor otherwise, the debts due from said company, in-ber 4, 1883, the parties appearing and being fully heard ourred by deposits in favor of miuors, insane persons in the premises, whereupou it was ordered and deor married women, such deposits having been made creed that all the depositors who had proved or might for married women in their own right, shall have a prove their claims as such stood and should stand on preference and be satisfied before any other debts due terms of perfect equality of right to share in the difrom said corporation are paid.”
vision and distribution of the funds or assets of said On August 17, 1883, the inspector of finance, pursu. | company, and that no depositor or class of depositors ant to the statute in such case made and provided, ap- is entitled to any preference over others," and the replied to the Court of Chancery by petition, setting oeiver was ordered and directed to pay out and disforth that he had ascertained and believed said com- tribute said funds and assets accordingly. · From pany to be insolvent, and praying for an injunction this order, some of those claiming a prefereuce have against the same, its officers, agents, and servants, re- appealed. strainiug it and them from all interference with or
I have now stated the substance of all the record discontrol of the books, assets, and property of said com- closes, and hence all there is in the case on which to pany, and for the appointment of a receiver to take base judgment. charge thereof, subject to the order and direction of
The defendant is proceeded against as and only as an the court, and for such further orders and directions insolvent corporation, and it cannot fail to be observed as to the court should seem meet.
that the record is exceedingly barren of facts to show Thereupon notice to show cause was duly issued and its real financial condition. served, and said company appeared, whereupon no
It is not claimed by the appellants that this comcause being showu nor objection made, the court granted an injunction restraining said company, its existence; but they coutend that it is absolutely and
pang is dissolved to the extent of losing its corporate president, treasurer, and other officers and directors, hopelessly insolvent, and that there is such a suspenand each and every of them, its and their agents and
sion of its powers and ability to do business as to renservauts, from transacting any further business as
der it incapable of fulfilling the object and purpose of such trust compauy until further order, and from all custody of or iuterference with the books, papers, as
its creation, and hence that to all practicable intents sets, and property of every wame and nature belonging it is dissolved, and that therefore the right of prefer
and purposes, and within the meaning of the charter, to said company, except to safely keep and preserve
euce attaches. the same until delivered to the receiver thereafter to
But the record does not show any such condition of be appointed or until further order. At the same time the court appointed a receiver, and upou giving things. If it be said, as perhaps it may well be, that
the granting of the injunction and the appointment *8. C., 56 Vt. 476.
of the receiver imply an adjudication of insolvenog,
it would still remain to inquire, insolvency in what mere insolvency, though total, is sufficient evidence of sense?
such surrender. The term "insolvency” is not always used in the same In Slee v. Bloom, 19 Johns. 456, the corporation had sense. It is sometimes used to denote an insufficionoy not only ceased to own any property, real or personal, of the entire property and assets of an individual to but had totally ceased from acting for the space of pay his debts. Tbis is its general and popular mean- about a year and four months. It was possessed of ing. But it is also used in a more restricted sense, to nothing and had abandoned the end and object of its express the inability of a party to pay his debts as they creation, without pretense of expectation or hope of become due in the ordinary course of business. It is ever resuming its functions. Chancellor Kent says of in this latter sense that the term is used when traders this case: “It amounts only to this, that if a private and merchants are said to be insolvent; and as ap- corporation suffer all its property to be sacrificed, and plied to them, it is the sense in which the National the trustees actually relinquish their trust, and omit Baukrupt Act used the term. Toof v. Martin, 13 Wall. the annual election, and do no one act manifesting an 40. So under the Massachusetts insolvent aots, the intention to resume its corporate functions, the courts term is not construed to mean an absolute inability to of justice may, for the sake of the remedy and in fapay one's debts at some future time on the settlement vor of creditors, who in such case have their remedy and winding up of his affairs; but an inability to pay in against the individual members, presume a virtual the ordinary course, as persons carrying on trade surrender of the corporate rights and a dissolution of usually do. Thompson v. Thompson, 4 Cush. 127, 134. the corporation. This is the utmost extent to which So under the Euglish Bankrupt Act, the phrase "in- the doctrine was carried, and to this extent it is a safe solvent circumstances" is construed to mean an inabile and reasonable doctrine." 2 Kent Com. 311. ity to pay in the ordivary course, as persons carrying
Penniman v. Briggs, Hopk. 300; S. C., in error, on trade usually do. Bayly v. Schofield, 1 M. & S. 338, Cow. 387, adopts and applies the doctrine of Slee v. 349; Shone v. Lucas, 3 D. & R. 218.
