(UnrttPll Slaui ^rljnol IGibtary KFN5250!C62" """""">' "*""" ^''^iniiiim'ilSiiiiKMiM''' °' ""^ ''3'« 0' New Y 3 1924 022 794 949 The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/cletails/cu31924022794949 THE BANKIKG STSTE STATE OF NEW YORK. CL THE BAHKOG SYSTEM STATE OF NEW YORK, WITH NOTES AND REFERENCES TO -A.IDJXJ3DC3-Br). C-A.SES; INCLUDING ALSO AN ACCOUNT NEW YORK CLEARING HOUSE. J COljNSELLOE AT LAW. ' .Jl; >> , C *', , NEW YORK: JOHN S. VOORHIES, LAW BOOKSELLER AND PUBLISHER, 20 ITASSATT STREET. 1857. * \ J Ayt^ ^^fSUr 6^/r^/ Entered according to Act of Congress, in the year 1857, by JOHN S. TOOKHIES, In the Clerk's Oflloe of the District Court of the United States for the Southern District of New York. Baesb & GoDwis, Pbihthss, 1 Sprnoo Street, N. T. \JNM??S CONTENTS I. An Introduction, containing a brief historical sketch of the two Banking Systems of the State of New York, prior to that intioduced by the General Banking Law of 1838. The first system was in force from 1791 to 1829, the second from 1829 to 1838. pp. vii. to k. n. A table of the Statutes embraced in this Volume, arranged in the order of the years in which they were enacted, pp. Ixy. to Ixxiii. in. A table of the Leading Cases decided by the Courts of the State of New York, from 1838 to 1856, relating to the General Bank Act of 1838, and the powers, &c., of corporations formed under it. pp. Ixxiv. to Ixxvi. IV. General Statutes enacted before 1838, viz.: the Statute of 1827 [Revised Statutes), entitled "Of Moneyed Corporations" (pp. 1-28); containing regulations to prevent their insolvency, and to secure the rights of their creditors and stockholders IV COITTENTS. (pp. 1-17); and concerning the election of tieir Directors (pp. 17-23); also, definitions of certain terms used in the Revised Statutes (pp. 23, 24); also, the Statute of 1827 {Revised Statutes), entitled " Of the general powers, privi- leges, &c., of corporations" (pp. 24-28); also, the Statute of 1829, called the "Safety Fund Act" (pp. 29-39); the Statute of 1830 {Revised Statutes), called the " Eestraining Act" (pp. 39-50); the Statutes of 1830 {Revised Statutes), entitled "Of proceedings against corporations in equity " (pp. 50-64) ; and "Of the voluntary dissolution of corporations" (pp. 64-75); also the Act of 1830, concerning bank notes (pp. 75, 76); and the Act of 1835, imposing certain restrictions on all moneyed corporations (pp. 77-79). V. The General Banking Law of 1838, as originally passed, with notes and references to subsequent amendments, and to the decisions of the Courts, (pp. 81-107.) VI. The General Banking Law as altered by subsequent legisla- tion, (pp. 211-223.) VII. All the Special Statutes passed since 1838, amendatory of the General Banking Law (pp. 107-208) ; also the statutes relating to Foreign Bank Notes (pp. 107, 193, 206); to suits by or against banking associations (p. 125); to Receivers of banking associations (pp. 127, 134, 135, 144, 145) ; also the statute to enforce the responsibility of Stockholders in certain banking corporations, &c. (pp. 155, 205) ; relating to unclaimed dividends and deposits (p. 173); CONTENTS. T to tlie distribution of fiinds held, by the Comptroller (p. 115); to the establishment of the Bank Department (p. Il8) ; and to the punishment of fraudulent and unauthorized issues and transfers of stock or bonds of corporations (p. 20'7). Vni. The Appendix contains the Restraining Acts of lT82, 1804, 1813, and 1818 (pp. 233-239); also, the statutes relating to the proceedings against coi-porations in Courts of Law (p. 240-245) ; to assessment of taxes upon corpo- rations (p. 224-229) ; to the collection of debts against corporations (pp. 232, 233) ; to abatement of suits by or against corporations (p. 230) ; to proceedings against foreign corporations (pp. 240-253) ; to promissory notes and bills of exchange (pp. 253-260) ; to interest of money (pp. 260, 261) ; to usury (pp. 262-265); and to dividends on stocks held by the State, or by literary or charitable institutions (p. 231); also, the provisions of the Constitution of 1846 relating to corporations (pp. 264, 265). The Appendix contains also, the names of all the Banks chartered by the State of New York, from 1791 to 1829 (pp. 284,285); and from 1829 to 1838, under the Safety Fund System (pp. 286-289) ; and from 1838 to 1855, under the General Banking Law (pp. 289-295) ; also the names of the Special Charter Banks whose charters had not expired in January 1855 (pp. 295, 296). The Appendix contains also, an account of the CLEARiNa House established in the City of New York, in 1853 VI COITTENTS. - (pp. 266-283) ; also a Digest of the Leading Decisions of the Courts of the State of New York, relating to the General Banking Law, and to the powers of banking corporations organized under it (pp. 29'7-225). IITRODUCTION. The origin of Banking dates far back. At first it was entirely a hard-money operation. The va- riety of coins used by different nations, gave rise to the class of money-changers, — the bankers or bro- kers of that day, — through whom the unavailable coin of other countries could be changed into that which was current in the land. In Greece, where violence often prevailed and property was insecure, treasure could be safely placed only in some spot held sacred by all. Hence Delphi became a place of deposit, and its celebrated temple was the seat of a bank as well as of an oracle. In Rome, also, there were bankers (argentarii), with whom the revenues, not only of individuals but of the State, were deposited. To the Jew bankers of commercial Lombardy we are indebted for the term. The progenitors of our spacious and splendid banking-houses were very simple things : a bench (Italian, ianco) was set up in the market place, for the exchange of money. Vi INTRODUCTION. The first public bank dates from A. D. 1163, and Venice claims the honor, (a) There is something of romance and glory in its origin, for it was founded to aid that heroic republic in the wars of the cru- sades. This was a bank of deposit only. With advancing commerce, Florence subsequently became the centre of the monetary transactions of Europe, and the business of banking was necessa- rily enlarged. Two hundred and fifty years after the establishment of the Bank of Venice, the Banks of Barcelona and of Genoa were founded. Two centuries more went by, before the growing commerce of Northern Europe obtained the Banks of Amsterdam, and Hamburgh, and Kotterdam, and Stockholm. The Bank of Etigland dates from 1694. Like its Venetian predecessor, it sprang from the exigencies of war. Yet its origin was humble. When one thinks of that vast govern- ment engine as it now exists, its huge banking- house, its army of officers and clerks, its tons of gold and silver, and its operations that reach and aflfect every quarter of the globe,— he can hardly read without a smile the title of its incorporating act : " An Act for the granting to their Majesties several rates and duties upon tonnage of ships and vessels, and upon beer, ale, and other liquors, for (a) LeTi on Mercantile Law, pp. 199, 200 ; MoCullooh's Diet. (Amer ed ) article " Banks (Foreign)." INTRODTJCTION. vii securing certain recompenses and advantages in the said act mentioned to sucli persons as shall volun- tarily advance the sum of £1,500,000 towards the carryiag on the war against France." (h) The Bank of Scotland is one year younger than her sister of England. The Bank of North America, under the old Con- federation, was established in 1V81 ; the Bank of Ireland in 1V83 ; the first Bank of the United States, in 1Y91 ; and the Bank of France in 1803.(c) "With this hasty and partial glance at the chro- nology of banking, we pass to the special history of New York legislation on the subject. The details of its changes and progress are in- structive. The system which now works so easily and safely, was reached only through a long and some- times painfal experience. We should know some- thing of the corruption and the gross abuses which prevailed under imperfect and ill-regulated plans of operation, — enkindling at times great popular excite- ment and indignation, — sometimes checking and sometimes modifying the action of legislatures, — ^ra order properly to understand and to appreciate the law which we have. It will be seen that from 1791 to 1838 two dis- tinct and widely different systems were tried and (6) 8 Stat, at Large, 5 W. INTEODUCTIOir. XVll porated "by tMs State prior to 1804. (p) Until tliat year, tte rigM of banking was a common-laTV right, belonging to individuals, and to be exercised at tbeir pleasure. The legislature had authority to regulate or restrain this right. This was done by the Mest^ainirig Acts hereinafter mentioned. After the first restraining law, banking became a frcmcMse derived from a grant of the legislature, and sub- sisting in those only who could produce the grant, {g) April 11, 1804, an act " to Rest/rain TJnincor- g^^^j,. •porated Ba/nMng Associations^'' was passed, (f) mi^" " The object of this statute was, to guaranty "to banks a monopoly of the rights and privileges granted to them, which had been encroached upon or infringed by private associations." (s) ■ This act was re-enacted in the Revised Laws of 1813. (f) "Previous to the restraining acts," saya Chief Justice Samage^ " there was no power ip) Bank of North America ... in 1'782. Bank of New York . . . .in 1791. Bank of Albany .... in 1792. Bank of Columbia . . . -in 1793. Manhattan Company . . .in 1799. Farmers' Bank . . . 'in 1801. New York State Bank ... in 1803. (2 R. L. 1813, p. 569.) (y) 16 Johns. E., 875, 379 ; 2 Johns, Ch. E., S71. (r) Laws 1804, p. 615. See p. 234, post. (s) N. Y Firemen's Ins. Co. v. Ely (2 Cowen, 711 . («) 2 E. L, p. 234. See page 236, post. 1804 xviii INTEODITCTION. possessed by a bank not allowed to individuals and private associations. They could in common, issue notes, discount notes, and receive deposits; the only difference was, that the former were not liable beyond their corporate property, while the latter were accountable in their persons and to the fuU extent of their private estate." (u) liepiana- Upou a memorial of the Chamber of Commerce tory Act of ^ of the City of New York, the legislature, in April, 1804, passed an act eayplanatory of the restraining act of that year, and declared it should not be con- strued to affect the corporation created by an act entitled " An Act for supplying the City of New York with pure and wholesome water." (v) Eestrain- In 1813, thc legislature passed an act "to pre- vent the passing and receiving of bank notes less than the nominal value of one dollar — and to re- st/rain wnincorporated lamJcmg associations.^'' (w) In 1815, the restriction in this act, as to issuing bills less than one dollar, was suspended until the end of the next session of the legislature, (x) November 12, 1816, the legislature passed an act entitled, "An Act concerning banks," (y) By this, it was enacted that no banking company should («) 2 Cowen, 710. («) See page 236, ^osfc (w) See page 236, pott. (x) Laws of 1816, p. 85. (y) See page 287, post. ing Act of 1818. mTRODUCTION. xix issue any bills or notes other ttan for the payment of money ; and that the sums expressed in any bills which any bank should issue, which were, according to the terms thereof, receivable only in payment of debts due to the bank, should be recoverable by the bearer of such bills, in like manner as if the same contained an express promise for the payment of money, (z) April 21, 1818, the legislature -passed ^^ An Act relative to banks, and for other purposes^ (a) Savage, Ch. J., in Fireman^s Insurance Company Eestmin- vs. My, (F) says, that the legislature found it" necessary to pass this act, in order to ^^ place indi- viduals upon the same footing with private associ- ations, with the same view to monopoly by the incorporated banking companies. The first of these acts" [the act of 1804, re-enacted in 1813] "pro- hibits the formation of any bank or fund for the purpose of issuing notes, receiving deposits, making discounts, or transacting any other busiaess which incorporated banks may or do transact by virtue of their respective acts of incorporation. The second " [the act of 1818] "prohibits any person, association of persons, or body corporate, from keeping any office of deposit, for the purpose of discounting promissory notes, or carrying on any kind of bank- («) Laws of 1816, p. 12. See p. 237, pott. (o) Laws of 1818, p. 242. See p. 237, poit. (6) 2 Cowen, 711. XX INTEODUCTION. ing business or operations whicli incorporated banks are authorized by law to carry on, or to issue any bills or promissory notes as private bankers, unless thereto specially authorised by law." The legislature in April, 1824, passed an act " to prevent the passing and receiving of bank notes payable otherwise than in Icmful money of the United States:''' (c) The foregoing statement, and the bank charters and restraining acts to which reference has been made, show the manner in which the banking sys- tem was introduced into this State, and by whom, and upon what principles, the business of banking was authorized by Icm to be conducted prior to the year 1825. We have seen that the main features of all these bank charters were derived from the acts incorporating the Bank of England in 1694, and the Bank of the United States in 1791 ; and that as neither of these charters, English or American, de- fined or specified the hanking powers (d) intended thereby to be granted, it became necessary by re- strictive and prohibitory clauses, to limit the powers of the corporations so created. Thus, we find in all these public enactments, from 1694 to 1825, unequi- vocal declarations by the English Parliament, by Congress, and by successive Legislatures of this State, that trading in any thing, except bullion, foreign (e) Laws 1824, p. SOS. See p. 289, post. See §§ 10. 11, p. 48, post, (d) See § 4, p. 26, pott ; and § 1, p. 39, pott ; and 2 Cowen E. 711. INTEODTJCTIOK. XXI coins and bills of exchange, — ^is not lanUng ; and tliat tte power to traffic in stocks or merchandise, was not "either necessary or expedient to accom- plish the purpose for which banks are instituted." (e) The model charter of the Bank of New York was granted, as we have already stated, in 1791. The company thus incorporated had been an organized and active business association for more than seven years previous, but had been unable to get a char- ter. The people had not yet forgotten the evils of the Continental paper money, and the legislature was jealous of every thing in that shape. The Bank of Albany was chartered in 1793, and that of Co- lumbia, at Hudson, in 1793. Until the close of the century, when the whole banking capital of New York was but fourteen hundred thousand dollars (ee), no party considerations seem to have influenced the creation or the action of banks. The demands of commerce and the public convenience were alone considered. But party spirit soon became warm and high. The Bank of New York was in Federal hands. The Kepublicans very naturally wished for a bank which they coidd control. As the legisla- ture had a majority of their opponents, and as even the Republican members were extremely jealous of moneyed institutions, the probability of obtaining a charter was very small. Management might accom- plish what could not be done otherwise. The plan, («) See Talmage v. Pell (3 Selden, 328, 346), GaHiner, J. («e) See List of Bsnts chartered from 1791 to 1829, pp. 284, W6,post. G UanLat- tan XXli INTEODTJOTION. devised by " a mind capacioijis of sucli tMngs," proved successful. Tlie city had just been ravaged ny'S"^*' ^y ^^^ yellow fever, and its need of water in purity ehSerwas and abundaucc had been more felt than ever. At obtained. this opportune moment the petitioners asked the government to incorporate them for the benevolent purpose of supplying this great want. It was a noble object, and met with favor. As they could not foresee how much these works would cost, they proposed the liberal sum of $2,000,000 capital. And furthermore, as it was possible that these water- works might not absorb the entire amount, they asked for a provision authorizing the proposed cor- poration to employ its surplus capital " in the pur- chase of public or other stock, or in any other moneyed trmisactions or operations not inconsistent with the Constitution and laws of this State, or qT the United States." And still further, as the object was to supply a want that would never end, it was reasonable that the grant should be perpetual. Such was the charter which Aaron Burr carried through the unsuspecting legislature of 1Y99, and which, under the modest name of the Manhattan Company^ soon turned out to be a genuine Banking Institution, endowed with great power and endless life (/). (/) It seems to be an admitted fact, tliat at the time the act was passed, incorporating the Manhattan Company, o majority of the members of the legislature, as well as the Council of Revision, did not suspect that it con- tained banking powers. (Ham. Hist, i., 129, 180, 325-828 ; 1 Burr, 413, 415 • People v. Manhattan Oomp. (9 Wend. 364) ; Laws, Web. ed. p. 370, § 8.) INTRODUCTION. xxiii The incorporation of tlie New York State Bank at Albany in 1803, of the Merchants' Bank in New York, 1805, and of the Bank of America in 1812, was much mixed up with and influenced by the partizan strifes of that stormy period. In each of these cases there were numerous charges of brib- ery^ and some of them were but too well substan- tiated. Mr. Hammond, in his Political History of New York, says — " The odium attached to all those im- plicated in the corrupt means used to promote the incorporation of the Bamk of America, was so great and so lasting, that no attempts were made for a long time afterwards ; and the iniquitous proceed- ings of former legislatures in relation to granting charters to moneyed institutions, had been so dis- graceful to the State and were so fresh in the recol- lection of the members of the Convention of 1821, as beyond all question induced them, with a view to the prevention of these practices, to insert the clause in the Constitution of 1821 which rendered necessary the assent of two-thirds of both houses of the legislature, in order to incorporate any moneyed institution." {g) Mr. Ham,mond gives a history of the means adopted to procure the charter of the Manhatta/n (g) Hammond's History, vol. i. p. XxiT INTRODUCTION. Oompcmy, in 1799— of the Merclumts' Bank, in 1805— and of the Banh of America, in 1812. (A) At the close of the first quarter of the present century, the State of New York had forty-two banking institutions, with the right to employ a capital of $28,900,000. The applications at this time for new hank charters, were very numerous, but not very successful. Cases of alleged corruption and mismanagement then on trial in the Courts of law, excited great interest, and disinclined the legislature towards the chartering of banks. A com- mittee was appointed to inquire into alleged viola- tions of charters by certain Insurance Companies in the city of New York. The chairman, Mr. Spencer, reported, that the companies referred to, were in the habit of loaniag their own bonds on promissory notes or personal securities ; that they claimed this right under implied powers, supposed to be con- ferred by vague and general expressions in their charters ; that large amounts of these securities had been issued, and were afloat in the community ; that many of these companies had the right by their charters to loan money '^ but that the committee questioned their right to issue bonds or notes for the purpose pf loaning them ; that this was strictly a banking privilege, and within the laws to restrain unincorporated banking associations. He reported (A) Hammond's Hist. vol. i., 219, 220, 309-315, 325, 327, 332-838. See also Note «, by General Root, p. 584. INTRODUCTION. XXV also that certain otter Insurance Companies, incor- porated witli the obvious intention that they should be located in the interior of the State, had been, after lying dormant for years, resuscitated and brought into operation in the city of Nevf York; that although a location was not expressly directed in the charters of these companies, yet from their titles, and known residence of the persons incorpo- rated, and of the citizens appointed directors and commissioners, there could be no reasonable doubt of the intention of the legislature; and that the Committee did not believe, that such palpable vio- lations of that intention, and of the spirit of their charters, would be sanctioned or sustained by the courts of the> State. (M) Mr. Spencer also reported a bill to prevent jJp«««^« fraudulent bankruptcies by incorporated companies..^»SS«.« This was the most important bill acted upon by the^i;?,^' legislature of 1825 ; and on the 21st day of April of that year, it was enacted, and became a law of this State, under the title of, ^'■An Act to prevent fraudvlent hanhruptcies hy incorporated companies, — to facilitate proceedings against them, — a/nd for otlier pv/rposesT (^') (AA) The report of Mb. Spencer will be found at length in the N. T. Evening Post of May 11, 1826. In all acts paBsed in 1826, incorporating Insurance Companies, a prohibition was ineerted against such Companies keeping an office for the transaction of business in any place except the city, town, or village designated in their charters. (Laws 1826, p. 46, § 15 ; p. 62, § 16 ; p. 153, § 1.) See Note 87, p. 92, joosi. (;■) Laws of 1826, p. 448. XXTi INTRODUCTION. This celebrated act contained many stringent reg- ulations, calculated to check abuses in all moneyed corporations, to prevent their insolvency, and to expedite proceedings against them. All transfers or assignments by incorporated companies, in contem- plation of insolvency, were declared by this act utterly void ; and if any incorporated bank should become insolvent, or violate its charter, or any other law binding upon it, the chancellor was authorized, upon the petition of any creditor, or upon the appli- cation of the attorney-general, by process of injunc- tion, to restrain the exercise of its powers, and to appoint a Keceiver of its effects, to be distributed " among the fair and honest creditors thereof" "This," says Chancellor Kent, "was a statute of Icmhriwptcy in relation to incorporated banks ; and it was an unusual provision, for the English bank- rupt laws, or the general insolvent laws of the several States, never extended to corporations!''' (F) By the Revised Statutes of this State, the provis- ions of the act of 1825 have been re-enacted and greatly enlarged. (J) Only two of the numerous applications for bank charters were granted by the legislature of 1825. The " Commercial Bank of Albany " and the (fc) 2 Kent's Com. 315. {I) See Chap. 18, Part I., Titles 2, 3, 4, of 1 Revised Statutes; also the Act concerning the Revised Statutes, passed Deo. 10, 1828, in Seas. Laws of 1829, p. 24, § It. See pages 1-11, post. INTRODUCTION. XXTU "Dutcliess County Bank" were chartered in that year. The legislature of 1825, in granting charters to Firstiegis- the two banks last named, for the first time defined L^SwdV' J T • T 1 fl powers, and limited the powers of corporations created for ^8^- banking purposes. In each of these charters, is in- serted a precise enumeration of the hankmg powers intended thereby to be conferred, accompanied with a declaration, that said banking company, so created, " shall have and possess no other powers whatever, except such as are expressly granted by this act." The grant of power to the " Commercial Bank of Albany " was as follows : that said company should have succession, be capable of suing and being sued, have a common seal, &c., and should " have and possess all incidental and necessary powers to carry on the business of banking, — ^by discounting bills, notes, and other evidences of debt ; by receiving deposits ; by buying gold and silver bullion, and foreign coins ; by buying and selling bills of ex- change, and by issuing bills, notes and other evi- dences of debt ; but the said company shall have and possess no other powers whatever, except such as are expressly granted by this act." Then the company is forbidden to trade, or to carry on "its operations of discount and deposit " elsewhere than in the city of Albany, (w) (m) LawB 1826, p. 198, § 1. xxviii INTRODUCTIOK. The specification of banking powers in tlie charter of this bank was adopted by the Revisers and the legislature, in 1827, as a definition of the term "bank- ing ' powers ;" (n) and the prohibition contained in this charter, that said banking corporation should have and possess no other powers except those thereby expressh/ granted, has now become a part of the general Statute Law of this State, applicable to all corporations, (o) In the year 1826, no bank charters were granted. (p) Numerous applications for acts iacorporating banking companies were made and pressed upon the legislature, but all were rejected, or indefinitely postponed, by a large majority of the senators, (q) ts« If 1*827. Events, however, occurred in 1826 which induced the legislature of 1827 to enact a most striagent and general code of statute regulations in relation to moneyed corporations, (jqq) In February, 1826, a committee of the Senate, of which SUas Wright was chairman, recommended that one of the senators be expelled from the Senate, on the ground that the means used by him in ob- taining charters of certain insurance companies were a violation of his duties as a senator, tended to cor- (») 1 R. S. 600, § 4. See p. 26, post, ani note. (o) 1 E. S. 600, § 3. See p. 25, pott, and note. {p) See Seas. Laws of 1826. (y) Hammond's Hist. vol. iii., p. 67. {qq) See Statute Segulations, pp. 1-11, post. INTRODUCTION. xxix nipt the public morals, and to impair the public confidence in the integrity of the legislature. The senator implicated, before any action by the Senate upon the resolution for his expulsion, resigned his seat as a member of that body, (r) In the summer and fall of 1826 and early in 182T, conspir.- several most respectable and influential citizens, injlf^'^" J the city of New York, were indicted and tried for an alleged conspiracy to defraud the Morris Canal & Banking Company, the Fulton Bank, the Trades- mens' Bank, the Mercantile Insurance Company, the Merchants' Fire Insurance Company, and other moneyed institutions. Several of the officers and directors or managing agents of the "Life & Fire Insurance Company," the " Sun Fire Insurance Company," the " United States Lombard Association," and the "Madison Fire Insurance Company," were implicated in these criminal prosecutions, which were widely and gen- erally known and designated at the time as the " conspiracy trials." The high standing, reputed wealth, and eminent talents of the persons indicted, — and the vast num- ber of stockholders and bondholders ruined by the frauds committed by the officers and directors of so many moneyed corporations, made these criminal trials famous throughout the country, — and the (r) Hammond's History, toL iii., pp. 68, 11. XXX INTRODUCTION. fraudulent practices thereby disclosed, produced, in this State, the most intense excitement and alarm. Among the operations which these trials brought to view, none, perhaps, were more clearly revealed than those which had been carried on by the managers of " The Life & Fire InmJt/romoe Com- panyr This company was originally chartered in 1822, by the name of "The New York Mechanic Life Insurance & Coal Company," and was author- ized to have a capital of $600,000, to make insurance on lives, to grant annuities, to purchase, sell, and work any mine or mines of coal, ); to prevent a fraudulent application or transfer of Loan Company," the " Sun Fire Insuranee," the " Greenwich Insurance," and the "Protection Fire Insurance Companies." In May, 182'7, the ease of Lambert v. The People (7 Coven, 166) was heard and determined by the Supreme Court. In June, 182'7, the same ease was argued before the late Court for the Correction of Errors. In September, 1827, that Court ordered a re-argument, and decided the case in December, 1827 (9 Co wen, 678, note a; see note J at the end of the case, on pp. 624, 625). Mr. Spencer, one of the Kevisers, was a member of the Senate in 1826 and 1827 — and Mr. Butler was the counsel of Jacob Barker. (See Conspiracy Trials ; also see The People v. Eekford, Barker, and others (7 Cowen, 533). The Peo- ple T. Vermilyea, Brown, and others (7 Cowen, 408). («) See 3 R. S., 2d ed., p. 630, (o) See § 1, sub. 2, p. S, post ; % 29, p. 11, post. (p) See § l,sub. 1, p. 3, post. xl INTEODTJCTION. the property and funds of a company, by its direc- tors or officers (q); "to prevent directors from employing the fmids of the company in the purchase of shares of its own stock," &c, (r) ; " to prevent speculators, by means of hypothecated stock or otherwise, from acquiring a control of a company in defiance of the wishes of the real stockholders " (s) ; and " in the event of insoVvency to secure an equal distribution of the effects of a company amongst all its creditors!''' (u) In January, 1828, there were two distract systems of statute law in force relating to moneyed corpora- tions, — one applicable to those existing prior to that time ; the other to govern all which should be created after January 1st, 1828. (v) The early bank charters, containing no reservation of power to the legislature to alter or repeal them, were regarded as contracts. It was, therefore, (q) See §§ 7, 8, pp. 6, 7, post, and notes ; also OilUt v. Phillips (3 Ker- nan, 114). (r) See § 1, sub. 5, p. 4, post. (s) See §§ Z1 to 43, pp. 19-21, ^osi. («) See § 9, pp. 8, 9, post, and note; also Gilletv. Phillips {SKeTntm, 114), and Brouwer v. Harbeck, decided in the Colirt of Appeals in March, 1864, See note (6), p. 9, post. See KeTiseis' Notes (3 p. S. 2d cd. p. 530). {v) 1 E, S. 601, chap. 18, title iv. "Special provisions relating to cer- tain corporations." These are applicable to corporations created before Jan- uary \st, 1828 ; and to certain other corporations not embraced in Title II, of Chapter 18; 1 R. S. 688, 689, chap. 18, title ii. The provisions of this Title II. are applicable to moneyed corporations created, &e., after January Ist, 1828. See p. \,post, and note; also, § 52, p. 23, post; also, 3 E. S, 2d. ed. p. 680. INTRODUCTION. xli deemed a questionable exercise of legislative power, to subject then existing corporations to the new and stringent regulations contained in the secmid title of the eigbteenth chapter, before referred to. By section fifty-two of that chapter, the legislature limited the application of the provisions of the second title to moneyed corporations created after January 1st, 1828. (w) The system of statute regulations reported by the Revisers and adopted by the legislature in 1827, for the government of all future moneyed corporations, was in force during the whole of the year 1828. Not a single bank charter, however, was granted in that year. This new system of statute law provided for the personal liability of the stockholders, and imposed penalties upon directors of moneyed corporations which were regarded as too onerous and severe, (a?) Eesponsible parties were indisposed to become directors of moneyed corporations subject to such a code of laws. No bank charters were granted untn after the objectionable provisions, above re- ferred to, were modified or repealed by an act passed in April, 1829. (y) January, 1829, Governor Van JBuren in his (m) La-B's 1829, p. 2£, § 16 ; also, § 52, p. 23, post, {x) See §§ 11 to 19, pp. 10-13, post ; also, p. \Z,post, and note, {y) See §g 30, 31, of Safety Fund Act of 1829, pp. 36, Si, post; also p. IS, post, and note. xlii INTRODUCTION. annual message to the .legislature, stated that of the forty tanks then in operation in this State, the charters of thirty-one would expire in two, three, and four years ; (s) that the collective cap- ital of these thirty-one banks, actually paid . in, amounted to $15,000,000 ; the debts due to them to more than $30,000,000 ; and that the debts due from them to the community, including their stock- holders, amounted to about $30,000,000 ; thalt the policy pursued of requiring the payment of a large honus to the State, or the performance of service, as the price of bank charters, was condemned by experience ; that the unbiased judgment of all ob- serving and thinking men, would concur in regard- ing it as an expedient from which no good had resulted ; that its tendency had always been to weaken the security of the public in these institu- tions for the performance of that in which the pub- lic interest mainly consisted — the faithful redemp- tion of their paper ; that all the conditions that should be prescribed should refer exclusively to the safety and stability of these institutions ; that " our chief duty in this respect is to see that the farmer (z) Daring the session which commenced in January, 1825, application was made for charters for new banking, insurance, and other companies, with nominal capitals of the amount of $52,000,000. During the session commencing January 1, 1826, applications were made for charters for 123 "banking and other moneyed corporations, wiih nominal capitals of $55,537,000. (Gouge's Hist, of Banking, pp. 179, 185.) Only two banks were chartered in 1826, and none in 1826, 1827, or 1828. (See Session Laws of those years.) INTRODUCTION. xliii when lie exchanges Ms produce or estate, the me- chanic his wares, the merchant his goods, and all classes of the community their property or services, for bank paper, may rest contented as to its value ;" that provisions invalidating all confidential assign- ments or trusts of any description — imposing severe penalties upon acts designed to divert the funds from the appropriation which, in justice and policy, ought to be made of them were of value, — and that the importance of some more efficient safeguards had been felt by former legislatures, (a) From January, 1829, to April 2d, 1829, the legis- lature, instead of granting or renewing any bank^aT charter, were engaged in discussing and perfecting a general act, applicable to all moneyed corpora- tions, having banking powers, which should be thereafter created in this State. This general act amended or modified some of the provisions of the general Statute Regulations of 1827, relating to that class (5) of moneyed corporations ; and pro- vided also for a perpetual fund, to be denomi- nated the '"''hanh fvmdr Hence this amendatory act has ever since been known as the Safety Fund Act of 1829. It was passed on the 2d day of April, in that year, under the title of " An Act to create a fund for the (a) See Governor Van Buren's Message, Jan., 1829. (i) See definition of the term "moneyed corporation," as used in the Revised Statutes,— § 51, p. 2S,poit. See § 30 & § 31, pp. 36, 87, post. Xliv INTRODUCTIOlf. "benefit of certain moneyed corporations, — and for other purposes^'' (c) One of tlie most important provisions of tlie act of 1829, is the express prohibition contained in the thirty-ififtli section. By this, every moneyed corpo- ration subject to the act was prohibited from issv/- ing any bill or note payable on time ; or payable -with interest, {d) This act also provided for the visitation and inspection of Bank Commissioners. Experience has demonstrated, that the statutory prohibition of 1829, against the issue of post notes by banks, has been more effectual, during the last twenty-five years, in securing to the citizens of this State a uniform and sound currency, and preventing bank insolvency, than all the restrictions and prohib- itions in the statutory regulations of 182Y, " No (c) Laws of 1829, p. 167. See pp. 29-38, pott. Governor Van Burcn, in his message of 1829, said that a former legislature had attempted to fur- nish more efficient safeguards, " through the medium of a personal responii- bility of the stockholders. [See §§ 11 to 19, pp. 10-13, post.'] But it is olijeoted, that the practical operation of such a provision, would be to defeat the object in view, by throwing this species of property, and of course its management, into the hands of irresponsible men;" and the Gov- ernor advised that such an experiment had better not be tried ; that it would be unsuccessful, and the consequences to flow from it disastrous. (See Gov. Van Buren's Message, January, 1829.) The Bank Fund, created under the provisions of the general amendatory act of 1829, was intended as a substi- tute for the personal liability of stockholders in cases of insolvency, as pro- vided in the sections of the general code, in part repealed by the act of 1829. As to the effect of laws imposing upon stockholders in banking com- panies, a personal liability for debts, see evidence of Gen. Austin and of V. Stickney, before a Committee of the House of Commons, 1836, pp. 91, 12'7 ; Carey on the Oredit System,, London, 1838, p. 128, and note. (d) See § 35, p. 38, post ; also, § 4, p. 114, post, and note. INTRODUCTION. xlv man or set of men," says Mr. McCulloch, " has ever had power to make unrestricted iasnes of paper, with- out atusing it." (dd) Under the safety-fund system, — bank charters Leading were of one unvarying form. These charters gave Ky-Cd"' a name to these institutions, fixed the place where 'era. their operations of discount and deposit should be carried on ; the time when their corporate existence should terminate, and the amount of their respect- ive capitals. They also specified the precise powers which these banks should possess in addition to the general powers enumerated in the eighteenth chap- ter of the first part of the Revised Statutes, (e) These institutions were expressly prohibited from trading in State stocks, goods, wares, or merchan- dise, and from commencing the business of banking untn the whole of their capital stock should be paid in specie. (/) They were also inhibited from hav- ing in circulation at any one time an amount of notes or bills exceeding twice their capitals ; while their loans and discounts were limited to an amount not exceeding twice and a half their capitals, (ff) {dd) See McCuUooh's Notes to Smith's Wealth of Nations, p. 491. Leavitt v. Palmer (3 Comstoot, 19, 33); Ontario Bank v. Schermerhorn (9 Paige, 109, 113, 114), See, also, § 4, p. 114, post, and note; and note 18, pp. 300-306, post. («) See Safety-Fund Bank Charters in Session Laws 1829 to 1836. See, also, §§ 1, 2 (Revised Statutes), pp. 24, 25, post. (/) See Safety Fund Bank Charters ; also, § 34, p. 38, post. {g) See § 27, p. 36, post. xlvi INTEODUOTION. Ttey were required to contribute annually one half of one per cent, upon tlieir capitals (not exceeding in all three per cent.), for the purpose of creating and continuing a fund to he denominated a "bank fund;" and they were subject to the visitation and inspection of Bank Commissioners. (A) safet'^tad -^ ^^^® years' trial of this system fully proved, woA?d. that the "bank fund" was wholly inadequate as an indemnity fund ; that the prohibition against the issue of bills or notes ; exceeding twice the capital, and against loans and discounts exceeding twice and a Tialf the capital, afforded no guaranty to the public against bank insolvency(m.). It has also been proved that the carefully contrived statute regulations of 1827 (w), requiring all banks to nlake annual state- ments to the Bank Commissioners, verified by the oaths of their of&cers, — ^were in many cases good for nothing, except to delude or deceive the public as to the real condition of their affairs; that the accounts of the banks that broke looked as well in these official statements as did those of the institu- tions that continued solvent; — that bankrupt and fraudulent concerns alone gained, by a code of regu- lations that could not be enforced,' — inasmuch, as it enabled them, by appearing to be prosperous, the better to deceive and blind the public. It had also (A) See §§ 2, 3, 4, 15-27, pp. 29, 30, 33-36, pos*. (m) Gouge's Hist, of Paper Money, p. 61. (n) See §§ 19, 20, pp. lZ-\5, poU. INTRODUCTIOlf. xlvii been demonstrated, that the quarterly inspection of the Bank Commissioners, armed as they were with the power to send for persons and papers (o), and to examine into all violations and abuses of law by incorporated banking institutions, furnished no reliable security to the public ; and that the peri- odical visits and examinations of these public inspec- tors, restrained only those officers and directors who did not require to be placed under any sort of sur- veillance, while they affijrded to less conscientious managers an opportunity, by misleading the Bank Commissioners, and by making false and exagger- ated statements of the affairs of their institutions, to get their condition represented as most prosperous, when perhaps it was quite the reverse. But, even in cases where the managing directors were perfectly honest, it was found that the publication of a toU- ance sheet afforded no certain information as to the actual condition of a bank; that bank directors were, like all other sanguine people, strongly in- clined to over-estimate the real values of the corporate assets; and thus, that debts and biUs receivable estimated, in the official statement, as if they were worth so much bullion, turned out in the end to be worth nothing, (p) (o) Laws 1827, p. 66. (p) MoCulloch's Notes to Smith's Wealth of Ifations, Edin. ed. (1846), p. 503. MoCulloch's Diet, article "Banks." Gouge's Hist, of Paper Money, p. fil. xlviii INTEODUCTION. It has been shown that the Bank of England was prohibited from engaging in any commercial or mercantile undertaking, other tha;n dealing in bills of exchange and gold and silver ; and yet this iristi- tution conducts the whole banking business of the British Government. " It acts," says Adam Smith, "not only as an ordinary bank, but as a great engiae of State." {g) It has also been seen, that for nearly half a century this State carefully inserted in every bank charter, an easpress prohibition against trading in government stocks (r) or ia goods and mer- chandise. (y) MoCuUocli's Diet, article " Bank of England" (r) London Banking Circular of January 17th, 1840, contains the follow- ing declaration : — " Any mercantile traffic conducted by a bank, beyond that of discount- ing and remitting bills created by the sale or consignment of produce, ought to be suppressed by public indignation. If they speculate in any commodity for profit, and not merely to protect themselves against an appre- hended loss, they ought to lose the power of conducting banking affairs, on proof of buch an act of delinquency being established." " After the instructive lessons of experience, which events have recently imparted, any bank in the United States, that should be weak and foolish enough to enter into the business of merchants from the love of profit, would exhibit evidence of unfitness for the discharge of their professional duties, coming very near to a symptom of insanity." — {^London Banking Circular, January Vjth, 1840.) In the case Of the Bank Commissioners v. The St. Latorence Bank (3 Sel- deh, 613, 516, Gakdinek, J., said, "The purchase of the stock for the purpose of pledging or selling it, as a means of raising money", is not within the powers conferred by the 18th section of the Statute to authorize the business of hanking. Such an operation would be evidence of itself, that the institution was seriously embarrassed, if not ifisolvent, and cannot, with any propriety, be deemed a necessary incident to the power of banking." See also Talmage v. Pell (3 Selden, 828). INTRODUCTION. xlix "We have also stown tliat this express proliibition against trading was continued by the legislature of this State, from an abundance of caution, in all bank charters granted after 1825, which contained a pre- cise enumeration of banking powers — and in those also, which were obtained after the enactment of the Revised Statutes, which declare, that in addition to certain general powers therein enumerated, and to those expressly given in its charter, or in the act under which it is or shall be incorporated, "mo corporation shall possess or exercise any corporate powers, except such as shall be necessary to the ex- ercise of the powers so enumerated and given." (s) In January 1838, all the banks in this State, and throughout the United States, were in a state of suspension; the "bank fund" was itself bankrupt; and the confidence of the public in the safety of the banhing system of 1829, was swept entirely away, (f) On the 11th of April, 1838, one hundred and forty-three bank delegates from eighteen States, met in convention in the city of New York, (») 1 R. S. 600, § 3. See § 3, p. 25, post, and Talmage v. Pell (3 Selden, 328, 345). See also §§1,2, pp. 24, 25, post. (t) May 10th, ISST, all the banks in the city of New York, by common consent, stopped payments in specie ; and immediately afterwards the banks throughout the State were in a state of suspension. On the 16th of May, 1837, the legislature passed an act "suspending, for a limited time, certain provisions of law, and for other purposes." (Laws 1837, p. 514.) By this act, every provision of law then in force, requiring or authorizing pro- ceedings against any bank in this State, with a view to forfeit its charter, was " suspended for one year.'' This power cannot now be exercised by the legislature without a violation of the Constitution of 1846. (See § 5, p. 266, port.) 1 INTEODUCTIOlf. for the purpose of considering the subject of the resumption of specie payments. TMs convention resolved — "that it be recommended to all the banks of the several States to resume specie payments on the first Monday of January next (1839) ; without precluding an earlier resumption on the part of such banks as may find it necessary, or deem it proper." Thi^ resolution was carried by a large majority, fourteen States voting for it, and two only voting against it. (tt) This convention of bank delegates adjourned on the 16th day of April, 1838 ; and two days thereafter (April 18, 1838), the legisla- ture of this State passed an act entitled, '■^An Act to authorize the business of BankingJ^ (u) Before taking up the provisions of this important act, let us see what theories were then held, by eminent political economists iu reference to bank issues and currency, and tow it was proposed to remedy the evils which had resulted, both in En- gland and in this country, from excessive issues of paper-money. Eemeay Thc paulc of 1825, in England, provoked a most proposed, rigid scrutiny into the whole banking system of Great Britain. Paper money, and the principles upon which alope its value can be maintained and banking safely carried on, were discussed in Parliar ment, and by the most eminent writers on these subjects both in Europe and in the United States. {tt) American Almanac, Boston, 1839, pp. 308, 309. (u) See p. 81, pott. INTiPODUCTION. li In February, 1826, Lord Liverpool expressed him- self, in the House of Lords, as follows : " The present system of law as to banks must now be altered, one way or another. It is the most absurd, the most inefficient ; it has not one recommendation to stand upon. The present system is one of the fullest liberty as to what is rotten and lad^ but of the most complete restriction as to all that is good." (v) "What is really wanted," said Mr. McCulIoch, "is not a regulation to allow banks with large capitals to be set on foot (for there have, at all times, been many such banks in England), — but a regulation to prevent any bank, be its partners few or many, fi'om issuing notes MfiihovA previously giving security for their payment." Mr. McCulloch insisted upon the doctrine, that to prevent overissues of bank paper, it was neces- sary, not only "to enact that all notes should be payable on demand^ — ^but that it was further neces- sary, in order to insure compliance with this enact- ment, to prohibit any one from issuing notes until he has satisfied the government of his ability to pay them." It should also be observed, he said, that in recommending that bankers "be obliged to give security for their issues, we in fact merely propose that a system, already adopted with respect to them, should be carried to its proper length. At present, (v) Lawson's Historj of Banking, p. 70. lii INTRODtrCHOK notes of the Bank of England, and of tte joint- stock and otter banks, are proMbited from cir- culating unless ttey be 'pa/yable on demand; and it is admitted on all kands tkat tkis is a proper reg- ulation. But why is it proper? Because it pre- vents any considerable excess of paper from getting into circulation (w), and hinders it, so long as it continues to circulate, from becoming less valuable than gold. It is , obvious, however, that this regu- lation is defective in the most important particular : the redundancy of paper is not the only evil to be provided against ; it is equally necessary that means should be taken to prevent the circulation of worthless paper ; and this cannot be effected by merely ordering notes to be paid on being presented. Such an order is obeyed only by opulent and re- spectable bankers, and forms no check whatever on those of a different character. It is, therefore, in- dispensable, if we would make the order really effectual, and prevent the intention of the legislature from being defeated and the public defrauded, by the misconduct or bad faith of those who issue paper^ to provide a security that it shall be complied with, or that notes shall, in every case, he paid when presented." It was further urged by Mr. McCul- loch, that it was clear that the " security to be given by a bank of issue, ought to be proportioned (lo) See § 35, p. 38, post ; also § 4, p. \\i,pott; also note 78, pp. 300- 306, pout. INTRODUCTION. liii to its issues, and not to its capital. The former mode will effectually protect the public from loss — the latter gives little or rather no protection what- ever ; that nothing short of the obligation to give securities for their issues can ever give the public that effectual guaranty for the integinty of the cur- rency that is so essential." (x) "What objection," said Mr. Kicardo, in his tract On cm Economical and Secure Currency, " can there be against requiring those who take upon themselves the office of furnishing the public with a circulating medium, to deposit with government an adequate security for the due performance of their engage- ments % In the use of money every one is a trader : those whose habits and pursuits are little suited to explore the mechanism of trade are obliged to make use of money, and are in no way qualified to ascer- tain the solidity of the different banks whose paper is in circulation ; accordingly we find, that men living on limited incomes, women, laborers and mechanics of all descriptions, are often severe sufferers by the failures of banks." Bold and reckless speculators may amass fortunes ; («) "A security of this sort has been exacted in the case of the Bank of England; and the whole £14,686,000 sterling lent by the bank to gov- ernment must be sacrificed, before the holders of her notes can sustain the smallest loss. Her stability has, therefore, been truly said, by Dr. Smith, to be equal to that of the British Government."— {M.aCyi\\ocb!i Diet., art. " Bank of England." See Art. 8, § 6, of the Constitution of the State of New York of 1846, pp. 264, 266, post. liv IM'EODUCTIOIT. "Lut the laboring classes, salaried officers, annuitants of every sort, professional men, medical, legal, and clerical, derive little benefit from the golden har- vest " caused by a redundancy of the currency, " but always share the full proportion of the reverses which inevitably ensue." (y) It was objected to the adoption of the plan of requiring a pledge of securities with the Government, that it would be injurious by locking up a portion of the capital of the banks. " But this," said Mr. McCulloch, " is plainly an error. Its only effect in this respect would be, to force such bankers as issue notes, to provide a sv/p^lemental capital as a security over and above the capital required for conducting their business. But this supplemental capital would not be unproductive. If it consisted of land, its owners would receive the rents ; and if it consisted of government securities, they would receive the dividends or interest due upon them, in the same way as other persons." " There cannot be a doubt that this is a case in which Government is bound to interfere. We have sustained incomparably more mischief from the issue of spurious paper than of base coin ; and in order to obviate such mischief in future, and to give that security to the public which is so essential, we have no alternative, if we (y) Baker on Banks in the United States (Boston), p. 41. INTRODUCTIOIT. Iv will not entirely suppress country notes, hut to re- quire security from the issuers ^ It was also contended by bankers in England, that, except so far as the issue of bills and notes is concerned, banking is a private business, {z) But it was urged, tbat whatever bank notes were in law^ they were practically and in point of fact a legal tender, and could not be rejected without expos- ing parties to much inconvenience ; that laborers, women, minors, and every sort of persons, were dealers in money, — were incapable of judging of the stability of banking institutions, and were conse- quently liable to be imposed upon ; and that there- fore it was the imperative duty of Government to interfere to protect the interests of those who could not protect themselves, by compelling all issuers of bills or notes on loan, or for circulation as money, to give ample security for their payment in specie, on demand ; that the issue of notes was, of all businesses, that which seemed to hold out the great- est prospect of success to the schemes of those who attempt to get rich by preying on the public ; that "if a set of individuals, with little or no capital, contrive by fair appearances, promises, and similar devices, to insinuate themselves into the public (2) In 1837, the legislature of this State repealed so much of the Restraining Act as prohibited a person or association of persons not incor- porated" from keeping offices for the purpose of receiving deposits, — or discounting notes or bills."