§ 5230. [U. S. Comp. Stat. 1901, 3506.] Whenever the Comptroller has become satisfied, by the protest or the waiver and admission specified in section fifty-two hundred and twenty-six, or by the report provided for in section fifty-two hundred and twenty-seven, that any association has refused to pay its circulating notes, he may, instead of cancelling its bonds, cause so much of them as may be necessary to redeem its outtanding notes to be sold at public auction in the city of New York, after giving thirty days' notice of such sale to the association. For any deficiency in the proceeds of all the bonds of an association, when thus sold, to reimburse to the United States the amount expended in paying the circulating notes of the association, the United States shall have a paramount lien upon all its assets; and such deficiency shall be made good out of such assets in preference to any and all other claims whatsoever, except the necessary costs and expenses of administering the same.

§ 5231. [U. S. Comp. Stat. 1901, p. 3507.] The Comptroller may, if he deems it for the interest of the United States, sell at private sale any of the bonds of an association shown to have made default in paying its notes, and receive therefor either money or the circulating notes of the association. But no such bonds shall be sold by private sale for less than par, nor for less than the market value thereof at the time of the sale; and no sales of any such bonds, either public or private, shall be complete until the transfer of the bonds shall have been made with the formalities prescribed by sections fiftyone hundred and sixty-two, fifty-one hundred and sixty-three, and fifty-one hundred and sixty-four.

§ 5232. [U. S. Comp. Stat. 1901, p. 3507.] The Secretary of the Treasury may, from time to time, make such regulations respecting the disposition to be made of circulating notes after presentation at the Treasury of the United States for payment, and respecting the perpetuation of the evidence of the payment thereof, as may seem to him proper.

§ 5233. [U. S. Comp. Stat. 1901, p. 3507.] All notes of national banking associations presented at the Treasury of the United States for payment shall, on being paid, be cancelled.

See Act of June 20, 1874, § 3, post.

§ 5234. [U. S. Comp. Stat. 1901, p. 3507.] On becoming satisfied, as specified in sections fifty-two hundred and twenty-six and fifty-two hundred and twenty-seven, that any association has refused to pay its circulating notes as therein mentioned, and is in default, the Comptroller of the Currency may forthwith appoint a receiver and require of him such bond and security as he deems proper. Such receiver, under the direction of the Comptroller, shall take possession of the books, records and assets of every description of such association, collect all debts, dues and claims belonging to it, and upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts, and, on a like order, may sell all the real and personal property of such association, on such terms as the court shall direct; and may, if necessary to pay the debts of such association, enforce the individual liability of the stockholders. Such receiver shall pay over all money so made to the Treasurer of the United States, subject to the order of the Comptroller, and also make report to the Comptroller of all his acts and proceedings.

See Act of June 30, 1876, § 1, and Act of March 2, 1897, amendment of section 3 of the same, post.

1. The receiver is the instrument of the Comptroller. He is appointed by the Comptroller, and the power of appointment carries with it the power of removal. It is for the Comptroller to decide when it is necessary to institute proceedings against the stockholders to enforce their personal liability, and whether the whole or a part, and if only a part, how much shall be collected. These questions are referred to his judgment and discretion and his determination is conclusive. The stockholders cannot controvert it. It is not to be questioned in the litigation that may ensue. He may make it at such a time as he may deem proper, and upon such data as shall be satisfactory to him. This action on his part is indispensable, whenever the personal liability of the stockholder is sought to be enforced, and must precede the institution of suit by the receiver. The fact must be distinctly averred in all such cases, and if put in issue must be proved. Kennedy v. Gibson, 8 Wall. 498, 19 L. ed. 476; approved in Casey v. Galli, 94 U. S. 673, 24 L. ed. 168.

2. It is sufficient for the appointment of a receiver that the Comptroller is satisfied of the facts, as required by this section, to authorize him to make the appointment. No legal proofs or evidence of the facts are required. The Comptroller is left to be satisfied, as best he can be under the peculiar circumstances of each case, of the existence of the facts and the necessity of his action. Hence, in an action by the receiver, the validity of the latter's appointment, or the right of the Comptroller to make it, cannot be questioned, notwithstanding the facts alleged in the certificate of appointment are not established by competent

legal evidence on the trial. Platt v. Beebee, 57 N. Y. 339; Cadle v. Baker, 20 Wall. 650, 22 L. ed. 448.

3. The action of the Comptroller in making the appointment is conclusive as to debtors, until set aside on application of the bank, for which provision is made in section 5237 [U. S. Comp. Stat. 1901, p. 3508], post. Id.

