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by him deposited in one or more state banks of deposit, savings banks or trust companies, to the credit of the superintendent of banks in his name of office, in trust for the several depositors with and creditors of the liquidated corporation from which they were received entitled thereto. The superintendent shall report to the legislature annually in his report the names of corporations so taken possession of and liquidated and the sum of unclaimed and unpaid deposits or dividends with respect to each of them respectively. The superintendent may pay over moneys so held by him to the persons respectively entitled thereto upon being furnished satisfactory evidence of their right to the same. In cases of doubt or conflicting claims he may require an order of the supreme court authorizing and directing the payment thereof. He may apply the interest earned by the moneys so held by him towards defraying the expenses in the payment and distribution of such unclaimed deposits or dividends to the depositors and creditors entitled to receive the same, and he shall include, in his annual report to the legislature, a statement of the amount of interest earned by such unclaimed dividends.

(Former section 18; L. 1909, ch. 143.) 1. A corporation organized under Laws 1851, ch. 122, for building, mutual loan, etc., associations, is subject to section 19. On the question whether it is expedient to continue business, the verified report of bank examiner, as well as the affidavits on motion for receiver, is to be considered. The conditional consent of shareholders to scaling down of book value of their shares and thus reducing liabilities held to be inoperative. People v. Republic Savings and Loan Association, 53 App. Div. 384, 65 N. Y. Supp. 1036.

2. The duty of the superintendent, imposed by section 19, to report to attorneygeneral on delinquent corporations includes reports on co-operative banking corporations organized under Laws 1851, ch. 122; the duty is not discretionary but is absolute, and a relator is not necessary. Where a deficit was caused by gross mismanagement, a scaling down of amounts due shareholders so as to decrease liabilities and show an excess of assets, will not save prosecution. People v. Mercantile Co-op. Bank, 53 App. Div. 295, 65 N. Y. Supp. 766.

3. An agreement was made between the Madison Square Bank and the St. Nicholas Bank (both of them being State banks) in January, 1891, by which the latter, a member of the New York Clearing House Association, became the agent to clear through the clearing house checks drawn upon the former. The latter bank submitted in writing a statement of the conditions on which it would undertake this business for the Madison Square Bank as follows:

"Fifty thousand dollars balance to be kept at all times, to be free from interest. An allowance at the rate of 2 per cent. per annum shall be allowed on average exceeding this amount. The Madison Square Bank is to keep with this bank $100,000 in approved bills receivable."

The cashier of the Madison Square Bank, in a letter dated January 9, 1891, to the St. Nicholas Bank, says:

"Referring to conversation of our president with your good selves, we would say that we accept the terms and conditions on which your bank agrees to clear for us as per your memorandum, namely, $50,000 balance to be kept with you at all times free of interest. Interest at 2 per cent. per annum to be allowed us on average exceeding that amount. This bank to keep with you $100,000 of approved bills receivable. . . . We enclose copy of a letter addressed by us to the clearing house committee to conform with the requirements of their circular of December 18th last."

That letter enclosed a copy of a resolution signifying the acceptance of the Madison Square Bank of the terms of the circular and authorizing its cashier to send a check for the annual payment of $200 required of banks clearing through members.

The oral agreement was made between the parties at the time of the arrangement referred to in said letter of the 9th of January, that other securities of equal value might be substituted from time to time for those first deposited, making up the $100,000 of bills receivable.

The object of the Clearing House Association, as stated in its constitution, is "the effecting at one place of the daily exchanges between the several associate banks, and the payment at the same place of balances resulting from such exchanges."

The Madison Square Bank was not a member of the association.
The twenty-fifth section of the constitution was as follows:

"Whenever exchanges shall have been made at the clearing house by previous arrangement between members of the association through one of their number, and banks in the city and vicinity, who are not members, the receiving bank at the clearing house shall in no case discontinue the arrangement without giving previous notice, which notice shall not take effect until the exchanges of the morning following the receipt of such notice shall have been completed."

This section was in force at and before January 9, 1891, and is still in force, and it was known to be so by the Madison Square Bank at the time of the making of this arrangement.

After the making of this arrangement, and on and after the 13th January, 1891, the St. Nicholas Bank made the clearances at the clearing house for the Madison Square Bank up to and including the 8th day of August, 1893, and the Madison Square Bank deposited and kept good, as to amount and value, its deposit of bills receivable with the St. Nicholas Bank and up to some time in July, 1893, kept good its money balance of $50,000 in addition thereto. Some time prior to August 8, 1893, the St. Nicholas Bank desired to end the arrangement for making clearances for the Madison Square Bank. At that date it held, also, certain collateral securities, taken upon loans made upon notes of the Madison Square Bank and by agreement they or their proceeds should be applied to any other obligations of that bank.

On the 8th day of August, 1893, the St. Nicholas Bank gave the notice required by the 25th section, that it would cease to make clearances for the Madison Square Bank. This was served upon the banks constituting the Clearing House Association on that day.

By the terms of section 25 this notice took effect upon the completion of the

exchanges at the clearing house on the 9th of August. These clearances were made every day immediately after 10 o'clock, and were completed before 12 o'clock. The St. Nicholas Bank paid, on the 9th of August, through the clearing house, checks drawn upon the Madison Square Bank by depositors having amounts to meet the same to their credit as depositors on the books of the Madison Square Bank, $372,000. On the 8th day of August, 1893, the Madison Square Bank, after ineffectual efforts to obtain a loan to relieve its immediate necessities, was visited by the clearing house committee and its condition examined; also by an examiner of the State banking department. After this examination by the committee of the clearing house their conclusion that the bank was not in a condition to continue business was communicated to the officers and some of the directors of the Madison Square Bank.