— (Laws 1837, p. 14.) See Note 18, p. 49, post. Ivi INTRODUCTIOlf. confidence, and can maintain £20,000, £S0,000, or £100,000 in ciroulation, tiiey secure a^ood income in the meantime, and when the bubble bursts and the imposture is detected, they are no worse off than when they set up the bank. On the contrary, the presumption is, that they are a great deal better off, — and that they have taken care to provide, at the cost of the creditors and a deceived public, a reserve stock for their future maintenance, (a) The legislature of 1837 repealed so much of the Kestraining Act of 1830 as prohibited a person, or association of persons not incorporated^ from keeping an office for the purpose of receiving de- posits, or discounting''notes or bills ; but left . in full force the inhibitions of that act against the issuing of bUls, notes or other evidences of debt on loan, or for circulation as money, by any person, or associar tion of persons. But the repealing act expressly declared that all the provisions of the Restraining Act, relating to " incorporated companies " or " bodies corporate," remained unrepealed, (w) The legislature of 1838, by the general banking law, so far modified the Kestraining Act, as to authorize corporations organized under it, as well (a) See MoCuUoeh's Essays on Money, and on Paper Money and Bank- ing, Phil, ed., 1851 ; also his Uotes on Money to Smith's Wealth of Nations, Edin. ed., 1846, pp. 604 — 50f ; also his Dictionary of Commerce, Amer. ed., 1840, and London ed., 1850, — articles, "Banks," "Banking," dec. (w) Restraining Act, §§ 3, 6, pp. 41, 42, post. Repealing Act of ISSY, §§ 1 to 4, p. i9,post, and note. INTRODUCTIOK. Ivii as individual bankers, to issue, " loan and circulate as money " a certain Icind of promissory notes, stUl leaving the proMbitions of tbe Restraining Act in fall force as to every other evidence of debt, (x) We proceed to state some of the distinctive prin- ciples of the third and, as yet, the latest system of Nevsr York Banking, introduced by the General Bank Act of 1838. Under the safety fund system of 1829, banks Thesys- possessed, with other specified powers, the express ^^^ss con- power to carry on the business of banking " by issu- ing bills, notes and other evidences of debt," paya- ble on demand and without interest, {y) They had the power to create paper money at pleasure, within the statutory limit as to the amount, (z) But the general banking law of 1838 excludes this power from the banking system which it es- tablishes. This is effected; [1] by separating the issue department from the banhing department, and placing the former under the exclusive direction of a {x) Chancellor Walworth, in Safford v. Wyckoff (4 Hill, 444), said, "The Act of 1838, which only authorizes a certain kind of notes to be put in circula- tion as money, leaves the restraining law in full force as to every other evidence of debt. These banking associations, therefore, are prohibited from Issuing any bills or promissory notes, or other evidences of debt, for the purpose of loaning them, — or having them put in circulation as money — whatever forms such evidences of debt may assxune." See, also, Warner v. Beers (23 Wendell, 115, 158, 159, 188). See §§ 3, 6, of the Bestraining Act, pp. 41, 42, post ; also §§ 1, 2, 3, General Bank Act, pp. 81, Si, post. (y) See note, 38 pp. 94, 96, post. (j) See § 21, p. 36, post. Iviii I5TR0DUCTI01 Not reported. . 4t-47 note. Palmer {Leanitt v.) Palmer v. P(if««. Palmer v. Lawrenee. Parmly v. TfeiiA TFartZ 5ani. P«ZZ {Talmage v.) Safford^. Wyekoff. Sagory v. Butois. . Simft V. ^er». . ^■to/e 0/ OAio V. i«a«i« {See Ta1r\ „ q<.ij„„ one 01 « 0,1 magey.Pell). . . \ 3 Selden, 32b . .317,321 Supervisors of Niagaira v. The S 4 Hill, 20 . .\ <,r,o on People. . . .\ 7 Hill, 504 . \ <^09.*^" Talmage v. Pdl. . . 9 Paige, Oh. R., 410 ' . 298 Talmage v. Pell. . . 3 Selden, 328 . 817, 321 The People v. Assessors of Water- ( 25 Wend., 686 . ) „„ , „._ tg Sto^' in violating, any provision in the preceding sections of this Article contained, shall be liable personally to the cred- itors and stockholders respectively, of the corporation of which he shall be a director, to the full extent of any loss ■ they may respectively sustain from such violation, lb. § 11- Hhery d/vreetor guilly of such violation, whether a loss shall or shall not result, shall he deemed gmltiy of a misdemea/nor, punishable hy fine, or i/mprisonment, or ioth, im the disoretion of the court hy which he shall he tried. [Kepealed : see note 6.] wheSchJge- § 12. EvcTy dwcctor sholl hc deemed to possess such a able for Bach violation. ]cnowledg6 of the affairs of his . corporation, as to enable him to determine whether any act, proceedi/ng, or omission, of its directors, is a violation of the foregoi/ng provisions or in contemplation of insolvency, with intent to give a preference to any particular creditor over others." " So long as insolvency neither exists nor is contemplated, the corpora- tion, like an individual, can appropriate its means to the payment of its debts, in such order and in such amounts and proportions aa the directors please. But upon insolvency, either actual or contemplated, this power ceases, and the law declares the absolute right of every creditor to share pro rata In the assets of the company, and will not suffer this right to be defeated by any act of the corporation or its officers. Hence, the right of purchasers in good faith are not protected, as in cases provided for by sec- tion ,eight of the same act. Such provisions are not necessary to protect the rights of parties. The creditor to whom the unauthorized payment or trans- fer is made, is not a purchaser, — he parts with nothing, — and upon being compelled to account for whatever he may have received, he still loses noth- ing which he has a right, legal or equitable, to retain. His debt revives, and he again becomes a creditor, and shares equally with the others in the property of the debtor. He receives all to which he ever had a legal right, and the equities coincide with the legal rights of the parties. The statute de- clares the transfer and payment void, in case of actual or contemplated in- solvency, if made with intent to give preference to creditors, irrespective of the knowledge of the party receiving the transfer or jiayment. * * * A corporation, like an individual, is insolvent when it is not able to pay its debts. Insolvency means a general inability to answer, in the course of busineu, the liabilities existing, and capable of being enforced." See Brouwer v. Sarbeck (1 Duer,Sup. R. 114). BANKING COEPOEATIONS. 11 of this Article^ «/ . */ «/ ferredSock stockholdcr, uThd&r the provisions of the last section, shall bie. not be collected from such stockholder, by reason of his in- sol/u&ncy, or his absence from this State, the sum remaining due on such assessment, shall be recoverable against the per- son from whom the delinquent stockholder, at any time within six months previous to the insolvency of the com- pany, shall have received a transfer of the shades, or any portion of the shares then held by him ; and every person hami/ng made such transfer, shall be liable in the samne ma/n- ner, amd for the sarnie proportion, that he would have been liable had he continued to hold the sha/res so transferred. [Repealed : see note 6.] constrnction § 18. The term "stockholders," as used in thepreced- BANKING CORPORATIONS. 13 ing sections of this Title, from ths fourteenth section m-eJ/'^m'/i*. clusi/ve, shall extend to every eqmtdhle owner of stock, ap- pea/ring on the looks of an insolvent compa/mj, in the na/me of a/nother person, and to e/oery person who shall have ad- vanced the instalhnents, or pv/r chase-money, of any sha/res of stock standing in the na/me of amy of his children un- der the age of twenty-one years ; hut no person holding stock as am, executor or administrator, or as a gua/rdian or trustee, appointed by a last will or testa/ment, or ly a court of competent authority, and no legal or equAtahle owner of stock, under the age of twenty-one yea/rs, shall he individu- ally responsible on account of the shares so held. [Re- pealed : see note 6.] § 19. It shall be the duty of every moneyed corporation Annn»i state- hereafter created, on the first day of January after its in- ^'SoSptton- corporation, and annually on the same day thereafter, to "' make out and transmit to the comptroller, in the form prescribed by him, a full statement of its affairs, verified by the oaths of its president and cashier, or treasurer or secretary. [See note Y.] § 20. Each statement ao transmitted shall contain \see contems " ^ thercoE note Y],' — (6) April 2d, 1829, the legislature by an act, entitled " An Act to create a fund for the benefit of certain moneyed corporations, — and for other pv/rposes " {Laws 1829, pp. 16*7, 172, § 30), enacted, that the above sections 14, 15, 16, IT, & 18, " so far as, they proTide for the personal liability of the stockholders of any insolvent corporation, shall not apply to any corporation subject to the provisions of this act; but the directors of every corporation subject to this act, shall be liable to the stockholders thereof as provided in the safd sections." But, March 8th, 1830, the Legislature, by an act entitled "An Act to repeal certain sections of Title Second of the Eighteenth Chapter of the First Part of the Revised Statutes" {Laws 1830, p. V3), repealed the above sections 11, 12, IS, 14, 15, 16, 11, & 18. But such repeal" shall not be con- strued to extend to or affect any existing corporation, or any officer or mem- ber thereof." 14 GENERAL STATUTES APPLICABLE TO 1. The amount of the capital stock of the corporation, paid in, or invested according to the provisions of its char- ter, and the amount of such stock as then possessed : 2. The value of the real estate of the corporation, speci- fying what portion thereof is occupied by the company as necessary to the transaction of its business : 3. The shares of stock held by such corporation, whether absolutely or as collateral security, specifying each kind and description of stock, and the number and value of the shares of each : 4. The debts owing to the corporation, specifying such as are owing from other moneyed corporations, the names of such corporations, and the amount due from each ; and also specifying the amount secured by bond and mortgage or judgment, the amount which, according to the provi- sion,s of this Article, ought to be included in the computa- tion of losses, and the total amount of such debts then col- lectible : 5. The amount of debts owing by the corporation, speci- fying such as are payable on demand, and such as are due to other moneyed corporations, the names of such corpora- tions, and the amount due to each : 6. The amount of the claims against the corporation not acknowledged by it as debts : 7. The amount for which the corporation is bound as surety, or for which it may become liable on the happen- ing of contingent events, whether upon policies of insur- ance or otherwise : and, ' 8. If the statement be froni a corporation having bank- ing powers, thg amount of its notes or bills then in circu- lation, of its loans and discounts, and of specie on hand. BANKING CORPORA?riONS. 15 § 21. Each statement subsequent to the first so trans- i-urtieroon- • , , J -I n T , _ W-, tents of each mitted snail also contain [see note 71, — statement »f- "- -" ter the first 1. The amount of the losses of the corporation charged, specifying whether charged on its capital or profits, since its last preceding statement, and of its diyidends declared and made during the same period : 2. The average amount for each month, duiing the preceding year, of the debts due to and from the corpora- tion : and, 3. If the statement be from a corporation having tank- ing powers, the amount on the first day of July of the same year of its notes or bills in circulation, of its loans and discounts, and of its specie on hand. § 22. Every corporation that shall neglect to make out Penalty for and transmit the statement required, for one month be- yond the period when by law it ought to "be made, may be proceeded against and dissolved as an insolvent corpora- tion. [See note 7.] S 23. It shall be the duty of the comptroller to enter Duty of ° •! r comptmller every such statement received by him, in a book to be pro-snch*8tete'° vided by him for that purpose, and which shall at all times, during office hours, be open to public inspection. [See note 7.] § 24. If it shall appear to the comptroller from any ^ statements received by him, that the provisions of its char- ter, or of this Title, have been violated by any corporation, or that there is reason to apprehend, that any corporation is or will become insolvent, it shall be his duty to report the facts, together with his opinion thereon, without delay, to the legislature. [See note 7.] (T) The above sections 19, 20, 21, 22, 23, & 24, were |0 far modified by the Safety Fund Ad of April 2d, 1829 {Laws 1829, pp. 167, 172, § 31), as to 16 GENERAL STATUTES APPLICABLE TO lb. § 25. It shall be the duty of the comptroller, to pre- pare forms of the statements above prescribed, and to transmit a copy thereof, together with such instructions as he may deem necessary, to eveif corporation which is or shall be bound to furnish such statements under the provisions of this Title. ofbS.''™ § 26. No corporation having Icmhlng powers, shall issue for circulation any bill or promissory note of a less denomination than one dollar. lb. and on § 27. No Corporation having hanhmg powers, and none of its directors, officers, agents or servants, shall, directly or indirectly, purchase or be interested in the pur- chase of any promissory note, or other evidence of debt, issued by such corporation, for a less sum than shall ap- pear on the face thereof to be then due ; and every person violating the provisions of this section, shall forfeit three times the nominal amount of the note, or other evidence of debt, so purchased, lb. § 28. No president, director, cashier, clerk or agent, of any corporation having icmhmg pow&rs, and no person in any way interested or concerned in the management of the affairs of any such corporation, shall discount, or di- rectly or indirectly make any loan upon, any note or other evidence of debt which he shall know to have been of- fered for discount to the directors, or any officer of such corporation, and to have been refused ; and every person violating the provisions of this section, shall, for each require the statements therein referred to, to be made to the Bant Commis- sioners instead of the State Comptroller, &e. The req^uirements of the 26th section of the General Banking Law of 1838 were substantially copied from ■ the above sections 20 & 21. BANKING CORPORATIONS. IT offence, forfeit twice the amount of the loan which he shall have made. § 29. No moneyed corporation, to which a charter shall ,^^^®23'"' hereafter be granted, shall commence the business for uo^ S"™" which it sball be incorporated, until its president and cashier, or treasurer, or secretary, or its two principal offi- cers, by whatever name they may be described, shall have made and subscribed an affidavit, stating that the whole of the capital stock of such corporation, or such portion thereof as, by its charter, shall be required to be paid or secured before the commencement of its operations, has been actually paid, or secured to be paid, according to the provisions of its charter. § 30. Every such affidavit, if made in a city, shall be how made and filed. made before the mayor or recorder of such city, and if made in a county, before the first judge of the county, or any master in chancery therein, and shall be filed in the clerk's office of the city and county, or of the county in which it shall be taken. S 31. The charter of every such corporation shall be Penalty ir " u J. not made. void, if the affidavit above required, shall not be duly made and filed within one year from the time such charter shall be granted. AETICLE SECOND. Regulations concerning the Election of Directors of Mon- eyed Vorporations. (1 E. S. 595 : see Note 8.) Sec. 32. Inspectors of elections ho-w chosen ; their pay. 33. Directors to supply vaeanciea in office of inspector. (8) April 29, 1847, the legislature passed an act, entitled "An Act con- cerning the election of Directors of Banking Associations" {Laws 1847, chap. 2 18 GENERAL STATUTES APPLICABLE TO 34. Officers of the corporation not to be chosen inspectors. 35. Inspectors to take oath. 36,- Si, & 38. Qualifications of voters. 39. Form of oath to be administered to persons offering to'vote who are challenged. 40. Affidavits to be attached to proxies. 41. Oath to be administered to persons offering to vote upon proxy, if challenged. 42. If challenged person refuse to take oath, his vote to be rejected. 43. If election do not take place on day appointed, -when to be held. 44. By-laws regulating elections, when to be made and to be published. 46. A register of transfers arid a book containing names of stock- holders, to be kept, pressly exeirvpted from the provisions of this Title, in the act cre- ating, renewing, or extending such corporation. ( 10 ) § 53. The term " directors," as used in this Title, shall "Directors" be construed to embrace all persons having by law, the direction or management of the aflEairs of any such corpo- ration, by whatever name they may be described in its charter, or known in law. (10) See Act concerning the Revised Statutes, passed December 10th, 1828 (Laws of 1829, p. 19, § 5, p. 23, § 16). Also, see Talmage v. Pell (3 Selden, 328); Oillett 'v. Moody (3 Comst. 479); Brouwer v. Harheck (decided by the Court of Appeals in March, 1854). 24 GENERAL STATUTES APPLICABLE TO § 64. The term " effects," as used in this Title, shall be construed to embrace every species of property, real and personal, including things in action. '>^'i?1?5'* § 56. The term " evidence of debt," as so used, shall of debt " de- " ' ' be construed to embrace every written instrument or se- curity, for the payment of money, importing on its face the existence of a debt, and v^hether under 'seal or otherwise. defined. fined. General powers. TITLE III. OF THE GENEEAL POWERS, PRIVILEGES, AND LIABILITIES OF CORPORATIONS. (1 H. S. 699.) Sec. 1. Powers of corporations. 2. To vest in every corporation hereafter created. 3. Corporations not to possess any additional powers, except those given by charter. 4. Wo corporation to exercise banking powers, unless expressly author^ ized. 6. When the stockholders may be required to pay in the balance on their stock. 6. A inajority of the body authorized to act for a corporation, may do business. 7. If corporation do not commence business in a year, powers to cease. 8. Every charter hereafter granted, subject to alteration by legislature. 9. Who to settle affairs of ooi-poration upon its dissolution. 10. Powers and liabilities of persons so acting. § 1. Every corporation, as such, has power,-'— 1. To have succession by its corporate name, for the period limited in its charter ; and when no period is lim- ited, perpetually : 2. To sue and be sued, complain and defend, in any court of law or equity : 3. To make and use a common seal, and alter the same at pleasure. BANiaNG CORPORATIONS. 25 4. To hold, purchase, and convey such real and per- sonal estate, as the purposes of the corporation shall re- quire, not exceeding the amount limited in its charter : 5. To appoint such subordinate officers and agents as the business of the corporation shall require, and to allow them a suitable compensation : 6. To make by-laws, not inconsistent with any existing law, for the management of its property, the regulation of its affairs, and for the transfer of its stock. § 2. The powers enumerated in the preceding section in wiat cor- shall vest in every corporation that shall hereafter be ere- vest. ated, although they may not be specified in its charter, or in the act under which it shall be incorporated. § 3. In addition to the powers enumerated in the first what other ■*■ powers to be section of this Title, and to those expressly given in its pos^^^^^d- charter, or in the act under which it is or shall be incor- porated, no corporation shall possess or exercise any cor- porate powers, except such as shall be necessary to the exercise of the powers so enumerated and given. ( 11 ) (11) This section (§ 3), the Revisers say, "is declaratory of a principle of law frequently recognized by our courts, and which it is deemed useful to confirm by legislative authority" (3 R. S. 2d Ed. 531). That corporations have only such powers as are expressly granted by the statute which creates them, and such as are incidentally necessary to the exer- cise of their express powers, — see Head w payable, after mentioned, shall annually be paid by the comp- troller to the several corporations by which the said fund shall be created, in proportion to the amount which each of the said corporations shall have contributed thereto ; but no corporation shall be entitled to any part of the said income, after it shall become insolvent, or shall be dissolved, or its charter shall expire. § 8. "Whenever the fund created by this act shall be Payments in • cases of re- reduced by the payment of the debts of an insolvent cor- auction of poration, to be made as liereinafter provided, belgw the sum as provided in the fourth section of this act, every moneyed corporation then existing, which shall be subject to this act, and every such corporation thereafter to be created, shall, on or before the first day of January, in every year thereafter, pay to the treasurer of this State, such sum to be designated by the comptroller, not exceed- ing a sum equal to one-half of one per cent, on its capital stock, as hereinbefore provided ; which last mentioned annual payment shall continue to be made by every cor- poration subject to the operation of this act, until the aforesaid fund shall be reimbursed,, and made to amount ' to the sum as provided in the fourth section ; after which, such annual payments shall be suspended, until it shall become necessary again to resort to the said fund, by reason of the insolvency of any such, corporation, as here- after provided, when the said payments shall be resumed in manner aforesaid ; and so on, from time to time, as oc- casion may require. 8 9. Whenever any corporation subject to the opera- Dntyof " ' court of tion of this act, shall become insolvent, and shall be pro- ^''»™'';-^^^^ 32 GENERAL STATUTES APPLICABLE TO beccmesin- ceeded against as hereinafter provided, it slian be the solvent ^ duty of the Court of Chancery, immediately after a final dividend of the property and effects of such insolvent cor- poration shall have been made among the creditors there- of, to cause an order to be entered on its minutes, setting forth, — 1. The total amount of debts against the said corpora- tion, ascertained and established by the said court, includ- ing lawful interest thereon : 2. The net amount of moneys derived from- the prop- erty and effects of the said corporation, and applied, under .the direction of said court, towards the satisfaction of such debts: and, 3. The total amount of moneys then req^uisite to pay off and discharge the said debts. Such order shall also direct the receiver appointed to take cbarge of the property and effects of the corporation, to apply to, and receive from, the comptroller of this State, in the manner hereinafter provided, the sum which shall be required to pay off and discharge the said debts. Dntrof § ^'^^ Upoii such receiver filing with the comptroller of comptroller, ^j^j^ gtatc, & copy of such Order, duly certified by the proper ofiicer, and countersigned by the chancellor, it shall be the duty of the said comptroller to draw his warrant on the treasurer, in favor of such receiver, for such sum, not exceeding the amount of the bank fund, as may have been declared by the said Court of Chancery to be necessary to satisfy the debts of the said corporation; and the moneys paid to such receiver by such warrant, shall be paid out by him, under the direction of the Court of Chancery, to the several creditors of the corporation. In case of § H- If, at the time of filing with the comptroller the Eeceiver. BANKING CORPORATIONS. 33 copy of sTicli order, the bank fund shall be insufiScient to *°„t°jSni°' satisfy all the debts of the insolvent corporation, a sum sufficient to satisfy the residue of such debts as shall remain unpaid, shall be paid to such receiver, in the manner provided in the last preceding section, out of the first moneys that shall thereafter be paid to the treasurer pursuant to the eighth section of this act ; and the moneys so paid to such receiver, shall be paid out by him in the manner required in the last preceding section. § 12. The moneys so paid out of the treasury, and all Moneys paid other moneys required by this act to be paid out of the *'"'S'*- treasury, shall be a charge upon the bank fund hereby created. §13. "Whenever the charter of any moneyed corporation, onerpira- subject to the provisions or this act, shall expire, every «tiarter. such corporation shall be entitled to receive its pro- portional share of said bank fund, which such corporation may have contributed thereto, after deducting thereout a proportional part of the charges upon the said fund, and V7hich share the comptroller is hereby authorized to pay to said corporation. § 14. No creditor of any insolvent corporation shall, by iDterest virtue of this act, receive interest upon his debt against such corporation, from and after the time such order is made as is required by the ninth section of this act ; nor shall such creditor be entitled to interest anterior to the presentation of his demand against such corporation, to the receiver that shall be appointed to take charge of the property and effects of such corporation. S 16. Three persons, to be styled "the Bank Com- „ ^ o s: > 1 Bank com- missioners of the State of New York," shall be appointed fa'dlSeir „ duty. 34 GENERAL STATUTES APPLICABLE TO in the manner hereinafter provided ; whose duty, or the duty of one of whom it shall be, once at least in every four months, to visit every moneyed corporation upon which the provisions of this act shall be binding ; and thoroughly to inspect the affairs of the said moneyed corporations ; to ex- amine all the books, papers, notes, bonds and other evi- dences of debt of said corporations ; to compare the funds and property of said corporations with the statements to be made by them as hereinafter provided ; to ascertain the quantity of specie the said corporations have on hand ; and generally to make such other inquiries as may be necessary to ascertain the actual condition of the said corporations, and their ability to fulfill all the engagements m ade by them. How often § 16. It shall be the duty of the said commissioners, or Tiiit banks .. some one of them, to visit and inspect the condition and affairs of any moneyed corporation, more frequently than once in every four months, if required so to do by any three of the moneyed corporations subject to the provisions of this act. To examine § ^'^- ^^^ ^^^^ commissioucrs, or either of them, shall have power to examine upon oath, all the ofiicers, servants, or agents of said corporations, or any other person, in re- lation to the affairs and condition of said corporations ; which oath the said commissioners, or either of them, are personally authorized to administer. Toap{)iyfor § 18- If the Said commissioners shall ascertain from an injunc- _ , , , , tion. such inspection ana examination, or in any other manner, that any of said corporations are insolvent, or shall have violated any of the provisions of their act or acts of in- corporation, or of any other act binding on such corporations, the said commissioners shall immediately apply to the court of chancery, upon bill or petition, for an injunction against BANKING CORPORATIONS. 35 such corporation and its officers ; and the same proceedings shall in all respects be had, and the court shall, possess the like powers upon su<;h application, as are provided by law, in respect to such applications, when made by the attorney general, or by any creditor. § 19. It shall be the duty of the said commissioners, in toi^pmuo the month of January in each year, to report to the legis- '"*• lature, the manner in which they have discharged the duties imposed upon them ; and to accompany such report by such abstracts from the reports made to them, and by such other statements as they may deem useful. §§ Twenty^ twenty-one, and twenty-two, as to the ma/nner of appointing hank commissioners, were repealed iy chap, U of 1837. § 23. The said commissioners shall hold their offices for ^ To^h^oia of- two years, but shall be at any time removable by the ^'"'' governor for misconduct or neglect of duty. § 24. Before the said commissioners shall enter upon the ^^ O"* <•' °'- execution of the duties of their office, they shall severally take the constitutional oath of office, before the secretary of state or some one of the circuit judges or judges of the county courts of any county ; and within ten days there- after shall cause such oath, certified by the officer before ■whom it was taken, to be filed in thq office of the secretary of state. § 25. The said commissioners shall not disclose the ^,^^°5j'^^'5^''- names of the debtors of any moneyed corporation examined ^„'^*''"'"' by them, or any information obtained in the course of such examination, unless required in a court of justice, or in the course of some proceeding authorized by this act. 8 26 There shall be allowed to each of said commission- Their saia- u rles, ers the annual salary of fifteen hundred dollars, to be paid quarterly out of the bank fund. 36 GENERAL STATUTES APPLICABLE TO Issues of § 27. It shall not be lawful for any moneyed corporation bank notes, , , . ef'snbfflv 8 1*' issue, or to have outstaHding or m circulation, at any modiaed. ^j^g^ g^^ amount of notes or bills loaned or put in circula- tion as money, exceeding twice its capital stock then paid in and actually possessed; nor shall its loans and dis- counts at any time exceed twice and a. half of the amount of its capital stock so paid in and possessed. [/See note 3, p. 4, ante,] Corporation § 28. If any such moneyed corporation shall violate the dissolved, jg^gj. preceding section ; or shall neglect to make any annual payment to the treasurer of this State, required by this act, for the space of three months after the time when the same ought to have been made, and after being notified of snch delinquency by the comptroller of this State ; or shall have lost one half of its capital stock paid in; or shall have suspended the payment of its bills in specie for ninety days ; or shall refuse to allow the officers of such corporation to be examined upon oath by the said com- missioners, in relation to the affairs and condition of such corporation, every such corporation may be proceed- ed against by the said commissioners, and dissolved by the chancellor, as an insolvent corporation, as hereinbefore provided. Penalty for § 29. Evcry officcr, agent, or clerk of a moneyed cor- ments, &o. pgration, who shall make false statements or false entries in the books of such corporation, or shall exhibit false papers with intent to deceive said commissioners as to the condition of such corporation, shall be deemed guilty of felony, and shall be subjected to imprisonment in the state prison, for a term not less than three, nor more than, ten years. LiabUity of § 30." The fourteenth, fifteenth, sixteenth, seventeenth, stockholders. Chap, 18 of and eighteenth sections of the second Titlfe of the eight- BANKING COEPOEATIONS. 37 eentli Chapter of the first Part of the Revised Statutes, iE.s.modi- ■"^ 'fled. so far as they provide for the personal liability of the stockholders of any insolvent corporation, shall not apply to any corporation subject to the provisions of this act ; but the directors of every corporation subject to this act shall be liable to the stockholders thereof, as provided in the said sections. [See note 6, p. 13, ante.] S 31. The nineteenth, twentieth, twenty-first, twenty-se- Aonuai ° ' J J J J statement. cohd, twenty-third, and twenty-fourth sections of the second f ^lPb^^^j. Title of the eighteenth Chapter of the first Part of the Re- vised Statutes, shall be and are hereby so far modified, in respect to the corporations subject to this act, that the state- ments therein required shall be made to the bank commis- sioners, instead of the comptroller ; and the powers there- in conferred on' the comptroller, shall not extend to any such corporation. [See note Q,p. 13, cmte.l § 32. No stockholder of any moneyed corporation hav- commission- ers, not to be ing banking powers, shall be appointed a commissioner stockholders. under and by virtue of this act ; and it shall not be lawful for the said bank commissioners, or either of them, di- rectly or indirectly to purchase, or in any manner what- ever to be concerned in any bank stock in this State. §33. Every moneyed corporation subject to this ^'^^i ■s.ste otinta- shall be entitled to receive the legal interest established/™'' or which may hereafter be established, by the laws of this State, on all loans by them made, or notes or bills by them severally discounted or received in the ordinary course of business ; but on all notes or bills by them dis- counted or received in the ordinary course of bnsiness, which shall be mature in sixty-three days from the time of 'such discount, the said moneyed corporation shall not take or receive more than at and after the rate of six per cen- tum per annum, in advance. 38 GENERAL STATUTES APPLICABLE TO Capital stock §34. Everj . moneyed, corporation subject to this act, hereafter to be 'created, shall before it makes any loans or discounts, have all its capital actually paid in ; which pay- ment shall be proved, on oath, to the satisfaction of the bank commissioners, before any such loans or discounts shall be made ; and every moneyed corporation, whose char- ter shall be hereafter extended, shall, within one year after such extension takes effect, pay in all Its capital, to be proved in like manner to said bank commissioners ; bu;t every such moneyed corporation, whose charter shall be so hereafter extended, shall be permitted to reduce its capital stock to any sum not below the amount actually paid* in at the time*of the renewal of its charter ; but such corpo- ration shall, within one year from and after the time of such renewal, file with the comptroller a cfertificate, under the seal of the corporation, setting forth the sum to which its capital stock is to be reduced, as aforesaid ; the filing of which certificate shall exempt such corporation from the operation of this section, as to so much of its capital stock as shall be reduced in the manner above stated. The issne of § 35. No moncj^cd Corporation subject to the provisions prohibited, of this act, shall issue any bill or note of the said corpora- tion, unless the same shall be made payable on demand, and without interest. (14) (14) By § 1 of this Act, it is enacted, that " every moneyed corporation having banking powers, hereafter to be created in this State, or 'whose char- ter shall be renewed or extended, shall he subject to the provisions of this Act." The Act is entitled, "An .Act to create a fund for the benefit of certain moneyed Corporations, — and for other purposes." By § 52 (p. 23, ante) of the General Code of Statute.Eegulations, amended by this act of April 2d, 1829, it is declared, that "the provisions of this Title shall be construed to apply to every moneyed corporation created" after January 1, 1828, "unless such corporation shall be expressly exempted (vom the, provisions of this Title, in the act creating, renewing, or extending such corporation." (1 R. S. 699, § 52.) In October, 1852, the Court of Appeals, in the case of Talmage v. Pfll, BANKING CORPOBATIONS. 39 RESTRAINING ACT OP 1830. (1 Bevised Statutes, pp. 711, 712, 718.) TITLE XX. OF UNAUTHOEIZED BANKING, AND THE CIR- CULATION OF CERTAIN NOTES OR EVID- ENCES OF DEBT ISSUED BY BANKS. § 1. No person unauthorized by law shall subscribe to, Associations '^ •' . *"■ certain or become a member of, or be in any way interested in, ^^JpfoPub'. any association, institution, or company, formed, or to be act of Fob. 4, held: — '' That every association organized under the act to authorize the business of banking, and the acts amending the same, is a moneyed corpor- ation within the meaning of the Statutes of this State relating to moneyed corporations, — and is bound and affected by those statutes — excepting only so far as such statutes are inconsistent with the provisions either of the act to authorize the business of banking, or of the acts amendiiig the same ;" — and also held, — " That such associations are banking corporations, and possess only authority to carry on the business of banking in the manner and with the powers specified in the said act." (3 Selden, 828, 34'7, 348.) The Safety Pund Banks have, among their express powers, the general unrestricted express power to carry on the business of banking, " by issuing bills, notes, and oth^^idences of debt ;" — ^yet, these banks were expressly pro- hibited by the above § 35 from issuing any bill or note payable on time, — or payable tdth interest. {See Safety Fund Charters, § 3 or § 4.) This general express power " to issue bills, notes, and evidences of debt," is not granted to banting corporations formed under the General Bank Act of 1838. (Zaws 1838, p. 249, § 18.) But these corporations are authorized to loan and circulate, as money, countersigned promissory notes (" received from the Comptroller "paya6'« on demand), " according to the ordinary course of banking business, as regulated by the laws and usages of this State." (Laws 1838, p. 246, ^ 3.) 40 GENERAL STATUTES APPLICABLE TO issT.iniiote formed, for the pm-pose of receiving deposits, making dis- counts, or issuing notes or other evidences of .debt to be loaned or put in circulation as money ; nor shall any pes- son unauthorized by law, subscribe to, or become in any way interested in, any bank or fund created, or to be created, for the like purposes or either of them. ( 15 ) There is no clause or provision in the. General Bank Act expressly exempting banking associations, formed under it, from the operation of any of the provisions of the general code of statute regulations of 182'7, as amended by the act of April 2d, 1829. The provisions of this amendatory act relating to the creation of a " Bank Fund," are inapplicable to associa- tions under the general law of 1838, not because such associations are not "moneyed corporations having banking-powers," but for the reason, that the issues of such associations, are placed under the direction of the State Comp- troller, and are secured irtfull by specific pledges of State stocks, , not by law, shall keep any office for the purpose of receiving &o' "see Mt deposits, or discounting notes or bills, or issuing any evi- Soteis'^ort. dences of debt, to be loaned, or put in circulation as money ; nor shall they issue any bills or promissory notes or other evidences of debt as private bankers, for the pur- pose of loaning them, or putting them in circulation as money, unless thereto specially authorized by law. [See note 16.] (16) In the case of Warner y. Beers (23 "Wendell, 115, 158, 159, 188), it •was conceded by the counsel of all the parties, as well as by the judges, that the General Banking Law was simply a conditional repeal of the Restrain- ing Act of 1830. In other words, it only authorized associations, formed under it, to issue a certain kkid of promissory notes for the purpose of being loaned, or put in circulation as money, leaving the restraining law in full force as to every .other evidence of debt. " Certain coflditions," says Ver- plancJe, Senator, " are imposed to entitle them to the benefit of this condi- tional repeal. Tliey can issue no paper, unless it be secured in a certain way, and duly attested by the Gcmptroller. The very same conditions are imposed on every individual who thinks fit to engage in this business." (23 Wend. 159.) In Safford v. Wyckoff (4 Hill, 444), the Cbanoellok said, — " The act of 1838, which only authorizes a certain kind of notes to be put.in circulation as money, leaves the restraining law in full force as to every other evidence of debt. These banking associations, therefore, are prohibited from issuing any bills or promissory notes, or other evidences of debt, for the purpose of loan- ing them, or having them put in circulation as money, — whatever forms such evidences of debt may assume." See also the opinion of Senator Sockee to the same effect, in Safford y. Wyckoff. (4 Hill, 463.) See also Leavitt\. Yates (4Edw. Ch. R. 134, 170, 183). The ChanoeIloe, in the case of The Attorney General v. The Mfe-andFire Insurance Company (4 Paige, 224; 9 Paige, 4Yl), held, that the promissory notes issued by that Company (called lAfe and Mre Bonds) were illegal and void, that there was sufficient on the face of these bonds to show that they BANKING CORPORATIONS. 43 § 7. Every person and every corporation, and every realty- member of a corporation, who shall contravene either of •were intended as a ciradating mediuni. The following is an exact copy of one of the "Life and Fire Bonds ." Dollars 6000. THE LIFE IN8DEAN0E Vignette. No. 4665. AND FIKE COMPAUT promise to pay Five Months after date, Geo. W. Gantz, or his order, at their office, Five Thoubakd Dollars, with interest at the rate of Six per cent per annum from the date hereof: interest payable quarterly. For the payment whereof the Cempamy bind themselves and their successors, and have hereunto caused their President and Secretary to subscribe their names. New Toek, Maeoh SOib, 1829, J. G. Swift, Asst Prest. M. L. Datis, Sec. (Endorsed.) Geo. W. Gantz. In 1840 and 1841, The North American Trust and Banking Company (an association under the General Banking Law), issued 800 promissory notes, dated December 16th, 1840, payable IS months after date, with interest, all for the sums of f 1,000 or $500, called "Yates Trust Notes." Vice Chancel- lor MoCouN, in 184S, in Leavitt v. Yates (4 Edw., Ch. R. 134, 170, 183), held, — that the Restraining Act of 1830 " was applicable to all banking associations and individual bankers, except so far aa it is modified by the provisions of the General Banking Law allowing the issue of bills for circulation as money, countersigned by the Comptroller" (pp. IVO, 171) ; and Vice Chancellor McCoun also held, in that case, — that the 800 "Yates Trust Notes" had sofar the character of circulating notes as to be within the prohibitions of the Restraining Act, as well as of the Act of May 14, 1840, and were therefore illegal, — and also, that they were void, because not based upon securities pledged with the Comptroller, nor intended to be countersigned by that officer. The following is an exact copy of one of the 800 " Yates Trust Notes." M GENERAL STATUTES APPLICABLE TO Bank bills under |1, not the provisions in the last section, or, directly or indirectly, assent to such violation-, shall forfeit one thousand dollars. § 8. No person shall pay, give, or receive in payment, or $1,000 Dlls. No. 100. New York, December 15th, 1840. Thirteen Months after date, the. NORTH AMERICAN TRUST - " lished. published, once in each week, for three weeks successively, in the state paper, and in a newspaper published in the county where the principal place of conducting the busi- ness of such corporation shall be situated. § 63. On the day appointed in such order, such mas- Proceea- ter shall proceed to hear the allegations and proofs of the "''• parties, and shall take testimony in relation thereto, and shall with all convenient speed, report the same to the court, with a statement of the property, effects, debts, credits and engagements of such corporation, and of all other matters and things pertaining to the affairs of such corporation. § 64:. Such master shall be entitled to the use of the hiTo^ &!"*■ original petition and schedules annexed thereto, if he re- quire the same, by an order on the clerk or officer of the court with whom they may be deposited, and shall return the same, with his report. § 65. Upon the coming in of the report of the master, when cor- if it shall appear to the court that such corporation is insol- ^° "JJ^"'™^- vent, or that for any reason, a dissolution thereof will be beneficial to the stockholders, and not injurious to the pub- lic interest, a decree shall be entered dissolving such cor- poration, and appointing one or more receivers of its estate and effects ; and such corporation shall thereupon be dissolved, and shall cease. § 66. Any of the directors, trustees or other officers Koceivere; Seonrity. rights. Tlieir au- thority. 68 GENERAL STATUTES APPLICABLE TO of such corporation, or any of its stockholders, may be ap- pointed receivers, who, before entering npon the duties of their appointment, shall give such security to the people of this State, and in such penalty, as the court shall direct, conditioned for the faithful discharge of the duties of their appointment, and for the due accounting for all moneys received by them. Their § 67i Such receivGrs shall be vested vrith all the estate, real and personal, of such corporation, from the time of their having filed the security hereinbefore required, and shall be trustees of such estate for the benefit of the credi- tors of such corporation and of its stockholders. [See -note 24, ante.'] § 68. Such receivers shall have all the power and au- thority, conferred by law upon trustees to whom an assign- ment of the estate of insolvent debtors may be made, pur- suant to the provisions of the fifth Chapter of the Second Part of the Eevised Statutes. [See 2 E. S. 40— 51.J To prose- §69. If there shall be any sum remaining due upon reVsofstJok. any share of stock subscribed in such corporation, the re- ceivers shall immediately proceed and recover the same, unless the person so indebted shall be wholly insolvent ; and for that purpose may file their bill in the court of chancery, or may commence and prosecute a-n action at law, for the recovery of such sum, without the consent of any creditors of such corporation. Togiveno- § 70. . The receivers, immediately on their appointment, pointment, shall givc uotice thereof, which shall contain the same matters required by law in notices of trustees of insolvent debtors ; .and in addition thereto, shall require all persons holding any open or subsisting contract of such corpora- tion, to present the same in writing and in detail to such BANKING CORPORATIONS. 69 receivers, at the time and place in such notice specified ; which shall be published for three weeks in the State paper, and in a newspaper printed in the county where the principal place of conducting the business of such cor- poration shall have been situated. § 71. All sales, assignments, transfers, mortgages, and certain conveyances of any part of the estate, real or personal, ^""'" including things in action, of every such corporation, made after the filing of the petition for a dissolution thereof, in payment of, or as a security for, any existing or prior debt, or for any other consideration, and all judgments confessed by such corporation after that time, shall be absolutely void as against the receivers who may be ap- pointed on such petition, and as against the creditors of such corporation. S 72. After the first publication of the notice of the Debtors to " ^ account to appointment of receivers, every person having possession "'"'''"'"• of any property belonging to such corporation, and every person indebted to such corporation, shall account and answer for the amount of such debt and for the value of such property to the said receivers ; and all the provisions of law, in respect to trustees of insolvent debtors, the col-receiv^ra." lection and preservation of the property of such debtors, the concealment and discovery thereof, and the means of enforcing such discovery, shall be applicable to the re- ceivers so appointed, and to the property of such corpora- tion. § 73. Such receivers shall have the same power to set- <,„ntTOTOr-^ tie any controversy that shall arise between them and any^"^' debtors or creditors of such corporation, by a reference, as is given by law to trustees of insolvent debtors ; and the same proceedings for that purpose shall be had, and with 10 GENERAL STATUTES APPLICABLE TO the like effect ; and application for the appointment of re- ferees may be made to any officer authorized to appoint such referees on the application of trustees of insolvent debtors, who shall proceed , therein in the same manner ; and the referees shall proceed in like manner, and file their report with the like effect in all respects. Meetings % 1i. The receivers shall be subject to all the duties of creditors " « to^be called, ^^^ obligations by law imposed on trustees of insolvent debtors, so far as they may be applicable, except where other provisions shall be herein made. They shall call a general meeting of the creditors of such corporation, with- in four months from the time of their appointment, when all accounts and demands for and against such corpora- tion, and all its open and subsisting contracts, shall be as- certained and adjusted as far as may be, and the amount of moneys in the hands of the receivers declared. [See 2 H. S. 40— 51 .J snbfisting 8 Y5. If there shall be any open and subsisting en- contracts. " i/ J. o gagements or contracts of such corporation, which are in the nature of insurances or contingent engagements of any kind, the receivers may, with the consent of the party holding such engagement, cancel and discharge the same, by refunding to such party the premium or consideration paid thereon by such corporation, or so much thereof as shall be in the same proportion to the time which shall remain of any risk assumed by such engagement, as the whole premium bore to the whole term of such risk ; and upon such amount being paid by such receivers to the person holding or being the legal owner of such en- gagement, it shall be deemed canceled and discharged as against such receivers. Eeceivers' § 76. Such rcccivcrs shall, in addition to their actual commissions disbursements, be, entitled to such commissions as the BANKING CORPORATIONS. Yl court shall allow, not exceeding tlie sum allowed by law to executors or administrators. § Y7. The receivers shall retain out of the moneys in to retain , _ certain mo- their hands, a sufficient amount to pay the sums, which neys. they are hereinbefore authorized to pay, for the purpose of canceling and discharging any open or subsisting en- gagements. § 78. K any suit be pending against the corporation ib. to meet suitB, or against the receivers, for any demand, the receivers may retain the proportion which would belong to such de- mand if established, and the necessary costs and proceed- ings, in their hands, to be applied according to the event of such suit, or to be distributed in a second or other divi- dend. § 79. The receivers shall distribute the residue of the order of payment of moneys in their hands, among all those who shall have'i«°'"- exhibited their claims as creditors, and whose debts shall have been ascertained, as follows : 1. All debts entitled to a preference under the laws of the United States : 2. Judgments actually obtained against such corpora- tion, to the extent of the value of the real estate on which they shall respectively be liens : 3. All other creditors of such coi-poration, in propor- tion to their respective demands, without giving any pref- erence to debts due on specialities. § 80. If the whole of the estate of such corporation be geeondand not distributed on the first dividend, the receivers shall, dmd. ^" within one year thereafter, and within sixteen months after their appointment, make a second dividend of all the moneys in their hands, among the creditors entitled there- to ; of which, and that the same will be a final dividend. 72 GENERAL STATUTES APPLICABLE TO three weeks' notice shall be inserted once in each week, in the State paper, a-nd in a newspaper printed in the county where the principal place of business of such cor- poration was situated. in^ThOTdn § ^^- ^uch secoud dividciid shall be made in all re- spects in the same manner as herein prescribed in relation to the first dividend, and no other shall be made thereafter among the creditors of such corporation, except to the creditors having suits against it, or against the receiv- ers, pending at the time of such second dividend, and except of the moneys which may be retained to pay such creditors, as herein provided ; but every creditor who shall have neglected to exhibit his demand before the first dividend, and who shall deliver his account to the re- ceivers before such second dividend, shall receive the sum he would have been entitled to on the first dividend, before any distribution be made to the other creditors. exhiSted""' § 82. After such second dividend shall have been made, the receivers shall not be answerable to any credi- tor of such corporation, or to any person having claims against such corporation, by virtue of any open or subsist- ing engagement, unless the demands of such creditor shall have been exhibited, and the engagenients upon which such claims are founded, shall have been presented to the said receivers, in detail and in writing, before or at the time specified by them in their notice of a second dividend, surpinsto §83. If after the second dividend is made, there shall fltockholders. remain any surplus in the hands of the receivers, they shall distribute the same among the stockholders of such corporation, in proportion to the respective amounts paid in by them, severally, on their shares of stock. taS°^ '"' § ^^' ^^^^ ^'^y s'lit pending at the time of the second dividend, shall be terminated, they shall apply the moneys ' BANKIXG CORPORATIONS. Y3 retained in their hands for that purpose, to the payment of the amount recovered, and their necessary charges and expenses ; and if nothing shall have been recovered, they shall distribute such moneys, after deducting their ex- penses and costs, among the creditors and stockholders of the corporation, in the same manner as herein directed in respect, to a second dividend. § 85. The receivers shall be subject to the control of control of the court of chancery, and may be compelled to account at any time ; they may be removed by the court, and any ' vacancy created by such removal, by death or otherwise, may be supplied by the court. S 86. Within three months after the time herein pre- Account ° by them. scribed for making a second dividend, the receivers shall render a full and accurate account of all their proceedings to the court of chancery, on oath, which shall be referred to a master to examine and report thereon. S 87. Previous to rendering such account the receivers Pre^ioM " ° notice there- shall insert a notice of their intention to present the same, °^ , once in each week, for three weeks, in the state paper, and in a newspaper, of the county in which notices of divi- dends are herein required to be inserted, specifying the time and place at which such account will be rendered. § 88. The master to whom such account shall be re- jjastBrt ferred, shall hear and examine the proofs, vouchers, and °'^' documents offered for or against such account, and shall report thereon fully to the court. § 89. Upon the coming in of such report, the court ^ shall hear the allegations of all concerned therein, andf^eff^™'' shall allow or disallow such account, and decree the same to be final and conclusive upon all the creditors of such corporation, upon all persons who have claims against it. Further accoants to 74 GENERAL STATUTES APPLICABLE TO upon any open or subsisting engagement, and upon all tlie stockholcfers of such corporation. .Such receivers shall be°rSred. ^Iso account from time to time in the same manner, and with the like effect, for all moneys which shall come to their hands after the rendering of such account, and for all . moneys which shall have been retained by them for any of the purposes hereinbefore specified, and shall pay into court all unclaimed dividends. Appeal 8 90. Any decree or order of the court of chancery, from decrees u ■/ . j i and orders, j^ade upou any petition presented pursuant to the provi- sions .of this Article, or in the course of any proceedings thereon, shall be subject to an appeal, in the same manner as other orders and decrees of the said court, if the same be made within six months after such order or decree made. Corporations § 91. The provisious of this Article shall not extend to excepted. any incorporated library society, or to any religious cor- poration, or to any select school or academy, incorporated by the regents of the university, or by the legislature. \_Se6 note 25.] (25) DECISIONS OF THE COURTS UPON SECTIONS 0? THE ABOVE ARTICLES, TWO AND THREE. (2 R. B. 462-46'?.) 1 Paige, S5; Ik the Matter of the Frcmklin Bank. (Act of April 21, 1825.) 1 Paige, 511 ; Attorney General v. The Bank of Oolumhia. (Act of April 21, 1825.) 3 Wend. 588 ; Attorney General t. The Bank of Columbia, (Act of April 21, 1825.) 