4. The language of the statute authorizing the appointment of a receiver, to act under the direction of the Comptroller, means no more than that the receiver shall be subject to the direction of the Comptroller. It does not mean that he shall do no act without special instructions. His very appointment makes it his duty to collect the assets and debts of the association. With regard to ordinary assets and debts no special direction is needed. Bank v. Kennedy, 17

Wall. 19, 21 L. ed. 554.

5. Stockholders are not ordinary debtors of the bank, and the receiver cannot enforce their personal liability without the direction of the Comptroller. Id.; and Kennedy v. Gibson, 8 Wall. 499, 19 L. ed. 476.

6. The receiver is the statutory assignee of the association, and is the proper party to institute all suits; they may be brought both at law and in equity, in his name, or in the name of the association for his use. He represents both the creditors and the association, and when he sues in his own name it is not necessary to make either a party to the suit. Id.

7. The liability of the stockholders is several, and not joint. The limit of their liability is the of the stock held by each one. Where the whole amount is sought to be recovered, the proceeding must be at law. Where less is required, the proceeding may be in equity, and in such case an interlocutory decree may be taken for contribution, and the case may stand over for the further action of the court if such action should subsequently prove to be necessary — until the full amount of the liability is exhausted. It would be attended with injurious consequences to forbid action against the stockholders until the precise amount necessary to be collected shall be formally ascertained. Id.; and Casey v. Galli, 94 U. S. 673, 24 L. ed. 168. It was held in Stanton, Receiver, v. Wilkeson, 8 Ben. 357, Fed. Cas. No. 13,299, that where less than the par value was assessed, the action might be at law, at the option of the receiver.

8. Though the stockholders are only conditionally liable for the debts of the bank, after all the ordinary resources have been exhausted (Bank v. Kennedy, above cited), still suits to enforce their personal liability may properly be brought before the actual exhaustion of all the assets. Kennedy v. Gibson, 8 Wall. 499, 19 L. ed. 476.

9. When contribution only is sought, all the stockholders who can be reached by the process of the court may be joined in the suit. It is no objection that there are others beyond the jurisdiction of the court who cannot for that reason be made co-defendants. Id.

10. In ordering an assessment, the stock certificates and the stock ledger are the basis upon which the Comptroller of the Currency, in the absence of fraud or mistake, must rely. Davis, Receiver, v. Essex Baptist Society, 44 Conn. 582, Fed. Cas. No. 3,633, obiter.

11. Where a shareholder of a corporation (as a national bank) is called upon to respond to a liability as such, and where a party has contracted with a corporation, and is sued upon the contract, neither is permitted to deny the exist

ence or the legal validity of such corporation. Casey v. Galli, 94 U. S. 673, 24 L. ed. 168.

12. The assessment bears interest from the date of the Comptroller's order. Id. 13. A stockholder of an insolvent national bank, who is also a creditor thereof, cannot in an action by the receiver to enforce an assessment, set off his individual claim against such assessment. Hobart v. Gould, 8 Fed. Rep. 57; Sawyer v. Hoag, 17 Wall. 610, 21 L. ed. 731. In the latter case it was decided by the United States Supreme Court, that a stockholder who had given his notes for his stock subscription, and who was sued thereon after the insolvency of the institution, could not offset debts due him from the corporation, is the ordinary course of business, on the ground that the money arising from the unpaid shares was a trust fund to be equally divided among all the creditors. See also Scammon v. Kimball, 92 U. S. (2 Otto) 362, 23 L. ed. 483; Garrison v. Howe, 17 N. Y. 458; In re Empire City Bank, 18 id. 199.

14. The United States District Court has jurisdiction to authorize a receiver of an insolvent national bank to compromise a debt. Matter of Platt, 1 Ben. 534, Fed. Cas. No. 11,211.

15. A court is not authorized by this section to order a receiver to "sell or compound" other than “bad or doubtful debts," from which category the personal liability of the stockholder is excluded, both by a separate classification in the section as well as by the import of its terms. Price, Receiver, v. Yates, 19 Alb. L. J. 295, Fed. Cas. No. 11,418.

16. The receiver of an insolvent national bank represents the bank, its stockholders and its creditors, but not in any sense the government; and neither he nor the Comptroller can subject the rights of the government to litigation in any court without some express provision of law to that effect. Case v. Terrell, 11 Wall. 199, 20 L. ed. 134.