The Madison Square Bank did not open for business on the following day. It was, in fact, insolvent on the 8th of August, 1893, and the officers of the St. Nicholas Bank knew before the exchanges were made on the 9th of August that the Madison Square Bank was insolvent, or that its insolvency was imminent and that it had stopped business.

Included in the gross sum of $372,000, the amount of the checks upon the Madison Square Bank, cleared by the St. Nicholas Bank on the 9th of August, were two checks drawn by the treasurer of the State of New York, against funds of the State deposited in the said bank, which checks were signed and dated on the 8th day of August, 1893, and were deposited in banks in the city of New York, which were members of the Clearing House Association, before 10 o'clock on the morning of the 9th of August, 1893, and were by such banks sent to the clearing house on said 9th day of August. The clearance of said checks was regular and according to the usual course of business among the banks constituting said Clearing House Association, notwithstanding the fact that they were not deposited for collection with a clearing house bank until the morning of the 9th day of August, 1893. The St. Nicholas Bank had no knowledge on the 9th day of August, 1893, of any irregularity in regard to the drawing, deposit or transmission to the clearing house of any of the checks going to make up said gross amount of $372,000.

The referee found that the payments of checks on the morning of August 9, 1893, were in the performance of its contract with the Madison Square Bank, and were not made with the intent on the part of either of the banks to give a preference to any creditor of the Madison Square Bank over any other creditor; or in violation of the Corporation Law of the State, and he held that the plaintiffs were not entitled to recover any part of the money or securities held by the St. Nicholas Bank. His decision was sustained by the Court of Appeals. O'Brien v. Grant, 146 N. Y. 165, 28 L. R. A. 361, 40 N. E. 871.

4. A proceeding by the attorney-general for dissolution takes precedence over a proceding for voluntary dissolution. Matter of Murray Hill Bank, 153 N. Y. 199. 5. As to the sufficiency of a complaint and statement of requisite facts. People v. Man. Real Estate and Loan Co., 175 N. Y. 133.

6. As to application of bankruptcy proceedings, see Collier on Bankruptcy, 7th ed.

§ 20. Examination by order of court. The creditors and shareholders of any such corporation whose debts or shares shall amount

to one thousand dollars may make application to the supreme court by a verified petition setting forth facts showing that an examination of the affairs of the corporation should be made, and the court may thereupon, in its discretion, order such an examination to be made by a referee for the purpose of ascertaining the safety of the investments and the prudence of the management of the corporation. The result of every such examination, together with the opinion of the referee thereon, shall be published in such manner as the court shall direct. The court shall make such order in respect to the expenses of the examination and publication as it may deem proper.

(Former section 19; R. S., 1518; L. 1882, ch. 409, § 19.)

This gives only a visitorial power and authorizes no interference except examination, and the publication of the result. Parmly v. 10th Ward Bank, 3 Ed. Ch. 395.

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§ 21. Reports. Every corporation and individual banker subject to the provisions of this chapter shall make a written report to the superintendent of banks, in such form and containing such matters as he shall prescribe. In the case of a bank, trust company or individual banker, the superintendent shall, at least once in every three months, designate some day therein in respect to which the report shall be made. In case of a bank, individual banker or trust company each such report shall state, in addition to the matters prescribed by the superintendent of banks, the amount of deposits the payment of which, in case of insolvency, is preferred by law or otherwise over other deposits. The superintendent of banks shall prescribe the manner and form of making such statement. If a savings bank, or safe deposit company, such report shall be made semiannually on or before the first day of February and August in each year, and shall contain a statement of its condition on the mornings. of the first days of January and July preceding. If a savings bank, such report shall state the amount loaned upon bond and mortgage, together with a list of such bonds and mortgages and the location of the mortgaged premises, as have not been previously reported, and also a list of such previously reported as have been since paid wholly or in part, or have been foreclosed, and the amount of such payments respectively; the original cost, date of purchase, date of maturity, stated rate of interest, par value and estimated investment value of all stock or bond investments, designating each particular kind of

stock or bond; the amount loaned upon the pledge of securities, with a statement of the securities held as collateral for such loans; the amount invested in real estate, giving the cost of the same, the amount of cash on hand and on deposit in banks or trust companies, and the amount deposited in each; and such other information as the superintendent may require. The estimate of investment value of stock and bond investment shall be made by each savings bank in the manner prescribed by the superintendent of banks, provided that no stock or bond shall be estimated at a higher price or value than its investment value by amortization as provided in section one hundred fifty-three of this chapter; or, if the interest upon said security has been in default for more than thirty days prior to the date of such report, or if said security shall cease to be a legal investment for savings banks, at a higher value than the market value thereof. Such report shall also state all the liabilities of such savings corporation on the morning of the said first day of January and July; the amount due to depositors, which shall include any dividend to be credited to them for the six months ending on that day, and any other debts or claims against such corporation which are or may be a charge upon its assets. Such report shall also state the amount deposited during the year previous, and the amount withdrawn during the same period; the whole amount of interest or profits received or earned and the amount of dividends credited to depositors, together with the amount of each semi-annual credit of interest, and the amount of interest that may have been credited at other than semi-annual periods, the number of accounts opened or reopened, the number closed during the year, and the number of open accounts at the end of the year, and such other information as may be required by the superintendent. If a safe deposit company, such report shall contain such particulars as the superintendent may prescribe. If a co-operative savings and loan association, or a mortgage, loan or investment corporation, such report shall be made annually on or before February first in each year, and shall contain a statement of its condition on the first day of January preceding. The superintendent may, for good cause shown, extend the time for making any such report not exceeding thirty days. Every such report shall be verified by the oath of the president and cashier or treasurer of such corporation or by such individual banker, to the effect that the same

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