Bloom. There a corporation for manufacturing purDenike v. New York & Rosendale Lime & Cement Co., poses, established under the general act of March 22, 80 N. Y. 599, was an action in favor of some of the 1811, had all its property, real and personal, sold on stockholders of said company for a dissolution of the execution and otherwise applied for the payment of corporation and the appointment of a receiver and the its debts, and ceased to hold any property whatever, winding up of its affairs. It was alleged and claimed, and was totally insolvent, and had ceased to manuamong other things, that the company was insolvent. facture or act as a corporation in any respect, and the The statutes of New York provide that “whenever trustees had no power to resuscitate the company by a any incorporated company shall have remained in- call on the stockholders, as their shares were paid up; solvent for one whole year
it shall be deemed and it was held that the corporation was to be deemed to have surrendered the rights, privileges, and fran- | dissolved for the purpose of the remedy of creditors obises granted by any act of incorporation * against the stookbolders individually. and shall be deemed to be dissolved.” In denying the But the rule established by these cases is qualified relief sought, the court said: “There is uo finding by another rule. that the property of this company was not sufficient to In Brincker hoff v. Brown, Johns. Ch. 217, it is said pay all its debts. It was simply found that it was in- that“ it does not follow that a corporation is dissolved solvent, and that may mean simply an inability to pay by the sale of its visible and tangible property for the and discharge its obligations as they accrue
payment of its debts and the temporary suspension of in the ordinary course of its business. The plaintiffs its business, so long as it has the moral and legal cagave evidence tending to show that the property of the pacity to increase its subscription, call in more capi. company was not equal in value to the amount of its tal, and resume its busiuess." And the court refused debts; and the defendant gave evidence tending to to carry the doctrine of Slee v. Bloom to the extent of show that there was property sufficient to pay all the holding that the sale of all the visible property of a debs and still leave the capital nearly or quite intact. corporation was of itself sufficient evidence of a surWhat the precise truth was as to the value of the prop- render, when all the other material circumstances erty the referee did not determine and was not re- were wanting, and said that the best evidence of a surquested to determine, and hence we do not know.”' render that Slee v. Bloom afforded was, that the trus
So in this case we have no information whatever as tees had virtually renounced their trust and ceased to
that State, Selden, J., says: “It appears from these The charter provides that the corporation shall be cases that in order to justify the inference that a corliable at all events, the act of God and the public ene- poration has surrendered its franchises it is not suffimies only excepted, for all deposits. There can there- cient that it has become utterly insolvent, nor even fore be no loss to depositors until the capital stock is that every vestige of its property has been sold by a gone; and the charter provides that when that is im- sheriff, but it must also have lost all power to continue paired by losses or otherwise, the directors shall forth- or to resume its business," and that nothing short of with repair the same by assessment.
this is equivalent to a surrender except as otherwise Nothing appears to show that such an assessment provided by statute. And in the same case Pratt, J., would not relieve this institution from all embarrass- says that the doctrine of Slee v. Bloom should not be ment, and render further administration by the re- carried beyond the precise facts on which the case ceiver unnecessary.