1 Paige, 684, 586 ; Bruyn v. Receiver Middle District Bank. 1 Paige, 258 ; In the Matter of the Niagara Insurance Co. 2 Paige, 438 ; Verplanck v. Mercantile Insurance Co. 3 Paige, 213 ; Robinson v. Smith. 4 Paige, 224; Attorney General v. lAfe and Fire Insurance Co. 5 Paige, 621 ; Devoe v, Ithaca and Owego R. R. Co. 6 Paige, 497 ; Bank Commissioners v. Bank of Buffalo. BANKING COEPOKATIOKS. T5 ACT OP APRIL 17th, 1830. [LAWS 1830. CHAP. 243. p. 265.] An Act concerning BamJc Notes: jpassed April Vlth, 1830. The People of the State of New Yorlc, represented in Senate a/nd Assembly, do enact as follows : § 1. Every note, bill or other evidence of debt, pur- porting to be a bank note, issued or to be issued by any incorporated banking institution of tbis State, shall, after the passage of this act, be deemed and taken to be paya- ble at the hanking house of such incorporated banking 6 Paige, 213 ; In the Matter of the Bank of Niagara. 6 Paige, 220 ; Holbrook T. Receivers of American Insurance Go. 6 Paige, 102; In the Matter of Receivers of Qlohe Insurance Co. I Paige, 294 ; Ward v. Sea Insurance Go. 8 Paige, 380 ; In tjie Matter of Waterbury v. Trustees of Eagle Iron Works. 9 Paige, 698 ; Judson v. Rossie and Galena Go. 9 Paige,. 471 ; Attorney General v. Life and Mre Insurance Co. 9 Paige, 152 ; Nathan v. Whitlock. 10 Paige, 290 ; Morgan v. N. Y. and Albany R. R. Co. 10 Paige, 378 ; In the Matter of Receiver of City Bank of Buffalo. II Paige, 118; Mickles v. Rochester City Bank. 1 Barb. Ch. K. 122; Pentz v. Bawley. 2 Barb. Ch. K. 360 ; In Matter of Groton Insurance Co. 3 Barb. Ch. R. 642 ; In Matter of Grototl Insurance Co. 3 Ed-w. Ch. R, 216; Nathan v. Whitlock. 2 Sand. Ch. R. 257 ; Mann v. Pentz. 2 Sand. Ch. E. 23 ; Boisgerard v. N. V. Banking Co. 4 Sand. Ch. R. 577 ; Sill v. Nautilus Insurance Go. 4 Sand. Ch. R. 659 ; In Matter of Jackson Marine Insurance Go. 3 Comstock, 415 ; Mann v. Fentz. 5 Selden, 147 ; Bogardus v. Rosendale Manufacturing Go. 12 Barb. S. C. R. 341 ; Damman v. Empire Mills. T6 GENERAL STATUTES APPLICABLE TO institution, any law or usage to the contrary hereof not- withstanding. (26) > (26) By § 31 of the General Banking Lam (Laws 1838, p. 253), it is en- acted as follows : " § 31. It shall not be lawful for any association formed under the pro- Tisioas of this act, to make any of its hills or notes of a denomiaation less than one thousand dollars, to be put in circulation as money, payable at any other place than at the office where the business of the association is carried on and conducted." By § 3 of the General Bank Act, it is provided, that the promissory notes, thereby authorized to be loaned and circulated as money by associations and individual bankers, shall be made payable at " the place of business, within this State, of such person or association." The cer- tificate required to be filed by § 16 of the same act, only provides for a designation of the " particular city, town, or village." April 26th, 1832, the Legislature passed an act, entitled " An Act to pre- vent the abatement of suits by or against corporations in certain cases.'' {Laws 1832, Chap. 295,;). 509, §§ 1, 2, 8, 4) BANKING CORPORATIONS. 77 ACT OP MAY 11th, 1835. [LAWS 1835: CHAP. 307, p. 365.] Ajs Act to amend the act entitled, " An act to create a fund for the benefit of the creditors of certain moneyed corporations, and for other purposes," passed April 2. 1829. Passed, May 11, 1835. The People of the State of New York, represented in Senate and Assembly, do enact as follows : S 1. It shall not be lawful for anu moneyed corporation Eeswc- •' •> ^ tions as to to charge, or in any manner receive the premium of ex-^™^'°- change on any draft made by such corporation, which shall be used or applied in the payment of any bill, note, or other demand, due to or discounted by such corporation, or to be interested directly or indirectly in the premiums on drafts which may be drawn or sold by any other corpo- ration or by any individual. § 2. It shall not be lawful for amy moneyed corporation ^^^^ °l^^_ to be in any manner, directly or indirectly, interested in"^' the fees of any notary public, or entitled to, or to receive any share of the same, in any manner whatsoever ; and any oflBcer or clerk of such corporation being a notary public shall not be entitled to charge or receive more than fifty cents for protesting and giving the requisite notices upon any note or bill of exchange, check or draft, paya- ble at the office of such corporation ; nor shall any such corporation or any of its officers or clerks, charge or re- ceive any sum for a notice upon any note, bill, or draft, which is not duly protested ; nor shall a notary receive any fees for protesting or giving the notice on any note, bill of exchange, check or draft, in which any moneyed cor- 78 GENERAL STATUTES APPLICABLE TO poration shall be interested, of "wliicli such notary shall be a stockholder. " Kestrie- §3- It sha\\nothela,wM {oT CMiy moneyed Corporation loTsanaSs-to place in the hands of any person, directly or indirectly, any money or bank notes, for the purposes ot loaning or discounting of paper, or under any pretense whatever of discounting or engaging that a?j.y moneyed corporation shall discount any note or draft, if presented at its counter. Directors. § 4. No cashier or director of a moneyed corporation within this State homing IvmMng powers, shall hold the office of director in any other moneyed corporation holding its charter under the safety fund system. Bank com- §5. The bank Commissioners shall have powcr, and it mist-ioners to ., t i fv* t* exflmine and shall bc their dutY, to examine under oath, the oiiicers oi report. *^ ■' all banks subject to their supervision, as to any offence against the provisions of this act and shall report to the legislature the names of any such corporations as shall of- fend against the provisions of this act, or who shall adopt and pursue any course of business with the intention of receiving more than the legal rate of discount. They may 8 6. The commissiouers shall be authorized to apply apply for an " _ rr J injanotion. ^q ^q chancellor, pursuant to the eighteenth section of the act hereby amended, for an injunction against cmy moneyed corporation who shall violate any of the provisions of this act, or who shall adopt or pursue any course of business which by this act the said commissioners are directed to re- port to the legislature, ^d the court of chancery may pro- ceed in the same manner as in any case now provived for by the eighteenth section of the act hereby amended. [See note 27.] (27) By 1 R. S. 598, § 61, it is enacted that, " the term ' moneyed corpora- tion^ aa used in this Title, shall be construed to mean every corporation BANKING CORPORATIONS. Y9 having banking powers, or having the power to make loans upon pledges, or deposits, or authorized by law to make insurances.'' (See p. 23, ante.) By § 1 of the act of April 2d, 1829 (amended by the above act of May 11th, 1885), it is enacted as follows; " § 1. Every moneyed corporation having banking powers, hereafter to be created in this State, or whose charter shall be renewed or extended, shall be subject to the provisions of this Act." (Laws 1829, p. 167.) {See p. 29, ante,) The Court of Appealsh&s finally adjudged, that associations formed under the General Banking Law, are corporations — and moneyed corporations ; and that they are within and subject to all the general statutes of this State, applicable to moneyed corporations, except when such statutes are incon- • sistent with the General Bank Act, or the acts amending the same. Gfillett V. Moody (3 Comst. 479); Talmage v. Pell (3 Selden, 328.) The Supreme Court in Ouyler & Sexton v. Sanford (8 Barb. S. C. R. 226), held, — that the prohibition contained in § 1 of the above act, of May 11th, 1835, does not apply to individual bankers under the General Bank Act ; that although an association under that act is a corporation, yet, that an indivi- dual banker cannot be so regarded ; that he lacks one of the attributes of a corporation, to wit, — its principle of succession and perpetuity. SPECIAL STATUTES APFLICABLE TO BANKING CORPORATIONS AND INDIVIDUAL BANKERS. [genekal banking law as oeiginallt passed.] (LAWS 1838, chap. 260, P. 245.) An Act to authorize the Imsmess of Banking. Passed April 18, 1838. The People of the State of New YorTc, represented in Senate and Assernbly, do enact as follows : § 1. The comptroller is hereby authorized and required ^^^ ^^^^ to cause to be engraved and printed in the best manner, to drouiating''* „ . . 1 , „ . T . notes: to be guard against counterfeiting, such quantity oi circulating eo'ntersigned notes, in the similitude of bank notes, in blank, of the dif- ^^06.'''° ferent denominations authorized to be issued by the incor- porated banks of this State, as he may from time to time deem necessary, to carry into effect the provisions of this act, and of such form as he may prescribe. Such blank circulating notes shall be countersigned, numbered, and registered in proper books, to be provided and kept for that purpose in the office of said comptroller, under his direc- 82 SPECIAL STATUTES APPLICABLE TO tion, by such person or persons as the said comptroller shall appoint for that purpose, so that each denomination of such circulating notes shall all he of the sarnie similitude, and bear the uniform signature of such register, or one of such registers. ( 28 ) On transfer S 2. Whenever any person or association of persons, ofpublic ° . . . faring^ not™ formed for the purpose of banking under the provisions of ed by oomp- this act, shall legally transfer to the comptroller any portion troller to aa- sooiaions. of the public debt now created, or hereafter to be created, by the United States, or by this State, or such other States of the United States as shall be approved by the comptrol- ler, such person or association of persons shall be entitled to receive from the comptroller an equal amount of such circulating notes, of different denominations, registered and countersigned as aforesaid : but such public debt shall in stock to be all cascs be, or be made to be, equal to a stock of the State eqnal to 5 stock™' "this producing five per cent, per annum ; and it shall not be lawful for the comptroller to take any stock at a rate above its par value. (29) A certain § ^" Such pcrsou or associatiou of pofsons are hereby au- ailthoHzedlo thorizcd, after having executed and signed such circulating be circalated , , , - , , - - , _ , as money, notes m the manner required by law, to make them obliga- tory promissory notes, payable on demand, at the place of (28) § 1 amended, May 26, 1841 {Lams 1841, chap. 819, p. 309, § 6), by excluding therefrom the words, " all be of the same similitude and." See Act of May 26, 1841, J30S<. By § 8 of the act of April 15th, 1864 (Laws 18S4, chap. 242, p. 551), it is enacted, that the " circulating notes delivered to individiud hankers, shall express only the indimdual liability of the banker issuing them, and shall be signed by him only, and not by any attorney or agent." See this act, post. (29) § 2 amended so as to mate it unlawful for the comptroller or the Superintendent of the Bank Department to receive any State stocks except BANKING CORPORATIONS. 83 business within this State, of such person or association, to the public stock issued or to be issued by the State of New York. See the following acts : Act of May 14lh, 1840 (_Liws 1840, chap. 363, p. 301, § 1). Act of March 16th, 1844 {Laws 1844, chap. 41, p. 35, § 1). Act of April 12th, 1848 {Laws 1848, chap. 340, p. 462, § 1). Act of March 12th, 1849 {Laws 1849, chap. 97, p. 136, § 2). Act of Api-a 10th, 1849 {Laws 1849, chap. 813, p. 455, § 1). See these acts, post. It was finally adjudged by the Court of Appeals, in October, 1852, in Talmage v. Pell (3 Selden. 328, 347, 348), that associations, organized under the General Banking Law, "have no power to purchase State or other stocks for the purpose of selling them for profit, or as a means of raising money, except when such stocks have been received in good faith as security for a loan made by or a debt due to such association, or when taken in pay- ment, in whole or in part, of such loan or debt." See, also. The Bank Com- missioners V. Tfie St. Lawrence Bank (3 Selden, 513). All bank charters granted by this State, from 1791 to 1838, contained an express prohibition, substantially in the following words, — " The said corpo- ration shall not, directly or indirectly, deal or trade in buying or selling any goods, wares, merchandise, or commodities whatsoever, or in buying or sell- ing any stock created under any law of the United States, or of any particu- lar State, unless in selling the same when truly pledged by way of security for debts due to the said corporation.'' See the charters of every Safety Fund Bank, as well as the charters granted before 1829. The two charters of the National Bank of the United States, granted by Congress in 1791 and 1816, contained express prohibitions against trading in any thing except bullion, &c. ; also, against purcliasing any public debt whatever. See these charters, in the United States Statutes at Large. The charters of the Bank of England, Bank of France, Bank of Scotland, and Bank of Ireland, also contain express prohibitions against trading (Stat- utes-at-Large, quarto ed., vol. 3, p. 568 ; 1 McCuUoch's Diet., American ed. (1840), pp. 76, 117, 121, 122; Lawson's History of Banking, Amer. ed., p. 228; Rees' Cycle, article "Bank.") The Safety Fund Banks were bound to pay annually to the treasurer of the State a sum equal to one half of one per cent, on their capital stock, until such payments amounted to three per cent, upon their respective capitals (Laws 1829, 167, §§ 2, 4 ; see pp. 29, 30, ante). By the Safety Fund sys- tem, the " bank fund" was not only limited to a specified percentage on capital, but was made liable for the payment of all the " debts, exclusive 84 SPECIAL STATUTES APPLICABLE TO loan and circulate the same as money, according to tbe or- of capital stock, of any of the said corporations " -which should become insol- vent (see §§ 4, 9, 10, of the act of 1829, pp. 30, 31, 32, ante). But by the general law of 1838, no bill or note can be delivered out by the State officer having exclusive charge of the issue department, unless the same shall be first secured by a transfer to that department of government stocks, &c., in value equal to the full amount of every bill or note so issued; and such stocks, <&c., are to be held in pledge " exclusively for the redemption " of such bills or notes (§ \%post). By the system of 1829, the " Safety Fund" was raised by a contribution of a small percentage upon the capital of each bank, with- out any reference whatever to the amount of its issues. But under the sys- tem of 1838, the trust fund, held in pledge by the issue department, ib pro- portioned to the issues of each banking corporation and individual banker, with- out any reference whatever to the amount of their nominal or actual capitals. The principle of separating the issue from the banking department was advocated by Mr. Lotd, in England, as early as the year 1837. In 1838, it was adopted by the legislature of New York ; and in 1844, Sir Robert Peel practically carried into effect the same principle, in dealing with the Bank of England on the renewal of its charter in that year. By the renewed charter (1844) of this institution, it is enacted that there shall be transferred; &c., " to the issue department of the Bank of England, securities to the value of £14,000,000, whereof the debt due by the public to the said governor and company shall be and be deemed a part." (See this Act, Stat. T & 8 Vict., c. 32.) " The object of this statute (Stat. "7 & 8 Vict., c. 32) has been," says Mb. McCuLLooH, " to obviate the chances of over issue and sudden fluctuations in the quality and value of money, by limiting the power to issue notes payable on demand," &a. * * * " While the directors lare left to manage the banking department at their discretion, their management of the issue depart- ment is subjected to what seems to be a well-devised system of restraint. The bank is allowed to issue to £14,000,000 of notes, upon securities (of which the debt of £11,015,100 lent by her to Government is apart); and whatever paper the issue department may at any time issue over and above this maxi- mum amount of securities, it must have an equal amount of coin and bul- lion in its coffers. Hence, it is impracticable for the issue department to in- crease its issues without, at the same time, proportionally increasing its stock of coin and bullion, or to diminish the latter without proportionally dimin- ishing the amount of paper supplied to the public and banking department" (McCulloch's Diet., London ed., 1850, pp. 82 to 88 ; Lawson's Hist., of Bank- ing, Amer. ed:, 1852, pp. I&jll; Gilbart on Banking, Amer. ed., 1861, p. 61 ; Levi on Mercantile Law, 1854, p. 202) In 1846, the people of this State made it a part of the fundamental law, that " the legislature shall provide by law for the registry of all bills or notes issued, or put in circulation as money, and shall require ample security for the redemption of the same in specie." (Constitution 1846, Art. 8, § 6.) BANKING CORPORATIONS. ' 85 dioary course of banking business, as regulated by the laws and usages of tbis State. ( 30 ) (30) § 35 of the amendatory act of April 2, 1829 (see p. 38, note 14, ante), is in these words : " No moneyed corporation subject to the provisions of this act, shall issue any bill or note of the said corporation, unless the same shall be made payable on demand and without interest." § 1 of the same act ^see p. 29, ante) is in these words : " Every moneyed corporation having banking powers, hereafter to be created in this State, or whose charter shall be renewed or extended, shall be subject to the provisions of this act." See § 62 of the General Code of Statute Regulations of 182'? (p. 23, elnte). This Code was amended as to all future " moneyed corporations having hanking powers," by the act of April 2d, 1829 (see p. 29 ante, and note 18, on that page. See, also, Talmage v. Pell, 3 Selden, 328, 347, 848 ; §§ 3, 4, of the act of May 14, 1840, ^os«; § 1 of the act of May 6, 1844, ^o«<; § 1 of the act of April 10, 1860, and notes 36 and 39, post.) The legislature of 1887 had repealed so much of the Restraining Act of 1830 {see §§ 1, 3 ifc 6, pp. 39, 41 & 42, ante; also, Note 16 on p. 42, ante) as prohibited " a person or association of persons, not incorporated, from " keep- ing offices for the purpose of receiving deposits, or discounting notes or bills," {Laws 1837, p. 14 tie p. 49, ante). But the inhibitions of the Restrain- ing Acts against the issue (by individuals or bodies corporate unless "thereto specially authorized by law ") of bills, notes, or other evidences of debt, on loan, or for circulation as money, were left by the legislature of 1837 in full force (see § 4, p. 26, ante, <& §§ 1, 3, cfc 6, pp. 89-43, ante). The legislature of 1838, by § 8 of the General Bank Act, so far modified §§ 1, 3, & 6, of the Restraining Act of 1830, and also § 4 on page 26, ante, as to authorize indi- viduals and corporations acting or formed under the general law, to " loan and circulate as money," countersigned and secured promissory notes, paya- ble on demand at their place of business within this State, " according to the ordinary course of banking business as regulated by the laws and usages of this State." (See Note 16, pp. 42-48, ante, and the cases there cited.) To authorize corporations, formed under the General Bank Act, to loan and circulate promissory notes, or other evidences of debt, as money, an express grant of power was required. (See §4, and note 12, p. 26, ante; also, §§ 3 & 6, and note 16, pp. 41 & 42, ante.) Hence it was conceded by Senator Vei-planck, in Warner v. Beers (23 Wendell, 158, 159), that the General Bank Act was oiJy a "conditional repeal" of the Restraining Acts. He says, " certain conditions are imposed to entitle them " (associa- tions) " to this conditional repeal. They can issue no paper, unless it be secured in a certain way, and duly attested by the comptroller. The very same conditions are imposed on every individual who thinks fit to engage in this business." (23 Wend. 158, 169) ; see, also, Safford v. Wyckoff (1 Hill, 86 'SPECIAL STATUTES APPLICABLE TO If notes § 4. In case the maker or makers of any such circulating not redeem'd , -Tin in lawfni note, Countersigned and registered as aforesaid, shall at any toSem'^ time hereafter, on lawful demand, during the usual hours fund. of business, between the hours often and three o'clock, at the place where such note is payable, fail or refuse to re- deem such note in the lawful money of the United States, the holder of such, note making such demand may cause the same to be protested for non-payment by a notary pub- lic, under his seal of office, in the usual manner ; and the comptroller, on receiving and filing in his office such pro- test, shall forthwith give notice in writing to the maker or makers of such note to pay the same ; and if he or they shall omit to do so for ten days after such notice, the comp- troller shall immediately thereupon (unless he shall be 11— S. C. ; 4 Hill, 444, 463); Bank of Orleans v. Merrill (2 Hill, 295) ; amiih & Warner v. Strong (2 Hill, 241); Swift v. Beers (3 Denio, 70); Zeavitt v. Palmer (3 Comstook, 19) ; Bank Commissioners v. The St. Lawrence Bank (3 Selden, 513); TalmOgeT. Pell (3 Selden, 328); also, the oases cited in Ifote 14, p. 40, ante. The third section of the General Bank Act contains the only grant of power to individual hankers and banking ooi;porations to issue, loan, or cir- culate their own engagements or promises. See note Z9, post, and note 51, post, and the cases there cited. In May, 1837, all the banks of this State suspended specie payments (Laws of 1837, p. 514). In April, 1838, when the General Bank Act was passed, every bank in the United States, without a single exception, was in a state of suspension. Their notes and bills were mad6 payable on demand, but they were not paid when demanded. In the midst of this universal bank suspension, the legislature of 1838 so far modified or repealed the Restraining Acts (§ 4, p. 26, ante, and §§ 3 ''» manner specified in the fourth section of this act, the comp- troller, after the ten days' notice therein mentioned, may 340, p. 462, § 2). By § 3 of this act, it is enacted that no mortgage depos- ited, shall be for a greater amount than $5,000. By § 10 of the Act of April 12th, 1851 (Zawa of 1851, chap. 164, p. 309), it is enacted, that "no one mortgage of lands shall hereafter be received as security for circulating bills to an amount greater than five thousand dollars." See these acts, post. (33) See § 7 of the Act of May 26th, 18il, post (Laws 1841, chap. 319, p. 310, 1), also, § 4 of the Act of April 12, 1861 (Laws of 1861, chap. 164, p. 309.) See these acts, post. (34) See §§ 7, 8, eeaon. imprisonment. (35^) § 15. Any number of persons may associate to establish cobpob»- " •' ^ •' TIONS, how offices of discount, deposit, and circulation, upon the terms '»"»>«*• and conditions, and subject to the liabilities prescribed in this act ; but the aggregate amount of the capital stock of any such association shall not be less than one hundred thousand dollars. ( 36 ) (35J) It will be perceived, that the Srst fourteen sections of the General Bank Act, relate exclusively to provisions and regulations for the creation and government of the issue department, and the State Officer, who is con- stituted its sole manager, including special directions as to the custody of the bank plates, and the penalties imposed upon the comptroller or superintend- ent (Laws 1851, chap. 164, p. 309, § 8), for any violation of such regulations. In 1843, the legislature compelled every safety fund bank to deposit with the comptroller their bank plates, and made it the duty of that oflScer safely to keep the same. (Laws 1843, p. 299.) See Constitution of 1846, Art. 8, § 6,— and § 8 of the Act of April 12, 1851 (Laws 1851, chap. 164, p. 309). (36) By § 2 of the Act of May 14th, 1840 (Laws 1840, chap. 363, p. 306), it was enacted that no association of persons " shall commence the business of banking, orations in a qualified sense, as within the intent and meaning of some particular statute ; but are corporations to all intents and purposes. If any thing can be settled by judicial decisions, this is settled." See also The Bank Commissioners v. The St. Lawrence Bank (3 Selden, 513). That a corporation must show a grant in terms, or by necessary implica- tion, for every power it attempts to exercise, See 1 E. S. 600, § 3, and Note 11, p. 26, ante, and the cases there cited; also, notes 19, 20, & 21, pp. 51-57, ante, and the cases there cited. 1 98 SPECIAL STATUTES APPLICABLE TO shares, succeed to all the rights and liabilities of prior shareholders ; and no change shall be made in the articles in Articles, of association by which the rights, remedies or security of Slc. its existing creditors shall be weakened or impaired. Such association shall not be dissolved by the death or insanity of any of the shareholders therein. Articles § ^^- •'-'' ^hall bc lawful for any association of persons foHncreaae^ Organized under this act, by their articles of association, to of capital. , provide for an increase of their capital, and of the number of the associates, from time to time, as they may think' proper. § 21. Contracts made by any such association, and all Contracts " J J ; signed ^^ notcs and bills by them issued, and put in circulation as money, shall be signed by the president or vice-president and cashier thereof; and all suits, actions and proceedings Actions brought or prosecuted by or on behalf of such association, may be brought in mav be brought or prosecuted in the name of the president name of the •' ° -^ ■■■ president, thereof ; and no such suit, action or proceeding shall abate by reason of the death, resignation or removal from ofBce of such president, but may be continued and prosecuted according to such rules as the courts of law and equity may direct, in the name of his successor in office, who shall ex- ercise the powers, enjoy the rights, and discharge the duties of his predecessor. ( 40 ) (40) In July' 1850, in deliyering the judgment of the Court of Appeals, in Gillett v. Moody (3 Comst. 479, 485, 486), BkonSos, Ch. J., said, — " There ■was a difference of opinion between the Supreme Court and the Court of of EiTors on the question whether the constitution applied to the free banks — the Supreme Court holding that it was applicable alike to all corpora- tions, while the Court of Errors thought it applied only to corporations cre- ated by special charter, and not to those formed under general laws. But both courts were agreed that the free banks are corporations. If there was room for a doubt on this point after the decision of the Court of Errors in Warner t. Beers (23 Wend., 103), the' decision of the same court in The Supervisors of BANKING CORPORATIONS. 99 § 22. All persons having demands against any such Actions association, may maintain actions against the president mmntained thereof ; which suits or actions shall not abate by reason Jlif tlfabate of the death, resignation or removal from office of such&o. president, but may be continued and prosecuted to judg- ment against his successor ; and all judgments and decrees obtained or rendered against such president for any debt or liability of such association, shall be enforced only against the joint property of the association, and which property shall be liable to be taken and sold by execution under any such judgment or decree. ( 40 ) § 23. No shareholder of any such association shall be share- hulders not liable in his individual capacity for any contract, debt, or^^^^^^^^^ engagement of such association, unless the articles of asso- '*"'■ Niagara v. The People (1 HiU, 504), removed all ground for snch a doubt. And yet I notice that some of the free banks still keep up a practice -which was adopted when it was thought necessary to keep up some such device to get round the constitution, and add the name of the president to the corpo- rate name of the institution, in bringing suits. It was long since held that this was unnecessary, and that the free banks might sue and be sued in the same corporate name which is used in transacting their other business. The People V. The Assessors of Watertown (1 Hill, 621). And as it is now settled that the free banks have a legal existence, it may be hoped that the incon- venient practice of using the name of the president in bringing suits by and against the corporation will be given up,'' (3 Comst., 485, 486.) Since the case of Oillett v. Moody, the Go^l/rt of Appeals has decided the case of Talmage v. Pell (3 Selden, 328, 347, 348), and has again adjudged " that every association, organized under the act to authorize the business of banking, and the acts amending the same, is a moneyed corporation.'' (3 Sel- den, 347.) As to the mode of bringing suits by and against associations under the general law, see, also, Delafield v. Kinney (24 Wend., 345); and CaseY. ITie Mechanics' Banking Association (I Sand., Sup. R., 693). In March, 1841, while the difference of opinion, alluded to by Judge Bkonson, existed between the Supreme Court and the Court of Errors, and before the decision by the latter Court of the case of The Supervisors of Ni- agara V. The People, the legislature passed the act entitled "An Act respect- ing suits andlegat proceedings hy or against banking associations." (Laws 1841, chap, 56, p. 33.) See this act, post. 100 SPECIAL STATUTES APPLICABLE TO ciation by him signed shall have declared that the share- holder shall be so liable. ( 40i) Provisions 8 24. It shall be lawful for such association to purchase, fis to Real ° ^ ' sstate. JjqJ^j g^jj^ convey real estate for the following purposes : 1. Such as shall be necessary for its immediate accom- modation in the convenient transaction of its business ; or 2. Such as shall be mortgaged to it in good fiMth, by way of security for loans made by or moneys due to such association ; or 3. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings ; or 4. Such as it shall purchase at sales under judgments, decrees or mortgages held by such association. ( 41 ) (40i) See the Act of April 5tli, 1849, entitled, "An Act to enforce the re- sponsibility of stockholders in certain banking corporations and associations, as prescribed by the constitution, and to provide for the prompt payment of de- mands against such corporations and associations." (Laws 1849, chap. 226, p. 340.) The eleyenth section of this act, amended by the act of March 15th, 1855. (Law? 1865, chap. 69, p. 101.) See these aeba, post. • ■ (41) The following is the 4th section of a Safety Fund Bank Charter : " § 4. The real estate which it shall be lawful for the said corporation to purchase, hold, and convey, shall be, " 1. Such as shall be requisite for its immediate accommodation in the convenient transaction of its business ; or, " 2. Such as shall have been mortgaged to it in good faith by way of se- curity for loans previously contracted, or for moneys due ; or, " 3. Such as shall have been conveyed to it in satisfaction of debts pre- viously contracted in the course of its dealings ; or, " 4. Such as shall have beenpurchased at sales upon judgments, decrees, or mortgages obtained or made for such debts. The said corporation shall not purchase, hold, or convey real estate in any other case, or for any other purpose. (See the charter of The Onondaga County Bank, Laws 1830, p. 174, § 4; Laws 1829, p. 326, § 5; Laws 1831, p. "71, § 4.) The Ohautauque County Bank (an institution under the Safety Fund sys- tem) being prohibited by its charter from purchasing, holding, or conveying real estate, except in certain specified cases, as above stated, it was held, that said bank had no capacity after the time for redeeming had expired, to pur- chase the interest of a judgment creditor who, by virtue of his own judg- ment, had acquired the title of the purchaser of land sold under execution, BANKING CORPORATIONS. The said association shall not purchase, hold, or convey ^ real estate in any other case or for any other purpose ; and all conveyances of such real estate shall be made to the president, or such other officer as shall be indicated for that purpose in the articles of association ; and which pres- ident or officer, and his successors, from time to time, may sell, assign and convey the same free from any claim there- on, against any of the shareholders, or any person claiming under them. § 25. Upon the application of creditors or shareholders chancellor of any such association, whose debts or shares shall amount examination, to one thousand dollars, and stating facts, verified by affi- davit, the chancellor may, in his discretion, order a strict examination to be made by one of the masters of his court, . of all the affiairs of such association, for the purpose of as- certaining the safety of its investments, and the prudence of its management ; and the result of every such examina- tion, together with the opinion of the master and of the chancellor thereon, shall be published in such manner as the chancellor shall direct, who shall make such order in respect to the expenses of such examination and publica- tion, as he may deem proper. ( 42 ) though the bank had unsatisfied judgments against the debtor whose land had been sold. The Chautauqite County Bank v. Riiley (4 Denio, 480). See, also, Russell v. Topping (5 McLean, 194). By § 4 of the act of April 10, 1849 (Laws 1849, chap. 313, p. 465), it is provided, that an association formed to take the place of an incorporated bank whose charter has expired, may hold, in addition to the real estate as prescribed in the above § 24, such other real estate as, at the time of the transfer of the property of the incorporated bank, it had received in pay- ment of debts previously contracted, or had purchased under judgments, ^o.)mptroi- January and July in every year, after having commenced the business of banking, as prescribed by this act, make out and transmit to the comptroller, in the form to be pro- vided by him, a full statement of the affairs of the associa- tion, verified by the oath of the president or cashier, which statement shall contain : — ( 43 ) Contents ^- '^^® amouut of the capital stock paid in according to epor . ^j^^ provisions of this act, or secured to be paid. 2. The value of the real estate of the association ; speci- fying what portion is occupied by the association as neces- sary to the transaction of its business. 3. The shares of stock held by such association, whether absolutely, or as a collateral security ; specifying each kind and description of stock, and the number and value of the shares of each. 4. The amount of debts due to the association ; specify- ing such as are due from moneyed or other corporations, or associations ; and also specifying the amount secured by bond and mortgage or judgment ; and the amount which ought to be included in the computation of losses. (43) This Bection repealed by § 5 of the Act of May 26th, 1841 (Laws 1841, chap. 319, p. 309); and new sections substituted in place of § 26. See the Act of May, 26th, 1841, §§ 1, 2, 3, 4, 5, post. By this act the an- nual statements were required to be made to the Bank Commissioners. April 18th, 1843, the legislature abolished the office of Bank Commis- sioner, and required every banking association to make quarterly reports to the comptroller. (Laws 1843, chap. 218, p. 300, 301, §§ 3, 4, 5, 6). See, also, § 2 of the Act of May, 6th, 1844 (Laws 1844, chap. 281, p. 416); also, § 1 and § 4 of the Act of December 4th, 1847 (Laws 1847, chap. 419, p. 519); also, § 9 of the Act of April, 12, 1851 (Laws 1851, chap. 164, p. 309). By the Act of April 15th, 1853, all banks, banking associations, and individual bankers doing business in the city of Nene York, are required, in addition to quarterly reports, to publish weekly statements, verified by the oath of the president or cashier. (Laws 186S, chap. 250, p. 539.) BANKING CORPORATIONS. 103 5. The amount of debts due by such association ; spe- contents of Report. cifying such as are payable on demand, and such as are due to moneyed or other corporations or associations. 6. The amount of claims against the association not ac- knowledged by it as debts. T. The amount of notes, bills or other evidences of debt issued by such association. 8. The amount of the losses of the association ; specify- ing whether charged on its capital or profits, since its last preceding statement, and of its dividends declared and made during the same period. 9. The average amount in each month during the pre- ceding six months of the debts due to and from the associ- ation ; the average amount of specie possessed by the same during each month, and the amount of bills and notes is- sued by such association, and put in circulation as money, and outstanding against the association, on the first day of each of the preceding six months. 10. The average amount in each month during the pre- ceding six months due to the association, from all the share- holders in the association, also the greatest amount due to the association in each of the said preceding six months from all the shareholders in such association. 11. The amount which the capital of the association has been increased during the preceding six months, if there shall have been any increase of the said capital ; and the names of any persons who may have become parties to the said articles of association, or may have withdrawn therefrom since their last report. ( 44 ) (44) The subdivisions 1 to 11 under § 26, are substantially the same as § 20 and § 21 (1 Revised Statutes, 592, 594), and the subdivisions there- under; see pp. 13, 14, 16, ante. The requirements of §§ 20, 21 (1 R.S., 598, 104 SPECIAL STATUTES APPLICABLE TO Statements It shall be the duty of the comptroller to cause the state- to be pub- lished, ment required to be made by this section, to be published in a newspaper printed in the county where the place of business of such association is situated, and in the State paper ; the expense of which shall be paid by such associa- tion. Penalty for § 27. If such association shall neglect to make out and neglect to ■nakoout transmit the statement required in the last preceding sec- *°' tion, for one month beyond the period when the same is required to be made, or shall violate any of the provisions of this act, such association may be proceeded against, and dissolved by the court of chancery, in the same manner as any moneyed corporation may be proceeded against and dissolved. ( 45 ) Provision § 28. If any portion of the original capital of any such as to divi- ' dends. association shall be withdrawn for any purpose whatever, whilst any debts of the association remain unsatisfied,- no dividends or profits on the shares of the capital stock of the association shall thereafter be made, until the deficit of Power of capital shall have been made good, either by subscription chancellor. ^£ ^j^^ shareholders, or out of the subsequently accruing profits of the association ; and if it shall appear that any such dividends have been made, it shall be the duty of the chancellor to make the necessary orders and decrees for closing the affairs of th6 association, and distributing its property and effects among its creditors and sharehold- ers. (45) 594), were binding on all Safety Fund Banks. See chartera of Safety Fund Banks. But Bee note 43, ante. (45) See § 39 on page 58, ante, and note 23 on page 59, ante; also § 5 of the Act of May 4, 184-0 (Laws of 1840, chap. 202, p. 154): also § 12 of the Act of May 14, 1840 (Laws 1840, chap. 363, p. 306): also § 3 of the BANKINO CORPORATIONS. 105 § 29. Sucli association shall be liable to pay the holder Damages on protested of every bill or note put in circulation as money, the pay- tuis or notes, ment of -which shall have been demanded and refused, damages for non-payment thereof, in lieu of interest, at and after the rate of fourteen per cent, per annum, from the time of such refusal, until the payment of such evi- dence of debt, and the damages thereon. ( 46 ) § 30. The president and cashier of every association Dntiesof „j 1 .. /.I. 1-11 1 president lormed pursuant to the provisions of this act, shall at all ond cashier, times keep a true and correct list of the names of all the shareholders of such association, and shall file a copy of such list in the office of the clerk of the county, where any office of such association may be located, and also in the office of the comptroller, on the first Mondays of January and July, in every year. § 31. It shall not be lawful for any association formed Biiis less than $1000. under the provisions of this act, to make any of its bills or ^» *ll^l^^^ notes of a denomination less than one thousand dollars to dauon.*^"' be put in circulation as money, payable at any other place than at the office where the business of the association is carried on and conducted. ( 47 ) Act of May 26, 1841 (Laws 1841, chap. 319, p. 308) : also, § 4 of the Act of April 18, 1843 (Law 1843, chap. 218, p. 299): also, § 2 of the Act of December 4, 1847 (Laws 1847, chap. 419, p. 519): also, § 2 of the Act of April 15, 1853 (Laws of 1853, chap. 250, p. 539). See the foregoing acts, post. (46) See § 5 of the Act of May 4, 1840 (Laws 1840, chap. 202, p. 154): also, § 5 of the Act of April 18, 1843 (Laws 1843, chap. 218, p. 299): also, § 1 of the Act of April 5, 1849 (Laws 1849, chap. 226, p. 340) : also, § 6 of the Act of April 11, 1851 (Laws 1851, chap. 203, p. 475), amending § 29 of the General Banking Law. (47) By § 3 of the General Banking Law, it is provided, that the bills or notes authorized to be issued by associations and individual bankers, shall be made " payable on demand at the place of business, within this on hand. 106 SPECIAL STATUTES APPLICABLE TO § 32. The legislature may at any time alter or repeal this act. a5^''spMie § ^^- '^^ association of persons authorized to carry on the business of banking under this act, shall at any time, for the space of twenty days, have on hand at their place of business, less than twelve and a half per cent, in spe- cie, on the amount of the bills or notes in circulation as money. ( 48 ) State, of sucli person or associations." By § 16 of the general law (see p. 92, ante), the only place of business required to be specified in the cer- tificate, is some "particular city, town, or village." Section 31, therefore, provides beyond this, that it shall not be lawful for any banking corpora- tion, organized under the general law, to make any of its bills or notes, of a denomination leas than $1,000, to be put in circulation as money, payable at any other place than " at the office where the business of the association is carried on and conducted." This provision, as to bank notes of all de- nominations, had been previously made by the Act of April 17, 1830 (Laws 1830, chap. 243, p. 265. See p. 15, and note 26, p. 76, ante). By the Act of 1830, every note, bill, or other evidence of debt, purport- ing to be a bank note, " must be deemed and taken to be payable at the banking house of such incorporated banking institution, any law or usage to the contrary thereof notwithstanding." In note 37 (p. 92, ante) are cited various acts of the legislature, passed subsequently to the general bank- ing law, confining and limiting the banking operations of associations and individual bankers, organized under it, to the place designated in their re- spective certificates; and also, to the place where their "circulating notes are dated, and purport to be issued." (48) § 33 was repealed by § 6 of the Act of May 14, 1840 (Laws 1840, chap, 363, p. 306. See this act, post. BANKING CORPORATIONS. 107 ACT OP MAY 7th, 1839. (LAWS 1839, CHAP. 855, P. 828.) An Act concerning Foreign BanJc Notes. Passed May T, 1839. The People of the State of New Yorle, represented m Senate and Assembly, do enact as follows : § 1. From and after the passage of this act it shall be Eestrio- tlon as to unlawful for any incorporated banking institution within J'J^^s" i*™^ this State, and for any association, or any individual or in- dividuals, authorized to carry on the business of banking by virtue of the act entitled "An act to authorize the business of banking," passed the 18th day of April, 1838, to receive, pay out, give or offer in payment as money, to circulate or attempt to circulate as money, any bill, note, or other evidence of debt, issued or purporting to have been issued by any corporation, association, or individual, situated or residing without this State, and which bill, note, or other evidence of debt, shall, upon any part thereof, purport to be payable or redeemable at any place, or by any person, association, or corporation within this State. § 2. It shall not be lawful for any incorporated banking institution within this State, or any association, or any individual or individuals authorized to carry on the busi- ness of banking by virtue of the said act entitled "An act to authorize the business of banking," directly or indirectly to procure or receive from any corporation, association, 6r individual, situated or residing without this State, any bank bill or note, or other evidence of debt in the simili- tude of a bank bill or note, issued, or purporting to have been issued, by such last-mentioned corporation, associa- 108 SPECIAL STATUTES APPLICABLE TO tion, or individual, with intent to issue and pay out, or in any way to utter or circulate the same as money, or to issue, pay out, or to utter or circulate the same, when pro- cured or received as aforesaid, as money. But nothing in this section contained shall prohibit the said banking insti- tutions, associations, and individual bankers, in the first part of this section mentioned, from receiving from their dealers and customers such foreign notes as are allowed by law to be circulated within this State in the regular and usual course of business, or from paying out the same when so received as last aforesaid. ( 49 ) Notes un- § 3. It shall not be lawful for any incorporated barfking institution within this State, or any association, or any in- dividual or individuals authorized to carry on the business of banking by virtue of the said act entitled "An act to authorize the business of banking," directly or indirectly to lend, or pay out for paper discounted or purchased by them, any bank bill, or note, or other evidence of debt which is not received at par by the said banking institu- tion, association, or individual, for debts due to the said banking institution, association, or individual. Penalty. § 4. Every corporation, and every association a,nd indi- vidual authorized to carry on the business of banking, who shall oflPend against any of the provisions of the previous sections of this act, shall forfeit for each and every offence the sum of one thousand dollars, to be recovered with costs of suit in the name and for the use of any person who shall sue for the same and prosecute such suit to judgment in any court having cognizance thereof: and every officer and clerk of such corporations and associations, and every such individual banker and his clerks and servants, who (49) § 2 amended by § 1 of the act of April 18, 1853 (Laws 1853, chap. 223, p. 428). See this act, post. BANKING CORPORATIONS. 109 shall knowingly act or assist in any violation of any pro- vision of this act, shall, upon conviction, be deemed guilty of a misdemeanor, and shall be punished by fine or im- prisonment, or both, in the discretion of the court before which such conviction shall be had ; but such fine shall not exceed five hundred dollars, and that such imprison- ment shall not exceed six months. § 5. This act shall take eff'ect immediately on its pas- ACT OF MAY 4th, 1840. (LAWS 1840, CHAP. 202, P. 154.) An Act relatmg to the redemption ofhank notes. Passed May 4, 1840. The People of the State of New Tbrk, represented in Senate and AssemMy, do enact as follows : § 1. Every moneyed incorporation in this State having ^gg„^ ^^ banking powers, and issuing bills or notes of circulation, inNcwTolk , . . . or Albany. and every banking association and individual banker, car- rying on banking business under the act to authorize the business of banking, except those whose place of business is in the cities of New York, Albany, or Brooklyn, shall, on or before the first day of July next, appoint an agent, who shall keep an office in' the city of New York or Al- bany, for the redemption of all circulating notes issued by such corporation, banking association, or individual 110 SPECIAL STATUTES APPLICABLE TO banker, which shall be presented to such agent for pay- ment or redemption. ( 49^^ ) § 2. Such agent shall be appointed in writing, and to brli^d in such appointment in writing shall be delivered to the lei's office, comptroller on or before the day above mentioned, and filed in his oflSce ; and any corporation having banking powers, banking association, banker, or other person, may be an agent for the purposes of this act ; and if any such incorporation, association, or banker, shall omit to appoint such agent within the time above mentioned, the comp- troller shall appoint such agent for such corporation, asso- ciation, or banker. List of § ^- '^^® comptroller, immediately after the said first p^wwied.''* day of July, shall publish, during such time as he may deem proper, a list of such agents in the state paper, and in at least two daily newspapers in the city of New York, the expense whereof shall be paid by the corporation, as- sociations, and bankers above mentioned. § 4. It shall be the duty of every such corporation, redeemed, banking association, and individual banker, out of the cities of New York, Albany, and Brooklyn, to redeem and pay on demand all circulating notes issued by such corpo- ration, banking association, or individual banker, pre- sented for redemption or payment at the office of their said agent in the city of New York or of Albany, at a rate of discount not exceeding one half of one per cent.(49J) § :>■ Every such corporation, banking association, or for neglect, individual banker, whose agent shall neglect or refuse to redeem their notes on demand as aforesaid, shall pay to (49-i) g 1 and § 4 of this act amended by §§ 1 and 2 of the act of Api-il 17, 1861 (Laws 1861, chap. 203, p. 375). See this aat,post. BANKING CORPORATIONS. Ill tlae person making such demand, interest upon the notes so demanded, at the rate of twenty per cent, per annum ; and if such redemption and payment of interest is not made at said office within twenty dayfe from the time when first demanded, such corporation, banking association, or individual banker shall be liable to be proceeded against by the bank commissioners, in the same manner, and with the like effect as any incorporated bank may be proceeded against for a violation of its charter ; and such corporation, banking association, or individual banker, shall not there- after issue, or put in circulation any of their bills or notes ; and the comptroller shall, in that case, proceed in the same manner as is directed in the fourth section of the act entitled " An Act to authorize the business of banking," passed April 18, 1838. § 6. Every association and individual banker who shall . , ^ " '' Agents to hereafter commence business under the act to authorize b°*P!JJ''^ol the business of banking, shall upon first receiving any cir- culating notes from the comptroller, appoint an agent for the purposes of this act, and be subject in all respects to the provisions of this act ; and the comptroller is hereby directed not to deliver any circulating notes to such asso- ciation or banker, until such appointment is made and filed in his office ; and such appointment shall be immedi- ately published by the comptroller in manner aforesaid. § 7. Appointments of agents made in pursuance of this Appoint- ments may act, may be revoked, and new appointments of agents may ''«"^''^<'<^- be made, from time to time, by delivering such revocation and appointment to the comptroller, who shall cause the same to be published as aforesaid. S 8. It shall be lawful for any number of incorporated a number " t/ J. of banks may banks, banking associations, and private bankers, by SLgree-H^i^l^ agent. 112 SPECIAL STATUTES APPLICABLE TO ment, to associate together for raising a joint fund to be placed in the hands of their common agent, for the re- demption of their circulating notes in the city of New York or Albany, anS also the circulating notes of other incorporated banks, banking associations, and individual bankers, in sucb manner, and under such regulation^, as may be agreed upon, and to employ such agents and clerks as they may deem necessary to carry on the business of such common agency ; but nothing in this section con- tained shall authorize the redemption or purchase by such agency of any circulating notes at a discount of more than one-half of one per cent., nor to relieve or discharge such incorporated bank, banking association, or individual banker, from any duty or liability required or imposed by this act. Saving § 9- Nothing in this act contained shall be so construed asto authorize-any incorporated ban^, banking association, or individual banker, to purchase, buy in, or take up, di- rectly or indirectly, their circulating notes at an amount less than what purports to be due thereon at any other place, or in any other manner than is directed in and by this act. BANKING CORPORATIONS. 113 ACT OF MAY 14th, 1840. (LAWS 1840, CHAP. 363, P. 306.) An Act to cumend the Act entitled "An Act to authoi'ize the Imsiness of Bamking^'' Passed May l^th, 1840. The People of the State of JVew York, represented in Senate and Assembly, do enact as follows : § 1. The second section of the act entitled " An Act to tifg^g^^"' authorize the business of Banking," passed April 18th, Mi^eOv the • 1 1 T T 1 comptroller. 1838, is hereby amended, so as to read as follows : W hen- ever any person, or an association of persons, formed for the purpose of banking, under the provisions of this act, shall lawfully transfer to the comptroller any portion of the pub- lic stock issued or to be issued by this State, such person, or association of persons, shall be entitled to receive from the comptroller an equal amount of such circulating notes of different denominations, registered and countersigned as aforesaid ; but such public stock sliall in all cases be, or be made to be, equal to a stock of this State, producing five per cent, per annum ; and it shall not be lawful for the comptroller to take such stock at a rate above its par value, nor above its current market value. § 2. The provisions of the said second section shall not f^^gtodtf' be construed to prevent the stocks now held by the comp- Somptellio*? troller under the act hereby amended, from being hereaf- ter transferred to, and received by him at their market value in the same manner as though this act had not been passed. 114 SPECIAL STATUTES APPLICABLE TO Account of 8 3. No association of persons shall commence the BecuritteB to "^ ' be deposited. ][)ugiiiegg of banking under the said act, until such associa- tion shall have deposited with the comptroller the securi- ties required by law, to the amount of one hundred thou- sand dollars. ( 50 ) Netes to 8 4. No banking association or individual banker, as bepayaWe " ° aSd^Sfut such, shall issue or put in circulation any bill or note of mterest. ^^.