17. An action will not lie against the receiver, upon a claim against an insolvent national bank. He has no control over the assets, except to pay their proceeds over to the Treasurer of the United States. If any action could be maintained against the Comptroller, it would be to enforce a proper distribution of the fund; but such action will lie against the bank which continues to exist for the purpose of being sued. Chemical National Bank v. Bailey, 12 Blatchf. 480,

Fed. Cas. No. 2,635.

18. A suit against a national bank to enforce the collection of a demand is abated by a decree dissolving the corporation, and forfeiting its rights and franchises. National Bank v. Colby, 21 Wall. 609, 22 L. ed. 687.

19. The property of a national bank organized under the Act of Congress of June 3, 1864 (13 Stat. at Large, 99), attached at the suit of an individual creditor, after the bank has become insolvent, cannot be subjected to the sale for the payment of his demand, against the claim for the property by a receiver of the bank subsequently appointed. Id.

on a note.

20. A depositor in a national bank which has failed and passed into the hands of a receiver, may set off the amount of his deposit against his debt to the bank Platt, Receiver, v. Bentley, 11 Am. Law Reg. 171. Even though the note has not matured. Berry, Receiver, v. Brett, 10 Supr. 627. A depositor of a bank is entitled to set off on a bond and mortgage the amount of his deposit. Matter of New Amsterdam Bank v. Gartter, 54 How. Pr. 385. But it

was held in Oborne v. Byrnne, 43 Conn. 155, 21 Am. Dec. 641, that a deposit could not be set off against a debt due the bank on a note, unless, perhaps, the deposit was made for the purpose of applying on such indebtedness, and the bank officer knew that fact.

21. A national bank having become insolvent, a depositor therein assigned his deposit to a debtor of the bank, Held, that the latter could not off set such deposit against his debt in an action thereon. Venango National Bank v.

Taylor, 56 Penn. St. 14.

22. Usurious interest paid cannot be set off. Hade v. McVay, 31 Ohio St. 231; Barnet v. National Bank, 98 U. S. 555, 25 L. ed. 212.

23. The priority of payment of debts given the United States by the provision of section 3466, U. S. R. S. [U. S. Comp. Stat. 1901, p. 2314], does not include demands against an insolvent national bank. Cook County National Bank v. United States, 107 U. S. (17 Otto) 445, 27 L. ed. 537, 2 Sup. Ct. Rep. 561, overruling S. C. 25 Int. Rev. Record, 266.

24. If a registered owner transfers his stock in a failing corporation to an irresponsible person for the mere purpose of escaping liability, or if his transfer is colorable only, the transaction is void as against creditors, so as to leave the real owner liable to assessment as a stockholder. One S. bought shares in a national bank, and caused them to be transferred to one E., a porter in the office of his New York broker, and irresponsible. At the time of the transfer, there was no suspicion of the insolvency of the bank, and it remained in good credit for more than a year afterward. Held, that S. was liable as stockholder upon the failure of the bank. National Bank v. Case, 99 U. S. 628, 25 L. ed. 488. See also Davis, Receiver, v. Stevens, 17 Blatchf. 259, Fed. Cas. No. 3,653.

25. The liability incurred by a holder of national bank stock is statutory, and not by contract. Being so, it attaches, as an incident of ownership, to all who are capable of such ownership, without reference to any supposed voluntary assumption by contract, express or implied. Therefore when national bank stock is held by a feme covert, either in her own right or subject to the marital rights of her husband, the liability to be assessed affects her alone, and it is not necessary, in an action to enforce collection of an assessment, to join her husband, as would be necessary if it were a common-law obligation or liability of the wife. Keyser v. Hitz, 2 Mackey (D. C.) 474.

26. Certain shares of stock were transferred directly from a husband to his wife, and a suit was instituted against both. Held, that the coverture did not exempt her from the liability imposed by this act on all the stockholders of a national bank. Anderson v. Line, 14 Fed. Rep. 405. That the liability of a shareholder in a national bank is by contract, or in the nature thereof. See Davis v. Weed, 44 Conn. 569, Fed. Cas. No. 3,658; citing Hawthorne v. Calef, 2 Wall. 22, 17 L. ed. 779; Loury v. Inman, 46 N. Y. 119; Bailey v. Hollister, 26 id. 112.

27. T. owed a national bank $35,000; R. had a deposit in the bank of $40,000; the bank, becoming insolvent, stopped payment. The next day R. assigned his deposit to T. Held, that T. could not set off the deposit against the indebtedness due from him to the bank, as it would give a preference of one creditor over the others, after the insolvency of the bank. Sections 5234 and 5242 [U. S. Comp. Stat. 1901, pp. 3507, 3517], apply to legal as well as voluntary transfers of the