rested. The New York cases, on which so much reliance is Can it be said of the defendant company that it has placed, establish the doctrine that if corporations do, lost all power to resume its business? Obviously not. or suffer to be done, acts that destroy the end and ob- It does not even appear that it is insolvent in fact, ject of their creation, it is equivalent to a surrender of much less that it is insolvent to such an extent that their corporate rights; but they do not decide that depositors can suffer thereby; nor is there any thing
to show that it has lost its power to resume its busi- receiver is said to be a statutory assignee, that after ness if permitted to do so. Hence we have absolutely the appointment of such a receiver the answer of the none of the essential elements for presuming a sur- corporation under the corporate seal is of no effect, render of corporate rights and privileges, wbich is the the corporation being virtually dissolved by the apground and reason of holding a dissolution in effect as pointment, the statute substituting the receiver for distinguished from a dissolution in fact.
the corporation as to all the corporate property and But another question remains for consideration : Did effects. Davenport v. City Bank of Buffalo, 9 Paige, 12. the appointment of the receiver, with the power given Now, the receivership in the case at bar is little else him, have the effect of virtually dissolving the corpo- than a common-law receivership. The receiver has no ration? The receiver is ordered to take charge and particular statutory powers conferred upon him; but possession of the property and effects of the corpora- in the language of the statute, he is “subject to the tion, and administer the same according to law, sub-Court of Chancery," and is made so by the order of ject to the order of the court.
his appointment; and said order is not strictly a judiIt is to be observed that the statute under which the cial act in the sense of being a decree or judgment i. receiver is appointed is unlike the statute under nally determining rights; and hence it is that the Leg. which a receiver is appointed to close up the affairs of islature may authorize the executive department of a private corporation whose charter has expired or the government to appoint receivers with authority to been annulled by forfeiture or otherwise. Uuder the take charge of and wind up the affairs of insolvent cor. latter statute (R. L., § 3275) the receiver, by virtue of porations, Auch as banking institutions. High Rethe power conferred on him by the statute, not only ceivers, $ 343. And as the object of this proceeding is pays the debts of the corporation, but distributes the to protect and preserve the corporate assets for the balance of the funds, if any, among the stockholders benefit of creditors, the court may on motion discharge or members of the corporation or their legal represen- the receiver and allow the corporation to resume the tatives, thereby finally settling and winding up all the management of its affairs, if satisfied that the interest affairs of the corporation; whereas under the former of all parties would be best subserved in that way; statute (R. L., 3 3555) the receiver pays the debts only, and for aught that appears this company may now be and does not distribute the surplus among stock-in condition to successfully make such a motion. holders, because evidently the corporation is still in We do not think that such a receivership as this, in existence, legally capable of receiving the surplus and view of the facts disclosed in this case, can be said in of resumivg its business and accomplishing the end
any just sense to operate a virtual dissolution of the and object of its creation. And even though the capi- corporation. tal is wholly gone, there would seem to be no legal Deoree afirmed and cause remanded. reason before a surrender or a forfeiture to prevent Taft, J., dissents. the members from furnishing renewed capital, and then proceeding to use their corporate powers. Coburn v. Boston Papier Maché Manufacturing Co., 10 Gray, | BANRING-DISCHARGE OF INDORSER-PAROL 243.
EVIDENCE AS TO LIABILITY, But in case of the expiration or annulment of a charter the corporate existence is gone for the purpose
PENNSYLVANIA SUPREME COURT, APRIL 14, 1884. of continuing the business for which the corporation
COMMERCIAL NATIONAL BANK V. HENNINGER. * was established (R. L., $ 3272), and nothing remains to
Where a bank is the holder of a note payable at the banking be done with the surplus except to divide it among the
house, and upon maturity the maker has a deposit in exstockholders or members.
cess of the amount of the note which deposit is not specIn Bank Commissioners v. Bank of Buffalo, 6 Paige, 497, it is said that as the statute relating to proceedings
ially applicable to a particular purpose, the bank is bound
to apply a part of said deposit to meet the note, and canin equity against corporations contemplates the mak
not elect to let the note go to protest and hold the ining of a final decree on the bill or petition against the
dorser. Where such a course is taken the Indorser is discompany that is to deprive it of all its corporate prop
charged from liability. erty and powers, and as a receiver appointed upon such
Where such a course was taken by a bank, the cashier of a proceeding, unless restrained in his powers by the
which was maker of the note in question, evidence was in. order appointing him, is absolutely vested with all the
admissible in an action by the bank against the indorser corporate property and effects, and authorized to dis
to show that the cashier had agreed in his official capactribute the surplus thereof among the stockholders af
ity that the indorser should not be bound, and further, in ter payment of the debts of the company, it fol
the said agreement was unauthorized, to show lows of course that a final order or decree for the ap.