^ association or individual banker, unless the same shall Penalty. ])q made payable on demand and without interest ; and every violation of this section by any officer or member of a banking association, or by any individual banker, shall be deemed and adjudged a misdemeanor, punishable by fine or imprisonment, or both, in the discretion of the court liaving cognizance thereof. (51) (50) § 3 amended by § 1 of the Act of May 6, 1844 (Laws 1844, chap. 281, p. 416). See this act, post. (51) See § 1 of the act of April 10, 1850 (Laws 1850, chap. 251, p. 486), amending § 4. See this act, post. la December, 1839, the case of Safford t. Wyckoff, President of the Farmers' Bank of Seneca County, was tried before Chshman, Circuit Judge. This was an action against that bank as the drawer of a negotiable bill or draft for $3,000, dated August 15, 1839, and payable thirty days after date, and signed "/. J. Fenton, Cashier." The bank was an association, formed under the general banking law of 1838. It was objected on the trial, among other things, that the bank " had no power to issue drafts on time, or any other paper except such as had been countersigned according to law." These objections were overruled by Cdshman, Circuit Judge, who directed a verdict for the plaintiff, which the jury rendered. (1 Hill, 12.) In April, 1840, the Court for the Correction of Frrors, in Warner v. Seers (23 "Wend., 101-190), held, that " associations organized in conformity with the provisions" of the general banking law, were " not bodies politic or cor- porate within the spirit and meaning of the constitution'' of 1821. But Sen- ator Veeflanok (who insisted in this ease, in opposition to the chancellor and to other senators, that these associations were, in no sense, corporations, but merely partnerships, relieved by a conditional repeal from the inhibitions of the general Restraining Act), held, that "certain conditions are imposed to entitle them to the benefit of this conditional repeal. They can issue no paper, unless it be secured in a certain way, and duly attested by the comp- BANKING CORPORATIONS. 115 § 5. It shall be the duty of the comptroller to receive Mutilated ^ J r notes mny be mutilated circulating notes issued by him, and to deliver °'"''"'°^'"^' in lieu thereof other circulating notes to the same amount. trailer. The very same conditions are imposed on every individual who thinks fit to engage in this business." (28 Wend., 159 ; see Safford T. Wyck- off, 1 Hill, 11.) After the decision of Ccshman, Circuit Judge, in Safford v. Wyckoff, in December, 1839, the officers of some of the associations assumed the power of issuing CTidences of debt, which an association under the general bank law had not only no legal power to issue, but the issue of which, by such a moneyed corporation having banking powers, was expressly prohibited by the 86th section of the amendatory act of April 2, 1829 (Laws 1829, p. 167, § 1 and § 35 ; see p. 29, ante; p. 38, ante; and note 14). But this was not the only evil — the individual bankers were not within the terms of this pro- hibition of the said 35th section ; and were not then required by the gen- eral law of 1838, to file any certificate stating their places of residence or of business, or to make any annual statement of their affairs to the comp- troller; but these individual bankers were authorized, by the same section (§ 3) and in the same language (as corporations formed under the 15th sec- tion), to loan and circulate countersigned notes — and by the act of 1837, they had previously been authorized to keep offices of discount and deposit. Some of these individual bankers, in 1839 and 1840, established banking offices in various parts of the interior of the State remote from the centers of business, — and commenced by issuing a certain amount of countersigned notes in the name of the " Atlas Bank," or some other such assumed name, — and after their countersigned notes became current, and the name of the "Atlas Bank,'' i tl3 c^< Ppl, a IziO & _ business of banking under the provisions of the act entitled " An Act to authorize the business of banking," shall be subject to taxation on the full amount of actual capital paid in, or secured to be paid in, as such capital by them severally, at the actual market value of such securities to be' estimated by the comptroller without any reduction for the debts of such individual banker or banking association. But in no case shall the capital of any such banking asso- ciation or individual banker, be estimated at a less sum than the amount of circulating notes delivered to such banking association or individual banker and not returned to the comptroller ; an^ in case the capital of such banking association has been reduced by the surrender of any se- curities to the stockholders thereof, and the certificates of stock held on account of such securities being surrendered to such banking association and cancelled, such banking association shall not be subject to taxation upon such part of its capital. saviBg § 5. Nothing in this act contained shall apply to any bank or banking association which has reduced its capital BANKING CORPORATIONS. 151 stock in violation of the twenty-eiglitli section of an act entitled " An Act to authorize the business of banking," passed April 18th, 1838. (59) ACT OF DECEMBER 13th, 1847. (LAWS 184'?, CHAP. 452, P. 611.) An Act to repeal section f/ve of the act entitled " An Act to amiend an act to abolish the office of hank commis- sioner, and for other purposes, passed Decenib&r Ath, 184T." Passed Decemler 13th, 1847. The People of the State of New Yorh, represented in Senate and Assembly, do enact as follows : § 1. Section five of the act entitled an act to amend an Eepeai. act eiftitled an act to abolish the oflBce of bank commis- sioner, passed December 4th, 1847, which section reads as follows, to wit : " Nothing in this act contained shall apply to any bank or banking association, which has reduced its capital stock in violation of the twenty-eighth section of an act entitled an act to authorize the business of banking, passed April 18, 1838," is hereby repealed. § 2. This act shall take effect immediately. (69) This section repealed by the act of December 13, 184'7 (Laws 184Y, chap. 452, p. 511). See this act, post. 152 SPECIAL STATUTES APPLICABLE TO ACT OF APRIL 12th, 1848, (LAWS 1848, CHAP. 340, P. 462.) An- Act amendatory of the act enUtUd, " An Act authoriz- ing, the business of hanking," passed A^il 18, 1838, and the acts amending the same. Passed April 12, 184:8. The People of the State of New York, represented in Senate a/nd Assembly, do enact as follows : Bankin ^ ^' ^^ banking associations, or individual bankers, or- MdTndWidu-ganized under the provisions of the act passed April 18th, be banks of 1838, entitled " An Act authorizing the business of bank- discount and ^ deposit. ing," and the several acts subsequently passed amendatory thereof, or which shall hereafter be organized, shall be banks of discount and deposit as well as of circulation ; and the usual business of banking of said associations, or indi- vidual bankers, shall be transacted at the place where such banking association, or individual banker, shall be located, agreeable to the location specified in the certificate directed to be made by the second clause of the sixteenth section of the act passed April 18th, 1838, hereinbefore mentioned, and not elsewhere ; and every report directed to be made by any law of this State from such association, or individual banker, shall be verified by the oath of the pres- ident and cashier of such association, or such individual banker, that the business of said association, or banker, has been transacted at such location. But nothing in this sec- tion shall be deemed to repeal or modify the provisions of the act passed ith May, 1840, entitled " An Act for the BANKING CORPORATIONS. 153 redemption of bank notes," as the same is applicable to all the banks, banking associations, or individual bankers of the State. § 2. The securities whicli banking associations, or indi-j^se^^J^'ies vidual bankers, hereafter to be organized under the provi- ?omptroUer. sions of the above recited act, passed April 18th, 1838, and the amendments thereto, shall deposit with the comptroller as security for the redemption of circulating notes issued to them by the said comptroller, shall be New York state stocks, in all cases to be or to be made to be equal to a stock producing six per cent, per annum, and it shall not be lawful for the comptroller to take such stocks at a rate above its par value or above its current market value : or the securities shall not be less than one half in such stocks and one half in bonds and mortgages upon improved, pro- ductive, unincumbered lands in this State, exclusive of any buildings thereon, said mortgages bearing an interest of not less than seven per cent, per annum, and to an amount not exceeding two-fifths the value of said lands. (60) ** § 3. IN'o mortgage hereafter to be deposited as security Amount in mortgages. as aforesaid, shall be for a greater amount than five thou- sand dollars each. § 4. The provisions of the first section of this act shall when, &o. ■^ to apply. apply to the banking associations and individual bankers now organized as aforesaid, on and after the first day of June, eighteen hundred and forty-eight. (60) By § 10 of the act of April 12, 1851 (Laws 1851, chap. 164, p. 309), it is enacted that the provisions of § 2 of the above act shall extend, ^ list to be re- port and list of stoclvholders to a referee, to be appointed f«™^ '<> «'- by him, with directions, after giving notice to all persons 164 SPECIAL STATUTES APPLICABLE TO concerned, to apportion the debts and liabilities of sncli corporation or association contracted after the first day of January, one thousand eight hundred and fifty, and re- maining unsatisfied among the said stockholders, ratably in proportion to their stock, according to the principles in this act declared, and to report his proceedings to such jus- tice, or some other justice of the supreme court in the same district. Hearing, 8 17. The Said referee shall cause notice of his appoint- when to be " '^ '^ the reS. i^ent, and the time and place of hearing on the matters so referred to him, to be given to each stockholder whose name appears on the said list at least ten days before such time, which notice shall be served on such of the said stockholders as may then reside in the county where the principal office or place for conducting the business of such corporation or association was situated, either personally or by leaving a copy thereof at the residence of such stock- holder, with some person of suitable age, and such notice may be served upon all other stockholders, by publishing the same in one advertisement, containing the names of all such last-mentioned stockholders, for at least three weeks, in such newspapers as any justice of the supreme court may direct, and the same shall always be published in the paper designated by law for the publication of legal notices, and in a paper, if there be one, printed in the county where the chief office for conducting the business of such corporation or association was located. AUega- § 18. On such hearing the said referee shall hear the tionsaitd proofs of all allegations and proofs of all parties and persons interested parties to he o ■*■ -^ ^ heard. ^^ ^^^ matter referred, and particularly shall ascertain the persons who are chargeable as stockholders for the debts and liabilities contracted as aforesaid, and the amount chargeable to each according to the rules and principles BANKING CORPORATIONS. 166 declared in this act. At the first special term of the su- preme court held in the county in which such receiver re- sides, or in an adjoining county, after the expiration of six weeks from the time of his appointment, such referee shall report to the justice holding such term, the apportionment of the debts and liabilities among the stockholders made by him in detail, with the proofs taken by him on such hearing. If, in the opinion of such justice, further time is requisite to enable the said referee to complete the appor- tionment directed, or to take further proof in reference to the same, he may grant such further time not exceeding ninety days. § 19. On the final completion of such apportionment, tbe Apportion- ment when same shall be reported at a special term of the supreme ^ ^^ J^f"'^ court, as hereinbefore directed, and on the coming in of ^"°"' **"'' any such report, the justice holding such term shall pro- ceed to examine the same, and hear the allegations of the parties and persons interested, and may modify or amend the same or may refer the same back to the same or another referee for further proof or examination, or may confirm the same. If there be a further reference, notice of hear- ing thereon may be given by a general notice published in the same newspapers in which the first notice appeared, for two weeks, and a report shall be made thereon within the time, to be specified in the order of reference. § 20. When the report of a referee, made according tOEeportwhen to be filed ia the preceding sections of this act, shall have been confirmed oier^'s offloe. by a justice of the supreme court at any special term thereof, after being modified or amended by him, the same, together with the order of confirmation, shall be filed in the office of the clerk of such county as shall be directed by such justice ; and unless an appeal be allowed and 166 SPECIAL STATUTES APPLICABLE TO entered tkerefrom as hereinafter provided, the said order of confirmation shall be final as a judgment against each stockholder for the amount found chargeable against him ; and one or more executions thereupon may be issued against any one or more of the stockholders named in such report or order, for the sum or sums chargeable against him or them, in the same manner and with the like effect as upon a j udgment in the supreme court, at the instance of the receiver of such corporation or association, and the money collected on such executions shall be paid to and received by such receiver. Money to § 21. The money so collected, after deducting all ex- pehses of proceedings, shall be without delay divided, distributed, and paid over to the creditors of such corpora- tion or association, in the same manner as hereinbefore provided in relation to the first dividend, by the said re- cdv'fer. NecsBsary 8:22. The iustice to whom any report by a receiver or lie allowed, by g. referee shall be made as herein provided, shall as- certain and allow the necessary expenses attending the execution of their duties, including the hire of such and so many clerks and such professional assistance as may ap- pear to have been useful to expedite the business com- mitted to them, and shall allow to them such reasonable compensation for their services, not exceeding the -rate of five dollars for each day actually employed, as he shall deem proper, which allowances and expenses shall be de- ducted and defrayed out of the cash in the hands of the receiver before making dividends thereof. DiTidends § 23. Neither the dividends herein directed to be made, and appor. not'tob'e'^de-'^^'" *^^ apportionment of the debts of such corporation or 'oM^yewf™^ association among the stockholders thereof, shall be de- BANKING CORPORATIONS. 167 layed or suspended by reason of the pendency of any liti- gation or controversy, for the recovery of any demand by or against such corporatioa or association, unless the same shall be expressly directed by a justice of the supreme court, residing in the district where the business of such corporation or association was 'conducted ; and such delay shall in no case exceed one year, and if at the time of de- claring any dividend, there shall be any prosecution pend- ing in which any demand against such corporation or association may be established, the receiver may retain in his hands the proportion which would belong to such demand and the necessary costs and expenses of the suit or proceeding, to be applied according to the event of such prosecution, or to be distributed in some future dividend to creditors or among^ the stockholders. § 24. If after paying and discharging the debts and After pay- liabilities of such corporation or association as herein pro- ^^"bow^die- vided, and defraying all the expenses of the proceedings,^" there shall remain or come to the hands of the receiver, any other assets or effects of such corporation or associa- tion the same shall be converted into bash as hereinbefore directed, and shall be paid to the stockholders upon whom any such debts or liabilities were apportioned in just and equal proportion to the sums contributed and paid by them. § 25. 'No appeal from any determination or order of a Appeal not to suspend or lustice 01 the supteme court, made pursuant to the nfth, <'eiay execa- " i / J. J tionnnrfinant sixth, seventh, eighth, and ninth sections of this act, sliall I" °*"'''° ' tion porsntiDt I to certain '■ sections. suspend or delay the execution of such order or the effect of such determination, unless shall be filed with the notice of the apipeal to the clerk of the court, a certificate -of' a justice of the supreme court, to the effect that there is 168 SPECIAl STATUTES APPLICABLE TO probable error in such order or determination, nor unless security be given satisfactory to such justice for the pay- ment of the demand upon which the proceedings in those sections may be founded, whenever jtidgment shall be rendered therefor, with interest at the rate often per cent, and costs. Under sec- § 26. No appeal from any order or determination made pursuant to the tenth section of this act, shall suspend or delay the execution of such order or the effect of such de- termination, unless there be filed, together with the notice of appeal to the clerk of the court, a certificate in all respects corresponding with that required in the last pre- ceding section, nor unless security be given satisfactory to the justice granting such certificate to indemnify the stockholders upon whose application such order or determination was made, against all damages, costs, ex- penses and losses by reason of any debt or liability of such corporation or association created after the first day of January, one thousand eight hundred and fifty. No refrr- § 27. No appeal can be made from any order of any ence to ref- , , „ , t i • - j» • eree. justice 01 tJic Supreme court under this act rererrmg any matter to a referee. Appeal § 28. An appeal from the determination of a justice b7 receiver, of the Supreme court confirming the apportionment of the debts and liabilities of a corporation or association among the stockholders thereof, as provided by this act, may be taken by the receiver of such corporation or association, or by any one or more of the stockholders affected by such apportionment, in the same manner and with the like security as provided by law in the case of appeals from a special term of the supreme court to a general term, or from the judgment of such general term, to the court of BANKING CORPORATIONS. 169 appeals in the same manner and with the like security and effect as appeals to the same court from any other like judgment, except that it shall not be necessary for a re- ceiver so applying* to give any security for costs or other- wise. § 29. If any such determination or iudgment shall be Newap- pnrtionment reversed or modified so that a new apportionment of such ^^° "• ^^ debts and liabilities shall become necessary, the court in which such reversal or modification shall be made, shall direct a new apportionment, and the matter shall be re- mitted to the proper justice of the supreme court for that purpose ; and the same proceedings shall be had thereon to complete such new apportionment as are herein pro- vided in relation to the original apportionment. § 30. Every security taken under the provisions of this securities act shall be filed with such clerk of the supreme court, as^*''- the justice taking the same shall direct ; and the same may be enforced by suit in the name and for the benefit of any person for whose benefit or indemnity the same was taken. § 31. Any creditor of any such corporation or associa- mghtof creditors tion who shall have neglected to present his demand to the y^° negieot or to present receiver before the first or subsequent dividend, and whomlnd^*' shall present the same before the second or any other sub- sequent dividend, shall receive the sum he would have been entitled to on any former dividend, before any distri- bution be made to other creditors. § 32. Every issue of fact or of law joined in any suit certain is- aeaiust any corporation or association described in the first or law joined ° ./ r In salt, to section of tliis act, upon any debt or liability contracted ''*™p™'- * So in the original. lYP SPECIAL STATUTES APPLICABLE TO after the first day of January, one thousand eight hundred and fifty, or against any receiver of such corporation c» association, or by any such receiver under the prbvigiong of this act, shall have preference at the court at which it shall be noticed for trial or argument, to all other causes ; and every case made, special verdict rendered,' bill of ex- ceptions and demurrer to evidence taken on such trial, anfi every issue of law joined on the pleadings in anysucli suit, and every appeal from any order or • deternain'atiotf, judgment or decree made or rendered under the provisions of this act, and every special motion relating to any pro- ceedings had under this act, shall have a preference in the hearing and argument thereof in any court where the same may be pending. ACT OF APRIL 10th, 1849. (LAWS 1849, CHAP. 81S, P. 456.) An Act amendatory of the act entitled "An Act to cmthor- ize the Business of BamJcmg" passed April 18,' 1838, and the acts amiendvng the same. Passed April 10, 1849. The People of the State of N&m Yorle, represented in Senate and Assembly, do enact as follows: stocks to § 1. The stocks which banking associations,, or individ- be deposited ■ ^ tooUer""^' ^^^ bankers, now or hereafter to be organized under the provisions of the act " To authorize the business of bank- ing," passed April 18, 1838, and the amendments thereto, shall hereafter deposit, with the comptroller, shall be New BANKING CORPORATIONS. 171 York state stocks, in all cases to be, or to be made to be, equal to stock producing six per cent, per annum, or at least one half the amount so deposited shall be in the stocks of the State of N"ew York, as before mentioned, and not exceeding one half in stocks of the United States, in all cases to be, or to be made to be, equal to a stock pro- ducing an interest of six per cent, per annum ; and it shall not be lawful for the comptroller to take such stocks at a rate above their par value, or above their current market value. § 2. The shareholders, or a maiority of them in amount, comptroi- who shall be owners of any incorporated bank continuing iJng'notes'to' * the business of banking until the expiration of their char-**"" ter, and who shall have associated themselves for the pur- pose ff banking, under the provisions of the "Act to authorize the business of banking," passed April 18, 1838, and the amendments thereto, shall be entitled to receive from the comptroller, who is hereby authorized to issue to the association so formed, circulating notes in amounts of not less than ten thousand dollars, upon the deposit of se- curities of the kind described, required by the provisions of the above-mentioned act, and the amendments thereto, to an amount equal to the circulating notes so issued. But if such banking association so formed shall not have depos- ited with the comptroller during the three years next fol- lowing the date of their articles of association an amount equal to that now required by law of banking associations as security for circulating notes previous to commencing the business of banking, the comptroller is hereby em- powered to retain the interest accruing upon securities so deposited until such association has complied with the pro- 172 SPECIAL STATUTES APPLICABLE TO visions of the act above recited in relation to the amount of security to be deposited in the office of the comptroller, lions^w § ^- ^f *^® shareholders, or a majority of them in ra™raum"f amouut, of any incorporated bank, within one year of the expiration of its charter, shall file with the president thereof a notice in writing, that they intend to avail them- selves of the provisions of the second section of this act to associate for the purpose of banking, it shall be lawful for the directors of said bank to purchase and hold such stock and other securities as the comptroller is or may be author- ized to receive for circulating notes under the provisions of the act to authorize the business of banking, passed April 18th, 1838, and the various acts amending the same, to such an amount as they shall deem for the interest of the shareholders thereof. • Providon 8 4. An association heretofore or hereafter formed to relaiive to ^ fnOTr^OTatod'take the place of an incorporated bank whose charter has banks, expired or is about expiring may, where all the stockhold- ers of such incorporated bank have assented to its organiza- tion under the act to authorize the business of banking, take and hold in addition to such real estate as is prescribed by the twenty-fourth section of the act to authorize the business of banking, such other real estate as at the time of the transfer of the property of the incorporated bank, having been received by it in payment of debts previously contracted to said bank, or purchased by it under judg- ments, or decrees in chancery in favor of said incorporated bank, according to law. BANKING CORPORATIONS. ACT or APRIL 11, 1849. LAWS 1849, CHAP. 437, P. 613.) 173 An Act to amend an Act relative, to UnclaAmed Bank dvo- idends and deposits, passed May 9, 1835, and for other pwrposes. Passed April 11, 1849. The People of the State of New York, represented in Senate and Assembly, do enact as follows : § 1. Every company or association now or hereafter in- statement ° •' r J ^ of unclaimed corporated or organized, or doing business under any gen- be'inbiuh'd eral or special law of this State, on or before the first day of September next and annually thereafter, shall cause to be published for six successive weeks in one public news- paper printed in the county in which such company or association may be located, and in the state paper, a true and accurate statement verified by the oath qf the cashier, treasurer, or presiding officer, of all deposits made with said company or association, and of all dividends and inter- est declared and payable upon any of the stock, bonds, or other evidence of indebtedness of said company or associa- tion which at the date of such statement shall have re- mained unclaimed by any person or persons authorized to receive the same for two years then next preceding. § 2. Such statement shall set forth the time that every statement ^ how to be such deposit was made, its amount, the name and the resi- °'°*°' dance, if known, of the person making it, the name of the person in whose favor the dividend or interest may have been declared, its amount, and upon what number of shares, and on what amount of stock, bonds, or other evidence of indebtedness of any such company or association. 17i SPECIAL STATUTES APPLICABLE TO ciaTf™"'"" § 3. The term " association " shall include every indiv- idual doing business alone, under any general or special law of this State. ACT OP APRIL 10th, 1850. (LAWS 1850, CHAP. 251, P. 486.) An Act to wmend the, act entitled " An act to amend the act entitled am, act to a/vbthorize the business of ha/nkirig" passed May 14, 1840. Passed April 10, 1850, The People of the State, of New- York, represented in Senate am,d AssembVy^ do enact as follows : § 1. The fourth section of the act entitled, "An Act to amend an act entitled ' An Act to authorize the business of banking,' " passed May 14, 1840, is hereby amended so to read as follows : No banking association or individual banker as such, shall issue or put in circulation any bill or note of said association or individual banker, unless the same shall be made payable on demand, and without interest, except bills of exchange on foreign countries, or places beyond the limits or the jurisdiction of the United States, which bills may be made payable at or within the customary usance, or at or within ninety days' sight, and every viola- tion of this section by any officer or member of a banking association, or by any individual banker, shall be deemed and adjudged a misdemeanor, punishable by fine or im- BAlfKING CORPORATIONS. 175 prisonment, or both, in the discretion of the court having cognizance thereof. (62) § 2. This act shall take effect immediately. ACT OP APRIL 10, 1850. (LAWS 1850, CHAP. 3S1, P. 726.) An Act to provide for a final distrihution of the funds held Tyy the comptroller, belonging to the creditors of in- soVoent Ixmks and hamkers. Passed April 10, 1850. The People of the State of New Yorh, represented in Senate and Assemhly, do enact as follows : % 1. It shall be the duty of the comptroller to make a rinaiais- ... . . . trlbution. final distribution of the funds in his hands arising from the sale of securities deposited with him under the act to authorize the business of banking, by associations or in- dividual bankers which have failed or may hereafter fail to redeem their circulating notes, which distribution shall be made in the manner herein prescribed. At the expira- tion of six years after the first sale made by the comp- troller, of the securities of any such insolvent banking as- sociation or individual banker, the comptroller shall issue a final notice to the holders of the circulating notes issued by such banking association or individual banker, requir- (62) See §35 of the act of 1829, p. 3,8, ante, and Note \i; also § 4 of th'eaot df May 14, 1840, p. 114, ante, -and Note 61, pp. 114 — 122, ante. 176 SPECIAL STATUTES APPLICABLE TO ing the presentation of such notes within six months after the date of said notice ; and any of such circulating notes which shall not be presented within the time thus specified shall cease to be a charge or claim upon the funds of said banking association or individual banker remaining in the hands of the comptroller. Any of such circulating notes which shall be presented within the period above limited, shall be received and paid by the comptroller, at the same rate which shall have been paid on like notes previously presented ; and if all the notes of any banking association or individual banker so presented shall liave been re- deemed at their par value, he shall pay to said associa- tion or banker the residue of the fund remaining in his hands belonging thereto. But in case said notes shall not have been redeemed at par, then the holder shall be entitled to a certificate showing the balance, if any, due thereon. § 2. At the expiration of the notice of six months re- quired to be given, by the preceding section, the comp- troller shall ascertain the amount of the residue of the fund remaining in his hands belonging to the creditors of such insolvent association or banker ; and after deducting therefrom all expenses justly chargeable thereon, he shall make a pro-rata distribution of the residue upon the outstanding certificates given for the balance due to the holders of the circulating notes of said association or banker which shall have been redeemed in part ; and it shall be the duty of the comptroller to issue a notice to the holders of such certificates, stating the rate or amount payable thereon, and requiring said holders to present the same within six months after the date of said notice ; and any of said certificates which shall not be presented with- BANKING CORPORATIONS. 177 in the time thus specified shall cease to be a charge or claim upon the residuary fund in the hands of the comp- troUei'. S 3. After making the final distribution directed in the unclaimed ftod. last preceding section, if any portion of said fund shall re- main unclaimed, the same shall be deposited in the treas- ury, and applied towards paying the ordinary expenses of the free banking department. § 4. The notice required to be given by this act to the NoUoe. creditors of insolvent banking associations or individual bankers, shall be published at least six weeks, in one or more newspapers which the comptroller shall deem best calculated to inform such creditors ; and the cost of such publication shall be defrayed out of the fund to which said notice shall refer. § 5. This act shall take effect immediately. ACT OP MARCH 29, 1851. (LAWS 1851, CHAP. 68. P. 15.) An Act to amend the act entitled "An act to authorise the business of bcmJcing" passed May 26th, 1841. Passed March 29, 1851. The People of the State of -New York represented m Senate and Assembly, do enact as follows : § 1. Section nine of chapter three hundred and nine- teen, laws of eighteen hundred and forty-one, being an act to amend the act entitled " An act to authorize the busi- 12 178 SPECIAL STATUTES APPLICABLE TO ness of banking," passed May 26, 1841, is amended so aa to read as follows : Securities 8 9. Sucli association or individual banker, after hav- when to be " doiiveredup jjjg complied with the provisions of the preceding section, oomp ro er. ^^^ ^^^^ having giveu notice in the State paper for two years, and also for the same length of time in at least one newspaper printed in the county where the said associa- tion or bank shall have been located, stating that all cir- culating notes issued by such association or bank are required to be presented to the comptroller for payment within two years from the date of such notice, and on giving a bond with three or more sureties, which bond shall be satisfactory to the comptroller, conditioned for the prompt redemption whenever presented within six years from its date of all outstanding notes of such associ- ation or individual banker, shall then be entitled to re- ceive from the comptroller all other securities which he may hold for the payment of any unredeemed notes of the said association or bank. ACT OP APRIL 12th, 1851. (LAWS 1851, CHAP. 164, P. 309.) An Act to organize a Bank Department. Passed April 12, 1851, " three-Jlfths being j>resent." The People of the State of New Yorh, represented in Senate amd AssemMy, do enact as follows : , Bank de- § 1. There is hereby established a separate and distinct partment. department which shall be charged with the execution of the laws heretofore nas'sed. or that mav be hereafter -naased BANKING CORPORATIONS. 179 in relation to the banks wliicli are subject to the act to create a fund for the benefit of the creditors of certain moneyed corporations, and for other purposes, passed April 2, 1829, or in relation to banking associations and indi- vidual bankers, formed or transacting business under the act to authorize the business of banking, passed April 18, 1838, and the several acts in addition to or amendatory thereof. § 2. The chief officer nf the said department shall be superio- ■1 '-11 - -I tendent. denominated the superintendent of the banking depart- ment. He shall be appointed by the governor, by and ■with the advice and consent of the senate, and shall hold his office for the term of three years. He shall receive an g^j annual salary of two thousand five hundred dollars, to be paid quarterly, in the first instance out of the treasury on the warrant of the comptroller. He shall employ from time to time the necessary clerks to discharge such duties as he shall assign them, whose compensation shall be paid to them monthly on his certificate, and upon the warrant of the comptroller in the first instance out of the treasury ; he shall appoint one of the said clerks to be his deputy, his deputy. who shall possess the powers and perform the duties at- tached by law to the office of the principal during a va- cancy in such office, and during the absence or inability of his principal. Within fifteen days from the time of notice of their appointments respectively, the superintendent and his deputy shall take and subscribe the oath of office pre- office, scribed by the constitution, and file the same in the office of the secretary of state, amd the said officers shall be in all respects subject to the provisions of the sixth title of chapter five of the first part of the Ee vised Statutes, so far as the same may be applicable. And the said superin- ent 180 SPECIAL STATUTES APPLICABLE TO tendent of the banking department shall give to the people Bond. Qf ^jjjg State a bond in the penalty of fifty thousand dol- lars with two sureties to be approved by the comptroller and treasurer of this State, conditioned for the faithful dis- charge of the duties of his office, and the said superintend- ent shall not, either directly or indirectly, be interested in any bank or banking association, or as an individual banker. superlntraa- § ^- '^® Superintendent of the banking department shall possess all the powers, perform all the duties, and be subject to all the obligations and penalties now conferred by law upon the comptroller of this State, or to which the comptroller is subject in relation to banks, incorporated and banking associations formed, and bankers transacting business under the laws specified in the first section of this act, and the said laws and all acts amendatory thereof, or in addition thereto, are hereby modified and amended, so that every power and duty thereby conferred on the comp- troller, shall from and after the appointment of such superintendent, be transferred to and conferred upon the said superintendent subject to the modifications contained in this act. Seal. § 4. The said superintendent with the approval of the governor, shall devise a seal with suitable inscriptions for his office, a description of which with a certificate of ap- proval by the governor shall be filed in the office of the secretary of the State with an impression thereof, which shall thereupon be and become the seal of office of the superintendent of the banking department, and the same may be renewed whenever necessary. Every certificate, assignment, and conveyance executed by the said superin- tendent in pursuance of any authority conferred on him BANKING CORPORATIONS. 181 by law, and sealed with his said, seal of office shall be re- ceived in evidence, and may be recorded in the proper re- cording offices in the same manner, and with the like effect as a deed regularly acknowledged or proved before an officer authorized by law to take the proof or acknowledg- ment of deeds, and all copies of papers in the office of the said superintendent certified by him, and authenticated by the said seal, shall in all cases be evidence equally, and in like manner as the original. An impression of such seal directly on paper shall be as valid as if made on a wafer or wax. S 5. All plates for bank bills deposited with the comp- Papers, . bills, &o. to troUer, all papers for bills, all securities, stocks, bonds 5^ 'T."' '■*-■*■ ' ' ' lerrett to su- and mortgages, and all otber papers whatever in the comp- int"'*''* troUer's office relating to the business of the banking de- partment, shall on demand be delivered and transferred to the superintendent thereof, and be and remain in his charge and custody. § 6. There shall be assigned to the said superintendent ^oomsand by the trustees of the State hall, suitable rooms therein for conducting the business of the said department, and the said superintendent shall from time to time furnish the necessary furniture, stationery, fuel, lights, and other proper conveniences for the transaction of the said business ; the expense of which shall be paid on the cer- tificate of the superintendent, and the warrant of the comptroller in the first instance out of the treasury. 8 7. All the expenses incurred in and about the con- Expenses " how aefray- ducting the business of the said department, including the ***• salary of said superintendent and his clerks, shall be de- frayed and paid by the incorporated banks, banking asso- ciations, and bankers in whose behalf they are incurred. 182 SPECIAL STATUTES APPLICABLE TO The expenses incurred, and services performed, specially for any incorporated bank, banking association, or banker, including tbe delivery of new bank bills for such as may be returned, and tbe destruction of the latter, shall be charged to such incorporated bank, banking associations, or banker, and all other expenses of the said department, shall be charged to the said incorporated banks, banking associations and bankers, in such proportions as the said superintendent shall deem just and reasonable. K such charges are not paid after due notice, the superintendent may apply the dividends on any stock, or the interest on any bonds and mortgages in his hands deposited by the bank, banking association, or banker, so neglecting, to make the payment of such charges with interest at the rate of seven per cent. ; and the moneys so received by the said superintendent on account of such charges, shall be deposited and paid by him into the treasury of this State, to reimburse all sums advanced from the treasury for such expenses ; and in case of there being no stocks, bonds or mortgages in the bank department deposited by such bank, association, or banker, then the said superintendent may maintain an action in his name of office against the delinquent l^ank, association, or banks, for the recovery of such charges, and the sums collected therein shall be paid into the treasuiy, and neither the said superintendent nor any clerk or person employed in his office shall take or receive directly or*indirectly, any compensation or pay for any services or extra services rendered in the banking de- partment, other than the compensation allowed by law ; and any person violating this provision, shall be deemed guilty of a misdemeanor. § 14 of g 8_ "j^g provisions of the fourteenth section of the BANKING CORPORATIONS. 18S "Act to authorize the business of banking," passed April^tnJApru eighteenth, eighteen hundred and thirty-eight, are hereby extended to the said superintendent and the officers and clerks employed in the bank department. See § 14, p. 91, ante. § 9. Instead of the comptroller, secretary of state, and ta^kf when*^ treasurer, it shall be the duty of the superintendent of the bank department to fix upon and determine a day in re- spect to which the reports of incorporated banks, banking associations and individual bankers, shall be made as pro- vided in chapter four hundred and nineteen of the Session Laws of one thousand eigbt hundred and forty-seven ; and the said superintendent shall, at least once in each quarter of a year, fix and designate some Saturday in e^ch preced- ing quarter in respect to which the said reports shall be made, and shall give notice thereof in the manner pre- scribed in the said chapter four hundred and nineteen ; and the said reports shall be made to the said superintend- ent as directed in the said chapter, and all willful false swearing in respect to such reports shall be deemed per- jury, and subject to the punishments prescribed by law for that oflfence. In case of neglect to make such report within one month from the time required, it shall be the duty of the superintendent to cause the books, papers, and affairs of the bank, association or banker, so neglecting, to be examined as directed by the third section of the said chapter four hundred and nineteen; and the reasonable expenses of such examination to be certified by the said superintendent shall be charged to the bank, association, or banker so neglecting, and shall be collected in the man- ner herein prescribed in respect to other charges against ,them. 184 SPECIAL STATUTES APPLICABLE TO how"to'iT'' § ^^- -"^^ provisions of the second section of the act ^^^^' chapter three hundred and forty of the laws of eighteen hundred and forty-eight, amending the " Act authorizing the .business of banking," shall extend and be applicable to banking associations and individual bankers organized before the passage of the said chapter three hundred and forty, as well as to those organized subsequently ; but no one mortgage of lands shall hereafter be received as secu- rity for circulating^^lls to an amount greater than five thousand dollars ; and any mortgage heretofore received or hereafter received for circulating bills, may be held by the superintendent of the banking department for the full nominal amount thereof notwithstanding a less amount of bills may have been or shall be delivered upon the deposit of such mortgage, and the whole nominal amount of such mortgage may be collected by any purchaser thereof in case it shall be necessary to sell such mortgage at its nominal amount to meet the liabilities of the banking association or banker by whom it was ^deposited ; but the same may be sold as for the amount of bills delivered upon its deposit when there is no deficiency of other means to meet the said liabilities. ^ Mnuai re. g ^-^ j^ ^j^^^ ^^ ^^j^^ ^^^.^ ^f ^-^^ Superintendent of the banking department to report annually to the legislature, at the commencement of its first session : 1. A summary of the state and condition of every in- corporated bank, banking association and individual banker, from whom reports have been received the preceding year, at the several dates to which such reports refer, with an abstract of the whole amount of banking capital returned by them, of the whole amount of their debts and liabilities, specifying particularly the amount of circulating notes BANKING CORPORATIONS. 185 outstanding, and the total amount of means and resources, specifying the amount of specie held by them at the times of their several returns, and such other information in re- lation to said banks, associations and bankers, as in his judgment may be useful : 2. A statement of the banking associations and bankers whose business has been closed during the year, with the amount of their circulation redeemed and the rate of such redemption per cent, and the amount outstanding : 3. To suggest any amendment to the laws relative to banking by which the system may be improved and the security of bill-holders and depositors may be increased : 4. To report the names and compensation of the clerks employed by him, and the whole amount of the expenses of the department during the year, and the amount if any for which the treasury shall be in advance : sUch report shall be made by or before the last day of the year, and the usual number of copies for the use of the legislature, and two hundred and fifty copies for the use of the depart- ment, shall be printed in readiness for distribution on the meeting of the legislature by the printer employed to print legislative documents, the expense of which shall be charged among the general expenses of the department, and collected as herein provided. § 12. This act shall take effect immediately. 186 SPECIAL STATUTES APPLICABLE TO ACT OP APRIL 17, 1851, (LAWS 1851, CHAP. 203, P. 378.) An Act to amend the several acts relating to Incorporated BomTcs, BanJcing Associations, amd Individual Ba/nk- ers. Passed April 17, 1851. The People of the State of New TorTc represented in Senate and Assembly, do enact as follows : offlcssof § 1- Section one of the act relating to the redemption of bank notes, passed May 4th, 1840, is hereby amended so as to read as follows : § 1. Every moneyed incorporation in this State having banking powers, and issuing bills or notes of circulation, and every banking association and individual banker carrying on banking business under the act to author- ize the business of banking, except those whose place of business is in the cities of New York, Albany, Brooklyn, or Troy, shall, on or before the first day of July next, appoint an agent, who shall keep an office in the city of New York, Albany, or Troy, for the redemption of all cir- culating notes issued by said corporation, banking associa- tion, or individual banker, which shall be presented to such agent for payment or redemption. § 2. Section four of the said act is hereby amended so as to read as follows : Rate of §4. It shall be the duty of every such corporation, banking association, and individual banker out of the cities of New York, Albany, Brooklyn, and Troy, to re- BANKING CORPORATIONS. 187 deem and pay on demand all circulating notes issued by such corporation, banking association, or individual banker, presented for redemption or payment at the ofiBce of their said agent, in the city of New York, Albany, or Troy, at a rate of discount not exceeding one quarter of one per cent. § 3. Whenever any action shall be brought against Demand ° •' o o and protest any incorporated bank, banking association, or individual ment"'^'^' banker, for the recovery of the amount due on any circu- lating note or notes registered in the comptroller's office, the paymcint of vrhich shall have been demanded at the banking house, or usual place of business of the defendant, if it shall appear on the trial or otherwise, to the court in which such suit is brought, that at the time such demand of payment was made, the defendant offered in payment the circulating note or notes issued by any banking asso- ciation or banker, other than the defendant, which were at the time at par in the city of New York, Albany, or Troy, or a draft or drafts on any bank, association, or banker in the city of New York, Albany, or Troy, or either of the same, for the amount of the circulating note or notes so presented, with an affidavit, if required, that such draft or drafts is or are available to their full amount, to insure the immediate payment thereof on presentation, or in case any action shall be commenced upon such note or notes before the expiration of fifteen days from the time of the first demand thereof, as above mentioned ; and provided such bank, association, or individual banker shall be ready and prepared to redeem such note or notes in the lawful money of the United States, at the counter or ordinary place of business of such bank, association, or banker, at the expiration of said fifteen days from the time of the first demand thereof, with interest, then in either case, the 183 SPECIAL STATUTES APPLICABLE TO plaintiif in such action shall not recover any costs, fees, or disbursements whatever against the defendants, and shall he entitled to recover no more than seven per cent, inter- est, in lieu of all damages for the non-payment of the said circulating note or notes ; but no interest shall be recov- ered upon such note or notes in any action, unless the plaintiff or holder thereof shall have again presented the same for payment, at the banking house or ordinary place of business of such defendant, on or after the fifteenth day after such first demand, and before the twentieth day, and the defendant shall have neglected and refused to pay the same with interest to that time, as aforesaid. And if such bank, association, or banker, at the time of the first pre- sentation of said circulating note or notes, shall have of- fered to pay current banknotes or drafts, or both, or either, in the manner above provided, and shall at the time of the second presentation, pay or tender the amount of such note or notes thus demanded, in the lawful money of the United States, at their banking house or ordinary place of business, then such bank, association, or banker shall not be deemed to have suspended or refused specie payment, within the meaning of any statutes authorizing proceedings for the dissolution of the charter of such bank, or authoriz- ing proceedings to restrain or enjoin the ordinary business of such bank, association, or banker, nor shall such bank, association, or banker, in such case, be liable to any other or greater damages for the non-payment of such circulating note or notes, than as above provided, any provision in the charter of any bank, or any other statute to the con- trary notwithstanding. Notes how § 4. The fourth section of chapter two hundred and protested. sixty of the laws of eighteen hundred and thirty-eight as BANKING CORPORATIONS. 189 amended by the first section of chapter forty-six of tlie laws of eighteen hundred and forty-one, is hereby further amended so that it shall read as follows: In case the maker or makers of any such circulating note or notes, countersigned and registered as aforesaid, shall at any time hereafter, on lawful demand during the usual hours of business, between the hours of ten and three o'clock, at the place where such note or notes is or are payable, fail or refuse to redeem such note or notes in the lawful money of the United States, tlje holder of such note or notes making such demand, may cause the same to be protested, in one package, for non-payment, by a notary public, under his seal of office, in the usual manner, unless the president, cashier or teller of such bank shall offer to waive demand and notice of the protest, and shall in pur- suance of such offer, make, sign and deliver to the party making such demand, an admission in writing, stating the time of the demand, the amount demanded, and the facts of the non-payment thereof, and the coniptroller, on re- ceiving and filing in his office such admission or protest, together with sucli note or notes, shall forthwith give notice in writing to the maker or makers of such note or notes to pay the same ; and if he or they shall omit to do so for fifteen days after such notice, the comptroller shall immediately thereupon (unless he shall be satisfied that there is a good and legal defence against the payment of such note or notes) give notice in the State paper, that all the circulating notes issued by such person or association will be redeemed out of the trust funds in his hands for that purpose, and the comptroller shall be required to apply the said trust funds belonging to the maker or makers of such notes, to the payment pro rata, of all the 190 SPECIAL STATUTES APPLICABLE TO circulating notes put in circulation by tlie maker or makers of such dishonored notes, pursuant to the provisions of this act, and adopt such measures for the payment of such notes, as will in his opinion most effectually prevent loss to the holders thereof. § 5. The twenty-ninth section of said chapter two hun- dred and sixty of the laws of eighteen hundred and thirty- eight, is hereby amended so as to read as follows : Damages § 29. Such associatiou or individual banker shall be for non-pay- ™™^ liable to pay the holder of every bill or note put in circu- lation as money, the payment of which shall have been demanded and refused, at the banking house or usual place of business of such association or banker, damages for non-payment thereof in lieu of interest at and after the rate of seven per cent, per annum, from the time of such refusal until the payment of such evidence of debt and damages thereon. ProTiao. § 6. Nothing contained in the third, fourth, and fifth sections of this act, shall apply to cases where circulating notes registered in the comptroller's office, shall be pre- sented for payment to the agent of any incorporated bank, banking association, or individual banker, appointed ac- cording to the provisions of chapter two hundred and two of the laws of eighteen hundred and forty, entitled "An Act relating to the redemption of bank notes," nor to any bank, banking association, or individual banker, for whom there shall not be at the time an agent duly appointed as prescribed in the said act ; nor to banks, associations, or individual bankers, whose place of business is in either of the cities of New York, Albany, Brooklyn, or Troy. BANKING CORPOEATIONS. 