First National Bank v. Gish's Assignees

The opinion of the court was delivered, by Read, J. — John B. Gish, a grain dealer, doing business at Elizabethtown, Lancaster county, addressed a letter to Andrew Gerber, cashier of the First National Bank of Mount Joy, asking for a discount of anote of six thousand dollars, with John S. Gish, his father, as endorser. The bank agreed to discount the paper offered, if John B. Gish would leave in bank one thousand dollars of it, to be appropriated to the reduction or payment of the note at maturity. The letter of the cashier communicating this to John B. Gish was shown to John S. Gish, and he assented to the arrangement and endorsed a note for six thousand dollars, drawn by John B. Gish to the order of John S. Gish, payable at the First National Bank of Mount Joy sixty days after date. This note was discounted by the bank on the 23d March 1869, and the net proceeds $5936 passed to the credit of John S. Gish, and on the 26th of the same month John B. Gish presented the check of John S. Gish to the bank for that sum, when the same was transferred on the books of the bank to the credit of John B. Gish, who on the same day drew his check on said bank as follows :— “ Mount Joy, March 26th 1869. First National Bank of Mount Joy Pay to Andrew Gerber, Cashier, on account of my note discounted, or bearer, one thousand dollars. John B. Gish.” This check is in the handwriting of Andrew Gerber, the cashier of the bank, and was immediately handed to and retained by him, and still remains in bank. After paying some indebtedness to the bank and the payment [17] of several checks drawn by him, there remained in bank the $1000 and $260, on the 3d April 1869, when John B. Gish made a voluntary deed of assignment of his estate for the benefit of his creditors, and on the 28th April 1869, a petition was presented to the District Court of the United States for the Eastern District of Pennsylvania, in pursuance of which he was on the 5th May following, adjudicated an involuntary bankrupt, and the plaintiffs were in July following appointed his assignees in bankruptcy, and the voluntary assignee, Philip Oldweiler, by the directions of the United States court, assigned and transferred to them all the estate of the said bankrupt, which had vested in him by virtue of the voluntary assignment of the 3d of April. On the 27th March 1869, John B. Gish drew a check in favor of Jacob Overholzer for $260, who transferred it to Samuel Eby, who presented it at the bank for payment on the 5th April 1869, when payment was refused. The plaintiffs claim these two sums of $1000 and $260. With regard to the first sum, the court were of opinion that the arrangement proposed by Andrew Gerber and agreed to by John B. Gish, and to which John S. Gish was privy, “was a violation of the law of the state as well as the bankrupt law, and the Act of Congress relative to the national banks; that it was in fraud on the law, and that John S. Gish would be precluded thereby from any preference, as to the one thousand dollars.” Our Act of 25th May 1858, was clearly not violated, for it permits the contract for and payment of more than six per cent., which the borrower or debtor alone can reduce to the lawful rate of interest. The 30th section of the Act of Congress of 3d June 1864, establishing a system of national banks, forfeits only the interest, but does not affect the principal; neither of these laws therefore support the opinion of the learned judge. Nor is the case covered by the 35th section of the Bankrupt Act of 2d March 1867, rendering “the giving a preference to any creditor or person having a claim against him or who is under any liability for him,” by any of the means pointed out in the section, and the means employed void. There was clearly no antecedent debt or liability. It was all one transaction, the effect of which was to reduce the original liability of John S. Gish to five thousand dollars, as clearly as if the note had been drawn for that sum only. This disposes of the claim for the one thousand dollars; but the learned judge was right as to the check for $260, presented two days after the general assignment, and which therefore the plaintiffs were entitled to recover. Judgment reversed and venire de novo awarded, unless the plaintiff remits so much of the verdict as consists of the $1000 with its interest.