that the bank was fully protected against loss by reason pointment of such a receiver is a virtual dissolution of
of stock owned therein by the cashier and by his official the corporation.
bond. The powers thus referred to as conferred upon the A. executed two promissory notes made payable to the order receiver are given by statute; and it is said in Ver
of B. at a bank of which A. was cashier. B. indorsed the planck v. Mercantile Ins. Co. of New York, 2 Paige, 438,
notes and had them discounted at the said bank. A. rethat the order appointing such a receiver is in effect a
fused to pay at maturity, and the notes were protested. final order in the cause, and unless altered or revoked
In an action by the bank on B.'s indorsement: operates a virtual dissolution of the corporation; that
Held, evidence to show an agreement between A. and B. that it is not a common-law receivership, but that the re
B.'s indorsement should impose upon him no obligation ceiver is a statutory assignee, vested with nearly all
to pay, and that the bank was protected from loss the powers and authority of the assignee of an insolv
through this agreement by stock in the bank owned by ent debtor. And the court points out the difference
A., and by his bond as cashier, is Irrelevant and inadmisbetween such a receiver and a receiver under another
sible. section of the samo statute and under an earlier stat
Held, further, A.'8 account with the bank is admissible in eviute, which are strictly common-law receivers, such as
dence to show a balance in his favor, on the day of the are usually appointed in suits between party and
maturity of the notes, sufficient to have paid them. party, and who have no powers except such as are con
RROR and the course and practice of the court. Indeed, so effective is the statute under which the
*8. O., 15 Week. Notes, 33.
ferred upon them by the order of their appointment ERROR to the Common Pleas of Berks County.
Assumpsit by the Commercial National Bank of (2) If the jury believe that B. F. Young made the Reading against Charles Henninger, upon two promis-deposit which composed the balance in bank at the sory notes iudorsed by defendant. Pleas, non-assump- time of the maturity of the notes in suit for the pursit with leave, etc. On the trial, before Hagenman, pose of paying notes other than the ones in suis, he P. J., the following facts appeared : Charles Hennin- had a right to appropriate said balance to the payment ger, the defendant, sold to B. F. Young certain shares of such other notes; and the defendant was not reof stock in the Peyusylvania aphite Mining Com. leased from his liability as indorser of the notes in pany, and received therefor his three promissory notes suit. made payable at the Commercial National Bank of Answer. If the jury believe that Mr. Young made a Reading, of which Young was the cashier, three, six deposit with the specific agreement with the bank at and nine months after date respectively. They were
the time it was made, that the mouey so deposited Indorsed by Henninger and discounted by the said was to be used for other notes, then the defendant bank. Young, the maker, alleging that Henninger had would not be released from his liability. But the jury defrauded bim in the sale of the Graphite stock,resolved will carefully consider the evidence. The deposit was not to pay the said notes, and at the time of the ma- credited on Mr. Young's general account without any turity of the second, banded it and the first, which he entry that it was for a special purpose; and the only had renewed, to a votary, who made demand at the evidence of any special purpose is the testimony of Mr. bank for payment. Young, the maker, as cashier of Young, who was the depositor and cashier. He does the bank, answered that the notes had not been pro not say that he ever notified any other officer of the vided for, whereupon they were protested, and notice bank of the disposition he intended to make of this thereof given to Heuninger. He paid the third note deposit. And so far as the evidence goes, it seems to when it matured, but refused to pay the first and sec- bave been an understauding he had with himself. ond, and the bank brought this suit to charge bim as (Ninth assignment of error.) iudorser.