191 ACT or APRIL 16th, 1852. (LAWS 1862, CHAP. STO, P. 584.) An Act to amend Section sixteen of Chapter nine of Title two of Part one of the Revised Statutes. Passed April 16, 1852. The People of the State of New Yorh, represented in Senate and AsserrMy, do enact as follows : § 1. Section sixteen of chapter nine of title two of part Amend- ^ menu one of tlie revised statutes is hereby amended by inserting the words " or Banking Associations," immediately after the words " safe incorporated moneyed institutions." § 2. This act shall take effect immediately. CONCURRENT RESOLUTIONS of March 4th, 1852. (LAWS 1852, P. 781.) In Senate. CoNctJKEENT Eksoltjtion. March 4, 1852. Whereas, a large number of bank note plates of broken banks, banks which have given notice of closing their busi- ness, and plates that are not used belonging to different banks are now in the bank department. Therefore resol/ved, if the Assembly concur, that the 193 SPECIAL STATUTES APPLICABLE TO superintendent of the banking department, be and he is hereby authorized and directed to destroy the said plates or cause the same to be done, and that hereafter whenever any bank, banking association or individual banker shall fail, or any bank, banking association or individual banker shall give notice of an intention to discontinue the busi- ness of banking, it shall be the duty of the said superin- tendent to destroy or cause to be destroyed all plates and impressions belonging to such bank, banking association or individual banker, and it shall be the duty of the said superintendent to include in his annual report a statement of all plates so destroyed as aforesaid. By order of the Senate. lEA P. BAKNES, CUrh. In Assembly. Apeil 16, 1852. Besolved, That the Assembly do concur in the passage of the foregoing resolutions. By order of the Assembly, EICHAED U. SHEEMAN, Cleric. BANKING COEPORATIONS. 193 ACT OP APRIL 13th, 1853. (LAWS 1863, CHAP. 223, P. 428.) An Act to amend an act entitled "An Act concerning foreign hamk nutesP Passed April 13, 1853. The People of the State of New York, represented i/n Senate and Assemhly, do enact as follows : § 1. Section two of the act entitled "An act concerning A^en^. foreign bank notes," passed May 7, 1839, is hereby amend- °'°'" "' '^'■ ed so as to read as follows: It shall not be lawful for any incorporated banking institution within this State, or any association or any individual or individuals, authorized to carry on the business of banking by virtue of the act enti- tled "An Act to authorize the business of banking," di- rectly or indirectly, on any pretence whatever, to procure or receive, or to offer to receive, from any corporation, as- sociation, person or persons whomsoever, any bank bill, or note or other evidence of debt in the similitude of a bank note, issued or purporting to have been issued by any cor- poration, association or individual situated or residing without this State, at a greater rate of discount than is or shall be at the time fixed by law for the redemption of the bills of the banks of this State at their agencies ; nor shall it be lawful for any banking institution, association, indi- vidual or individuals, in the first part of this section men- tioned, to issue, utter or circulate as money, or in any way, directly or indirectly, to aid or assist in the issuing, utter- ing or circulating aa money, within this State, of any such 13 194 SPECIAL STATUTES APPLICABLE TO bank bill, note or other evidence of debt, issued or purport- ing to have been issued by any corporation, association or individual situate or residing without this State, or to pro- cure or receive in any manner whatever any such bank bill, note or evidence of debt, with intent to issue, utter or circulate, or with intent to aid or assist in issuing, uttering cia^e!"'* or circulating, the. same as money within this State ; but nothing in this act contained shall be construed to prohibit any bank or banking institution receiving and paying out such foreign bank bills as they shall receive at par in the ordinary course of their business ; and nothing in this sec- tion contained shall prohibit the said banking institutions, associations and individual bankers, in the first part of this section mentioned, nor shall they be prohibited, from re- ceiving foreign notes from their dealers and customers in the regular and usual course of their business, at a rate of discount not exceeding that which is or shall be at the time fixed by law for the redemption of the bills of the banks of this State at their agencies, or from obtaining from the corporations, associations or individuals, by which or by whom such foreign notes were made, the payment or redemption thereof. teStlnd""' § ^' ^^ shall not be lawful for any person within this discount. State to issue, utter or circulate as money, or in any way, directly or indirectly, to aid or assist in the issuing, utter- ing or circulating as money, within this State, of any bank bill, note or other evidence of debt in the similitude of a bank bill or note, issued or purporting to have been issued by any corporation, association or individual situated or re- siding without this State, which shall have been received by such person at a greater rate of discount than is or shall be at the time fixed by law for the redemption of the BANKING CORPORATIONS. 195 bills of the banks of this State at their agencies, or to pro- cure or receive, in any manner whatsoever, or to offer to receive any such bank bill, note or evidence of debt, at a greater rate of discount than is or for the time shall be fixed by law for the redemption of the bills of the banks of this State at their agencies, with intent to issue, utter or circulate, or with intent to aid or assist in issuing, uttering or circulating, the same as money within this State ; but saving nothing in this section contained shall prohibit any person not authorized to carry on the business of banking within this State, nor shall any such person be prohibited, from re- ceiving foreign notes in the regular and usual course of business, or from obtaining from the corporations, associa- tions or individuals by which or by whom such foreign notes were made, the payment or redemption thereof. § 3. The penalties provided in section four of the act hereby amended shall apply to any violation of this act. § 4. This act shall take effect immediately. PeDaltlea. ACT OF APRIL 15th, 1853. (LAWS 1863, CHAP. 250, P. 539.) An Act relating to Incorporated Banks, Ba/nhmg Associa- tions, and Individual Bamlcers, located and doing iusi- ness in the city of New YorJc. Passed April 15, 1853. The People of the State of New York, represented in Senate amd Assembly, do enact as follows: § 1. In addition to the quarterly reports now required by law to be made to the superintendent of the banking de Beports or statements. 196 SPECIAL STATUTES APPLICABLE TO partment, by incorporated banks, banking associations, or individual bankers, in this State, every incorporated bank, banking association or individual banker, located and doing business in the city of JVew York, shall publish or cause to be published on the morning of every Tuesday, in a newspaper printed in said city, to be designated by the su- perintendent, a statement, under the oath of the president or cashier, showing the condition of the bank, banking as- sociation or individual banker making such statement, on the morning of each day of the week next preceding the date of such statement, in respect to the following items and particulars, to wit : average amount of loans and dis- counts, specie, deposits and circulation. Forfeiture. § 2. Such Statement shall be published at the expense of the bank, banking association or individual banker making the same ; and if any bank, banking association or individual banker shall refuse or neglect to make the statement required in the first section of this act for two successive Tuesdays, it shall forfeit its charter (if an incor- porated bank), and its privileges as a banking association or individual banker ; and every such bank, banking asso- ciation or individual banker may be proceeded against, and its affairs closed, in any manner mow required by law in case of an insolvent bank or banking association. The terms "banking association" and " individual banker," as used in this act, shall be deemed to apply only to such banking associations and individual bankers as are or may be organized under the " Act of April 18, 1838," and the several amendments thereto. § 3. This act shall take effect on the first day of August one thousand eight hundred and fifty-three. BANKING CORPORATIONS. 197 ACT OP APRIL 3d, 1854. (LAWS 1854, CHAP. 138, P. 321.) An Act fm the withdrawal of the Circulating Bills of incorporated hanJcs, whose cha/rters have expired or may hereafter expire. Passed April 3, 1854. TTie People of the State of New York, represented in Senate and Assembly, do enact as follows : § 1. The circulating notes issued by any incorporated ^^JJ^^^/^*^^ bank, whose charter has expired or shall hereafter expire, '^'^*'"'^' • shall be withdrawn from circulation by the tnistees or legal representatives thereof, and returned to the superintendent of the bank department, to be destroyed, as follows ; The notes of banks whose charters have already expired, one third part of its circulating notes in one year, one other third part within two years, and the remaining one- third part within three years, from the time this act shall take effect. And the circulating notes of all banks whose charters shall hereafter expire, as follows : One third part in one year, one other one-third part thereof in two years, and the remaining one-third in three years, from the time their charters shall respectively expire. But this section shall not prevent any person, individual ProTiso. banker or banking association from presenting to the tnist- ees or legal representatives of such expired incorporated bank such circulating notes for payment at any time. And nothing contained in this act shall in any manner affect or impair the duties, liabilities or obligations of the trustees, 198 SPECIAL STATUTES APPLICABLE TO directors or stockholders of such expired incorporated banks, or the rights or remedies of any of the holders of such circulating notes. to^e're-""' § 2. Every banking association transformed from an incorporated bank, and the officers and agents of every such association, and the trustees and agents of all such expired incorporated banks, shall be prohibited from issu- ing, paying out, or in any way, directly or indirectly, cir- culating the notes of any incorporated bank whose charter has expired, or shall hereafter expire, after the time limited by the first section of this act for its withdrawal from cir- culation. And every such association, officer, agent or trustee, that shall offend against any of the provisions of this act, shall be liable to the penalties prescribed by law for issuing bills or promissory notes, for the purpose of put- ting them into circulation as money, without being author- ized by law. Security 8 3. ^q^ jn ggge of any failure to return such circula- for notes not ^ •^ returned, ^.j^^g j^^^^g (.^ ^-^^ Superintendent of the bank department to be destroyed, as provided for in the first section of this act, the said trustees or legal representative of such expired in- corporated bank shall deposit with such superintendent an amount in cash, which shall be equal to the circulating notes required to be returned as aforesaid, to be held as security until the said circulating notes are returned to said superintendent to be destroyed, except as to the last one- third part of said circulating notes, for which no deposit of money shall be required. But said last one-third part of said circulating notes shall be withdrawn from circulation and destroyed, as far as practicable, as provided for in the first section of this act. And if any trustee or legal representative of such ex- BANKING OORPOEATIONS. 199 pired bank shall neglect or refuse to comply with the pro- visions of this act, it shall be the duty of such superintend- ent to proceed to wind up the affairs of such expired bank in the same manner as if it were an insolvent corporation. § i. This act shall take effect on the first day of May next. ACT OF APRIL 10th, 1854. (LAWS 1864, CHAP. 185, P. 442.) An Act directing the copies and certificates of association of ia/nks to he transferred from tlie Secreta/ry' s office to the Ba/nking Department. Passed April 10, 1854. The People of the State of New York., represented in Senate and Assembly, do enact as follows : § 1. All copies of certificates of association under and by virtue of the general free banking law and the acts amendatory thereof, filed in the office of the secretary of state, shall be transferred to the banking department; and hereafter all copies of certificates of association, formed pursuant to such laws, shall be filed in the office of the superintendent of the banking department, who shall furnish, on payment of the same fees now chargeable in the secretary's office, all certificates in relation thereto as if the same had been originally filed in his office. All the powers conferred upon or duties required by any law of this State to be performed by the secretary of state, in re- lation to banking associations, shall hereafter be performed by the superintendent of the banking department. § 2. This Act shall take effect immediately. 200 SPECIAL STATUTES APPLICABLE TO ACT OF APRIL 15th, 1854. (LAWS 18S4, CHAP. 242, P. S51.) ■ » ■ An Act cmiendatory of the act entitled "An Act authori- zing the business of hanhing" passed April 18, 1838, and the ahts amending the same. Passed April 15, 1854. The People of the State of New York, represented in Sen- ate and Assembly, do enact as follows : Examining § 1. The person designated by the superintendent of agent, the bank department, under the existing laws, to examine the books, papers, and affairs of any bank, banking associ- ation or individual banker, shall take and file in the office of the clerk of the county where he resides, the oath of office prescribed in the constitution, and be shall have au- thority to examine on oath any individual banker, and the officers, agents, partners, and clerks of such banker, and of any bank or banking association, touching the matters which he shall be directed to inquire into ; and any willful false swearing in any such examination shall be perjury. And when directed by the said superintendent, such per- son shall inquire whether any banker transacts the busi- ness of banking at the city, town, or village where the cir- culating notes of such individual banker purport to have been issued and dated ; and whether any bank or banking association transacts the business of banking at the place designated in its charter or certificate of- association ; and whether such banking business is conducted in the manner prescribed by law. BANKING CORPORATIONS. 201 sum- mon any per- § 2. Such person shall have power to summon, in writ- ^^7^ ing under his hand, any inhabitant of the county in which b°?orehTm.'^^ he may be conducting the inquiry to appear before him and testify in relation to the same. If the party so sum- moned shall refuse or neglect to appear at the time and place specified in such summons, or having appeared shall refuse to be sworn, or shall refuse to answer any pertinent and legal question, he shall forfeit the sum of one hundred dollars to be sued for and recovered, with costs, by the superintendent of the bank department, in his name of office, and to be paid into the treasury to defray the gene- ral expenses of the bank department ; and upon such ne- glect or refusal being duly proved by the person conduct- ing such inquiry, before any justice of the supreme court, if such justice be satisfied that the party so neglecting or refusing ought to be examined touching the matters of such inquiry, he shall by warrant commit such party to the jail of the county, there to remain in close custody until he shall submit to appear, or testify, or answer, as the case may require. § 3. If it shall appear from such examination and unsonnd ^ ■ ^ ^ banks and report that any bank, banking association, or individual '>»°^*"s- banker is in an unsound or unsafe condition to do banking business, or that the business of banking is not transacted by such bank, association, or banker at the place where said circulating notes are dated and purport to be issued, or is not transacted in the manner prescribed by law, it shall be the duty of the superintendent to withhold and refuse to issue or deliver any registered notes to such bank, association or banker, and to retain the interest on all se- curities held in trust for such bank, association or banker 202 SPECIAL STATUTES APPLICABLE TO until such time as he shall be satisfied that such bank, as- sociation, or banker is in a sound and safe condition to do a banking business, and that the business of banking is transacted by such bank, association, or banker at the place where their circulating notes are dated and purport to be issued, of^report"™ § *• Whenever the superintendent shall deem it proper, a copy of any such report shall be published in the State paper, and in at least two daily newspapers in the city of New York. The reasonable costs and expenses of every such examination and publication shall be paid by the bank, association, or banker whose affairs are examined, in the manner provided in the "Act to organize a bank department." be fll^b^'" § ^- '^^^ second and third sections of chapter two hun- bankiS' dred and eighty-one of the Laws of eighteen hundred and forty-four are hereby extended and declared to be applica- ble to every individual banker who is now doing business or shall hereafter do business under the general banking laws of this State, or who has received or hereafter shall receive circulating notes under the said laws ; and the certificate required by the third section of the said act shall be filed by every individual banker now doing business as afore- said, and who has not already filed the same, within sixty days after this act shall take effect, and by every individual banker who shall hereafter desire to obtain circulating notes under the general banking laws of this State, previ- ous to the delivery of any such notes to him. In case of a notice being filed with the superintendent of the bank department, of any change of residence of any individual banker, and of the place of doing his business, the super- BANKING CORPORATIONS. 203 intendent shall publish a notice thereof in the State paper, and in such other newspapers as he shall direct, at the ex- p^mse of such banker. § 6. "When it shall appear by the return of any iDp- 87 — 88, ante.] Bills how to Original /Section 6. The bills or notes so to be counter- signed, and the payment of which shall be so secured by the transfer of public stocks, shall be stamped on their face, " Secured by the pledge of public stocks." [See § 6, p. 88, ante.] Bonds and Original Section 7. Instead of transferring public be'bASir' stocks as aforesaid, to secure the whole amount of such ratesdeiiver- bills or notes, it shall be lawful for such person or associa- o4- tion of persons, in case they shall so elect before receiving any of the said bills or notes, to secure the payment of one- hialf of the whole amount so to be issued, by transferring to the comptroller bonds and mortgages upon real estate, bearing at least seven per cent, interest, of this State, pay- How bills able annually or semi-annually ; in which case all such '"^,^1T.S!* bills or notes issued by the said person or association of persons, shall be stamped on their lace, " Secured by pledge of public stocks and real estate." [As amended hy § 2 (?/ Act of April 12, 1848, p. 153, ante. See also, § 7, p. 88, ante.] charaoter Original Section 8. Such mortgages shall be only upon of ™^'|»s™' improved, productive, unincumbered lands within this value of State, to an amoimt not exceeding' two-fifths the value of MMrtataS. said lands, independently of any buildings thereon ; and the comptroller shall prescribe such regulations for as- certaining the title and the value of such land as he may deem necessary ; and such mortgages shall ' be payable within such time as the comptroller may direct. [As amended iy % 2 of Act of April 12, 1848, p. 153, ante. See also, § 8, p. 88, ante.] Securities (d) The Securities which banking associations or indi- ited witr°' vidual bankers hereafter to be organized under the provi- comptroUer. gions of the above recited act, passed April 18th, 1838, and the amendments thereto, shall deposit with the comp- troller as security for the redemption of circulating notes issued to them by the said comptroller, shall be New York state stocks, in all cases to be or to be made to be equal to a stock producing six per cent, per annum ; and APPENDIX. 215 it shall not be lawful for the comptroller to take such stocks at a rate above its par value or above its current market value ; or the securities shall not be less than one- half in such stocks and one-^half in bonds and mortgages upon improved, productive, unincumbered lands in this State, exchisive of any buildings thereon ; said mortgages bearing an interest of not less than seven per cent, per annum, and to an amount not exceeding two-fifths the value of said lands. [§ 2 of Act of April 12, 1848, p. 153, ,1 , '■ 1 • dividend troiier become msuiiicient for that purpose, he may receive may be re- the dividend on all stocks as well as the interest on bonds *^^'"^' and mortgages, and shall deposit the same in some safe bank or banking association in the city of Albany, in his name, in trust for the association or banker to whom ihe same ma'y belong. The deposit to be made on such terms and at such rate of interest as the comptroller may deem most conducive to the interest of such association or outedT '''°' banker, and to be withdrawn and paid over, whenever in the opinion of the comptroller the securities of such asso- ciation or banker shall be sufficient to warrant it. [§7 0/' Act of May 14, 1840,^. 117, ante.'] Original Section 13. The plates, dies and materials to ^^^^^ ^^^ be procured by the comptroller, for the printing and mak- to reWn in' ing of tl'.e circulating notes provided for hereby, shall re-fheMmp- main in his custody and under his direction ; and the ex- *"'"*''• penses necessarily incurred in executing the provisions of j. „ , this act, shall be audited and settled by the comptroller, in executing and paid out of any moneys in the treasury not otherwise paw.""'' ^""^ appropriated ; and for the purpose of reimbursing the same, the said comptroller is hereby authorized and re- quired to charge against and receive from such person or association applying for .such circulating notes, such rate per cent, thereon as may be sufficient for that purpose, and as may be just and reasonable. [^See § 13, p. 90, ante.'] Original Section 14. It shall not be lawful for the comptroi- comptroller, or other officer, to countersign bills or notes '« not to J. >- ' ' • i- J? P i • countersign tor any person or association oi persons, to an amount in biiis beyond the aggregate exceeding the public debt, or public debt^°S^^° and bonds and mortgages at their value, as provided in the second section of this act, deposited with the comp- Penalties troller by such person or association ; and any comptroller ^°'™'*^°° or other officer who shall violJite the provisions of this sec- vision, tion shall, upon conviction, be adjudged guilty of a misde- meanor, and shall be punished by a iine not less than five thousand dollars, or be imprisoned not less than five years, or by both such fine and imprisonment. [See § 14, p. 91, ante.] ( 63 ) i (63) By the Act of April 12, 1851, Chap. 164, § 8, it was enacted that the provisipns of the fourteenth section of the General Bank Act of 1838 218 APPENDIX. Mntiiatcd (J) It shall be the duty of the comptroller to receive ^J^s^'^''^ mutilated circulating notes issued by him, and to deliver in lieu thereof other circulating notes to the same amount. [§ 5 of Act of May 14, 1840, p. 115, ante.] Banking corporations may be onued. AsBOcia- tions staali make a cer- tificate. Contents thereof. How proved, re- corded, and filed. Cer'iflcates may be nsed as evidence. Original Section 15. Any number of persons may as- sociate to establish offices of discount, deposit and circula- tion, upon the terms and conditions and subject to the lia- bilities prescribed in this act; but the aggregate amount of the capital stock of any such association shall not be less than one hundred thousand dollars. [See § 15, p. 91, ante.] Original Section 16. Such persons under their hands and seals, shall make a certificate which shall specify : 1. The name assumed to distinguish such association, and to be used in its dealings ; 2. The place where the operations of discount and de- posit of such association are to be carri?^ on, designating the particular city, town, or village ; 3. The amount of the capital stock of such association, and the number of shares into which the same shall be divided ; 4. The names and places of residence of the share- holders, and the number of shares held by each of them respectively ; 5. The period at which such association shall commence and terminate ; which certificate shall be proved or ac- knowledged and recorded in the office of the clerk of the county where. any office of such association shall be estab- blished, and a copy thereof filed in the office of the super- intendent of the banking department. [See % 16, p. 92, ante, as amended hy § 1, p. 1 99, ante.] Original Section 17. The certificate required by the last preceding section to be recorded and filed in the offi- ces of the clerk of the county and superintendent of the banking department, as afoiKsaid, or copies thereof, duly certified by either of those officers, may be used as evi- dence in all courts and places for and against any such as- sociation. [As amended iy § 1, j?.'199, ante.] shall extend to the Buperintendent of the banking department and the offi- cers and clerks employed in that department. See § 8, pp. 182, 183, ante. •"^y § ^t P- 18f > ante, the powers, duties, obligations and penalties con- ferred or imposed by law upon the comptroller, or to which the comptroller is subject in relation to banks, (fee , are so modified as to be transferred to and confeiTcd upon the superintendent of the banking department. APPENDIX. 219 {Jc) All copies of certificates of association, under and Tohafliea by virtue of the general free banking law and the acts pwiment.^' amendatory thereof, filed in the office of the secretary of state, shall be transferred to the banking department ; and hereafter all copies of certificates of association, formed pursuant to such laws, shall be filed in the office of the superintendent of the banking department, who shall fur- nish, on payment of the same fees now chargeable in the secretary s office, all certificates in relation thereto, as if the same had been originally filed in his office. All the powers conferred upon, or duties required by any Jaw of this State to be performed by the secretary of state in lela- tion to banking associations, shall hereafter be performed by the superintendent of the banking department, [%'i-of Act of April 10, 1854, p. 199, ante^ Original Section 18. Such association shall have Express power to carry on the business of banking, by discounting soSTttoDs.'" bills, notes, and other evidences of debt ; by receiving deposits ; by buying and selling gold and silver bullion, foreign coins and bills of exchange, in the manner specified in their articles of -association for the purposesauthorized by this act ; by loaning money on real and personal secui-ity ; and by exercising such incidental powers as shall be ne- cessary to carry on such business ; to choose one of their number as president of such association, and to appoint a cashier, and such other officers and agents as their business may require, and to remove such president, cashier, officers and agents at pleasure, and appoint others in their place. [See § 18, p. 94. JVote 39, pp. 95—97, ante.] {I) No association of persons shall commence the busi- AFsocia- ness of banking under said act until such association shall dividiui have deposited with the comptroller the securities required JJepofuBecti- by law, to the amount of one hundred thousand dollars Icompt^^}}'^ and no individual banker or bankers shall commence the business of banking under said act, or receive circulating notes under the same, until such individual banker or bankers shall have deposited with the comptroller the se- curities required by law, to the amount of fifty thousand • dollars. [§ 1 of Act of May 6, 1844, p. 142_, ante.] Original Section 19. The shares of said association shares ti> shall be deemed personal property, and shall be transfer- Jj^p^J^^'^^^ able on the books of the association in such manner as may d"w tranWu'- be agreed on in the articles of association ; and every per-* son becoming a shareholder by such transfer, shall, in pro- „, ^ . portion to his shares, succeed to all the rights and liabili- ehavfhoidcrs. 220 APPENDIX. No chaoge ties of prior shareholders ; and no change shall be made impair right in the articles of association by which the rights, remedies "'iTocMon or security of its existing creditors shall be weakened or not dissolved impaired. Such association shall not be dissolved by the eta! of BhaJe- death or insanity of any of the shareholders therein. [See lio'ders. § 19, ^. 96, ante.] Arttoies Original SecUon 20. It sball be lawful for any associ- may provide ation of pcrsons Organized under this act, by their articles ofoap?S!eh!. of associatiou, to provide for an increase of their capital and of the number of the associates, from time to time, as they may think proper. \_See % 20, p. 98, ante^ Contracts Original SecUon 21. Contracts made by any such as- how signed.' sociatioD, and all notes and bills by them issued and put in circulation as money, shall be signed by the president or vice-president and dashier thereof ; and all suits, actions And suits, and 'proceedings brought or prosecuted by or on behalf of cuted!™'^ such association, may, be brought and prosecuted in the name of the president thereof ; and no such suit, action, or proceeding shall abate by reason of the death, resignation or removal from office of such president, but may be con- tinued and prosecuted, according to such rules as the courts of law and equity may direct, in the name of his successor in office, who 'shall exercise the powers, enjoy the rights, and discharge the duties of his predecessor. [See % 21, j?. 98, ante.'] Actions Original Section 22. All persons having demands Sined a^St against any Such association, may maintain actions against pj^^identof the president thereof ; which suits or actions shall not abate Not to abate hy reason of the death, resignation or removal from office ^removal"' ^^^ president, but may be continued and prosecuted to judgment against his successor ; and all judgments and enfoTMd™' decrees obtained or rendered against such president for against Joint any debt or liability of such association, shall be enforced onJy."' ^ only against the joint property of the association, and which property shall be liable to be taken and sold by execution under any such judgment or decree. [See § 22, p. 99, a7ite.'\ shareh»id- Original Section 23. 'Eo shareholder of any such asso- sonS°yii"bie^i^tion shall be liable in his individual capacity for any Ts^of^ss' contract, debt, or engagement of such association, unless elation mate the articlcs of association by him signed, shall have de- themeo. glared that the shareholder shall be so liable. [See § 23, p.Qd,ante.'\ (64) (64) See the Act of April 5th, 1849, § 1, p. 165, ante. By this act it is APPENDIX. 221 Original Section 24. It shall be lawful for such asso- pt wh^t ciation to purchase, hold and convey real estate for the ^Mmi following purposes : Se? ""' 1. Such as shall be necessary for its immediate accom- modation in the convenient transaction of its business ; or, 2. Such as shall be mortgaged to it in good faith, by way of security for loans made by, or moneys due to, such association ; or, 3. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealitigs ; or, 4. Such as it shall purchase at sales under judgments, decrees, or mortgages held by such association. The said association shall not purchase, hold or convey Prohibited real estate in any other case or for any other purpose ; and anj^otl/" all conveyances of such real estate shall be made to theP'^P''^*' president or such other officer as shall be indicated for i,ow^ con- *'^' that purpose in the articles of association ; and which ™y«^ president or officer, and his successors, from time to time may sell, assign and convey the same, free from any claim fromany thereon, against any of the shareholders, or any person "'"'"jf^g^f" claiming under them. \See § 24, omd Note 41, p. 100, shareiioiders. ante?^ Original Section 25. Upon the application of creditors, when chan- or shareholders, of any such association, whose debts or examiMtim' shares shall amount to one thousand dollars, and stating ^'ff^fj,"'^ facts, verified by affidavit, the chancellor may, in his dis- cretion, order a strict examination to be made by one of the masters of his court, of all the affairs of such associa- tion, for the purpose of ascertaining the safety of its in- vestments, and the prudence of its management ; and the result of every such examination, together with the opinion be^puSueS of the master, and of the chancellor thereon, shall be pub- lished, in such manner as the chancellor shall direct, who shall make such order, in respect to the expenses of such examination and publication, as he may deem proper. [_See § 25, p. 101, ffiwfo.] Ongvnal Section 26, repealed Sy § 5 of the Act of May 26, 1841. [See § 26, pp. 102—104, ante: also, § 5, p. 192, am,te.'\ ( 65) provided, that atockholders of any corporation or joint Btock association for banking purpogea, issuing bank notes or any kind of paper credits to circu- late as money, after January 1, 1850, shall be individually responsible, equ- ally and ratably. (See § 1, p. 156, ante.) (65) But see § 3, and § 4, p. 138— 189, anie; also, §§ 1, 2, 3, p. 146— 222 APPENDIX. Original Section 27. If such association stall neglect to make out and transmit the statement required in the last preceding section (§ 26), for one month beyond the period when the same is required to be made, or shall vio- late.,any of the provisions c^ this act, such association may be proceeded against, and dissolved by the court of chan- cery, in the same manner as any moneyed corporation may be proceeded against and dissolved. [See § 27, p. 104, ante.'] (66) ' If capital Original Section 28'. If any portion of the original cap- J^o*?vEd8it3,l of any such association shall be withdrawn for any to be made, purpose whatever, whilst any debts of the association re- main nnsatisfied, no dividends or profits on the shares of the capital stock of the association shall thereafter be made, until the deficit of capital shall have been made good, either by subscription of the shareholders, or out of the subsequently accruing profits of the association ; and Penalty for if '* shall appear that any such dividends have been made, it makin^g divi- gjiall be the duty of the chancellor to make the necessary case. orders and decrees for closing the affairs of the association, and distributing its property and effects among its cred- itors and shareholders. [See § 28 and note 45, p. 104, ante.] Damages for Original Scction 29. Such association or individual menr^" banker shall be liable to pay the holder of every bill or note put in circulation as money, the payment of which shall have been demanded and refused, at the banking house or usual place of business of such association or banker, damages for non-payment thereof in lieu of inte- rest at and after the rate of seven per cent, per annum, from the time of such refusal until the payment of such evidence of debt and damages thereon. [As a/mended Tyy § 5 o/ the act of April 17, 1851 {p. 190, ante) ; see, also, §29;jp. 105.) Original Section 30. The president and cashier of name'of cvcry association, fornied pursuant to the provisions of ?o"e k'e^™ *'^"^ ^^*' shall, at all times, keep a true and correct list of and where' the uamos of all the shareholders of such association, and shall file a copy of such list in the ofiice of the clerk of the county where any ofiice of such association may be loca- 150, ante: also, §§ 1, 2, p. 173, ante: also, § 9, p. 183, ante: and also, §§ 1, 2, p. 195—196, ante. (66) See Note 46, p. 104, ante, and the statutes and sections there cited. APPENDIX. 223 ted, and also, in the office of the comptroller, on the first Mondays of January and July, in every year. {See § 30, p. 105, ante.] Original Section 31. It shall not be lawful for any ^^^jj^^^jj™ association formed under the provisions of this act, to make not <» be any of its bills or notes of a denomination less than oneSea^aSy*' thousand dollars, to be put in circulation as money, pay-?he°^^? able at any other place than at the office where the busi- '{"« a«sooiO' ness of the association is carried on and conducted. [See § 31 and note 47,^. 105 amte ; also, § 1 p. 75, ante.] Original Section 32. The Legislature may at any time alter or repeal this act. [See § 32j?. 106, ante.] Original Section 33. Rejpealedhy ^6 of the act of May 14r, 1840 (p. 116, ante). See § 33, jp. 106, ante. Note. — ^The pi-o visions of statutes, passed subsequently to 1838, relating exclusively to indmidual bankers, are omitted in the above statement of amendments to the General Banking Law. 224 APPENDIX. REVISED STATUTES. CHAPTEE Xin. PAET II. TITLE IV. (1 2i. 8. 414—418.) TITLE IV. REGULATIONS CONCERNING THE ASSESSMENT OF TAXES ON INCORPORATED COilPANIES, AND THE COMMtJTATlON OR COLLECTION THEREOF. Companies § 1- All moneyed or stock corporations deriving an in- '^?i^« '"'»==»- come or profit from their capital, or otherwise, shall be liable to taxation on their capital, in the manner herein- after prescribed. (67) § 2. The president, cashier, secretary, treasurer, or deura^stote- Other proper oflBcer, of every such incorporated company, mentatoaa- gball, ou or before the first day of July in each year, make and deliver to the assessors, or one of them, of the town or ward in which such company is liable to be taxed, accord- ing to the provisions of the sixth section of the second title of this chapter, a written statement, specifying, 1. The real estate, if any, owned by such company, the towns or wards in which the same is situated, and the sums actually paid therefor : 2. The capital stock actually paid in and secured to be paid in, excepting therefrom the sums paid for real estate, and the amount of such capital stock held by the State, and by any incorporated literary or charitable institution : And, (67) The Supreme Court, in December, 1842, and the Court of Errors, in December, 1844, in The Supervisors of Niagara v. The People (4 Hill, 20, and 1 Hill, 604), held, that associations, formed under the General BamJc- ing Law, are corporations within the meaning of 1 R. S. 414, § 1, and liable to tax&tion on their capital. The Legislature, by the act of December 4th, 1847 (§ 4, p. 150, ante), enacted, that all individual banters, as -ffell as banking associations, shall be subject to taxation on the full amount of actual capital paid in, or se- cured to be paid in, » assessed by them, and the property of such companies, and the property of all other incorporated companies, liable to tax- ation in their respective towns, in their assessment rolls, in the following manner : 1. They shall insert in the first column of their assess- ment rolls the name of each incorporated company in their respective towns or wards liable to taxation on its capital or otherwise ; and under its name they shall specify the amount of its capital stock paid in, and secured to be paid in, the amount paid by such company for real estate then belonging to such company, wherever the same may be situated, the amount of all surplus profits or reserved funds, 15 226 APPENDIX. exceeding ten per cent, of their capital, after deducting therefrom the said amount of said real estate, and the amount of its stock, if any, belonging to the State and to incorporated literary and charitable institutions. {As amended hy Charp. 654, Lams 1853, p. 1240.) 2. In the second column, they shall enter the quantity of real estate owned by such company, and situated within their town or ward ; and in the third column, the actual value thereof, estimated as in other cases. 3. In the fourth column, they shall enter the amount of the capital stock of every incorporated company paid in, and secured to be paid in, and of all such surplus pro- fits or reserved funds as aforesaid, after deducting the sums paid out for all the real estate of such company, wherever the same may be situated and then belonging to it, and the amount of stock, if any, belonging to the people of this State and to incorporated literary and charitable institu- tions. (As amended ly Chap. 654, Lams 1853, p. J 240.) § 7. The assessoTW shall insert in the colum/n mentioned in the jpreceding section, the cash value of the stock of all manwfkct'wring and turnpike corporations [to he ascer- tained iy the assessor, hy the sales of the stock, or in any other inam,ner), deducting therefrom the items mentioned in the preceding section ,• which value, thus ascertained, to- gether with the value oj the real estate of such corporations, shall constitute the a/mownt on which the tax of such corpo- rations shall he levied. {Repealed Laws 1853, Chap. 654.) Preceding § 8. The provisions of the fifteenth section of the se- tended ^^' Coud title of this chapter, shall be, and are hereby ex-, tended to the incorporated companies in the two preceding sections named ; and the president, secretary, or other pro- per officer, may make the aflldavit required by said sec- ' tion. (68) _ § 9. If the president or other proper officer of any in- corporated company named in the assessment roll shall show to the satisfaction of the board of supervisors, at their annual meeting, within two days from the commencement (68) § 15. If any person, whose real or personal estate is liable to taxation, shall at any time before the assessors shall have completed their assessments, make affidavit that the value of his real estate does not exceed a certain sum, to be speeifi^ed in such affidavit ; or that the value of the personal es- tate owned by him, after deducting his just debts, and his property invest- ed in the stock of incorporated companies, liable under this chapter to tax> ation on their capital, does not exceed a certain sum to be specified in the affidavit, it shall be the duty of the assessors to value such real or personal estate, or both as the case may be, at the sums specified in such afiidavit, and no more. (1 R. S. 392, § 15.) APPENDIX. ~ 227 thereof, by the affidavit of such officer, to be filed with the clerk of the board, that such company has not been, dur- ing the preceding year, in the receipt of net annual profits or clear income equal to five per cent, on the capital stock of any such company paid in, or secured to be paid in, after deducting from the amount of their capital stock the entiSto^ assessed value of their real estate, such company shall be ^S""'"' entitled to commute for their taxes on such capital stock by paying directly to the treasurer of the county in which the business of such company is transacted, a sum equal to five per cent, on such net annual profits or clear income, and also such further sum as shall have been assessed on such roll, as the taxes on their real estate. And the as- sessment of every moneyed or stock corporation, author- ized to make dividends on its capital, from which no such affidavit shall be received as aforesaid, shall be conclusive evidence that such corporation was liable to taxation, and was duly assessed. {As amended hy Chap. 654, Laws 1853, p. 1240.) § 10. The capital stock of every company liable to tax- whatprop- atioii, except such part of it as shall have been exempted ^^'^plf^'^^ii^. in the assessments under the previous sections of this title, wo to ta^a- together with its surplus profits or reserved funds exceed- ing ten per cent, of its capital, after deducting the assessed value of its real estate, and also the real estate of every such company, shall be assessed and taxed in the same manner as the other personal and real estate of the county, unless sudi company shall be entitled to commute, as by the provisions of the preceding section, and shall elect so to do. {As amended hy Chap. 654, La/uas 1853, p. 1240.) § 11. All oorrvpanies employed wholly or principally commuta- in manufacturing, and all marine insurance companies,^^"^- whose net annual income shall not exceed five per cent, on the capital stocTc paid in, and secured to he paid in, shall he entitled to commute for their taxes, hy paying directly to the treasurer of the county in which the husiness of the company is transacted, five per cent, upon all such net in- come made hy such company during the preceding yea/r. § 12. AU turnpike, hridge, or canal compames, whose net annual income shall not exceed five per cent, on the capital stocJc paAd in, and secv/red to he paid in, shall he exempted from taxation. § 13. To entitle a/ny such compa/ny to the exemption Eeqnisites aforesaid, the president am,d secreta/ry, or some two ojfioersm^""'''' of the company, shall make affida/vit, stating the capital stock paid in, and secv/red to he paid in, together with the 228 APPENDIX. stated and collected. Duty of 8upervisor3. income and profits, and the total expenditwes, during the preceding year, of such company ,' which affida/vit shall ie delivered to the assessors of the town, at the ti/me of mahvng their assessments. {Last three sections repealed ly Chap. 654. Lams 1853.) § 14. The president, or otlier proper officer of each company electing to commute, shall make affidavit before some officer authorized to take affidavits, stating the amount of such net income ; and on filing the same with the clerk of the board of supervisors, at their annual meet- ing, within two days from the commencement thereof, ac- companied by the receipt of the county treasurer, acknow- ledging the payment of the proper commutation, such board of supervisors shall impose no tax on the property of such company. Taxestobe § 15. The amount of taxes assessed on all incorporated companies liable to taxation, and not electing to commute, shall be set down by the board of supervisors, in the fifth column of the corrected assessment roll, and shall form a part of the moneys to be collected by the collector. § 16. The board of supervisors having completed the assessment, shall transmit to the comptroller, with the ag- gregate valuations of the real and personal estate in their county, a statement, showing the names of the several in- corporated companies liable to taxation in such county ; the amount of the capital stock paid in, and secured to be paid in, by each ; the amount of real and personal proper- ty of each, as put down by the assessors, or by them ; and the amount of taxes assessed on each. In those counties in which there is no such company, the boards of supervi- sors shall certify such fact to the comptroller, with their returns of the aggregate valuations of real and personal estate. § 17. The collector shall demand payment of all taxes assessed on incorporated companies, from the president, or other proper officer, of such companies, and if not paid, shall proceed in the collection and payment thereof, in the same manner as in other cases, and shall be liable to the same penalties for the non-payment of moneys collect- ed by him. And the collector's receipt shall be evidence of the payment of such tax. § 18. Such taxes shall be paid out of the funds of the company, and shall be ratably deducted from the divi- dends of those stockholders whose stock was taxed, or shall be charged upon such stock, if no dividends be after- wards declared. Duty of collector. Taxes bow paid. APPENDIX. 229 § 19. If tlie collector shall not be able to collect any prooeea- tax assessed upon an incorporated company, lie shall re-jf^f^lft't,'^®" turn the same to the county treasurer, and at the same ooHeaM. time, make affidavit before the county treasurer, or some other officer authorized to administer oaths, that he had demanded payment thereof from the president, or other proper officer of the company, and that such officer had refused to pay the same, or that he had not been able to make such demand, as the case may be ; and that such company had no personal property, from which he could levy such tax. § 20. The county treasurer shall thereupon certify such u,. facts to the comptroller, who shall pass to the credit of such county treasurer the amount of all taxes so returned and certified, as in the cases of taxes on the lands of non- residents. § 21. The comptroller shall furnish the attorney-general Atcomej-- with the names of all companies refusing or neglecting to 1™™'^},"^^^ pay the taxes imposed on them, with the amount due from oery. them respectively ; and the attorney-general shall there- upon file a bill in the court of chancery, against every such company, for the discovery and sequestration of its prop- erty. § 22. The chancellor, on the filing of such bill, or on powers of the coming in of the answer thereto, shall order such part °''"'™"'"'- of the property of such company to be sequestered, as he shall deem necessary for the purpose of satisfying the taxes in arrear, with the costs of prosecution ; and he may also, at his discretion, enjoin such company, and the officers thereof, from any further proceedings under their act of incorporation, and may order and direct such other pro- ceedings as he shall deem necessary, to compel the pay- ment of such tax and costs. § 23. The attorney-general may also recover such tax, pnrthfr with costs, from such delinquent company, by action in "niedy. any court of record in this State. 230 APPENDIX. ACT OF APRIL 26th, 1832, (LAWS 1832, CHAP. 295, P. 609.) As Act to prevent the abatement of suits iy or ag'ainst cor- porations^ in certain cases. Passed April 26, 1832. Hon of^a"' § 1. The dissolution of a corporation by a decree of the corporation court of chancerj, or by the expiration of its charter, or suit. ° '' otherwise, stall not abate any suit or proceedings in favor of such corporation, which shall have been pending at the time of such dissolution ; but all such suits or proceedings may be continued by the receivers who shall have been appointed for such corporation by the court of chancery, or by the trustees on whom the estate and effects of such- corporation shall have devolved, in the name of such cor- poration, or in the names of such receivers or trustees, who may be substituted as plaintiffs under the direction of the court in which the suit shall be pending, and subject to such order as the court may deem expedient, in relation to the payment or security of costs. New suits § 2. Whenever a receiver of the property or effects of taought. a corporation has been appointed before its dissolution or afterwards, new suits may be brought and carried on by any such receivers, either in their own names or in the names of the corporation for which they shall have been appointed ; but no new suit shall be brought in the name of a corporation after it shall have been dissolved, or after the expiration of its charter. To be con- § 3. No suit Commenced in the name of any such re- tinued. cciver, shall be abated by his removal or death ; but the same may be continued in the name of his successor, or of the corporation, if its charter has not expired or been dis- solved, as may be directed by the court in which the suit shall be pending. Power of § 4:. The court in which any suit or proceeding against a corporation which shall have been dissolved by the de- cree of the court of chancery, or by the expiration of its charter, or otherwise, shall be pending at the time of such dissolution, shall have power, on the application of either party thereto, to make an order for the continuance of such the court APPENDIX. 231 suit or proceeding, and the same may thereafter be contin- ued until a final judgment or decree shall he had therein, which shall have the like effect upon the rights of the par- ties, as if such corporation had not been dissolved. ACT OP MAY 13th, 1845. (LAWS 1845, CHAP. 195, P. 224.) Au Act in relation to stocks in moneyed corporations held hy the State or iy literary or charitable institutions. Passed May 13, 1845. The People of the State of New York, represented in Senate and Assembly^ do enact as follows : § 1. Any moneyed or stock corporation deriving profit ^^^i^^^'^- or income fi'om its capital or otherwise, shall add to the dividend which shall be declared, upon any stock owned by the State or by any literary or charitable society or in- stitution, a sum equal to the assessment for taxes paid upon an equal amoiint of the stock of such corporation not exempt from taxation. § 2. The provisions of the sixth subdivision of the BcncaK.f fourth section of the first title of chapter thirteen of thefroiatax™ first part of the Revised Statutes, whereby all stocks owned *'""• by the State or by literary or charitable institutions, in moneyed or stock corporations, are exempted from taxa- tion, are hereby declared to be for the benefit of the State or the institutions owning such stocks, and not for the ben- efit of the said corporations. ( 69 ) (69) By subdiTision 6 of §4,1 R. S., 288, "all stocks owned by the State, or by literary or charitable institutions " are exempted from taxation. See, also, subdivision 2 of § 2, p. 224, ante. 332 APPENDIX. ACT OF MARCH 19th, 1852. (LAWS 1852, CHAP. 11, P. 6T.) Ak Act to facilitate the collection of debts aga/mst corpora- tions. Passed March 19, 1B52. The People of the State of New YorTc represented m /Senate amd Assembly, do enact as follows : andZt" f § •'"■ '^^^ receiver heretofore appointed by any court in reeeiver&° ° this State, by virtue of section tnirty-six, chapter eight, title four, article two, part three, of the revised statutes of this State, shall have and possess all the power and author- ity, and be subject to the same obligations and duties, as are provided in article third, title fourth, chapter eight, part third of the revised statutes of this State, in relation to receivers appointed in case of the voluntary dissolution of a corporation. ( 70 ) Eeceivcrs § 2. In case the col-poration, in regard to which a re- Effib^eDt'oii ceiver has been or shall hereafter be appointed, is or shall notm.'"™ ^^ ^ mutual insurance compam/ such receiver shall have full power under the authority and sanction of the court appointing him, to make all such assessments on the pre- mium notes belonging to such corporation, as may be necessary to pay the debts of such corporation, as by the charter thereof the directors of such corporation have au- asSimenf thority to make ; and the notice of such assessment may be to be given, given iu the same manner as is provided in the charter of said company for the directors of said company to give ; and the said receiver shall have the like rights and reme- dies, upon and in consequence of the non-payment of such assessments, as are given to the corporation or the direct- ors thereof by the charter of such corporation. ^jSnrrender g 3. Such receiver is authorized to receive a voluntary surrender of all policies issued by such corporation, or to (70) See § 36, chap. 8, title i, article 2, part three of the Revised Stat- utes, p. 51, ante; also article 3, title 4, chap. 8, part 3, of the Revised Stat- utes, pp. 64-74, ante. APPEiroiX. . 