Raynor v. . Pacific National Bank

Rapallo, J. The attachment was issued on the 9th of January, 1882. If at that time the defendant was insolvent, or in contemplation of insolvency, or had committed an act of insolvency, the attachment was prohibited by section 5242 of the Revised Statutes of the United States, and the order setting it aside should be affirmed. (Robinson v. Nat. Bank of Newberne, 81 N. Y. 385; 37 Am. Rep. 508.) We think the evidence submitted to the court below was ample to sustain its conclusion that the bank had committed an act of insolvency, and was insolvent, when the attachment was issued; where it is conflicting we do not review it. The affidavit on which the attachment was granted stated that the bank was in an embarrassed condition and was about to, or had failed; the affidavit of the bank examiner showed that the „ bank had been insolvent since the 18th of November, 1881, and its doors had been closed since that time ; that its debts and obligations greatly exceeded the total value of all its available assets. On the 22d of Hay, 1882, it was placed in the hands of the receiver. At the time of the issuing, of the attachment, January 9, *373 1882, the property and affairs of the bank were actually in charge of Daniel Medham, a National bank examiner, under the direction of the comptroller of the currency. The report of the examiner clearly shows that at that time the bank was insolvent to a large amount, there being a deficiency in its assets of over one million dollars. Afterward by an assessment upon its stockholders, and voluntary aid extended to it by its directors, it placed itself in such condition that it was enabled in March, 1882, to resume business for a short period, but ultimately failed, and was officially declared insolvent on the 22d of May, 1882. The condition of the bank at the time the attachment was issued is the material point. The attachment having been issued when the bank was clearly insolvent, it was illegally issued, in violation of the statute, and could not be made valid by the subsequent acquisition by the bank of further capital. If the attempt to restore the bank to a sound condition had been successful, probably further litigation on the subject of the attachment would have been unnecessary, for all the debts could have been paid. But the resuscitation was only of short duration; during its brief continuance the bank paid a large amount of debts in full, and the plaintiffs now urge that this fact should estop it from setting up its insolvency to avoid the attachment of the plaintiff. But it must be observed that the application to set aside the attachment is not made by the bank for the benefit of its stockholders, but is made for the benefit of the remaining creditors, and the fact that the fund to which they look for the payment of their claims has already been depleted by the payment to some creditors in full is no reason for permitting other preferences to he obtained. Since the argument of this case our attention has been called to section 4 of the act of Congress of July 12, 1883, which it is claimed operates as a repeal of section 5242 of the United States Revised Statutes. We do not think that such is its effect. In the first place the section referred to applies by its express ‘terms only to suits thereafter brought against National banks. Secondly, it provides merely that the jurisdiction for such *374 suits shall be the same as for suits against State banks. The repeal is only of laws inconsistent with the above provision. We do not see that the law which prohibits the issuing of attachments against insolvent National banks conflicts with the provision in regard to the courts in which suits against such banks may be brought. There is no inconsistency in conferring jurisdiction of the suits on certain courts, and at the same time prohibiting suitors in those courts from issuing attachments in such suits, which will result in giving to the suitors preference over other creditors of an insolvent bank. One provision relates to the jurisdiction of the courts to entertain the suits, the other to a particular proceeding in'such suits, which is prohibited in cases of insolvency. It cannot be supposed that Congress intended to throw the door open whereby diligent creditors might obtain preferences by means of attachments, while retaining all the other provisions of section 5242, designed to guard against such preferences. The language of the act of 1883 does not manifest any such intention. The order should be affirmed, with costs. All concur, except Andrews, J., absent. Order affirmed.