Verdict for defendant and judgment thereon. Defendant offered to prove an agreement by Young, Whereupon plaintiff took this writfassigning for error, as cashier, at the time of the giving of the notes that inter alia, the admission of the testimony excepted Henninger's indorsement should impose upon him no to, and the answers of the court to the points above obligation to pay, but should operate merely as a trans- set forth. fer of tbe notes, and further to show that if this trans
Cyrus G. Derr (D. N. Schreffer with him), for action between Young and Henninger was unauthor
plaiutiff in error. ized by the bank, the latter was protected from loss by shares of the capital stock of the bank owned by Young
Jeff. Snyder (George F. Baer with him), for defend.
ant in error. and by his boud as cashier. All of which was objected to by the plaintiff as irrelevant. Objection overruled. PAXSON, J. The fourth and eighth assignments Exception. (First, second and third assignments of raise the prominent questions of this case. The fourth error.) Defendant also offered to prove a custom alleges error in admitting in evidence the account of among the Reading banks to charge notes made paya- Mr. Young with the bank on February 28, 1882, for the ble at the bank to the account of the maker, without purpose of showing that there were funds on deposit any special direction from the maker so to do. Ob- to his credit sufficient to have paid the notes in conjected to by plaintiff as irrelevant. Objection over- troversy ; while tbe eighth alleges the court erred in ruled. Exception. (Fifth and sixth assignments of instructing the jury, in answer to the plaintiff's first
point, "that if Mr. Young had a deposit in bank suffiDefendant further offered in evidence Young's ac- cient to pay these notes on the day they became due, count with the plaintiff bank on February 28, 1882, to and there were no circumstances shown in the case show that at the time of the maturity of the notes that would forbid the bank from so doing, the bank there were funds on deposit to his credit sufficient to was obliged to charge up these notes against Mr. have paid the same. Objected to by plaintiff as irrele- Young's deposit. Especially was the bank required to vant. Objection overruled. Exception. (Fourth as- do so if the jury find that there was some understandBigument of error.)
ing between the cashier and the president that the Mr. Young testified that the sum deposited to his defendant would not be called upon to pay these notes, credit at the time of the maturity of the notes bad and such credit would be no injury to the bank." been raised by the sale of certain securities for the The defendant was the indorser of the notes in suit. purpose of paying notes other than the ones in suit, The maker was B. F. Young, who was also the cashand subsequently maturing, and the said balance was ier of the bank. The notes had been discounted by actually applied to the payment of such other and sub- the bank, and were payable there
the day Bequently maturing notes. There was no other evi- they matured; at the close of banking hours there was dence upon this point.
on deposit to the credit of Mr. Young a balance suffiThe plaintiff requested the court, inter alia, to cient to meet the notes. Instead of charging up the charge: (1) A bank is not bound when a note owned notes against the deposit, the cashier handed them to a by it, and made payable at its banking house, becomes motary for protest. The object of this was to hold the due, to appropriate moneys of the maker ou deposit indorser, and compel him to proceed against the maker with it to the payment of the note. The indorser has in order to let in a defense which the maker could not no right to ask that the bank shall do so.
set up against the bauk. The defendant contends that Auswer. We answer and charge that if Mr. Young the failure of the bank to charge up the notes against had a deposit in bank sufficient to pay these notes on Mr. Young's deposit relieved him as indorser, the day they became due, and there were no circum- That there were no circumstances in the case to prestanices shown in the case that would forbid the bank vent the bank from applying the deposit to the notes from so doing, the bank was obliged to charge up these has been found by the jury. There is no doubt as to notes against Mr. Young's deposit. Especially was the right of a depositor to control his deposit up to the the bank required to do so if the jury find that there point where the rights of others attach. He may draw was some understanding between the cashier and the it out by his check; he may apply it to a particular president that the defendant would not be called upon purpose by making it a special deposit, or by specific to pay these notes, and such credit would be no injury directions communicated to the bank. None of these to the bank. (Eighth assignment of error.)
things is found in the case. The mere mental inteu