233 cancel the policies issued by sncli corporation, in all cases where, by the charter of such corporation, the directors thereof are authorized to receive the surrender of, or can- cel the policies issued by such corporation. § 4. The court by which any such receiver may have jj^^eiver been or shaU be appointed, is authorized upon a proper to examine action instituted for that purpose by such receiver, to ex- ration. °°''"" amine by a reference or otherwise, as it may deem proper, into the proceedings and acts of such corporation ; and if it shall appear upon such examination that the directors or officers of such corporation, or either or any of them, have in any manner misapplied, or improperly disposed of the funds, property or effects of such corporation, it shall be lawful for such court to decree that such directors or officers of such corporation, as shall have been guilty of such misapplication or improper disposition of such funds, property or effects, to pay the same to such receiver, and to enforce such decree, by such process as may be neces- sary to accomplish that object. § 5. This act shall take effect immediately. RESTRAINING ACT OP 1782. (1 GREENLEAFS ED. LAWS, P. 50.) Aif Act to prevent the estahUshmemt of any hemic withirh* this State other than the Bank of ]N oeth Ameeioa, and for incorporating the same within this State, passed April nth, 1782. I. Se it, therefore, enacted h/ the people of the State of New York, represented in Senate and Assermly, am,d it zs hereby enacted Iry the authority of the sarne. That the said bank mentioned in the said ordinance shall be, and is hereby, incorporated and made a body politic .Within this State, by the name and style of The President' Directors, and Company of the Bank of Noeth Ameeioa, with all and singular the powers,' privileges, and immunities in the said ordinance specified ; and that no other lanh, public or pri- vate, shall be established within this State dwing thepres- 234 . APPENDIX. ent war with Great Britain, on pain of tlie forfeiture of one hundred pounds for every offence, by every person concerned in such bank or banks, being thereof convicted in the Supreme Court of jiidicature of this State ; which forfeiture shall go one-half to the complainant, and the other half to the treasury of this State. [Two other sec- tions follow this — and the act recites the ordinance of the Continental Congress of May 26, 1781.] RESTRAINING- ACT OF 1804. (3 WEB. ED. LAWS, P. 616.) An Act to restra/in unincorporated BamMmg Associations. Passed April 11th, 1804. I. Be it enacted hy the people of the State of Nenjo York, represented in Senate and Assernbly, That from and after the passing of this apt, no person unauthorized by law shall subscribe to or become a member of any association, insti- tution or company, or proprietor of any bank or fund for the purpose of issuing notes, receiving deposits, making discounts or transacting any other business which incorpo- rated banks may or do transact by virtue of their respect- ive acts of incorporation ; and if any person unauthorized 'by law as aforesaid, shall hereafter subscribe or become a member or proprietor as aforesaid, he shall forfeit and pay for every such offence the sum of one thousand dollars, to be recovered by any person who shall sue for the same, in an action of debt, one-half thereof to his own use, and the other half to the use of the people of this .State ; and all notes and securities for the payment of money, or the de- livery of property, made or given to any such association, institution, or company, not authorized as aforesaid, shall be null and void : Provided, nevertheless, that nothing herein contained shall be held in any way to extend to the association in the city of Albany, known by the name of' the Mercantile Company, nor the association in the city of New York, known by the name of the Merchants' Bank, until the first Tuesday in May, one thousand eight hundred and five. APPENDIX. 235 n. And lye it^v/rther enacted, That all unincorporated associations, institutions, or proprieties, formed for any of the purposes aforesaid, that now exist in this State, shall after the first Tuesday in May, one thousand eight hundred and five, cease to issue notes and to loan money ; and any person concerned or interested in the issuing such notes, or loaning any such money as aforesaid, after the first Tues- day of May, one thousand eight hundred and five, shall forfeit and pay, for every such offence, the sum of one thousand dollars, to he recovered and disposed of in the manner prescribed in the first section of this act. EXPLANATORY ACT, APRIL, 1804. (3 "WEB. ED. LAWS, P. 611, § 9.) "Whereas, the Chamber of Commerce of the city of New York have, by their respectful r^emorial to the Legislature, expressed apprehension that the bill passed both houses of the Legislature at the present session, entitled " An Act to restrain unincorporated banking associations," may be so construed as to subject individuals to inconvenient restric- tions in their usual commercial business and pursuits ; Therefore, for the removal of those apprehensions, IX. JBe it enacted and declared, That nothing in the said bill contained shall be deemed or construed to prevent any person, association or company from transacting or pursuing any business other than such as companies or banks, incorporated for the express purpose of banking, usually do or transact, nor shall any thing in the said act contained be deemed or construed in any manner or way to afif'ect the incorporation in the city of New York, created by virtue of an act entitled " An Act for swpplying the (My of NewYork withpv/re and wholesome water P 236 APPENDIX RESTRAINING ACT OP 1813. (2 REVISED LAWS 1813, P. 234.) An Act to prevent the passing and recei/umg of Bamk Notes less tham the nominal value of one dollar, and to restrain Unincorporated Banking Associations. Passed April 6, 1813. I. Be it enacted 'by the People of the State of New York, represented in Senate and AsseirMy, That no person or persons whomsoever, within this State, shall give or receive in payment of any debt or demand whatsoever, or in any way attempt or offer to circulate, any bank bill or promissory note of any banking company within this State or elsewhere, for the payment of money, which shall be for less than the nominal value of one dollar, and any per- son , offending against this act, either as giver, receiver or circulator of such bank bill or promissory note, shall foi;- feit and pay the nominal amount or value of such bank bill or promissory note so given or received, or attempted or offered to be circulated, to be recovered with costs of suit in any court within this State having cognizance thereof, by action of debt, by any person who will sue for the same, to his or her own use. Provided, that such suit or action be brought or commenced at any time within thirty days after the offence be done and committed. II. And ie it fwrther enacted, that no person, unau- thorized by law, shall subscribe to or become a member of any association, institution, or company, or proprietor of any bank or fund, for the purpose of issuing notes, receiving deposits, making discounts, or transacting any other busi- ness which incorporated banks may or do transact, by vir- tue of their respective acts of incorporation : and, if any person, unauthorized by law as aforesaid, shall hereafter subscribe or become a member or proprietor as aforesaid, he shall forfeit and pay for every such offence the sum of one thousand dollars, to be recovered by any person who APPENDIX. 237 shall sue for the same, in an action of debt, one-half there- of to his own use, and the other to .the use of the people of this State ; and all notes and securities for the payment of money or the delivery of property, made or given to any such association, institution or company, not authorized as aforesaid, shall be null and void. ACT OP 1816. (LAWS 1816, P. 12.) An Act concerning Banks. Passed November 12, 1*6. Be it enacted amd declared hy the People of the State of New York represented in Senate and AsserrMy, That no Banking Company shall issue, or cause to be issued, any bills or notes, other than for the payment of money ; and that the sums which may be expressed in any bills or notes which any banks shall issue, or cause to be issued, which are according to the terms thereof receivable only in pay- ment of debte due to the bank, shall be recoverable by the bearer of such bills or notes, in like manner as if the same contained an express promise for the payment of money. RESTRAINING ACT OP 1818. (LAWS 1818, P. 242.) An Act relative to iadks and for other pwrposes. Passed April 21, 1818. 1 . Be it enacted hy the people of the State of New York, represented in Senate am,d Assenmy, That it shall not be lawful for any person, association of persons, or body corpo- 238 APPENDIX. rate, from and after the first day of August next, to keep any office of deposit fox tKe purpose of discounting promis- sory notes, or for carrying on any kind of banking business or operations, which incorporated banks are authorized by law to carry on, or issue any bills or promissory notes, as private bankers, unless thereunto specially authorized by law : Provided^ that nothing in this act contained shall be deemed to extend to the bank in New York owned by Jacob Barker, called the Exchange Bank, until three years after the passing of this act : Provided also, that nothing in this act contained shall be deemed or construed to abridge, enlarge, or in any way affect any rights heretofore granted by law to any incorporated company. eL. And he it further enacted. That in case any person or persons, or body corporate, shall contravene the fore- going provisions, every such person or persons, and the members of every such corporation, who shall either di- rectly or indirectly assent thereto, shall for every offence forfeit the sum of one thousand dollars, to be sued for by the Attorney-General, and recovered in an action of debt, in the name of the people of this State, in any court of record, with costs to be taxed, and that one-half of the said forfeiture, when recovered, shall be to the use of the said people, and the other half to the infoi'mer. III. And he it fv/rther enacted/., That in case any incor- porated bank shall refuse to pay any of its bills or notes hereafter to be issued, in lawful money of the United States, on demand, the holder of such bills or notes shall be entitled to recover the amount thereof, in an action on the case, for money lent, with interest thereon, at the rate of ten per cent, per annum, from the time of such refusal, with costs. lY. And he it further enacted, That the second section of the act, entitled, "An act to amend the act entitled 'An Act to incorporate the stockholders of the Bank of Orange, passed 6th April, 1813, and for other purposes,' " passed April 16, 1817, be, and the same is hereby re- pealed. (71) {11.) The second section in the act of April 15, 1817, is in these words: II. And be it further enacted, That the President, Directors and Company of each of the inoorporoted banks in the Stats of New York, shall hereafter be APPENDIX. 239 ACT OP 1824. (LAWS 1824, P. 303.) An Act to prevent the Passing and Receimng of Bank Wotes, payable otherwise tham, in lawful money of the United States. Passed Aprill2, 1824. Whereas it hath of late become a practice with certain institutions, to issue bills, or notes payable in bills, notes or drafts, or otherwise than in money, whereby many unsus- pecting persons are liable to be deceived and defrauded, — • Wherefore, for the prevention of such practice hereafter, Pe it enacted iy the People of the State of New York, represented in Senate and Assemhly That no person or per- sons whomsoever, within this State, shall, after the first day of May next, give or receive in payment of any debt or demand whatsoever, or in any way attempt or offer to circulate, any bank bill or bills, or promissory note or notes, of any banking company whatsoever, made payable, or purporting to be payable otherwise than in la/wful money of the United States ; and any person or persons offending against this act, either as giver, receiver, or cir- culator of such bank bill or bills, or promissory note or notes, shall forfeit and pay the nominal amount or value of all and every such bank bill or bills, or promissory note or notes, so given or received, or attempted or offered to be circulated, to be recovered, with costs of suit, in any court within this State having cognizance thereof, by action of in- debitatnis assumpsit^ by any person who will sue for the same, to his or her own use ; in which action it shall be sufficient for the plaintiff to declare generally as for money had and received to his or her use, pursuant to this act, and give the special matter and this act in evidence : Provided^ that such suit or action be commenced within sixty days after the offence be done or committed. (72.) entitled to demand and receive an Interest not exceeding seven per cent per annum, on all loans and discounts made by each of them for a longer period than sixty days ; any thing in the acts of incorporation of any of the said banks to the contrary notwithstanding. — (Laws, ISlT,^. 306.) (V2) The Legislature, in 1830, enacted as follows (Bevised Statutes, vol. 1, p. 713. Original Sections 10 t& 11. Seep. 48, ante.) § 10. Kg person shall give, pay, or receive in payment, or in any way 240 APPENDIX. REVISED STATUTES. CHAPTER Yin. PAET IE. TITLE IV. (2 E. 8. 457—460.) TITLE IV. AETIOLE FIEST. OF PROCEEDINGS BY AND AGAINST CORPOEATIONS IN, COURTS OF LAW. § 1., A foreign corporation created by the laws of any other State or country, may, upon giving security for the payment of the costs of suit, prosecute in the Courts of this State, in the same manner as corporations created under the laws of this State. §2. But where by the laws of this State, any act is for- bidden to be done by any corporation or association of in- dividuals, without express authority by law, and such act shall have been done by & foreign corporation, it shall not be authorized to maintain any action founded upon such act, or upon any liability or obligation, express or implied, arising out of, or made or entered into, in consideration of such act. circulate, or attempt to circulate, any bank bill, or any promissory note, bill, check, draft, or other evidence of debt, issued by any banking company whatever, which shall be made payable otherwise than m lawful money of the United States. § 1 1. Every person offending against any provision of the last section, shall forfeit the nominal amount or value of such bill, note, or other evidence of debt so given, paid, received, circulated, or offered, to any person who will sue for the same, in the name of the overseers of the poor of the town where the offence shall be committed, with their consent and under their direction, in an action, to be commenced within sixty days after the com- mission of the offence, {See note 11, at foot of page 48, ante; and 2 R. 8., IIS, % 11.) APPENDIX. 241 3. In suits brought by a corporation created by or proof of poration. under auy statute of this State, it shall not be necessary to J^"""^'""""- prove, on the trial of the cause, the existence of such cor- poration, unless the defendant shall have pleaded in abate- ment or in bar, that the plaintiffs are not a corporation. § 4. The first process for the commencement of a suit Process against a corporation, shall be a summons, except in those ''^''''"'"'™' cases where a scire facias or other process is allowed by law ; and such process, and all other writs and process against corporations, may be issued and tested on any day in term, and may be made returnable on any day in the same or the next succeeding term, in the same manner as process issued against individuals may be issued, tested and returned. [See § 27, Code of Procedure^ § 5. Writs of summons and other process for the com- How served. mencement of a suit against a corporation, may be served on the return day of such process, or previous thereto, on the presiding officer, the cashier, the secretary or the treasurer thereof; and if there be no such officer, or none can be found, such service may be made on such other offi- cer or member of such corporation, or in such other man- ner, as the court in which the suit is brought, may direct. \See % 134, Code of Procedure^ §6. "When such process shall have been returned duly P^e'"!- served, the appearance of the corporation shall be entered, and the plaintiff shall proceed thereupon in such suit, in the same manner as in personal actions against natural persons. § Y. In every such action, the plaintiff may declare on a Declaration, cause of action which arose previous to the commencement of the suit, although the same may have arisen after the teste of the process by which the action was commenced. § 8. In any such action founded upon a note or other Judgment evidence of debt, for the absolute payment of money on ^'^'^ '^''"'' demand, or at any particular time, if it shall appear that tlje first process, together with a copy of the declaration was served at least twenty days before the return of such process, the plaintiff may file a declaration in such suit on such return day, or on any subsequent day in the same term, and may apply for judgment. § 9. On such application, the court shall render judg- ib. defence ment for the plaintiff as by default, either interlocutory or "" ""^'"^ final, or both, as the case may require ; unless it shall satis- factorily appear to such court, that such corporation has 242 APPENDIX. food and substantial defence on tlie merits, whicli shall be iselosed by affidavit. Keference § 10. If siich defence consist of a set-off, and be of such "' ™'*' a nature that the cause might be referred, the court shall immediately refer, the cause to the clerk thereof, or to some other fit persons, to hear the proofs of the parties, and re- port thereon; and the proceedings thereon shall be the same in all respects as in cases of refereflce. ^^Preference § H. Evcry issue of fact joined in such cause, shall sSohTnus? have a preference at the court at vrhich it shall be noticed for trial, to all other causes ; and every case made, special verdict rendered, bill of exceptions and demurrer to evi- dence taken, on such trial, and every issue of law joined on the pleadings in any such suit, shall have a preference in the argument thereof in any court where the same may be pending. § 12. When judgment shall be rendered against any s. incorporated bank, for the amount of any bills or other evidences of debt, payable absolutely, the payment of which shall have been refused by such bank, and no mea- sure of damages shall be specified in the act incorporating such bank, the plaintiff shall recover interest on -such amount from the time of such refusal, at the rate of ten per cent, a year, instead of the rate of interest established by law. Eeriting § 13. In actions by or against any corporation created jOTauo"™' Iby or. under any law of this State, it shall not be necessary to recite the act or acts of incorporation, or' the proceed- ings by which such corporation was created, or to set forth the substance thereof, but the same may be pleaded by reciting the title of such act, and the date of its passage. Mistake in § 14; In suits or proceedings by or against any corpora- powiuon!"' tion, a mistake in the naming of such corporation, shall be pleaded in abatement; and if not so pleaded, shall be deemed to have been waived. Attach- § IS- Suits brought in the Supreme Court by a resident mentagamstof tliis State, against any corporation created by or under poralonT the laws of any other State, government or country, for the recovery of any debt or damages, may be commenced by attachment. ( 73 ) Bywhom § 16. The court, or any judge thereof in vacation, and (73) This section amended by the Act of March 16th, 1849 (Laws 1849, Chap. 10'7, p. 142). See this act, ^osi. APPENDIX. 243 any officer authorized to perform the duties of such Judge, in vacation, may, on the application of the plaintiff, issue such attachment to the sheriff of the county in which any property of such corporation may be, commanding him to attach and safely keep all the estate, real and personal, of such corporation. § 17. Such application shall be in -writing, and shall be proof to accompanied by the affidavit of the plaintiff^ or one of theoWainit plaintiffs, specifying the sum in which such corporation is indebted to him, over and above all discounts.; or specify- ing the amount of damages to which he shall claim to be entitled. § 18. If such suit be for the recovery of a debt, they„„„jj„ original security, if any, shall be produced at the time of i" certain making such application, and a copy thereof shall be an-*™**" nexed to the affidavit: if there be no written security, then the original accounts shall in like manner be produced, and a copy thereof be annexed to the affidavit. § 19. If such suit be for the recovery of any damages, ' ^flJ,^^^^^. the facts and circumstances to establish the grounds of such ness re- claim, and the amount thereof, shall be proved by the'^"'™'^' affidavit of at least one disinterested witness. § 20. Before such attachment shall issue, a bond shall Bond for be executed by or on behalf of the plaintiff, to the defend- '"'^^■ ants, in the penalty of two hundred and fifty dollars, with sureties to be approved by the officer to whom the appli- cation is made, conditioned to pay all costs which shall be awarded against such plaintiif in such suit, which bond shall be filed by the officer receiving the same, in the office of a clerk of the court. § 21. The sheriff to whom such attachment shall be di- Powers of rected and delivered, shall proceed thereon in all respects ''^°'^^' in the manner prescribed by law in case of attachments against absent debtors, shall make and retni-n an inventory, and shall keep the property seized by him, or the proceeds of such as shall have been sold, to answer any judgment which may be obtained in such suit. ( 74 ) § 22. if any property so seized shall be perishable, or Proceed- if any part of it be claimed by any other person than 8uch^j^J^^_'' corporation, or if any part of it consist of a vessel belong- ing to any port or place in this State, or any of the United (74) This section amended by § 2 of the Act of May 14th, 1840. Laws 1840, Chap, 364, p. 296. See this act, post: also the Act of April Uth, 1842 (Laws 1842, Chap. 197, p 227. See this act, post). 244 APPENDIX. States, or of any foreign vessel, or of any share or interest in any vessel, the same proceedings shall be had in all re- spects, as are provided hy law upon attachments against absent debtors, lb. § 23. Any bond required in any such case to be given by a petitioning creditor, may be given by the plaintiff in the suit ; and any bond required to be given to the sheriff serving such attachment, shall be held for the benefit of the plaintiff in such suit. in''/on^aa - § ^4. In oas6 judgment 1)6 T67hdered foT the plavThtiff vTh mentfor any such smt, cmd an execution de awarded thereon, the plaintiff. sJiQ-riff shall ossign to the plaintiff amy hond taken lyy hvm in the cov/rse of the proceedings, shall pay over to such plaintif the proceeds of all sales of perishoMe property, or of amy vessel, or sha/re or i/nterest in a vessel, sold iy him, or so much thereof as may he necessa/ry to satisfy such execu- tion / and if any ialance remain due, he shall sell, wider such execution, so much of the property of such corporation remaining, in his ha/nds, as m,ay he necessary to satisfy such haloMoe. ( 75 ) Proceed- | 25. If the plaintiff in such action be nonsuited, or SmenTis discoutiuue the same, or judgment for any cause pass Mts'!°'^°°^' against him, every such bond taken by the sheriff, all the proceeds of such sales, and all the property of such corpo- ration remaining in his hands, shall be delivered by such sheriff to the defendants or their agents, in the same man- ner and upon the same teritis as are prescribed in the case of an attachment against an absent debtor being dis- charged; and in case of the failure of such corporation to comply with such terms, the sheriff shall proceed in like manner as directed in case of an absent debtor. . Penaityfor § 26. If it shall appear to the court that any such suit vexatious agaiust a foreign corporation was brought vexatiously and without just cause, they shall award double costs against the plaintiff; and such plaintiff shall be liable to the de- fendants for all damages which they may sustain by such proceedings. Appear- § 27. At anytime before the plaintiff in such suit shall fendante!*" have lost a trial therein, and after such time, upon good cause shown, the court may allow such corporation to ap- pear in the action and defend the same, upon such terms as the court shall think proper. (75) This section repealed by § 6 of the Act of April 11th, 18i2 (taws 1842, Chap, igY, p. 227). See this act, post. APPENDIX. 245 § 28. "Whenever such corporation shall have appeared Discharge in such suit, they may apply to the officer who issued such ment. attachment, or to the court, for an order to discharge the same. § 29. Upon such application, the said corporation shall Bona to be deliver to the court or officer, a bond to the plaintiff in the fSnti!* suit, with at least two sureties, residents and freeholders in this State, to be approved by such court or officer, in a pen- alty at least double the amount of the claim of such plain- tiff, proved as herein before directed, conditioned that the obligors in such bond will, on demand, pay the amount of the judgment that may be recovered against such corpora- tion, in such suit. §30. If there be more than one attachment issued j^P'^^-^^ against any foreign corporation, in behalf of several plain- several suits, tiffs, at the same term, or during the same vacation of a term, and judgments be rendered in favor of such plaintiffs, the court shajl apportion the proceeds arising from the sale of the defendant's property, among the said plaintiffs, in proportion to the amount of their respective judg- ments. ( 76 ) ACT OF MAY 14th, 1840. (LAWS 1840, CHAP. 354, P. 296.) An Act to amend the Revised Statutes in relation to proceedings agadnst absent debtors and foreign corpora- tions. Passed May lUJi, 1840. The People of the State of New York represented in Senate and AssemMy, do enact as follows: § 1. The eighth section of article first of title first of i"™"'''fy. chapter five of part second of the Revised Statutes, ismadeofef-° hereby amended so as to read as follows : oralbsmf *" "He shall immediately, on making such seizure, with*"- the assistance of two disinterested free-holders, make a>ju8t (76) See the Acts of May 14th, 1840, April 11th, 1842, May 13th, 1846, ■ February 21st, 1848, and March 15th, 1849, post 246 APPENDIX. and true inventory of all the property so seized, and of the books, vouchers, and papers taken into his custody, stating therein the estimated value of the several articles of per- sonal property, and enumerating such of them as are peri8h> able; which inventory, after being signed by the Sheriff, and the appraisers, shall, within ten days after such seizure, be returned to the officer who issued the warrant ; and the reSiradeMs, sheriff shall, under the direction of such officer, collect, creruts, &o. xeceivo, and take into his possession, all debts, credits, and effects of such debtor, and commence such suits and take cotostThm? such legal proceedings in the name of such debtor, as may be necessary for that purpose ; and which suits and pro- ceedings may be continued by the trustees to be appointed as lifireinafter directed, until a final termination thereof." § 2, The twenty-first section of article first of title four of chapter eight of part three of the Eevised Statutes, is hereby amended to read as follows : Powers of " The sheriff to whom such attachment shall be directed fatiSf'toVr-' and delivered shall proceed thereon in all respects in the ^jf°g°°'''*"*" manner prescribed by law in case of attachments against absent debtors, shall make and return an inventory, and shall keep the property seized by him, or the proceeds of such as shall have been sold, to answer any judgment which may be obtained in such suit, and shall, under the direction of the officer issuing such attachment, collect, receive, and aeite,°cred-' take into his possession, all debts, credits, and effects of its,&c. such, debtor, and commence such suits and take such legal proceedings, either in his own name or in the name of such foreign corporation, as may be necessary for that purpose, and discontinue the same at such time and on such terms, as the said officer may direct." § 3. The twenty-fourth section of article first of title four of chapter eight of part three of the Eevised Statutes, is hereby amended to read as follows : Proceed- " Jn casB )vdqment "be rendered for the 'plmntvff m mw ingsonjudg- , . , ''-.*' ,. 7 -j ■» ,7-^ Vr 7 .yr* ments against swe A suzt, and an easecuhon be a/wa/rded thereon, the shenjj poMtfons?' shall assign to the plamtif amy bond taken by him in the course of the proceedvngs, amd all debts, credits, and effects of such corporations as he may have seized, shall pay over to such plaintiff the proceeds of all sales of perishable prop- &rty, amdthe proceeds of all said debts, credits, or effects as he 'may home received, or of any vessel or share or interest in a vessel sold by hAm, or so much thereof as may be neces- sary to satisfy such execution ; and if any halance r&mavn, due, he shall sell v/nder such execution so much of the prop- APPENDIX. 24:7 ^^ ? bill of exchange, or non-payment of a bill of excliange, be directed." promissory note, or other negotiable instrument, may be given by sending the same by mail, it shall be sufiicient if such notice be directed to the city or town where the per- son sought to be charged by such notice resided at, the time 17 258 APPENDIX. of drawing, making or endorsing such bill of exchange^ promissory note or other negotiable instrument, unless such person at the time of affixing his signature to such bill, note, or other negotiable instrument, shall in addition thereto specify thereon the post-office to which he may require the notice to be addressed. . „ 8 25. Nothing in this act shall apply to bills of ex- tion of last change, promissory notes, or other negotiable instruments, section. made or drawn before this act takes effect. ACT OF APRIL 23, 1835. (LAWS 1835, CHAP. 141, P. 152.) An Act m relation to Bills of Exchange and Promiswry Notes. Passed April 23, 1835. The People of the State of New York, represented in Senate and Assembly, do enact as follows : Notice, how § 1- In all cases where a notice of non-acceptance of to be given, g^ \y[\\ gf exchange, or non-payment of a bill of exchange, promissory note or other negotiable instrument, may be given by sending the same by mail, it shall be sufficient if such notice be directed to the city or town where the person sought to be charged by such notice resided at the time of drawing, making, or endorsing such title of ex- change, promissory note or other negotiable instrument, unless such person at the time of affixing his signature to such bill, note, or other negotiable instrument, shall in addition thereto, specify thereon the post-office to which he may require the notice to be addressed. § 2. Nothing in this act shall apply to bills of - ex- saving change, promissory notes, or 'other negotiable instruments cianee. made or drawn before this act takes effect. APPENDIX. 259 ACT OF APRIL 4th, 1849. (LAWS 1849, CHAP. 261, P. 892.) An Act to designate the holidays to 1)6 observed in the ac- cmta/nce and payment of Bills of Exchange and Prormssory Notes. Parsed April 4, 1849. The People of the State of New YorJc, represented i/a Senate and Assembly, do enact as follows : § 1. The following days, viz*. : the first of January, H»"*«y»' commonly called New-years day, the fourth day of July, the twenty-fifth day of December, commonly called Christ- mas day, and any day appointed or recommended by the governor of this State, or the President of the United States, as a day of fast or thanksgiving, shall for all pur- poses wbatsoever as regards the presenting for payment or acceptance, and of the protesting and giving notice of the dishonor of bills of exchange, bank checks and promissory notes, made after the passage of this act, be treated and considered as is the first day of the week, commonly called Sunday. 260 APPENDIX. REVISED STATUTES. PAET II., CHAPTER IV., TITLE III. (1 H. S. 771—173.) TITLE III. OF THE INTEREST OF MONEY. § 1. The rate of interest upon the loan or forbearance of any money, goods or things in action, shall continue to be seven dollars upon one liundred dollars for one year, and after that rate for a quarter or less sum, or for a longer or shorter time. Greater in- § 2. 1^0 person or Corporation shall, directly or indi- MMieiL™ rectly, take or receive in money, goods or things in action, or in any other way, any greater sum or greater value, for the loan or forbearance of any money, goods or things in action, than is above prescribed. Excess paid § 3. Every person, who, for any such loan or forbear- covered btok^"^^' ^hall pay or deliver any greater sum or value than is in ono year, abovc allowed to be received, and his personal repre'senta- tives, may recover in an action against the person who shall have taken or received the same, and his personal representatives, the amount of the money so paid or value delivered, above the rate aforesaid, if such action be brought within one year after such payment or delivery. •When fo § 4. If such suit be not brought within the said one year, by"Tve.wera ^^^ prosccuted with effect, then the said sum may be sued of poor, &e. for and recovered with costs, at any time within three years after the said one year, by any overseer of the poor of the town where such payment may have been made, or by any county superintendent of tiie poor of the county in which the payment may have been made. Contracts § ^- "^^^ bouds, biils, notes, assurances, conveyances, all for greater other coutracts Or securities whatsoever, and all deposits of sum, TO! . gQQ(jg Q], otjjgj. things whatsoever, whereupon or whereby there shall be reserved or taken, or secured, or agreed to be reserved or taken, any greater sum or greater value, for the loan or forbearance of any money, goods or things in action, than is above prescribed, shall be void ; but Except ne- ^ijig gectiou shall not extend to any bills of exchange or APPENDIX. 261 promissory notes, payable to order or bearer, in the liands|jj«»M8^Mi!», of an endorsee or holder, who shall have received the same hoods <.f in good faith, and for valuable consideration, and who hadout'^BotiJe.''" not, at the time of discounting^such bill or note, or pay- ing such consideration for the same, actual notice, that such bill or note had been originally given, for a usu- rious consideration, or upon a usurious contract. [This Section amended iy %1 erf the Act of May 15, 183Y. See this act, post.'] § 6. Every person offending against the provisions of offenders this Title, sliall be compelled to answer on oath any bill d?B°'over'!'^ '" that may be exhibited against him in the court of chan- cery, for the discovery of any sum of money, goods or things in action so taken, accepted or received, in viola- tion of the foregoing provisions, or either of them. § 7. Every person who shall discover and repay or re- Difcovery, turn the money, goods, or other things so taken, accepted fehel-pen- or received, or the value thereof, shall be acquitted and ""y- discharged from any other or further forfeiture, penalty or punishment, which he may have incurred by taking or receiving the money, goods or other thing so discovered and repaid, or returned as aforesaid. § 8. Whenever any borrower of any money, goods or Borrower things in action, shall file a bill in chancery for a discov- *""'s tin not J ii J il_' • J.' J. 1 topayinte- ery of the money, goods or tnings m action taken or re- rest on sum ceived, in viola,tion of either of the foregoing provisions, '''°"°*' it shall not be necessary for him to pay, or offer to pay, any interest whatever on the sum or thing loaned ; nor shall any court of equity require or compel the payment, prJ^ciValfw- or deposit, of the principal sum, or any part thereof, as a''"^'^''. condition of granting relief, to the borrower in any case of a usurious loan forbidden by this chapter. § 9. For the purpose of calculating interest, a month Months ana shall be considered the twelfth part of a year, and as con- be^reckoned. sisting of thirty days ; and interest for any number of days, less than a month, shall be estimated by the propor- tion which such number of days shall bear to thirty. § 10. Whenever, in any statute, act, deed, written or nowinte- verbal contract, or in any public or private instrument J^^,'J°^''j«^<">'- whatever, any certain rate of interest is or shall be men- cerutn caee. tioned, and no period of time is stated for which such rate is to be calculated, interest shall be calculated at the rate mentioned, by the year, in the same manner as if the ' words " per annum" or " by the year," had been added to such rate. 262 APPENDIX. ACT OP *MAY 15, 1837. (LAWS 18d1, CHAP. 430, P. 486.) An Act to prevent uswy. Passed May 15, 1837. The People of the State of New YorTe, represented in Senate and Assembly, do enact as follows : § 1. The fifth Section of Title three, of chapter four, ment of fifth part two of the Remised Statutes is hereby amended so as ''"""'• to read as follows : § 5. All bonds, bills, notes, assurances, conveyances, all other contracts or securities whatsoever (except bottomry and respondentia bonds and contracts), and all deposits of goods or other things whatsoever, whereupon or whereby there shall be reserved or taken, or secured or agreed 4o be reserved or taken, any greater sum, or greater value, for the loan or forbearanc e of any money, goods or other things in action, than is above prescribed, shall be void ; but this act shall not affect such paper as has been made and transferred previous to the time it shall take effect, witnesses. § 2. Whenever in an action at law the defendant shall plead or give notice of the defence of usury, and shall ve- ■ rify the truth of his plea or notice by affidavit, he may, for the purpose of proving the usury, call and examine the plaintiff as a witness, in the same manner as other wit- nesses may be called and examined. Offenders § 3. Evcry pcrsou offending against the provisions of awelJ!"'^ '" the said title, or of this act, may be compelled to answer on oath, any bill that shall be exhibited against him, in the court of chancery, for relief, or discovery, or both. Bills In § 4. Whenever any borrower of money, goods, or things Chancery, jj, action, shall file a bill in chancery, for relief or discov- ery, or both, against any violation of the provisions of the said title or of this act, it shall not be necessary for him to pay or offer to pay any interest or principal on the sum or -thing loaned ; nor shall any court of chancery require or APPENDK. 263 compel the payment or deposit of the principal sum or interest, or any portion thereof, as a condition of granting relief or compelling or discovering to the borrower in any case, usurious loans forbidden by said title or by this act. _ § 5. Whenever it shall satisfactorily appear by the ad- coartT" ""^ missions of the defendant, or by proof, that any bond, bill, note, assurance, pledge, conveyance, contract, security, or any evidence of debt, has been taken or received in viola- tion of the pi'ovisions of said title or of this act, the court of chancery shall declare the same to be void, and enjoin any prosecution thereon, and order the same to be surren- dered and cancelled. § 6. Any person who shall directly or indirectly re- ^^'J"''''- ceive any greater interest, discount, or consideration than is prescribed in the said title, and in violation of the pro- visions of said title or of«this act, shall be deemed guilty of a misdemeanor, and on conviction thereof, the person so offending shall be punished by fine not exceeding one thousand dollars, or imprisonment not exceeding six months, or both. § 7. It shall be the duty of all courts of justice to court to charge the grand jury especially to inquire into any viola-jiu^f'' ^"'" tion of the provisions of the said title, or of this act. § 8. Every plaintiff examined as a witness pursuant to ^™}^'^;. the provisions of this act, or any defendant under the pro- swearing, visions of this act, who shall swear falsely, shall upon con- viction thereof suffer the pains and penalties of wilful and corrupt perjury ; but the testimony given by any plaintiff, or the answer of any defendant, made pursuant to the said title or of this act, shall not be used against such per- son before any grand jury, or on the trial of any indict- ment against such person. § 9. So much of title third, chapter fourth and part Bepmi. second of the Kevised Statutes, as is inconsistent with the provisions of this act, is hereby repealed. § 10. This act shall take effect on the first day of ^^^J ^^^'^ next. i8»r. "' ' 264 APPENDIX. ACT OP APRIL 6, 1850. (LAWS 1850, CHAP. 172, P. 334.) An Act to prohibit corporations from interposing the defence of usv/ry in any action. Passed April 6, 1850. The People of the State of New York, r&presemted in Senate and Ass&irMy, do enact as follows : Defence of § 1 • ISTo Corporation shall heireafter interpose the de- Hsury. fence of usury in any action. . § 2. The term corporation, as used in this act, shall be '"'construed to include all associations and joint stock com- panies having any of the powers and privileges of corpo- rations not possessed by individuals or partnerships. § '6. This act shall take effect immediately. CONSTITUTION OF THE STATE OF NEW YORK. {Adopted in 1846.) AETIOLE VIII. Corpora- 1 1. Corporatious may be formed under general laws ; oreatei"^^ but shall not be created by special act, except for munici- pal purposes, and in cases where, in the judgment of the legislature, the objects of the corporation cannot be ob- tained under geneial laws. All general laws and special acts, passed pursuant to this section, may be altered from time to time, or repealed. Debts of §2. Dues from corporations shall be secured by such ""''"""°°^' individual liability of the corporators and other means as may be prescribed by law. r "*^?de-™ § ^- '^^ term corporations, as used in this article, shall fined. be construed to include all associations and joint stock APPENDIX. 365 companies having any of the powers or privileges of cor- porations not possessed by individuals or partnerships. And all corporations shall have the right to sue and shall be subject to be sued in all courts in like cases as natural persons. § 4. The legislature shall have no power to pass any charters act granting any special charter lor banking purposes ; but purposes. corporations or associations may be formed for such pur- poses under general laws. § 5. The legislature shall have no power to pass any speciepay- law sanctioning in any manner, directly or indirectly, the™™'°" suspension of specie payments by any person, association or corporation issuing bank notes of any description. § 6. The legislature shall provide by law for the regis- Eegistryof try of all bills or notes issued or put in circulation as money, and shall require ample security for the redemp- tion of the same in specie. § 7. The stockholders in every corporation and ioint inaiTMnni , V -i-i-ii- "^ ■'••iT"'i responsibili- stock association tor banking purposes, issuing bank notes ty of stook- or any kind of paper credits, to circulate as money, after'"''*"'' the first day of January, one thousand eight hundred and fifty, shall be individually responsible to the amount of their respective share or shares of stock in any such cor- poration or association, for all its debts and liabilities of every kind contracted after the said first day of January, one thousand and fifty. § 8. In case of the insolvency of any ^ank or banking insolvency association, the bill holders thereof shall be entitled to prefMeDce. preference in payment over all other creditors of such bank or association. 266 APPENDIX. NEW YORK CLEARING HOUSE. Foe two years past, the banks of the City of New YorJe have conducted their exchanges with each other through the Clea/ring House. The adoption of this system lias not only saved inuch labor, but has led to important changes in the manner of doing business. Some account of its origin, its working, and its results, will not be deemed inappropriate here. At the time when this institution started, fifty-seven banks, between which exchanges had to be made; were doing business in the city of l^ew York. On the plan then in use, each bank must have an account with every other bank. In fact, each one of these institutions kept a City Bcnik Ledger pf fifty-six bank accounts, and also, on their General Ledger, an account with " City Bomfcs, " which account was made up of the totals of the fifty-six accounts in the City Bank Ledger. Thus, each bank, which exchanged with all its associates, was compelled to keep fifty-seven open, active accounts. It follows, tliat the whole number of such accounts, supposing that all ex- changed with all, was three thousand two hundred and forty-nine. This, however, would overstate the actual fact, as there were always some exceptions to a universal and reciprocal exchange. Each bank received from its dealers, on deposit or in payment of notes, &c., the bills of and checks upon every other city bank, and also of banks not in the city, if they redeemed at pa/r through some bank in it. At the close of the day's transactions, the funds thus received were as- sorted and brought together. The items for each bank were entered on a slip, with the total amount in which each was debited. To these, on the following morning, were added such items as came by mail, or from any other source before the delivery of the exchanges. For the total amount, after such additions, an entry had to be made to the debit of each bank whose exchange had been increased. APPENDIX. 267 The exchanges were then sent from bank to bank. For two hours and more the tellers and porters were occupied in their reception and delivery ; before the result could be known, it was necessary to receive the last exchange, to make at least fifty-six debit and credit entries on the books of the respective banks, and the same number of entries in the pass-books used in exchanging. That is, there were one hundred and twelve postings on each of the fifty-six City Bank Ledgers. Thus an aggregate of about six thou- sand five hundred entries and postings were required daily, in making the exchanges. There were so many banks, that it took a large part of their time to exchange and settle with one another. Their balances were paid in coin, and the custom was to settle them on Friday of each week, though all were at liberty to draw at pleasure for balances due. Every bank was daily a debtor to some banks, and a creditor of others. Ttiis happened, whether a bank were, in the aggregate, deb- tor or creditor. When a settlement was made, each bank had to draw off, on a separate book, the city bank balances as they stood on the morning of settlement-day after the exchanges were made. When the money market was stringent, or specie was want ed for shipment, the banks often drew on one another, without waiting for tlie regular settling day. After the week- ly statement law went into force (see pp. 195, 196, ante) they used to draw nearly every day. The course of oper- ation was somewhat as follows : — A bank, wanting specie, drew on some other bank which owed it a balance ; this batik paid, probably, with a draft on some other bank which owed it. Then came a general drawing of drafts, extending to all the banks, and lasting through the bank- ing hours. Next came a movement of specie from bank to bank, all over the city. Some paid, others took, — one or the other, all did ; and when the movement was over, they were just as near a settlement as when they began. All this expensive fuss was occasioned often by a small defici- ency of coin in some particular quarter. Often, the result of such movements was a general ■want of confidence, followed by a contraction of loans, by need- less panics, and fluctuating stock markets. A system at- tended with so much labor and uncertainty, so productive of errors, of competition, and disagreement, could not be long endured. The want of some better system for the mutual exchanges and settlements of the banks, was gener- ally and strongly felt. The General Bank Act and the 268 APPENDIX. mimerons banks to which it gave rise, the passage of stricter laws in regard to banking, and especially of that which required tlie rendering of a weekly statement, tended much to make more apparent the necessity of some change. But though bank officers talked the matter over, and though various schemes and remedies were suggested, in con- versation and through the papers, nothing effectual was done, until 1853. On the 23d of August in that year, in obedi- ence to a call from the Mechanics' Bank, a meeting of bank officers was held to consider the subject. Sixteen Presi- dents, one Vice-Presidefit, and twenty-one Cashiers were present, the representatives of thirty-eight banks. No such meeting had occurred for a long time. Among the officers of the older banks there were several who had not met for years, and quite a number of the gentlemen were wholly unacquainted. ^Notwithstanding this, the meeting proved remarkably harmonious. The necessity of some change in the prevailing system Was fully recognized, and a commit- tee was appointed to consider the subject and report a plan. A series of meetings followed, which resulted in forming an association of banks, and in the establishment, by that associ- ation, of the New Yorh ,Olea/ring House. Ihe Clearing Souse commenced operations under the direction of a com- mittee appointed by the associated banks. Their names follow : — Fean-cis W. Edmonds, Cashier of the Mechanics' Bank. James Punnett, Cashier of the Bank of America. Augustus E. Sillimah, Cashier of the Merchants' Bank. John L. Evkeitt, Cashier of the Broadway Bank. PiCHAJJD Beeet, Cashier of the Tradesmens' Bank. By this committee. Me. Geoege D. Ltman, then a teller in the BanTc of North America, was appointed Man- ages of the Cleaeing House, to be assisted by two Clerks ; soon after. Me. Jacob ^tovs: ^di&m&dL& Assista/nt Manager. The institution thus organized, has been in successful operation from that time. At its commencement, there were fifty-two banks in the association, forty-eight of which are still associated. The five banks which declined joining were small institutions. Two or three of them subsequently sought admission, which it was not thought advisable to grant. 'So bank can now do business unless it is admitted to the Clearing House, or makes its exchanges through some bank belonging to the association. Such an arrangement APPENDIX. 269 is too inconvenient to "he extensively adopted. As no new banks have been established since the Clearing House be- gan, its creation has evidently proved a wholesome check upon excessive banking. On the day when the Clearing House began business, about twenty-seven hundred open active accounts on the ledgers of the associated banks, were balanced, — the most of them for the first time, and all of them finally. The business which had rendered necessary this large mimber of accounts, was thenceforth accomplished more quickly, with less annoyance to bank officers, and with greater safety to all concerned. While there was an immense saving of time and labor, the incidental benefits resulting far exceeded the expecta- tions of those who projected the establishment. It has strengthened the entire banking system of the city; it tends to prevent sudden contractions and expansions ; makes the business of banking more uniform, regular, and safe ; while the banks themselves are really more inde- pendent. Each bank now regulates its affairs by the daily position of its balances with the Clearing House ; knowing that its debtor balances must be paid every day in full, and that its credit balances will be received in the same way. As the daily movements of each bank in the asso- ciation can be known by inspecting the accounts of the Clearing House, every bank knows how to govern its ex- changes with its associates, and may conduct its own busi- ness with entire independence of other banks. Under the old mode, banks had no means of knowing each others' situation. The Clearing House books show this, and are open to all the members. The value of such information must be evident to all. Tliis association of the banks gives strength to them all. No bank which does not manage its business on a safe basis, and according to the true princi- ples of banking, will be received or retained by the associa- tion. It is quite clear that the associated banks have a great advantage over any which may try to do business inde- pendently of the Clearing House. The daily settlement, in full, of balances, is sure to correct any tendency among the associates, to excessive banking. Such a state of things becomes immediately known to all, is followed by loss of credit and standing, and, if continued, by suspension or expulsion ; and this is the same as utter ruin. Credit is essential in the conducting of banking business ; and if a 270 APPENDIX. / bank has not enough of this essential to make its exchanges, it cau no longer do business, and must wind up. In the bank association of the NewYork Clearing House, there is a common bond of union. All have an equal voice in its management. All share alike in its privileges and benefits. In an important sense, the interest of each is thus made the interest of all. Nor is it a slight advantage that it brings together, and makes acquainted, theofiicers of the several banks — and thus leads to harmony both of feeling and action. While each institution still seeks for itself the highest profit consistent with security, all are brought to feel that they have a common interest in maintaining the credit of the banking system. All must be aware that the prosperity of the city of New York is largely dependent on the credit of its banks. Through the facilities which they afford or withhold, they give tone to its business, which they not only represent, but, to a great extent, sustain and control. How import- ant that their management should be right and safe ! How essential to the prosperity of a mercantile community, that the credit of its banks should continue unimpaired! There can be no question that the establishment of the New York Clearing House has added to the credit of the city banks, and to the permanent prosperity of the cify itself. As this institution is now well established, its use- fulness admitted, and its system about to be imitated by the banks of other cities, an account of the mode in which its business is conducted may be timely and useful. The daily routine of business is as follows : At ten, A. M., each of the forty-eight associated banks is represented at the Clearing House by a settling clerk and a specie clerk, or porter. The settling clerk brings a state- ment, showing — First. The amount which has been received by the bank he represents, of checks upon, bills of, and checks and notes of, other banks redeemed by each and every bank belonging to the association, down to the close of business on the preceding day. Secondly. Amounts received by remittances or in other ways, and added to the exchanges, that morning. Thirdly. The united amount of the first two items, be- ing the total of what they bring to the Clearing House for exchange. The following is given as a specimen of the ruling or form of the above statement. APPENDIX. 271 Wo. 1, Settling CUrKs Statement of the Banh of New York, October 1st, 1855. KO. BANKS. FIB3T DEBIT. ADDITIONS. TOTAL DEBIT. BANKS CK. NO. 2 3 4 Manhattan Co., . . . Merchants' Bank, . Mechftnics' Bank, . Footings, $10,000 00 2,000 00 5,000 00 $7,000 00 600 00 $10,000 00 9,000 00 5,600 00 $6,000 00 15,000 00 8,754 00 2 3 4 $17,000 00 $7,500 00 $24,500 00 $29,754 00 Dr. Balance, $5,254 00 He also brings a ticket, which informs the Clearing Souse of the amount sent for exchange by the bank he represents, and for which he receives a crejdit. This amount is shown in his statement, under the column headed " Total debit," and in the above example would be $24,500 00. This statement has a column in which the amounts to be received are to ie entered. This column is headed " Banks Cr." The specie clerk or porter of each bank brings with him a statement of the amount, which the bank he repre- sents sends in against each of the other banks, made in the following form : No. 1, Specie Cleric's Statement of the Bank of New York, October 1st, 1855. NO. BANKS. DE. DE. RECEIVED BY. NO. 2 3 4 Manhattan Company, . Merchants' Bank, .... Mechanics' Bank Union Bank, $10,000 00 9,000 00 5,500 00 C. B. S. G. 2 3 4 5 $24,600 00 The specie clerk also brings the exchanges, composed of checks upon and bills of the several banks, made up in parcels for each bank, with a slip upon the top stating the amount of each item of exchange ; stating also the total of the amount to be delivered each bank. This statement has a column headed " Eeceived by " — the slip covering each exchange is in the following form, as shown by a slip of Bank No. 1, the Bank of 2NeW York, on Bank No. 2, the Manhattan Company : — 272 APPENDIX. No. 2, Manhattan Company. From Ho. 1, Bank of New York. Check, $2,500 00 6,500 00 1,000 00 Bills, $10,000 00 The counter of the Clearing House is an ellipse. Each of the forty-eight banks, which are numbered according to their age, has its own portion of this counter, distinctly marked. At ten o'clock the manager calls the clerks to their stations. The settling clerks arrange themselves on the inside of the counter — the specie clerks take the outside. The specie clerks so arrange their exchanges, that the first is for the bank next on the right — and the last for that up- on the left. At the manager's signal, each of these clerks moves toward the right, and delivers to the bank next his, the parcel of monej' which he has for it. For this he takes a receipt of the settling clerk, who must first make sure that the amount received corresponds with that named in the statement brought by the specie clerk. In this way, the specie clerks proceed till they have made the circuit of the counter : by which time all their exchanges have been delivered, and a receipt has been taken- for each. The whole is done in five minutes. The settling clerks enter the exchanges on their statements to the credit of the re- spective banks, and then call them over with the specie clerks to make sure that all is right. They then ascertain the amount received, and the difference between that and the amount brought by the specie clerk of their bank to be exchanged. This decides whether it is debtor or creditor with the Clearing Plouse. The specie clerks now go home, and the receipts which they carry convey to the banks thus early in the morning, a knowledge of their position at the Clearing House for that day. The settling clerks remain, and each prepares a ticket, stating the amount he has re- ceived — the amount brought, and the balance between the two sums, whether for or against his bank. From these APPENDIX. 273 tickets, and those whicli were brought to the Clearing House by the settling clerks, the entries on the Clearing House proof are made, and, at half-past ten, the result is announced. It is plain that the aggregate amount of exchanges sent to the Clearing House, and for which each bank receives on the proof sheet its proportion of credit, must be the same as the aggregate amount returned to the banks, after making the exchange — although each bank thus becomes a debtor or creditor of the Clearing House. The total indebtedness thus created, of the banks to the Clearing House, exactly equals the indebtedness of the House to those banks which brought a greater amount of exchanges than they received. In omer words, each bank sends to the Clearing House forty-seven parcels of exchange — ^being one for each of the other associate banks. For these, respectively, it gets the receipts of the settling clerks of their banks. With the total of these receipts it is credited by the Clearing House. It also receives one exchange from each of the other forty- seven banks, giving the receipt of its settling clerk therefor. With the total amount thus received, it is debited by the Clearing House. If a bank delivers a larger amount of ex- changes than it receives, the Clearing House becomes in- debted to it for the difference : or, if it be the other way, the Clearing House is its creditor for the balance. The following specimen of a proof sheet, made for five banks, illustrates what is stated above : — • New York Clearing House Proof, October 1st, 1855. KO. BANKS. BALANCES DUE BY BANES. BANKS DB. BANKS CB. BALANCES DDE TO BANKS. 1 2 3 4 6 B'k of Ne-w York, Manhattan Co., . . Merchants' Bank, Mechanics' Bank, Union Bank, $5,254 00 46,000 00 8,111 80 $1,129,754 00 1,450,000 00 2,796,000 00 1,195,634 20 1,039,892 88 $1,124,500 00 1,500,000 00 2,750,000 00 1,200,000 00 1,036,781 08 $50,000 00 4,365 80 $54,365 80 $7,611,281 08 $7,611,281 08 $54,365 80 As might be expected in a process depending on the accuracy of nearly a hundred clerks, errors often occur. It seldom happens that a proof is obtained at the first trial. 18 274 APPENDIX. To detect these errors, small check tickets, like the accom- panying example, are used. All the banks are provided with sets of these tickets, printed with blank amounts, one for each bank, and made up in parcels, in numerical order, as the banks are arranged at the Clearing House: each bank using one set of tickets per day. It has already be^n shown that the proof is based on the statements of the settling clerks ; that No. 2, Manhattan Company, from No. 1, , Bank of New York. $10,000 the amounts therein stated are assumed as correct ; and that the credit entries are made from exchange slips. It is evi- dent that the statement of each settling clerik contains two amounts, which must also be found on the statement of every other bank in the association. To assure their agreement it is necessary that each settling clerk shall make a set of tickets from his statement, showing thei amount according to it, which he has set against every other bank. After making out and delivering these tickets, each settling clerk proceeds to compare and check those which he has received. He thns reconciles his entries made from exchanges re- ceived, with the debits made on the statements of the banks from which the exchanges came. If the, proof be not ar- rived at in this way, the diflfierence is clearly owing to some error in footing. To ascertain where and what it is, the settling clerks are directed to interchange their statements, and to examine each other's footings. By this process the last error is detected and a proof is made. The clerks are then dismissed, and not till then. To insure dispatch and accuracy, forty-five minutes are allowed for getting the proof. For every error not found before the expiration of this time, a fine is imposed, varying from one dollar to twelve dollars, and these fines are reported monthly to the banks whose clerks have made the errors. The clerks are thus rendered vigilant and at- tentive, and the making of the proof seldom exceeds the allotted period. Connected with the Clearing House is a deposit baitk. At this time the Bank of America acts in such capacity for the association. In this bank, the other members of the association deposit specie in such sums as they see fit, receiving certificates of deposit in sums of $500, |1,000, $5,000, and $10,000. These certificates state that the Bank of America has received, and holds the same in trust, APPENDIX. 276 as a special deposit, payable only to the order of a bank belonging to the association, on presentation, indorsed by such bank. The amount held in this way by the Bank of America for some time past is $6,600,000. Tlie certificates alluded to are used instead of specie, in settling balances with the clearing house. They thus ren- der needless a daily and costly transportation of coin. At one o'clock, the debtor banks come to the clearing house, and pay the balances against them in these certifi- cates ; or if the sums be less than $500, in their own notes and in coin. These banks having all paid their debts and taken the manager's receipts therefor, the creditor banks, at half past one, come in, by their specie clerks, take the balances due them, and give their receipts for the same. At two, P. M. the settlement is completed, and the day's work is over. The results thus accomplished may be briefly enumer- ated as follows : First: The condensation for each bank of forty-eight balances into one, and the settlement of that balance with- out a movement of specie. Secondly: The avoidance of numerous accounts, entities, and postings. Thirdly : Great saving of porters' time, and risk in mak- ing exchanges and settlements from bank to bank. Fourthly : Relief from a vast amount of labor and an- noyance to which the great armj' of cashiers, tellers, and book-keepers were subjected under the old system. Fifthly : The liberation of the associated banks from all injurious dependence on each otlier. Sixthly : The absolute facility afforded by the books of the Clearing House, for knowing at all times the manage- ment and standing of every bank in the association. To other advantages and results, more general in their nature, and less direct, but not less important and benefi- cial, we have already alluded. The Clearing House sys^ tern needs no higher commendation than the fact, that it has proved entirely satisfactory to the banks and banking interests of the city of New York. It has checked, and almost wholly prevented, those violent expansions and con- tractions of loans, which produce unhealthy fluctuations in the money market. It has enlarged the specie basis of the banks by rendering it absolutely necessary for its members to hold at all times such an amount in specie, or specie certifi- cates, as will enable thejp to meet promptly every demand 276 APPENDIX that can be made upon them. It thus- makes the suspen- sion of specie payments very improbable. The system has proved no less satisfactory to the com- munity in general. Its value is beginning to be under- stood elsewhere. Boston has just adopted it. Its immense and manifest utility must commend it to every large city in the Union. Possibly, the time is not remote when a voluntary system of par exchanges, and redemption of bank issues, will exist among all the banks of the United States. The business of the Few York Clearing House in ex- changes, averages about $20,000,000 per day. The daily balances amount to about $1,000,000. Yast as are these amounts, the exchanges are all made in five minutes ; the proof is obtained in less than an hour, and the balances between the banks are all settled between the hours of one and two, P. M. For two years this enormous business has been transacted without the error or loss of a single cent. The institution costs the banks about $16,000 a year ; an expense which is divided among them in proportion to their capital. It is, therefore, as cheap as it is useful. The Clearing House is on the second floor of ISo. 82 Broadway. Its officers are, a manager, an assistant man- ager, and a clerk. Its accounts, though so large in amount, are very simple. They are mainly kept in four books. First : The Eecoed Book. This is a mere copy of the proof sheet. Second : The Balance Book. In this a receipt is taken for every balance paid to a creditor bank. Third : The Ledger. In this all amounts entered on the Eecord Book are duly posted to the account of each bank. Fourth : The Monthly Statement Book. This is made up from the Ledger, and is a proof of it. The last is the most important book kept by the Clear- ing House. It shows the monthly amount of exchanges received from and delivered to each bank ; the balances paid and received by each ; and the monthly movements of each bank, whether as debtor, in excess, or creditor. By examining this book through a series of months, the course of business in any bank may be exactly known ; and from this a reliable opinion may be formed in regard to the man- agement and real position of the Bank. Accordingly, this book is often consulted. By reference to it, the bank offi- cers regulate, to a great extent, their mutual exchanges. APPENDIX. 27T There are other boots, such as its own accounts, and one for the statistics of banking. The weekly statement required by law of the banks, and published in the pa- pers every Tuesday morning, is made up in tabular form from this book. An account of these statements is kept with each bank, an account which shows its increase or decrease of business. From the same book at the end of the year, is drawn a statement of the average business of each bank during the year. The fluctuations in business in any month or week, the growth or decline of business with each and every bank, may be found here. This association is a voluntary organization, and is gov- erned by the following Constitution.* * For the preceding clear and valuable account of the New York Clear- ing Souse, the compiler is indebted to Geobge D. Lyman, Esq., the able and successful Manager of the Institution. 278 APPENDIX. CONSTITUTION NEW YORK CLEARING HOUSE. Adopted June 6tli, 1$54. § 1. The name of thia, Association shall be "The New ToEK Oleaeing Hoitsb Association." § 2. The objects of the Association shall be the effecting at one place of the daily exchanges between the several Associated Banks, and the payment at the same place of the balances resulting from such exchanges. But the Asso- ciation shall be in nowise responsible in regard to such ex- changes, nor in regard to the balances resulting therefrom, except so far as such balances shall be actually paid into the hands of the Manager. The responsibility of the Asso- ciation is strictly limited to the faithful distribution by the Manager among the Creditor Banks, for the time being, of the sums actually received by him ; and should any loss occur whilst the said balances are in the custody of the Manager, they shall be borne and paid by the Associated Banks, in the same proportion as the other expenses of the Clearing House, as hereinafter provided for. § 3. The Association at present consists of the following members : — {Here cure inserted the names of the Associated Banks.) § 4. Each Bank belonging to the Association shall be represented at all meetings thereof by one or more of its principal officers, and shall be entitled to one vote. § 5. A general meeting of the Association shall be holden at the Clearing House, on the first Tuesday in Oc- tober, in each year, at 12 o'clock M. At every annual meeting a Chairman shall bfe elected, by ballot, to preside at that meeting, and all subsequent meetings during the year. "Whenever he shall be absent, a Chairman pro tern. APPENDIX 279 shall be appointed. At the same meeting, a Secretary shall also be elected by ballot. § 6. Special meetings shall be called by the Clearing House Committee whenever they may deem it expedient, or whenever they shall be thereto requested by any seven of the Associated Banks. § 7. At all meetings of the Association, a qiwrum for the transaction of business shall consist of a majority of the whole number of Associated Banl;s. § 8. At every annual meeting, a Standing Committee of Five Bank Officers shall be elected by the majority and by ballot, to be called the Clearing House Committee, whose duty it shall be to procure, from time to time, a suitable room or rooms for the Clearing House ; to provide proper books, stationery, furniture, fuel, and whatever else may be necessary for the convenient transaction of business thereat ; to appoint a Manager annually, and such Clerks as may be necessary ; to establish rules and regulations to be observed at the Clea/ring House in cases not provided for in this Constitution, subject to the approval of the Association ; and generally to supervise the Clearing House affairs. This Committee shall have charge of the funds belonging to the Association ; shall draw on each bank for its quota of the expenses ; and shall also, at the first meeting of the Association after their election, submit detailed estimates of the expenditures that will be required for the Clearing House during the current year. § 9. The salary of the Manager shall always be fixed by the Association. The salaries of the Clerks shall be fixed by the Clearing House Committee. The Manager shall give a bond, with sureties, in the sum of ten thousand dol- lars, and each Clerk in the sum of five thousand dollars, to be approved by said Committee. § 10. The Manager, under control of tlie Clearing House Corrmviitee, shall have immediate charge of all business at the Clearing House, so far as relates to the manner in which it shall be transacted ; and th6 Clerks of the estab- lishment, as well as the Settling Clerks and Porters of the several Associated Banks, while at the Clea/ring House, shall be under his direction. § 11. The Clearing House Committee shall have power to remove the Manager or any of the Clerks, whenever, in the opinion of the Committee, the interest of the Associa- tion shall require. § 12. The hour for making exchanges at the Clea/ring 280 APPENDIX. Souse shall be 10 o'clock A. M., precisely. At 1 o'clock P. M., the debtor banks shall pay to the Manager, at the Cleanng House, the balances against them, either in actual coin, or in the certiiicates hereinafter mentioned, except fractional amounts. At 1^ o'clock P. M., the creditor Banks shall receive from the Manager, at the same place, the respective balances due to them, provided the balances due from the debtor Banks shall then have been paid. § 13. Should any one of the Associated Banks fail to appear at the Glearmg Souse at the proper hour, prepared to pay the balance against it,-the amount of that balance shall b6 immediately furmshed to the Olea/rvng House by the several Banks exchanging at that establishment with the defaulting Bank, in proportion to their respective balances against that Bank resulting from the exchanges of the day; and the Manager shall make requisitions accordingly, so that the general settlement may be accomplished with as little delay as possible. The respective amounts so furnished the Clea/rvrig House on account of the defaulting Bank will, of course, constitute claims on the part of the several respond- ing Banks against that Bank ; but, as before stated, the Association ^all in nowise be responsible therefor. § 14. Errors in the exchanges, and claims arising from the return of checks, or from any other cause, are to be ad- justed directly between the banks who are parties to them, and not through the Clearing House, the Association being in no way responsible in respect to them. § 15. Reclamations for errors and deficiencies in specie received at the Clearing House, contained in bags or other packages, sealed and marked in conformity with any rules established upon that subject by the Clearing House Com- mittee, should be made within a reasonable time by the receiving Bank directly against the Bank whose mark the sealed bag or package bears, the Association not being re- sponsible for the contents of such sealed bagS or other packages. § 16. The Associated Banks shall, from time to time, appoint one of their own number to be a Depositary to re- ceive, in special trust, such coin as any of the Associated Banks may choose to send to it for safe keeping. The De- j^ositary shall issue certificates in exchange for such coin, in proper form, and for convenient amounts. Such certifi- cates shall be negotiable only among the Associated Banks, and shall be received by them in payment of balances at tlie Clea/ring House. Such special deposits of coin are to APPENDIX. 281 be entirely voluntary, eacli Bank being left perfectly free to make them or not at its own discretion. The coin thus placed in special deposit is to be the absolute property of such of the Associated Banks as shall, from time to time, be the holders of the certificates, and is to be held by the Depositary subject to withdrawal, on the presentation of the proper certificates, at any time during banking hours. § IT. New members may be admitted into the Associa- tion at any meeting thereof. Such new members shall pay an admission fee of one thousand dollars, and shall signify their assent to this Constitution in the same manner as the original members. But no new member shall be admitted except by a vote of three-fourths of those present. § 18. A Standing Committee oi Five Bank Officers shall be appointed at every annual meeting, to whom all appli- cations for admission into the Association shall be referred for examination. § 19. For cause deemed sufficient by the Associated Banks, at any meeting thereof, any Bank may be expelled from the Association, and debarred from all the privileges of the Clearing House, provided a majority of the whole number of Associated Banks vote in favor tnereof, § 20. A Standing Committee of Five Officers of BamJes shall be elected at every annual meeting, who, acting in concurrence with the Clearing Souse Cormrvittee, shall have 5)0wer, in case of extreme emergency, to suspend any Bank rom the privileges of the Cleaning Souse until the pleasure of the Association thereupon shall be ascertained. But no such suspension shall take place unless a majority, at least, of each of these two Committees shall be present at the or- dering thereof, nor unless the vote be unanimous. In case of such suspension, the Clearing Souse Committee shall forthwith call a general meeting of the Association to take the matter into consideration. § 21. Any member 6f the Association may withdraw therefrom at pleasure, first paying its due proportion of all expenses incurred, and signifying its intention to withdraw, to the Clearing Souse Com,mitfee. ' § 22. The expenses of the Clearing Souse, not including the expense of printing for the several Banks (which last- mentioned expense shall be apportioned equally), shall be borne and paid by the several Banks belonging to the As- sociation, according to their respective capitals, as follows : Banks having capitals of less than $500,000, shall pay $100 each, annually. 282 APPENDIX. Banks having capitals of less than $1,000,000, and not less than $500,000, shall pay $200 each, annually. Banks having capitals of $1,000,000 and over, shall pay $300 each, annually. And in the same proportion if more funds become necessary. § 23. This Constitution, when agreed to by the Associa- tion at any general meeting thereof, by a majority of votes, shall be submitted to the respective Boards of Directors of the several Banks herein named as members of the Asso- ciation, for their adoption. When adopted by a majority of the whole number of Banks, it shall be deemed and taken to be in full force and operation. Adoption shall be signi- fied by the signature of the proper officer of the Bank to two copies hereof, one to be kept by the Chairman of the Clewring House Committee, and the other by the Secretary of the Association. A copy of the vote or resolution of the Board authorizing such signature shall be deposited with the Secretary. Such Banks as shall not adopt this Consti- tution within two months from the time it is agrefed to in general meeting as above mentioned, shall, at the expira- tion of such two months, cease to be members of the Ass6- Ciatioh, provided the Constitution shall then bie in opera- tion. § 24. Amendments of this Constitution may be made at any meeting of the Association, by the vote of a majority of all the members thereof, notice of the proposed amend- ments having been given at a previous meeting. The following is a list of the banks in the city of New York, now belonging (November, 1855) to the Asso- ciation called the New Yoek Cleaeing House — with the capital, and the Clearing Souse number, of each bank. No. Na-mks of Banks. Capital. 1. Bank of New York, . $2,000,000 2. Manhattan Company, Merchants' Bank, 2,050,000 3. . 1,490,000 4. Mechanics' Bank, 2,000,000 5. Union Bank, . 1,500,000 6. Bank of America, 2,000,000 7. Phcenix Bank, . . 1,200,000 8. City Bank, , . 1,000,000 APPENDIX. 283 No. Kames of Banks. 9. Nortli Eiver Bank, 10. Ti-adesmen's Bank, . 11. Fulton Bank, 12. Cliemical Bank, 13. Mercliants' Exchange Bank, 14. National Bank, 15. Butchers' and Drovers' Bank, 16. Mechanics' and Traders' Bank, 17. Greenwich Bank, 18. Leather Manufacturers' Bank, 19. Seventh "Ward Bank, 20. Bank of the State of New York, 21. American Exchange Bank, 22. Mechanics' Banking Association, 23. Bank of Commerce, 24. Bowery Bank, 25. Broadway Bank, 26. Ocean Bank, 27. Mercantile Bank, 28. Pacific Bank, 29. Bank of the Kepublic, . 30. Chatham Bank, 31. People's Bank, . 32. Bank of North America, 33. Hanover Bank, 34. Irving Bank, 35. Metropolitan Bank, 36. Citizens' Bank, 38. Grocers' Bank, . 40. Nassau Bank, 41. East Eiver Bank, 42. Market Bank, 43. St. Nicholas Bank, 44. Shoe and Leather Bank, 45. Corn Exchange Bank, 47. Continental Bank, 48. Bank of the Commonwealth, 49. Oriental Bank, 50. Marine Bank, 62. Atlantic Bank, Capital. 655,000 600,000 600,000 300,000 1,235,000 750,000 600,000 200,000 200,000 600,000 500,000 2,000,000 3,000,000 632,000 5,000,000 356,650 600,000 1,000,000 1,000,000 422,700 1,500,000 450,000 412,500 1,000,000 1,000,000 300,000 2,000,000 400,000 300,000 600,000 413,060 660,000 600,000 600,000 914,000 1,600,000 760,000 300,000 500,000 400,000 Whole No. of Banks, 48. Capital, $47,880,900 284 APPENDIX. BANKS CHARTERED BY THE STATE OF NEW YORK FEOM 1782 TO 1829. Yeae. Kames of Banes. Okiqinal Capital. 1Y82. ' Bank of Noeth Ameeioa,* . $10,000,000 1791. Ba^ of ITifiW YOEK, . . 1,000,000 1792. Bank of Albany, 260,000 1793. Bank OF Columbia, . 160,000 1799. Manhattan Company, 2,060,000 1801. Farmers' Bank, . 300,000 18Q3. New Yoek State Bank, 460,000 1805. Mbeohants' Bank, . 1,250,000 1807. Mohawk Bank, 200,000 1808. Bank of Hudson, 800,000 1810. Mechanics' Bank, 1,500,000 1811. Bank of Newbuegh, 400,000 u Bank of Teoy, 600,000 (( Union Bank, . . . . 1,800,000 (( Mechanics' and Faemees' Bank, . 600,000 cc Middle Disteict Bank, 500,000 1812. Bank of Ameeica, . . . 6,000,000 (( City Bank, . 2,000,000 « New Yoek Manufactueing Company, 700,000 (C Bank of Utica, . 1,000,000 1813. Bank of Oeange County, . 400,000 li Ontario Bank, 500,000 li Bank of Lansingbuegh, 200,000 a Catskill Bank, . . 400,000 1814. 181.^ ' • 1816. Bank of ISTiagaea, . 400,000 (( Jeffeeson County Bank, . 400,000 * This Bank was chartered by the Continental Congress in 11S1. never transacted business under its New York Charter. It APPENDIX. 285 Year. Names of Banes. Obiginal Capitai. 1817, Bank of Geneva, 400,000 (C Phcenix Bank, . 700,000 (( Bank of Attbuen, 400,000 (1 Bank of Washington and Waeren, . 400,000 (C Bank of Plattsbuegh, 300,000 1818. Centkai. Bank, . 200,000 u Bank of Chenango, 200,000 (C Feanklin Bank, 600,000 1819. Geeene County Bank, 90,000 1820. 1821. ]892 ' * 1823. Tradesmen's Bank, . 600,000 1824. Fulton Bank, .... 500,000 a Chemical Bank, 400,000 , 1855.) American Exchange Bank, Atlantic Bank, Bank or America, Bank op Commerce, Bank op the Commonwealth, Bank op New York, Bank op North America, . Bank op the Eepublic, . Bowery Bank, . Broadway Bank, . Bull's Head Bank, Butchers' and Drovers' Bank, Chatham Bank, . Chkmical Bank, Citizens' Bank, . City Bank, Continental Bank, . Corn Exchange Bank, . East River Bank, Fulton Bank, . Grocers' Bank, . Hanover Bank, Irving Bank, Island City Bank, . Marine Bank, . 19 Capital. $3,000,000 400,000 2,000,000 5,000,000 750,000 2,000,000 1,000,000 1,500,000 356,650 600,000 173,300 • 600,000 450,000 300,000 400,000 1,000,000 1,500,000 914,000 413,050 600,000 300,000 1,000,000 300,000 299,200 500,000 Counteesiqn'd Notes in ClEOULATION, Aug. 2d, 18SS. $316,001 94,554 2,165 82,161 138,506 87,794 105,268 163,696 209,808 95,799 54,926 97,605 273,300 144,091 74,033 94,405 92,654 137,395 83,744 110,717 105,944 79,496 94,074 290 APPENDIX; Banking Coeporations, under the General Law, in the Citt of New Yokk. (August 2d, 1855.) Capital. Counteksign'd Notes in OmODLATION, Aug. 2i>, 1855. Market Bank, Mechanics' Bank, Mechanics' Banking Association, Mercantile Bank, Merchants'" Exchange Bank, Metropolitan Bank, . Nassau Bank, New York Exchange Bank, » North River Bank, 'Ocean Bank, Oriental Bank, . . Pacific Bank, . Peoples' Bank, Phenix Bank, , Saint Nicholas Bank, . Shoe and Leather Bank, . Tradbsmbns' Bane, . Union Bank, $650,000 2,000,000 632,000 1,000,000 1,235,000 2,000,000 500,000 ' 130,000 655,000 1,000,000 300,000 422,700 412,500 1,200,000 500,000 600,000 600,000 1,500,000 $113,960 411,103 184,763 84,290 118,178 101,377 117,365 114,896 170,008 107,104 93,477 110,923 119,481 92,267 91,916 106,852 241,365 15,000 $40,693,400 $5,132,461 Banking Cobpohations, under the General Counteksign'd Law, in the State of New Yobk. Capital. Notes in (August 2d, 1855.) OlROULATION, Aug. 2d, 1855. Agricultural Bank, $125,000 - $94,14'7 Albany Exchange Bank, . 311,100 66J11 103^59 Auburn City Bank, 200,000 Ballston Spa Bank, .... 125,000 77,806 Bank of Albany, .... 360,000 Bank of Albion, .... 100,000 106,621 Bank of Attica, .... 160,000 95,990 Bank of Auburn, .... 200,000 82,097 Bank of Binqhamton, 200,000 163,542 Bank of the Capitol, 350,000 90,163 Bank of Central New York, 110,200 84,561 Bank of Chemung, .... 100,000 92,651 Bank of Corning, .... 104,500 42,-609 APPENDIX. 291 Banking Corporations, under the General Codnterbign'd Law, in the State of New York. Capital. Notes in (August 2d, 1855.) Circulation, Aug. 2d, 1856. Bank of Coopkrstown, $200,000 $144,362 Bank of Coxsackie, 120,000 84,266 Bank of Dansville, .... 150,250 76,559 Bank of Fayetteville, . 113,900 72,085 Bank of Fishkill 150,000 83,524 Bank of Fort Edward, . 128,600 87,734 Bank of Genesee, .... 100,000 88,474 Bank of Geneva, .... 205,000 133,275 Bank of Kinderhook, 200,000 70,286 Bank of Lowville, 50,000 99,901 Bank of Malonb, .... 100,000 87,618 Bank of Newark, .... 100,000 85,349 Bank of Nbwburgh, .... 300,000 85,203 Bank of Pawling, .... 175,000 104,796 Bank of Port Jervis, 120,000 97,597 Bank of Rhinebeck, 125,000 80,756 Bank of Rondout, 100,000 85,539 Bank of Salem, .... 110,000 92,301 Bank of Saratoga Springs, 100,000 80,068 Bank of Silver Creek, . 90,060 87,539 Bank of Sing Sing, .... 140,000 76,321 Bank of Syracuse, .... 200,000 110,415 Bank of Troy, Bank of Ulster, .... 440,000 100,000 71,242 Bank of Utica, 600,000 68,956 Bank of Vernon, .... 100,000 58,224 Bank of Watbrtown, 47,779 35,335 Bank of Watbrvillb, 120,000 114,289 Bank of West Troy, .... 250,000 67,968 Bank of Whitestown, . 120,000 48,679 Bank of Yonkerb, .... 150,000 58,029 Black River Bank, 150,000 118,470 Broomb County Bank, 100,000 96,242 Buffalo City Bank, 204,800 100,029 Camden Bank 120,000 18,898 Canal Bank of Lockport, . . . 109,050 55,403 Catskill Bank, 110,007 8,059 Central Bank of Brooklyn, . 200,000 93,974 Central Bank of Cherry Valley, 200,000 17,120 Central Bank of Troy, . 300,000 95,931 Chester Bank, ..... 100,400 71,524 Chjttenango Bank, 110,000 80,826 Citizens' Bank, Fulton, 125,000 93,186 292 APPENDIX. Banking Corporations, under the General Counjersion'd Lav, in the State of BTew York. Capital. Notes in (AvGCST 2d, 1855.) ClROHLATION, Aug. 2d, 1855. City Bank of Brooklyn, $300,000 183,225 City Bank of Oswego, 209,000 97,015 Commercial Bank of Albany, 400,000 182,803 Commercial Bank of Glen's Falls, . 136;400 97,958 Commercial Bank of Rochester, . 330,000 261,206 Commercial Bank of Troy, 300,000 160,217 Commercial Bank of Whitehall, . 108,200 72,796 Cro0se Bank, 110,000 68,781 Cuylbr's Bank, .... 100,000 101,661 Delaware Bank, .... 150,000 90,530 Eagle Bank, ..... 200,000 145,686 Elmira Bank, 200,000 115,990 Exchange Bank of Genesee, . 100,000 66,273 Exchange Bank at Lockport, . 150,000 96,805 Fallkill Bank, . . . 160,000 74,049 Farmers' Bank of Amsterdam, . 11'7,500 93,089 Farmers' Bank of Hudson, 300,000 134,621 Farmers' Bank of Lansingburgh, 150,200 82,813 Farmers' Bank of Saratoga County, 200,000 106,899 Farmers' Bank, Troy, 350,000 51,500 Farmers' and Citizens' Bank of Long Island, .... 200j000 82,716 Farmers' and Drovers' Bank at Som- •EKS, . . ... . . 111,150 46,503 Farmers' and Mechanics' Bank of Genesee, 100,000 76,490 Farmers' and Mechanics' Bank of EOCHESTER, 100,000 100,500 Fort Plain Bank, .... 150,000 84,227 Fort Stanwix Bank, .... 150,000 149,205 Frankfort Bank, .... 105,000 89,264 Frontier Bank, . I . 100,000 83,756 Fulton County Bank, 150,000 90,633 Genesee County Bank, 200,000 106,667 Genesee Eiver Bank, 130,000 102,738 Genesee Valley Bank, 140,100 109,086 Glen's Falls Bank, 112,000 119,041 Goshen Bank, ..... 110,000 50,121 Hamilton Bank, .... 110,000 106,538 Hollister Bank of Buffalo, 200,000 98,862 Huguenot Bank of New Paltz, 126,0011 85,056 Hungerford's Bank, .... 125,000 86,386 Ilion Bank, 100,000 100,069 APPENDIX. 293 Banking Coepoeations, cndek the Genekal Countersiqn'd La-w, in the State op New Yoek. Capital. Notes in (AuonsT 2d, 1865.) ClBODLATION, Aug. 2d, 1855. International Bank $400,000 127,526 Jefferson County Bank, 200,000 18,700 Jddson Bank, 122,000 78,106 Long Island Bank, 400,000 202,725 Ldther Wright's Bank, 200,000 100,050 Manufacturer's Bank, Troy, . 200,000 45,647 Market Bank of Troy, 293,350 96,818 Marine Bank of Buffalo, 300,000 125,964 Mechanics' Bank of Brooklyn, 200,000 121,731 Mechanics' Bank of Syracuse, 140,000 76,793 Mechanics' Bank of Williamsburgh, 250,000 76,970 Mechanics' and Farmers' Bank of Albany, 350,000 47,025 Merchants' Bank of Albany, 250,000 101,616 Merchants' Bank in Poughkeepsie, . 150,000 94,685 Merchants' Ba.nk in Syracuse, 160,000 106,796 Merchants' and Farmers' Bank, Itha- ca, 70,000 64,331 Merchants' and Mechanics' Bank, Troy .9fio nnn Middletown Bank, .... 125,000 79,970 Mohawk Bank of Schenectady, . 125,(100 33,997 Mohawk Valley Bank, 160,000 93,211 Mutual Bank of Troy, . 199,000 72,938 New York and Erie Bank, 200,000 84,291 New York State Bank, . 300,000 25,208 Niagara River Bank, 104,000 99,419 Oliver Lee & Co.'s Bank, 170,000 84,002 Oneida Central Bank, 146,800 111,205 Oneida County Bank, 125,000 55,697 Oneida Valley Bank, 105,000 66,858 Onondaga Bank, .... 115,000 88,061 Oswegatchib Bank, .... 112,223 56,793 Otsego County Bank, . 200,000 47,079 Pine Plains Bank, .... 100,000 76,253 Powell Bank, .... 175,000 201,424 Pulaski Bank, 100,000 97,169 Putnam County Bank, . 104,430 35,922 QuASSAicK Bank, .... 300,000 84,152 Ebnsselaer County Bank, 200,000 82,487 EocHESTER Bank, .... 100,000 188,713 Rome Exchange Bank, . 100,000 70,020 Salt Springs Bank 200,000 92,251 294: APPENDIX. "Banking Ooepokations, undue the General Counteesign'd Law, in the State of New York. Capital. Notes in (August 2d, 1855.) Circulation, Aug. 2d, 1855. Speaker Bank, .... $100,000 $80,064 State Bank of Troy, .... 250,000 110,184 State of New Yoek Bank, 125,000 93,296 Susquehanna Valley Bank, 100,000 43,545 Syracuse City Bank, 250,000 104,159 Union Bank of Albany, . 250,000 93,007 Union Bank op Kinderhook, . 182,000 85,891 Union Bank of Rochester, 500,000 255,066 Union Bank of Sullivan County, . 150,000 94,474 Union Bank of Troy, 300,000 83,807 Union Bank of Watertown, . 180,400 94,540 Utica City Bank, .... 200,000 92,78-1 Washington County Bank, . 150,075 64,822 Watertown Bank and Loan Company, Vl,605 56,921 West Winfield Bank, . 100,000 97,722 Webdsport Bank, .... 100,000 91,091 White's Bank of Buffalo, 200,000 109,180 Williamsburg H City Bank, 333,300 114,159 |26,644,3'79 $13,553,696 Aggregate of Capital invested, in Banking Corporations, organized under the General Bank Act, in the City of New York, and existing August 2d, 1855, . $40,693,400 Aggregate of Capital invested in Banking Corpoi'ations, organized under the General Bank Act, in the State of New York, located out of the City of New York, and existing August 2d, 1855, .... 26,644,379 196 Banks. Aggregate Capital, .... $67,337,779 Aggregate of Countersigned Notes in circulation Au- gust 2d, 1855: — New York City Banks, New York Country Banks, Countersigned Notes, $5,132,461 13,553,696 $18,686,167 APPENDIX. 295 STATEMENT, Prom, tTie Annual Seport, January, 1855, of the Supeein- TENDENT of the Banking Depa/rtment, of the State of New York — showing the capitals of the Forr-ForE then existing Speciai, Chaetee Banks, — the locality of each, — and the years when their several ohaetees will easpire. NAME OF BANK. CHABTEB WILL EXPIEE. Albany City Bauk, Atlantic Bank Bank of Albany Bank of Chenango, Bank of Lansingburgh, Bank of Orange County, Bank of Orleans, Bank of Owego Bank of Poughkeepsie, Bank of Rome, Bank of Salina, Bank of the State of Sevr York, Bank of Whitehall Brooklyn Bank Broome County Bank Cayuga County Bank, Central Bank Chautauque County Bank, GhemilDg Canal Bank, Easex County Bank, Fanners' and Manufacturers' Bank of Poughkeepsie, i&reeuwich Bank, Herkimer County Bank, Highland Bank Hudson River Bank, Kingston Bank, Leather Manufacturer's Bank, . . Lewis County Bank, Livingston County Bank Madison County Bank, Manhattan Company, Mechanics' Bank Mechanics' and Traders' Bank,. Merchants' Bank, Albany Brooklyn, Albany, Norwich, Lansingburgh, Goshen, Albion Owego, Poughkeepsie, . Rome, ; . Salina New York, . . . Whitehall, ... Brooklyn, . . , . Binghamton, . . Auburn Cherry Valley, Jamestown, . . . Elmira Keeseville, . . . Poughkeepsie, New York, . . Little Falls,.. Newburgh, . . Hudson, Kingston New York, . . Martinsburgh, Geneseo Cazenovia, . . . New York, . . New York, . . New York, . . New York, . . $500,000 600,000 240,000 120,000 120,000 105,660 200,000 200,000 100,000 100,000 150,000 2,000,000 100,000 160,000 100,000 250,000 120,000 100,000 200,000 100,000 300,000 200,000 200,000 200,000 160,000 200,000 600,000 100,000 100,000 100,000 2,050,000 1,440,000 200,000 1,490,000 1864 1866 1855 1866 1855 1862 1864 1866 1858 1862 1862 1866 1869 , 1860 1855 1863 1855 1860 1863 1862 1864 1855 1863 1864 1855 1866 1862 1863 1865 1858 Charter perpetual. 1856 1857 1651 296 APPENDIX. NAME OF BANE. OHAETER WILL EXPIRE. Montgomery County Bant, National Bank New York Dry Dock Company, Ogdensburgh Bank, Oneida Bank, Ontario Bank, Ontario Branch Bank, Rochester City Bank, Sackett's Harbor Bank, Saratoga County Bank, Schenectady Bank, Seneca County Bank, Seventh Ward Bank, Steuben County Bank; Tanner's Bank, Tompkins County Bank, Tradesmens' Bank, Troy City Bank,. trister County Bank, Westchester County Bank, .... Yates County Bank, Johnstown, . . New York, . . New York, . . Ogdensburgh, Utiea Canandaigua, Utiea, Rochester,, Buffalo, . . . Waterford, Schenectady, Waterloo, . New York, Bath Catskill, . . . Ithaca New York, Ti-oy, Kingston, . . Peekskill,.. Penn Yan, . $100,000 750,000 200,000 100,000 400,000 200,000 800,000 400,000 200,000 100,000 150,000 200,000 500,000 150,000 100,000 250,000 400,000 300,000 100,000 200,000 100,000 1857 1857 Charter perpetual, 1859 1866 1866 1856 1866 1865 1857 1862 1863 1863 1862 1860 1866 1855 1863 1861 1863 1869 $18,041,060 APPENDIX. 297 DiaEST OF THE LEADING DECISIONS OF THE COURTS OF THE > STATE OF NEW YOEK, EELAXma TO THE GENERAL BANKING LAW OF 1838, AND THE POWEES OF BANKING COEPOfiATIONS ORGANIZED UNDER IT. Thomas v. Dakin. (22 Wendell, 9-112.) In Octobee, 1839, the Supreme Court /i^ld^ in this case, — Assooia- that associations formed under the General Banking Law, thTgenera' are corporations, — and a majority of the court held that the],"^^^^" "Act to authorize the business of banking" is a valid and constitutional law, on the assumption that it received the assent of two-thirds of the members elected to each branch of the Legislature, — and that it would be presumed to have heen. thus passed, wai'H the fact was denied by plea; the court refused to pass on this question on a demurrer to a declaration by an association m a suit for the recovery of a debt. (77) (Tt) By the Constitution of the State of New York, of 1821, it was or- dained as loUows: Section IX. The assent of tw(y thirds of the members elected to each branch of the legislature, shall be requisite to every bill appropriating the public moneys or property for local or private purposes ; or creating, con- tinuing, altering, or renewing any body politic or corporate. The 2d section of the 1 2th Article of the Constitution of Michigan, de- clares, that " the legislature shall pass no act of incorporation, unless with the assent of at least two-thirds of each House." The legislature of that State, by a majority vote, passed a General Banking Lam, similar, in many respects, to the New York General Bank Act. The Supreme Court of Mich- 298 APPENDIX IN THE COURT OP ERRORS. WaKNEE v. BeEES, & BOLAITOEE V. StEVENS. The general banking law waa conBtitn- tionally pass- ed. Associa- tions are not corporations wituin tlie spirit and meaning of tlie constitu- tion of 1821, (23 Wendell, 103-190.) IiT Apeil, 1840, the Couet eoe the Coreection of Ee- EOEs held, ill these cases, — (1.) That the law entitled " An Act to authorize the business of banking," passed April 18th, 1838, is valid and constitutionally passed, although it may not have received the assent of two-thirds of the mem- bers elected to each branch of the Legislature, and held, — (2.) That the associations organized in conformity with the provisions of the act entitled " An Act to Authorize the business of banking," are not bodies politic or corporate within the spirit and meaning of the , Constitution, — and this Court reversed the judgments of the Supreme Court in these cases ; the reasons of the Supreme Cov/rt for these judgnients being the same as in Thom,as v. Daki/ti, ante. Talmage v. Pell. Associa- tions nnder the general law are cor- poraiions. {^ Paige, Ch. JR., ilO.) In Maech, 1840, the Chancellor held, that associations under the General Law of 1838, are in fact corporations, and that suits brought by them, in the name of their Presi- dent, may be continued in the name of the Eeceiver, under the sjiecial order of the Court. igan declared bo much of that law as autliorized tlie organization of bank- ing associations or corporations under it, to be invalid. Green v. Groves (1 Doug., 351). See also Nesmith v. Shelden (4 McLean, 375). It has been held, that a body will be taken to be a corporation when it is constituted by an act of parliament in such a way, or for such purposes, aa show that the meaning of the legislature was, that the body should have a perpetual duration, although no express words are used constituting it a corporation. This is called a corporation by implication. Grant on Corpo- rations, London ed., 1850, p. 8. Note (o), p. 8 ; Hote (b), p. 6, and cases there cited. APPENDIX. 299 Paemlt v. Tenth Waed Bank. (3 Edw. Ch. JR., 395.) In Mat, 1840, Vice Chancellor McGcnm held, that an association under the General Banking Law can only be proceeded against and dissolved/or the causes assigned in the 21th section of the General Bank Act of 1838. See § 27 and Note 4:5,p. 104, ante. Delaeteld v. Kjnnet. (24 Wendell, 345-350.) In Octobee, 1840, the Supreme Court held in this case. How »aii» on a demurrer to a declaration, that a suit against an asso-toongh^Ac. ciation, under the General Banking La/w, may be brought against it, either in the name of the association, or in that name, ■with the addition of the name of the President thereof, but that the contract must be stated as having been made by or with the bank, using the name by which it ac- quires riffhts of action or contracts liabilities, or the decla- ration will be bad : And that it is not necessary to allege in the declaration, that notes or bills issued, &c., were signed by the President or Yice President and Cashier, but that it is sufficient to allege in general terms that the association made the contract. Ely v. Speague. (1 ClarU Ch. R., 351.) In Octobee, 1840, Yice Chancellor Whittlesey held, that a share- a person who becomes a subscriber to an associated bank, htaS^^I under the General Law, and pays for his ptock by a bond ff^^ and mortgage, stands in two capacities towards the bank: stands in twn one as debtor upon his bond and mortgage, and the other wards'the ^' as shareholder, by reason of his stock ; that a shareholder''™''- cannot refuse to pay his interest upon his bond and mort- 300 APPENDIX. gage (given for stock) because the directors refuse to de- clare a dividend of the interest and profits, neither will the collection of such interest be restrained until the directors make a dividend. Saffoed v. "Wtckoff. (1 Rill, 11-17.) ABsocia- In Jan0Aet, 1841, the Swpreme Court heldva. this case — powe?tol8°-° t^^t associations under the (reneral BanTcing Law have no sae ncgotia- authority to make bills of exchange, or to issue any nego- ceptcSfer- tiable paper, save under the sanction of the comptroller, """^ "****■ and in the form prescribed by statute ; that no action can be maintained against the bank or others upon paper so illegally issued, this appearing on its face ; that the inten- tion of an act must be judged by its necessary consequen- ces, and where these are directly pernicious, the intent to work mischief becomes a conclusion of law. The action in this case was a joint action against the drawer and endorser of a bill of exchange for $3,000, dated August 15th, 1839, payable to the order of Bevben D. Bodge, thirty days after date. See form of post-bill in this case, p. 118, ante. The judgment of the Supreme Court in this case was r&versed by the Coii/rt of.£krors (4 Bill, 442). /See Note 30, j?. 85 ante : and Bank of OMUcothe v. Bodge (8 Barb. S. C. E., 233). (78) pS) Mr. Justice Cowen, in January, 1841, in delivering the opinion of the Supreme Court in the case of Saffordv. Wyakoff (1 Hill, 11) said, — "that the action of the banks," organized under the General Banting Law of this State, " is very much limited by the statute, especially with regard to the issuing of negotiable paper. One great object of the statute was, to guar- anty the redemption of all such paper, by the assignment of stocks or mort- gages of real estate to the Comptroller, without whose consent it cannot issue; and when issued with that consent, it must bear a certain form." * * » * * " Onee allow an issue of negotiable paper independently of the State agents, and they will be no longer appealed to. Thus, a security, which it is difficult to preserve, under the most careful supervision, would be entirely thrown away ; and the restraint upon excessive issues, so clearly intended by the Legislature, would be removed." * * » " An adjudication that this bill binds the bank, would be a direct precedent for its issue of bills paya- ble to bearer. It could reach the same thing practically, by drawing bills or notes payable to its cashier or other instrument, to be endorsed by him in blank; and then, even if a distinction could be raised between these, and bills or notes payable to bearer, of what use all the precautions of the statute ? APPENDIX. 301 Ita fimda, formg and penalties, would be subjects of derision, and the direct consequence, a drciUating medium of the very worst character — a pQst-note system without the semblance of security." — (1 Hill, 11, 14, 15.) Mr. JnsTiOE CowE^f, in January, 1842, in Smith v. Strong (2 Hill, 241, 243, 244), said — " I am of opinion, that negotiable paper, in whatever form, issued by institutions under the General Banking Law, except under the sanction of the Comptroller, is a fraud upon the statute by which they are created, and upon the public for whose benefit they were restricted to cir- culating paper secured by stocks and mortgages. This we held in Saffotd V. Wjickoff (1 Hill Eep., 11). It is now said we were mistaken in supposing that the original statute meant to restrict the issue of any negotiable paper, except ordinary bank bills or notes sent out to circulate as money. I then thought this argument answered by the fact, that bills of exchange may be used as a circulating medium ; and I insisted that the statute should not be defrauded by a mere change in form of the paper issue." « * » * "it is true, that the drawer of the bill in question, does not, on its face, stand primarily liable as the bank would do if it had made a note — and in this respect, the bill is not the same as a bank bill issued by the (jrawer. Tet, by issuing it without funds in the hands of the drawee, or by adding a waiver of a demand and notice, the bill would have been, in effect, precisely the same when endorsed in blank by the payee. The bank might so have shaped the bill as to become the acceptor, and issued it in that form. Even with- out any such device, bills of exchange, especially those payable at a future day, answer the purpose of a circulating medium to a considerable extent; while, with those devices (and they can always be superadded, and be made matter of general notoriety) the bank may become, and be universally con-, sidercd primarily liable as upon its legal paper." — 2 Hill, 243, 244. In 1849, in Leavitt v. Palmer (3 Comstock, 19, 33), Mr. Josticb Bronson said, — that "negotiable promissory notes and bills of exchange, payable at a future day, when issued by a bank in good credit, may perform, to a great extent, the office of a circulating medium. This has never been doubted by those who have considered the subject. * » * * Indeed, the fact that such paper may enter into the currency of the country, is matter of history. Witness the post-notes of the late Bank of the United States, and the nego- tiable notes and bills of some of our own banks, which followed, though on a more humble scale, both the frauds and the baukruptcy of the National io- Btitution. The issuing of such paper belongs to mercantile and commercial transactions, and not to the business of banking. Experience has shown that the banks which engage in such enterprises, are rotten, and sooner or later will end in defrauding the community." — 3 Comstock, 33. Amount of Bills op Exchange m Circulation in Great Britain. Leone Levi, in his Manual of Mercantile Law, speaking of the immense im- portance bills of exchange have acquired as a ri-presentattve of money, says, — " An attempt has been made to ascertain the magnitude and fluctuations of the amount of bills of exchange, inland and foreign, in circulation at one time in Great Britain, during the period 1828-lf'47, both inclusive; and it was shown that the total amount of bills, inland and foreign, amounted to an average mm of £110,018,000. The enormous increase of commerce since then must have proportionally increased the amount of bills in circulation, and that they may be assumed to reach at present (1854), £150,000,000 sterling." — Levi on Mercantile Law, 232. Raising Monet by Circulation, — ob Drawing and Re-dbawino. Adam Smith, in his Wealth of Nations (Edinburgh ed., 1846, pp. 135, 136), published near the close of the eighteenth century, thus describes the 303 APPENDIX. mode of raising money by the circulation of fictitioua bills of exchange, pay- able on time: — "This expedient was no other than the wellrknown shift of drcming and re-drawing— ^the shift, to which unfortunate traders have some- times recourse, when they are upon the brink of bankruptcy." * » * * * * * "The trader A, in Edinburgh, we shall suppose, draws a bill upon B, in London, payable two months after date. In reality B, in London, owes nothing to A, in Edinburgh ; but he agrees to accept A's bill upon condition, that before the term of payment, he (B) shall re-draw upon A, in Edinburgh, for the same sum, together with the interest and a com- mission, — another bill payable likewise two months after date. B, accord- ingly, before the expiration of the first two months, re-draws this bill upon A, in Edinburgh, who again, before the expiration of the second two months, draws a second bill upon B, in London, payable likewise two months after date ; and before the expiration of the third two months, B, in London, re- draws upon A, in Edinburgh, another bill, payable also two months after date." "This practice has sometimes gone on not only for several months, but for several years together, the bill always returning upon A, in Edinburgh, with the accumulated interest and commissions of a;ll former bills. The in- terest was five per cent, in the year, and the commission was never less than one-half per cent, on each draft. This commission being repeated more than six times in the year, whatever money A might raise by this expedient, must necessarily haVe cost him something more than eight per tent, in the year, and sometimes a great deal more, whenever either the price of the commission happened to rise, or when he was obliged to pay compound in- terest upon the futerest and commission of former bills. M'his practice was called raising money by Circulation," — Smith's Wealth of Nations, Edinburgh ed, 1846, pjt). 1S6, 136. " When two people," says Adam Smith, " who are continually drawing and re-drawing upon one another, discount their bills always with the same banker, he must immediately discover what they are about, and see clearly that they are trading, not with any capital of their own, but with the capi- tal which h-e advances to them. But this discovery is not altogether so easy ^ when they discount their bills sometimes with one bankel', and sometimes with another, and when the same two persons do not constantly draw and re-draw upon one another, but occasionally rim the round of a great circle of projectors, who find it for their interest to assist one another in this method of raising money, and to render it, upon that account, as difficult as possible to distinguish between a real and a, fictitious bill of exchange^-'be- tween a bill drawn by a real creditor upon a real debtor, and a biU for which there was properly no real creditor but the bank which discounted it, nor any real debtor but the projector who made use of the money. When a banker had even made this discovery, he might sometimes make it too late, and might find he had already discounted the bills of those projectors to so great an extent, that, by refusing to discount any more, he, would neces- sarily make them all bankrupts, and thus, by ruining them, might perhaps ruin himself" — Adam Smith's Wealth of Nations, Edin. ed., 1846, />. IS'?. The method above described was by no means, says AnAM Smtth, " the most common or the most expensive one in which those adventurers some- tiines raised money by circulation. It frequently happened that A in Edin- burgh would enable B in London to pay the first bill of exchange, by draw- ing, a few days before it came due, a second bill at three mouths' date, upon the same B in London. This bill, being payable to his own order, A sold in Edinburgh at par; and with its contents purchased bills upon London payable at sight to the order of B, to whom he sent them by the post. To- wards the elid of the late war, the exchange between Edinburgh and Lon- don, was frequently three per cent, against Edinburgh ; and those bills at sight must fiequently cost A that premium; this transaction, therefore, being repeated at least four times m the year, and being loaded with a APPENDIX. 303 commission of at leaat one half per cent upon each repetition, must at that period cost A, at least 14 per cent, in the year." — Smith's Wealth of Na- tions, Min. ed. 1846,^. 136, Note 2. " We do not mean to insinuate," says Mr. MoChllooh, " that there are no Jictitiows bills of exchange, or bills drawn on persona ■who are not really in- debted to the drawer, in the market. In every commercial country, bills of this description are always to he met with ; but they are only a device for obtaining loans, and do not, and cannot, transfer real debts." » * * * " The merchants who purchase, or the bankers who discount these bills, reaUy advance their value to the drawers, who, aa long as they continue, by means of this system of drawing and re-drawing, to provide funds for their payment, command a borrowed capital equal to the amount of fictitious paper in circulation. It is clear, however, that the negotiation of such bills has no effect in the way of transferring and settling the the real bona fide debts reciprocally due between any two or more places. Fictitious bills balance eath other. Those drawn by London on Glasgow, are exactly equal to those drawn by Glasgow on London, for the one set is drawn to pay the other, — the second destroys the first, — and the result is nothing. The method of raising money by the discount or sale of fictitious bills, has been severely censured by Dr. SMrra, as entailing a ruinous expense on those en- gaged in it, and aa being resorted to only by projectors or persons of sus- picious credit." — McCulloch's Essay on Exchange. History op a Scottish Bane — established in 1769 — Failed in 1771. This Bank had a paid-up capital of £128,000, or 80 per cent, of £160,000. It was established, says Adam Smith, for the purpose of relieving the dis- tresses of the country, under the firm of Douglass, Heeojj & Co. Its coffers were never well filled. A great part of the proprietors when they paid in their first installment, opened a cash account with the bank ; and the direc- tors, thinking themselves obliged to treat their own proprietors with the same liberality with which they treated all other men, allowed many of them to borrow upon this cash account what they paid in upon all their subsequent installments. Such payments, therefore, only put into one coffer what had the moment before been taken out of another. "But," says Adam Smith, " had the coffers of this bank been filled ever so well, its excessive circulation must have emptied them faster than they could have been replenished by any other expedient but the ruinous one of drawing upon London, and when the bill became due, paying it, together with interest and commission, by another draught upon the same place. Its coffers having been filled so very ill, it is said to have been driven to this resource within a very few months after it began to do business. The estates of the proprietors of this bank were worth several millions, and by their subscription to the original bond or contract of the bank, were really pledged for answering all its en' gagements. By means of the great credit which so great a pledge neces- sarily gave it, it was, notwithstanding its too liberal conduct, enabled to carry on business for more than two years. When it was obliged to stop, it had in the circulation about two hundred thousand pounds in bank notes. In order to support the circulation of those notes, which were continually returning upon it as fast as they were issued, it had been constantly in the practice of drawing bills of exchange upon London, of which the number and value were continually increasing, and, when it stopped, amounted to upwards of six hundred thousand pounds. This bank, therefore, had, in little more than the course of two years, advanced to different people up- 304: APPENDIX. tions — and, as snch, are liable to taxation. Bank of "Wateetown Vj Absessoes, &c., of "Wateetown. (25 Wendell, 686, 687.) AsMciations In Jtjlt, 1841, the Swpreme Cov/rt held, on a motion for arecorpora- g, mandamus — that associations formed under the General BanTcing Law, are Oorporaldons, and as such, are liable, like other moneyed institutions, to be taxed on all lands and personal estate owned by them. See 1 £. S. 414:, § 1, ^. 224, flwite. (79) wards of eight hundred thousand pounds at fife per cent. TTppn the two hundred thousand pounds which it circulated in bank notes, this five per cent, might, perhaps, be considered as clear gain, without any other deduc- tion besides the expense of management. ' But upon upwards of six hundred thousand pounds, for which it was continually drawing hills of exchange upon London, it was paying, in the way of interest and commission, up- wards of eight per cent., and was consequently losing more than three per cent, upon more than three fourths of all its dealings. * » * " At the first setting out of this bank, it was the opinion of some people, that how fast soever its coffers might he emptied, it might easily replenish them by raising money upon the securities of those to whom it had ad- vanced its paper. Experience, I believe, soon convinced them that this method of raising money was by much too slow to answer their purpose; and that coffers which, originally were so ill filled, and which emptied themselves so very fast, could be replenished by no other expc;dient but the ruinous one of drawing bills upon London, and when they became due^ paying them by other draughts upon the same place with accumulated in- terest and commission. But though they had been able by this method to raise money as fast as they wanted it, yet instead of making a profit they must have suffered a loss by every such operation ; so that in the' long run they must have ruined themselves as a mercantile company, though, per- haps, not so soon as by the more expensive practice of drawing and re- drawing.' They could still have made nothing by the interest of the paper, which, being over and above what the circulation of the country could abr sorb and employ, returned upon them, in order to be exchanged for gold and silver, as fast as they issued it; and for the payment of which they were themselves continually obliged to borrow money. On the contrary, the whole expense of this borrowing, of employing agents to look out for people who had money to lend, of negotiating with those people, and of drawing the proper bond or assignment, must have fallen upon them, and. have been so much clear loss upon the balance of their accounts. The pro- ject of replenishing their coffers in this manner may be compared to that of a man who had 'a water-pond, from which a stream was continually running out, and into which no stream was continually running, but who proposed to -keep it always equally fall by employing a number of people to go con- tinually with buckets to a well at some miles' distance, in order to bring water to replenish it." — Adam Smith's Wealth of Nations, Edin. ed. 1846, pp. ISY, 138, 139, and Notes. Mb. Justice Bkonson's Definition of a CoBPOKATiofr. (79) " A corporation aggregate, is a collection of individuals united in one body, under such a grant of privileges as secures a succession- of mem- bers without changing the identity of the body, and constitutes tte APPENDIX. 306 The People v. Assessoes of Wateetown. (1 Hill, 616-623.) This is the same case reported in 25 Wendell, 686. The opinion of Nelson, C. J., is reported in 25 Wendell, and of Bronson, J!, in 1 Hill. members for the time being, one artificial person or legal being, capable of transacting some kind of business like a natural person. It does not occur to my mind, that any thing else can be essential to the definition. Such a union as I have mentioned, can only be effected under a grant of privileges from the sovereign power of the State. A corporation is there- fore said to be a legal being, or the mere creature of law. It is convenient, though not absolutely necessary, that this artificial person, like a natural one, should have a name by which it may be known and designated in the transaction of business. And when the doctrine was, that a corporation could only contract by its seal, a seal was said to be an indispensable requisite. So, immortality was once thought to be an attribute of all cor- porations ; but that now means no more than a continued succession of members for such period, whether long or short, as may be allotted to this legal entity by its creator." — The People v. The Assessors of Watertotm, 1 Sill, 616, 620. Chief Justice Marshall's Definition of a Cobpokation. "A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence. These are such as are supposed best calculated to effect the object for which it is created." — Dartmouth College v. Woodward, 4 Wheaton, R. 63'6. Mr. Ktd's Definition of a Corporation. " A corporation, or body politic or body incorporate, is a collection of many individuals united in one body, under a special denomination, having perpetual succession under an artificial form, and vested by the policy of the law with a capacity of acting, in several respects, as an individual, par- ticularly of taking and granting property, contracting obligations, and of suing and being sued ; of enjoying privileges and immunities in common, and of exercising a variety of political rights, more or less extensive, ac- cording to the design of its institution, or the powers conferred upon it either at the time of its creation or at any subsequent period of its exist- ence." — Kyd on Corp. Intro. 13. Mb. Jasies Grant's Definition of a Cobpobation. "The ideal being, called a corporation, we may thus define to be a con- tinuous identity, endowed at its creation with capacity for endless dura- tion, residing in the grantees of it and their successors ; its acts being deter- mined by the will of a majority of the existing body of its grantees or their 20 306 APPENDIX. Hunt v. Yan Alsttne, (25 Wendell, 605-614.) In Octobbe, 1841, the Swpreme Court held, on demurrer to pleas, in an action on a bill of exchange, in the name of an indvoidual describing himself as the President of a banking association, that a plea in har of the action^that the General Banking Law (under which the association was formed) was not passed by a vote of two-thirds, &c. — ^is not good, where the plaintiff fails to allege title to the bill, and the declaration, besides the count on the bill, contains the common oovnts. Bank of Orleans v. Meeeill. (2 HUl, 295.) Post Mr- In Janijaey, 1842, the 8v/preme Court hdd that a cer- depositiue- tificate of deposit issued by a general law bank, payable **'• to the order of a particular person, 6 months after date, successors at any given time, acting within the limits imposed by the oon- , stitution of their body politic, such will being signified to strangers by uniting under the common seal ; having a name, and under such name a capacity for taking, holding, and enjoying all kinds of property, a qualified right of disposing of its possessions, and also a capacity for taking, hold- ing and enjoying, but inalienably, liberties, franchises, exemptions, aiid privileges; together with the right or obligation of suing and being sued only under such name. This is the definition of the ideal creation, — the ens rationis called a corporation; and it will be found to measure and de- scribe accurately the attributes of a corporation proper ; that is to say, a, corporation created merely as a corporation, without any restrictive or limiting clauses in the instrument of creation. It is not by any means true, however, that all existing corporations come up fully to the whole extent of the above definition, because corporations are held to be in this oounti-y, the creatures of the crown or of Parliament, and conse- quently there is scarcely any limit to the variety of forms in which they may be produced. But continitoia identity, a name and a common sea], seem indispensable requisites to the creation of a corporation proper." — Grant on Corporations, London ed. 1860, pp. 4, S. Distinction between Corporations & Partnerships. "It has been said, that the great distinction between the common joint stock companies or partnerships, and corporations, is, that in the first, the Iqfo looks to the individuals of whom .the partnership is composed, and knows the partnership no otherwise than as being such a number of individ- uals; while in the second, it sees only the creature of the charter, the body corporate, and knows not the individuals." — Wordsworth's Law of Joint Stock Companies, p. 4. APPENDIX. 307 with interest, is, in eJBFect, a promissory note — and cannot be sanctioned as the basis of a recovery, without disregard- ing the provisions of the statute against the issue of a spuri- ous and illegal currency ; and that this case is witbin the principle of Safford v. WycTcoff, d) Smith <& Warner v. Strong. (80). See Zeavitt v. Palmer (3 Comst., 19). (80) In the case of the Southern Loan Company v. Morris (2Barr'8Penn. R. 175), the Supreme Court of Pennsylvania held, that an indorser is not liable on a promissory note of a corporation which it could not lawfully issue, — even though the instrument purported to be a certificate of depoait which it was lawful for such corporation to issue ; for the reason that prop- erties of promissory notes which are forbidden, cannot be given to lawful instrnmeDts. The certificate of deposit, held illegal in this case, was in the form following : " The Puiladelphia Loan Company promises to pay to H. Morris, or order, $1000, three months after date, being a deposit made by him with the Company, bearing interest at the rate of — per cent, per annum, payable at the office of the Company." " GEO. S. SCHOTE, President. "T. MOORE, Cashieb." {Indorsed by defendant.) The 16th section of the charter of this company expressly authorized "a certificate of deposit to be given to the depositor, stating the rate of in- terest, and the period for which such a deposit is made ;" but this company was prohibited from issuing notes or bills of credit, or promissory notes in the nature of bank notes, or exercising any banking privileges. " But vain are legislative enactments," says Sekgeant, J., " if disregarded by those in- trusted to execute them. These plain directions have been unceremoniously set aside, by the i^sue of instruments, which, in their ostensible character and effect, are as plain promissory notes as it is possible to make them : be- ing promises, in consideration of money received, for the payment of money, payable to order at a certain time, and then negotiated and put in circula- tion." • * * "And even if they were legitimate Certificates of Deposit, such as the Tompany are authorized to issue, they would not be negotiable instruments, so as to make the indorsee liable on his indorsement." (2 Barr R., 175-m.) In the ease of Miller v. Austin (13 Howard, 218), the Supreme Cobkt of the United States held a certificate of depopit, in the form following, to be a negotiable instrument or promissory note : " Mississippi Union Bank. "Jackson, Miss,, Feb. 8, 1840. "No. 959. " I hereby certify that Hugh Short has deponied in this bank, payable 12 months from 1st May, 1839, with 6 per cent, interest till due, fifteen hun- dred dollars, for the use of Henry Miller, and payable only to his order, upon the return of this certificate. " Wm. p. Gratson, CAsniEH.'' Endorsed " Hevry Miller." ^^ Austen, Wilmerding, ti; Co.^' See the Form of the Certificate of Deposit passed upon by the Supreme Court, if Errors of the State of Connecticut in the cose of Kilgore v. Jiuek- ley (U Conn. R., 363). Also J/oore v. Oann (12 Ohio, 300). Leavitt v. JPalmer (3 Comstock, 19, 35). , In the matter 'f the Ohm Life Insurance and Trust Company (9 Ohio, 291) : Lawler v. Walker (18 Ohio,' 151); also Note 51, PJ3. 114-122 ante: also Noteti, p. 300 ante. 308 APPENDIX. Smith & Waenee v. Steong. (2 mil, 241-247.) AsBocia- In Jantjaby, 1842, the Supreme Gorni held, that associa- powe?tol"°tions Tinder the general banking law, have no power _ to 8aeiiegoti8.^jgg^g negotiable paper of any kind, save under the sanction colSK^-of the comptroller ; and that bills of exchange, payable at wmpMer. a future day, answer the purpose of a circulating medium, and so are within the restrictions of the general banking law against the issuing of unauthorized paper — and that an indorsee of such a bill, drawn by such an association, is chargeable with notice of its illegality, and cannot, there- fore, recover against the indorser. The case of Safford v. Wychoff (1 Hill, 11), commented on and explained. This was an action of assumpsit against the indorser of a bill of exchange for $1000, payable four months after date. The objection was taken at the trial, that it was issued contrary to the 4th section of the Act of May 14th, 1840. See % i. Act of May lith, 1840, p. 114 ante : and form of hill in this case, p. 119 a/nte; also, Note 78, jp. 300 ante. (81) WiLLOUGHBY V. CoMSTOCK. (3 Eill, 389.) Associa- In July, 1842, the Supreme Court held, that associa- t'on^^"'^""'- tions under the General JBank Act of 1838, are corpora- (81) The distinction between bills of exchange drawn or issued by hankers, aiid mercantile bills of exchange, is thus stated by William John Lawson, in his History of Banking : — " There is also a difference between banker's bills of exchange and mer- cantile bills of exchange, inasmuch as the former are^ essentially in their nature, the same as bank notes payable on demand ; but they are less secure than notes payable on demand, because the banker may fail before the bill becomes due. The issue by a banker of his bill, is not a proof of any trans- action in trade ; it is a mere exchange of credits. The banker creates, and puts out, a piece of paper that will circulate, against one or many that will not circulate. The banker's bill of exchange will circulate because the con- fidence in his ability to pay the bill at maturity, is undoubted ; the differ- ence, therefore, between the bill of exchange which' the banker creates entirely upon himself, and those other bills of exchange which are created by the customers of the banks, is, that the latter are the real types of the quantity of business done upon credit, whilst the credit which circulates is the quantity which the banker chooses to send out of either sort" — Zawson'a Hist, of Banking, London ed., 1850, p. 44. APPENDIX. 309 tions, and hence in an action against sucli an instWiition, it is no ground of defence that the defendant is a member thereof. The People v. Supervisors op !tTiA6AEA. (4 Hill, 20-26.) In Decembee, 1842, tlie Supremie Court held, that as- Associa- sociations formed under the General Banking Law, are pSonVand CorpoTotions, and like other moneyed or stock corporations JJ^^[j^^* '" are liable to taxation on their capital. See 1 R. 8. 414, § 1, f. 224 ante : this case affirmed iy the Court of Errors. IN THE COURT OP ERRORS. Saffoed v. Wyokoff. (4 Eill, 442-446.) In December, 1842, the Couet fob the Coeeection of Eeeoks reversed the decision of the S'wprevne Cowrt in this case. The head-note of the reporter is as follows : " A negotiable draft or bill of excliange in the ordinary form, though issued by an association organized under the general banking law, without the sanction of the comp- troller, will bind the association as in favor of a honafide indorsee; and this notwithstanding it be signed by the Cashier only." " Otherwise, however, as between the association and one not occupying the position of a honafide holder, if it appear that the draft or bill was issiied iy way of loan, — or for the purpose of being put in circulation as money. SemUe." " How far these associations may, as incidental to the general powers expressly conferred on them by statute, issue negotiable paper, without the sanction of the comp- troller — e. g., for the payment of their debts, the transfer of their funds, &c. — discussed and considered." " Where there is enough on the face of a negotiable note or bill of exchange to create a suspicion that it was issued 310 APPENDIX. contrarj^to law, and to put the party who takes it upon inquiry, he is not entitled to be considered a lona fide holder. Semlle." " A negotiable note or bill of exchange, though given by a corporation having only an incidental right of issuing such paper in certain special cases, must be presumed to have been legally issued until the contrary appear. Sem- lU:' (82) Yalk v. Ckandall. (1 Sand. Oh. li., 179.) ab to mode I^ OoTOBEE, 1843, Assistcmt Vice-Chaiioellor Sandford "* t^iniioai ^'^^'^ — that associations under the General Bank Act are confined to the provisions of that act, and cannot be legally organized uptil its substantial enactments, relating to the mode and manner of organization, are substantially com- plied with. (82) It is difficult to say, what waa really decided by the Court of Mr- rors in this case, except, that it was held that a bill of exchange, although signed by the Cashier only (see § 21, p. 98, ante), might support a recov- ery, against a banking corporatiou, by a bona fide holder, in the absence of all proof that the bill was not drawn to transfer funds in the legitimate business of banking; — but whether on the ground assumed by Senators BocTcee d; Hopkins, that the banking corporation could not set up its own illegal act ; or on the ground that the drawing of a bill may be included in the power to buy and sell bills (S«e § 18, ». 94, ante), also stated by Hop- kins, Senator; or on the ground stated by the Chancellor, that these corpor- ations might give negotiable drafts "in payment of the rent of their bank- ing houses, the salaries of their cashiers and clerks, and for many other purposes connected with the legitimate business of banking" — [and the Chancellor adds, " for any thing that appears to the contrai-y, the draft set out in this record, was given in payment of such a debt, though, out of the ease, it may perhaps be Shown that it was made to be put in circulation as money " (4 Hill, 446)] ; or on what other ground, the decision was made, — query. The Chancellor and Senator Paige delivered written opinions for affirmance, and Senators Hopkins and Bockee for reversal. The judgment of the Supreme Court was reversed by a vote of 13 to 9. It should be stated, that neither the general prohibition in 1 iJ. & 600, § 3 {p. 25 ante), nor the express prohibition in § S5 (p. 38 ante), were referred to in this case, either in the Supreme Court, or in the Court of Errors. The question as to the application, to these banking corporations, of the general statutes of this State, relating to moneyed corporations,vra.i not raised in this case : that question has since been finally adjudged by the Court of Appeals in Gillet v. Moody (3 Comst., 479), and in Talmage v. Fell (SSelden, 328). See also Gillet v. Phillips, decided by the Court of Appeals in October, 1855. See form of bill in this case, p. 118 ante: also Ifo'te 78, p. 300, ante. Also, Note 81, p. 308 ante. See James v. Patten (2 Selden, 9). APPENDIX. 311 Lkavitt v.. Tylee. (1 Sand. Oh. B., 207-210.) In Novembee, 1843, Assistant Vice-Chcmcellor Sand- iE.8.,e9i, ford held — that an assignment made by an insolvent bank- fVeonte!''^ ing association under the general law, was invalid in law by the Uh <& 9th sections of 1 E. S., 691. In the Mattee of the Bank of Dansville. (6 mil, 370-372.) In Maech, 1844, the Supreme Court held — that that^-^*"^^- Court had no authority to set aside an election of directors of sapreme by an association under the general banking law. — £ut^^^ see Gilletv. Moody, in the Court of Appeals (3 Comst. 479), and note 40 on page 98 ante ; also, Talmage v. Pell (3 Sel- den, 328). BoiSGEEAED V. N. T. BANKING CoMFAHT. (2 Sand. Ch. B., 23-28.) In AuGirsT, l^iii, Assistant Yice-Cha/noellor Sandford Eev. stat. h^ld — that banking associations under the general law of ■^"""*' 1838, are within the provisions of the Revised Statutes relative to proceedings against corporations in equity. IN THE COURT OF ERRORS. Stjpeevisoes of Niagara v. The People. (7 iftZ^, 604-518.) In December, 1844, the Court foe the Coeeection of ijsooia. Eeeoes Ae^fl^that associations formed under the general "»j"|'™«"- banking law, are Gorporations within the meaning of 1 H. «« «iYoo%'b^ Vice- Chancellor Mc- Tatcstrast Qoun. A banking associatlou Issued iVi December, 1840, assignmen . g^^ promisst)ry notes, all of the same date, payable thirteen months after date (with interest) to the order of a clerk in the employ of the association, and at the same time, executed a trust deed conveying to trustees corporate effects to secure the payment of said notes, said deed and notes bearing the same date. The Vice- Chancellor held, that the 800 notes were within the prohibitions of the Restrain- Restraining Act, as well as of the Act of May 14th, 1840, isso^Mdlet ^'^'^ were illegal and void ; and also that they were void, of Mayuth bccause not countersigned by the Comptroller or secured '^''' as required by the general banking law ; and that the notes being illegal and void, the trust deed made to secure them was also void. This case is generally known as the " Tates Trust Case.''^ No appeal was ever prosecuted from the decree niade by the Vice- ChoMcellor. See form of notes in^this case, p. 119 ante. APPENDIX. 315 Tylee v. Yates. (3 Barl. S. C. R., 222-229.) In June, 1848, the Supreme Court {ShcmMand, Gray, yatet da Sill, Justices) held, that post-notes issued by a bank- ^^',™^ ing association, dated December 15th, 1840, were abso- time, void, lately void, and that an assignment of securities by means of a trust deed, as collateral for the payment of such poft- notes, is also void. See Leavitt v. Palmer, decided in 1849, by the Court of Appeals (3 Comst., 19). LEAvm V. Blatchfoed. (5 Ba/rl. S. C. R., 9-37.) In November, 1848, the Supreme Court {Hurlbut, Mc- post-uotcs Coun, (& Edwards, Justices), held, that banking associa-E»y«weui^^ tions under the General Bank Act of 1 838, are corporations, renoy : se- and that all general laws relating to moneyed corporations S^JX". applied to such associations — accordingly, that the pro-^°"'-^**8 visions of the Revised Statutes, 1 R. S., 588, to prevent the an*«-' insolvency, &c., of moneyed corporations, are applicable to such associations; that under the provisions of the act of May 14th, 1840, promissory notes given by a banking association, payable after date, are illegal and void, even though they were not intended to circulate, and were in- capable of circulating, as money ; and although such notes were payable in London, in sterling money : but that though such notes were void, the original indebtedness for which they were given, remained, and that a deed assign- ing property in trust as collateral security for the pay- ment of such indebtedness, was valid. The deed in this case recited such original indebtedness. But the judg- ment of the Supreme Court, in this case, so far as it upheld the trust deed as a valid security for the illegal notes, was reversed by the Court of Appeals, in Leamitt v. Palmer (3 Comstock, 19). This is generally styled the " Blatchford (& Murray Trust Case." %eeform of notes, p. 120 amte. GiLLET V. MOODT. (6 Ba^l., S. C. R., 185-190.) In Januabt, 1849, the Swpr&me Court {Paige, TTi^ asbocih- lard, (& JSand, Justices) held, that banks formed under tho"ugh cor- 316 APPENDIX. poratioii8,arethe general banking law are corporations constitutionally SieprOTJ" formed — but that they are not within the provisions of the ^S^""* Eevised Statutes (1 R. S., 591, § 8,_§ 9, seepp.^ 1, 8 anU), statutes. " to prevent the insolvency of moneyed corporations, and to secure the rights of their creditors and stockholders." But see this case reversed in the Court of Ajppeals (3 Comst. 479.) Palmer v. Yates. (3 Samd. Sup. R., 137-161.) AreBoiu- In Septembee, 1849, the Superior Court of the City of ^u^e\iT' ^6W York {Duer, Mason, c& Campbell, Justices) held, in tti°orizinTa *^^^ c&se, that a resolution of a Committee of the Board of transfer of Dircctors of a banking corporation, authorizing the trans- feoKxceed- fer of Corporate effects exceeding in value $1,000, is a $1000, llSf. sufficient compliance with the_ statute {IB. S., 591, § 8), *uanie''w"h ^^P*'^ ^^^ maxim ratihahitio priori mandato (Kgmpouratur ; ?ij:^. 591,5 and that when a prior authority is rendered necessary, by raJ^a teins? a Statutory provision, the want of such an authority may thorizidby°a ^® supplied, and the act impeached be rendered valid by prmkmare- proof of its adoption by the party by whom it might have the'^oni o/been authorized; although a resolution of a Board of ■^SSuent Directors, ratifying an assignment made by a president of »J«p'j.™™p-a banking corporation, without authority, may have no want of prior retroactive force; yet, the assignment is valid from the ' KaSa'caiion time that the "sancl/ion of the Board has thus been given to aS™ fJra?' ^t > "1^^ ^^0^ ^^^ every person who, for a valuable con- Such a sideration, acquires an interest, legal or equitable, by an transfer valid . , <• ^ t ,• • < i i j only from assignment from a moneyed corporation, is to be deemea a time of ^'■^''- py^gff^Q^gj, within the meaning of the exception contained in 1 B. 8., 591, § 8 ; "ij"'. «» deed, illegal and void, and reversed the residue of the de- ing money^ ' cree of the Supreme Court — and held, that the statute of"!,^' May 14, 1840 \Stat. 1840, 306, § 4), is not confined in its interpretation to bills and notes capable of cvrculation as §4p.ii4 money ; that negotiable promissory notes issued by a bank- aned to Dotes ing association, payable in London, in sterling money, 12°?P^'}^®ti°^ months after date, with interest, and delivered to a Lon- »» money, don firm on account of a previous liability of the bank, were illegally issued and void ; and further held, that a trust deed, executed at same time, transferring corporate g,"^™'!!?^ effects of the bank to trustees for the purpose of securing secure poBt- the payment of the notes, was also illegal and void ; and """^ "**"'■ that a court of equity will not reform a deed or writing, unless it be alleged and proved that there was a mistake or accident in the preparation of the instrument, so that it does not express the true intention of the parties ; and that a court of equity could not reform the deed in this case, so as to enable it to stand as a security for the original liabil- 318 APPENDIX. ity for which the postnotes; were given. See this casein 5 Barb. S. C. JR., 9, under the title of Leavitt v. Blatoh- ford. ^e&form of posfrnotes in this case, p. 120 ante. (83) Bank of Chillicothe v. Dodge. (8 Barl., S. 0. E., 233-238,) Post-bill dated Sept. 30th, 1S89, illegal Foreign la/ut. In Maech, 1850, the Swpreme Court {Johnson, Wells, di Selden, Justices) held, that a draft or bill, dated Sep-' tember 30th, 1839, payable three months after date, issued by a banking corporation, under the general law, is utterly fraudulent and void as being , prohibited by statute ; and that no person by any act can give validity or vitality to it as a commercial paper anywhere ; but that money ad- vanced upon ^iich a draft in Ohio, by an Ohio bank, to Dodge, the indorsee of the draft, could be recovered back in an action against him, on the principle that money thus paid, must be considered as having been paid without con- sideration ; and also, that such Ohio bank (being a foreign corporation) is not presumed to have knowledge of our statute, ^ea form of post-iill in this case, p. 118 ante. (84) (83) The Palmers, for whose benefit the trust asBignment in this case •was made, were foreigners, residing in London. The promissory notes de- creed illegal by the Court of Appeals, were payable in London, in British currency; The counsel of the l-'almers raised and argued this point : " If the 48 bills or notes were prohibited by the statute, they were not on that account void, especially as they were to be delivered to an English credi- tor, as security f»r an English debt, and were made payable in England;" and also, the further point, that if the Palmers " had had full notice of the object" (of certain bills of exchange involved in the case, and which were accepted by them in London), " thdy were not chargeable with notice, that such object was an act forbidden by the law of New York." See Palmers' Points, in the Cowrt of Appeals. In 1852, the Court of Appeals decided the case of the State of Ohio v. Leavitt, Receiver of the North Ameiican Trust and Banking Compavy, a corporation created under the general banking law of the State of New York. (3 Selden, 328.) (84) Mr. G-RKSt,vii'iaBTreatiseon the Law of Corporations, &a.ya — "Tliere is authority to show that fo'reign-made corporatiois may sue in this coun- try (England) in like manueras a corporation domiciled here, although it do not appear that a naine had ever been given them, or that they had ever APPENDIX. 319 CtjTLEK & Sexton v. Sandfoed. (8 Barh., S. G. JS., 225-232.) In Maech, 1850, the Supreme Gmirt {Johnson, Wells, Aotofisss, (& Selden, Justices) held, that tlie act of 1835, which p- " '^'■ makes it unlawful fir any moneyed incorporation to charge or receive the premium of exchange on any draft made by it, which shall be used or applied in payment of any bill or note discounted by such corporation, does not apply to individual hankers ; that although associations formed un- der the General Banking Law, are corporations, yet an individual banker cannot be so regarded ; that he lacks sued before in the name in which they brought their action here. It will be necessary, however, to prove at the trial, by the proper instruments, that they are legally constituted a corporation, capable of suing, in their (More countri/. Actions of this kind lie by the comity of nations, although • the corporation was created in a manner different from that which the law of this country requires ; in fact, the law of this country, in all the oases on this subject, gives way to, and is ruled by, the law of the foreign country. A corporation is deemed to be domiciled in tlie country from which it derives its act or charter of incorporation." {Grant on Law of Corporations, Lon- don ed., 1850, pp. 200, 201.) iSee Louisville Railroad Company v. Letton (2 How., 497). . *# . Every person who deals with a corporation, is bound to know what its powers are. Public laws of a particular State, creating or limiting the powers of its local corporations, are notice to all persons, within or without the State, dealing with such corporations, or in their contracts or securities. This point was direcily adjudged by Mr. Justice McLean, in Boot v. Godard and Hayden v. Davis (3 McLean, C. C. R., 102, 276.) A corporation can make no contracts, and do no acts, within or without the State which creates it, except such as are authorized by its charter ; and those acts must also be done by such officers and agents, and in such manner, as the charter authorizes; and if the law creating a corporation does not, by the true construction of the words used in the charter, give it the power to exercise its powers beyond the limits of the State, all con- tracts made by it in other States, would be void. Bank of Augusta v. ^aW« (13 Peters, 588). In construing contracts made by a corporation, the question of corporate capacity is always involved. Bank of Chillieothe v. awayne (8 Ohio R., 256, 286, 287, 288). Bank of the United Slates v. Owens (2 Peters, 627)._ " We shall briefly repeat," says Mr. Grant, " a most important principle of corporation law, whi . 305 by Grant; 305 distinction between corporations and partner- ships, 306 "moneyed," defined by Revised Statutes, . . 28 has such powers as are expressly granted, . . 25 n. and such incidental powers as are neeeaawry to the exercise of its express powers, ... 25 the exercise by, of powers not granted prohibited, 25 shall not by construction of implication possess hanMng powers, 26 forbidden, by the act of 1850, thereafter to inter- pose the defence of usury, .... 264 voluntary dissolution of, 64-75 proceedings against, in equity, .... 50-64 proceedings against, in courts of law, . . . 240 foreign, proceedings against, .... 242-253 not estopped fi-om denying its power to make a contract, fi3 n. unless expressly authorized hy law, forbidden to exercise banking powers, . . 26 or to employ its effects for the purpose of issuing notes, &c., 41 or to keep any offM for the purpose of re- ceiving deposits, &c., .... 42 or for the purpose of issuing notes, &c., . 42, 48 n. See Banking Corporations, Restraining Acts. CREDITORS of moneyed corporations, regulations to secure the rights of, 1-17 bill holders, in certain cases, to have a preference, 265 stockholders to be individually responsible, in certain cases, 265 34:2 INDEX. Page. COUNTERSIGNED NOTES, aggregate ' amount in circula- tion in August, 1855, 294 See Circulating Notes. DAMAGES on protested circulating notes 190 on protested bills of exchange, .... 256, 257 See Bills of Exchange. DEBTS of certain banking corporations, stockholders liable for, 155 against corporations, an act to facilitate the collection of, 282 DECISIONS on § 4 of the act of May 14th, 1840, . . 114^122 n. on § 1, General Statute (1 R. S. 689), . . . . 2, 3, 320 on §§ 8, 9, General Statute (1 R. S. 591), . . 7, 8, 9 n., 323 on the restraining acts, 42 n., 48 relative to the General Banking Law, . . . 297-325 relative to Receivers of corporations, . . . . 57 n. as to unauthorized contracts made by corporations, . 51-55 n. as to proceedings against corporations, &c. . . 74, 75 n. DEFINITIONS of certain terms used in the Revised Statutes, 33, 24 term " moneyed corporation " defined, . . 23 term "directors," 23 term " effects," ....... 24 term " evidence of debt," 24 term "corporations," as used in the Act of April 6th, 1850, to prevent corporations from inter- posing the defence of usury, .... 264 term " corporation," as used in the Constitution of 1846, 264 term "association," as used in the act of April 11th, 1849, . . 174 term "stockholder," as used in the act of April 5th, 1849, 155 a corporation, definitions of, by jurists and others, 304, 305 n. partnerships and corporations, distinction be- tween 306 n. See Corporation, Banking Corporations. DIGEST OF LEADING DECISIONS relating to General Bank Act, 297-325 INDEX 343 " DIRECTORS," as used in Revised Statutes, defined, . as to election of, 17- penalty on, for violating certain sections of Revised Statutes, ......'.. penalty on, for purchasing notes of the corpora- tion for less than amount due, . penalty on, for discounting notes in certain cases. penalty on, for violating § 3 of Restraining Act, trustees of creditors in certain cases, . See Officers and Directors. DISSOLUTION {Voluntary) of corporations, when directors may apply for dissolution, contents of application, order to show cause, when to he entered, when corporation to be dissolved, who may be appointed receivers, rights, interest, and authority of such receivers, such Receivers to have all the power of trustees of estates of insolvent debtors, certain sales, &c. declared void, . debtors to account to Receivers, . Receivers to have power to refer controversies. Receivers' commissions, . . . 70, 71, order of payment of debts, . Receivers subject to control of Court of Chancery, decrees and orders subject to appeal, . certain corporations excepted. See Corporations, Receivers. DIVIDENDS by banking corporations, — to be made from profits only, .... how profits are to be calculated, .... surplus profits, how ascertained, .... losses, how to be charged, how to be declaxed on stock owned by the State, or literary, &c. institutions, .... Page. 23 ■23, 146 10 16 16 41 28 64-77 65 66 66 67 67,68 68 68 69 69 69 134, 135 71 73 74 74 5 6 5 5 231 344 INDEX. Page. DIVIDENDS by banking corporations — continued. not to be made if any part of capital has, been , withdrawn, 104 provision if capital is reduced, &c., . . . 140 if made in such a case, the Chancellor may order their affairs to be closed 104 "DRAWING, & RE-DRAWING" of bills, described by Adam Smith, 301 n. See Bills of Exchange, Fictitious Bills. DISTRIBUTION of funds by the Comptroller, . . . 175-177 "EFFECTS," the term defined in Revised Statutes, . . 24 "EVIDENCE OF DEBT," the term deflued in Revised Statutes, - . . '24 EXERCISE of unauthorized banking powers prohibited, . 26 EXPRESS GRANT of banking powers necessary to their exercise by a corporation, .... 26 EXPRESS POWERS of banking corporations, . . . 94, 95 n. of safety fund banks, . , 94, 95 n. See Banking Powers. FICTITIOUS BILLS, description of, by M'Culloch, . . 303 n. are a device for obtaining loans, . . . 302, 303 n. have no effect in transferring or settling debts, . 303 n. , the system of dr a/wing S re-drawing is a mode of borrowing money, : . . . 802, 303 n. fictitious Mils balance each other, . . . 303 n. those drawn by London on Glasgow, are exactly equal to those drawn by Glasgow on London, . 303 n. See BiUs of Exchange, Drawing and Re-drawing, Raising Money by Circulation. '' FOREIGN BANK NOTES, acts concerning, . . 107-109, 193 See Bank Bills. FOREIGN CORPORATIONS, are within the prohibitions of the Restraining ^ct, §§ 3, 6, 41, 42, 50 n. may prosecute suits, &c 240 upon giving security for costs, .... 240 INDEX. 345 FOREIGN CORPORATIONS— continued. when they shall not maintain an action, attachments against, . . . 242, 243, 246, in what courts suits may be brought, . by whom suits may be prosecuted, in what cases suits may be brought, . Act of May 14th, 1840, as to proceedings against, Act of April 11th, 1842, as to suits against, 247, Act of May 13th, 1845, as to suits against, . Act of Feb. 21st, 1848, as to suits against, . Act of March 15th, 1849, as to remedies against, actions against, under the Code of Procedure, FRAUDULENT BANKRUPTCIES of corporations. Act of 1825, to prevent, this was a statute of hanhruptcy applied to cor porations, English bankrupt laws did not extend to corpora- tions, provisions of the Act of 1825 re-enacted in Re- vised Statutes, See Statute Regulations of 1827, p. 1-28. FRAUDULENT ISSUES of corporate bonds or stock, de clared to be a felony, . . .• . GENERAL BANKING LAW, as originally passed {vnth notes omd references), as altered by subsequent legislation, GENERAL LIABILITIES of every corporation, . Prkileges of every corporation, . Powers of every corporation, . . INCORPORATED BANKS, Act as to withdrawal of their circulating notes after their special charters have expired, their power to hold real estate, .... INDIVIDUAL BANKER, must file a certificate stating residence, penalty for neglect, Page. 240 247, 253 252, 253 252, 253 252, 263 245, 246 248, 249 249, 250 261 252 253 XXVI n. 207, 208 81-107 211-223 24 24 24 197 172, 100 144 144 346 INDEX Page. INDIVIDUAL BANKER— continued. to deposit securities to the amount of $60,000, . 143 to be banks of discount and deposit, as well as of circulation, 152 to transact business at place of residence specified in the certificate, 162 notice of change of residence to be filed, . . 144 penalty for neglecting to make reports, . . 143 in whose name business shall be conducted, . 143, 204 sale of banking business prohibited, . , . 204 to be individually liable for circulating notes, . 204 notes, how signed, 204 to report names of persons interested with him, . 143 penalty for not making such report, . . . 143 persons interested to file a certificate, . . . 203 persons interested to be jointly liable for debts, . 203 circulating notes to express individual liability, . 204 circulating notes of, to be payable on demand, and without interest, .... 82-86, 114 subject to taxation, 150 See Banking Corporations. INJUNCTIONS against moneyed corporations, — may be issued to restrain any corporation from exercising a franchise not granted, ... 51 to restrain individuals from exercising corporate rights not granted to them, .... 51 when to be issued, . . . .62, 58, 59, 159, 160 to prevent illegal alienations of corporate property, 64 to prevent directors from using corporate funds for purposes unauthorized by the charter, . * 56 n. in case of insolvency, to prevent oflBcers, &c. fi-om exercising corporate rights, &c. . . 68, 159, 160 ; if corporation is unable to pay its debts, . . 58 to restrain proceedings at law against corpora- tions in certain cases, 64 INDEX. 347 Pago. INJUNCTIONS against moneyed corporations — continued, may be issued upon the application of share- holders in certain cases, . . . . 65 n., 69, 160 See Chancellor, Banking Corporations, Insolvency. INSOLVENCY of moneyed corporations, regulations to pre- vent, 1-17 object of these regulations, as stated by the RevkoT), sxxix, 9 n. if insolvent, corporation may be enjoined, ... 58 or if unable to pay its debts, 58 or for violations of its charter 68, 104 conveyances by, when insolvent, with intent to give a preference, invalid in law, 8, 9 insolvency defined by Allen, J., in Brouwer v. Sar- leck, 9n. if not " clearly solvent," the judge shall, by an order, declare a corporation to be insolvent, . . . 160 See Banking Corporations, Injunction, Chancellor, Conveyances, Insolvent Corporations. INSOLVENT CORPORATIONS with banking powers, pro- ceedings against, 68, 158-160 if insolvent, or unable to pay their debts, . . 58 for violations of any provisions of their charters, . 68, 104 for violations of any other law binding upon them, 68 insolvency defined by Allen, J., in Brouwer v. Ha/rteck, 9 n. upon whose application injunction may issue, 56, 59, 158-170 for what causes injunction may issue, 58, 59, 104, 140, 149, 155, 156, 159, 160 a Receiver may be appointed, . . .59, 158-170 powers and duties of Receivers, . . 60,68,161-170 bill holders to have a preference, ... 265 directors, &c., may be made parties in certain cases, 61 jurisdiction over directors, &c., .... 61 proceedings on bills filed by creditors, . . 61 decree when corporation is insolvent, ... 62 348 INDEX. INSOLVENT CORPORATIONS— continued, distribution of coi'porate property, liabilities of stockholders, .... liabilities of directors, how enforced, . discovery by a corporation may be compelled, when officers compelled to answer, answers of officers, how far evidence, . answers, in what cases only, compelled, persons compelled to answer exonerated from prosecution, &c., .... when proceedings at law shall be stayed. certain corporations excepted, &c.. See Banking Corporations, Injunction, Chancellor. INSPECTORS of election of directors, how chosen, power to supply vacancies, . officers not to be inspectors, oath of inspectors, qualification of voters, form of oath to be administered, when votes shall be rejected, not to vote on hypothecated stock, any person challenged shalll take an oath, &c., affidavits to be annexed to proxies, certain by-laws invalid, .... books of transfer to be kept, married women may vote in certain cases, . penalty for refusing inspection of books, . remedy for persons aggrieved by an election, duty of Supreme Court, .... INTEREST OF MONEY, an act in relation to, . rate at which discounts may be made by banks subject to the act of 1829, rate of interest allowed to incorporated banks by the act of 181T, notes or biUs issued by banking corporations pay- able with interest prohibited. Page. 62 62 62 63 63 63 63 63 64 64 18 18 18 19 19 19 19 19 19 20 20 21 20 n. 21 21 22 260-262 37 238 n. 38, 114 INDEX. 349 Pago. INTEREST OP MONEY— continued. recovery of, on protested circulating notes, regu- lated, when interest shall not be recovered on such notes, for the purpose of calculating interest, a month to be considered the twelfth part of a year, and to consist of 30 days, interest for less than one month to be estimated by the proportion which the number of days shall bear to 30, how interest shall be calculated in certain cases, . See Usury. ISSUES by banking corporations, — under exclusive control of the comptroller or superin- tendent, ....... must be payable on demand, must be payable without interest^ must be payable at bank's place of business, must be secured by government stocks, &c., must be stamped by the government, by Bank of England, secured by a debt of the English government, ....... liiin., 84n. See Circulating Notes, Post Notes, Bills of Exchange, Loans & Discounts, Fictitious Bills, Banking Systems. ISSUES, unauthorized, of corporate bonds, &c., declared to be a felony, 207, 208 JUDGMENT SUFFERED by a moneyed corporation when insolvent, with intent to give a preference, in- valid, See Conveyances, Transfers, Payments, Lien Cre- ated. HOLIDAYS, an act to designate, HUNT'S CASE, report and decision in LEADING DECISIONS, relating to the general banking law, and the powers of corporations formed under it, . 297-325 187, 188 188 261 261 261 81-91, 136-139 38, 82, 114 38, 114, 174 82-85, 105 82, 88, 265 88 8,9 259 44 n. 350 INDEX in relation Statutes to LIABILITIES (general) of every corporation, certain liabilities, stockholders liable for, LIENS CREATED by a moneyed corporation, when insolvent with intent to prefer, invalid, . in contemplation of insolvency, with like intent, invalid See Conveyances, Transfers. LIFE & FIEE BONDS, for what purpose issued, form of these bonds, . powers of Life and Fire Ins. Co. . adjudications upon, LITERARY INSTITUTIONS, stocks held by, act i to dividends on, . LOANS, when to be called in, . . . LOANS AND DISCOUNTS, limited by Revised three timei the capital paid in, . by the Safety-Fund Act, to trciee and a half the capital paid in, but this act required the whole capital to be actually paid in before any discounts, &c. could be made, this act also limited the issue of notes to twice the capital paid in, by charters before 1829, debts of banks, over deposits, limited to tJvree times capital paid in, See Charters. See Clinton's message, 1827, p. xxxvi. Charters prior to 1829, required only a small per- centage on capital to be paid in before issuing notes, &c. See Charters before 1829. general banking law as amended, requires an aggregate capital of $100,000, and a deposit with Comptroller of $100,000 of securities before commeneing banking business, .... but the general law only authorizes secured and countersigned notes to be loaned, . LOSSES, how to be computed Page. 24 155 8,9 8,9 xxxi , 43, 122 xxxi xxxiii 231 6 4 36 88 36 91,114 82,88 6,6 INDEX. 351 Page. MANHATTAN COMPANY, how its charter was obtained in 1799, xxi, xxii MERCANTILE TRAFFIC by Bank of England, forbidden, ix n. — xlviii n. this bank an engine of state, .... xlyiii it conducts the banking business of the British Government, xlviii See Trading, Prohibition, Charters. McCULLOOH, doctrines advocated by, with respect to secur- ity for bank issues, li to liii "MONEYED CORPORATION," the term defined in the Revised Statutes 23 shall not be interested in notarial fees, . . 77 nor in premiums on certain drafts, ... 77 nor place-moneys in the hands of any one for the purpose of discounting, &c., .... 78 See Corporations, Banking Corporations, Insolvent Corporations, Chancellor. MORTGAGES, for a greater amount each than $5,000, cannot be received by Comptroller, .... 153, 184 See Circulating Notes. NATIONAL BANKS of the U. S.— forbidden to trade in any thing, except bullion, &c., xiv mercantile traffic by banks condemned, . . xlviii NEW YORK CLEARING HOUSE, account of, . . . 266-267 average amount of daily exchanges, . . . 276 mode in which these exchanges are made, . 270-275 results accomplished by this system of ex- changes, 275 some of the advantages of this system, . . 275 it checks violent expansions, and contractions of loans, 275 it compels banks to keep a larger specie basis, 275 constitution of the Clearing-House, , . . 278 names of aasoeiated banks, .... 282, 283 NOTES, issue of, by banking corporations, payable on time, or payable with interest, prohibited, . . .88, 114, 174 352 INDEX. Page. NOTES— continued. giTen in violation of §§ 1, 3, 3 of Restraining Act, void, 41, 42 for less than one dollar, prohibited, . . . . 16, 44, 45 See Bills, Post Notes, Foreign Bank Notes, Circulating Notes, Bills of Exchange, Fictitious Bills. OFFICERS AND DIRECTORS of moneyed corporations, penalties on, — for violating certain sections of the Revised Statutes, 10 for purchasing notes, &c. of such corporations, for less than amount due 16 for discounting notes refused by directors, . 16, 17 for refusing to exhibit transfer books, . . 21 for violations of §3 and §6, ofthe Restraining Act, 41, 43, 49 for issuing or circulating notes, &c. in violation of § 4 of the Act of May 14th, 1848, . . 114 for making false statements, or false entries in the books of such corporations, ... 86 for refusing to exhibit the book containing the names, &c. of stockholders, .... 15T for vfillfuUy signing, with intent to issue, false certificates of shares, &c 207, 208 may be decreed to pay over to a Receiver corporate funds misapplied, or improperly disposed of, . 10, 233 PAYMENTS by a moneyed corporation when insolvent, with intent to prefer, invalid, . . . . 8, 9 in contemplation of insolvency, with like intent, invalid, 8, 9 See Conveyances, Transfers. PARTNERSHIPS & CORPORATIONS, distinction between, 306 n- PLACE where the operations of discount, &c. are to be carried on, to be specified in the Articles of Associa- tion, (see p. XXV.) 92 n. See Individual Banker, Change of Place of Business. PENALTY on eveiy person and every corporation violating or assenting to the violation of § 6 of the Restraining Act, 43,44 INDEX 353 Pago. PENALTY— continued. on ofBcers violating § 4 of the Act of May 14, 1840, , 1 14 for circulating bills less than one dollar, ... 47 for circulating notes, &c. payable otherwise than in lawful money of the U. S 48 See Officers & Directors. POST BILLS, issue of, by banking corporations, prohibited, except, &c 88, 114, 174 See Bills of Exchange, Fictitious Bills, Post Notes, Circulating Notes. POST NOTES, &c., issue of, by banking corporations or by individual bankers, prohibited, . . 38, 114, 174 decisions as to the issue of, . 26 n., 48-45 n., 116, 117 n. forms of, adjudicated upon iy the courts, in Atty. Gen. v. Life S Mre Int. Co., . 43, 122, xxxii in N. r. Life Ins. & Trust Co. v. Beebe, . 26 n. in HunCs Case, 44, 45 n. inSaffordy:. Wychoff, 118 n. in Banh of CMlicotJie T. Bodge, . . . 118 n. in Smith & Warner v. Strong, . . . 119 n. ia Swift -v. Beers, 119 n. in Zeaviit v. Palmer, ..... 120 n. in Bank Commrs. v. St. Lawrence BanJc, . 120 n. in Talmage v. Pell, 121 n. in Leavitt v. Yates, 121 n. in Southern Loan Co. v. Morris, . . . 307 n. in Miller v. Austin, 307 n. POWERS (general) of every corporation, . . . . 24, 25 See Banking Powers. PREFERENCES given by moneyed corporations, when in- solvent, &c. invalid, 8, 9 See Conveyances, Transfers. PRINCIPLES ADJUDGED by the highest court in the State in reference to the general bank law, &c. Ix to Ixiii PRIVILEGES (general) of every corporation, . . . 24, 25 23 354: INDEX. Page. PROCEEDINGS against corporations in Equity^ ... 60, 65 at Law, . . . 240-247 See Banking Corporations, Chancellor, Injunc- tion. PROHIBITION against trading, in all bank charters prior to 1825, vii-xvii, 83 n. omitted in first Pennsylvania charter of the Bank of North America yiii inserted in the second charter, . . . . xi n. inserted in the charters of the two national Banks of the U.^., xiv n. inserted in charters of Banks of England, France, Scotland, and Ireland, ix n. against the issue of post notes, . . . 38,114,174 against the exercise, by corporations, of powers not expressly given, &c 25 against the transfers of corporate effects, in cer- tain cases, 6, 7, 8 See Circulating Notes, Post Notes, Conveyances, Chancellor. PROFITS, how calculated, preparatory to a dividend, . . 5 surplus, how ascertained, 5 PROMISSORY NOTES, Acts in relation to 253-260 See Circulating Notes. PROVISIONS of Title II. chap. 18, 1 R. S. 588, apply to every moneyed corporation created after Jan- uary, 1828, 23 PURCIHASERS at Receivers' sales, act in relation to, . . 144 QUORUM of a Board of Directors, 27 REAL ESTATE, in what cases banking corporations can acquire and hold the same, . . . 100, 101 n. conveyances of real estate to be made to the pres- ident, or other ofScer indicated in the articles, 100, 101 But see %! of the general statute, p. 6. See Incor- porated Banks. INDEX. 355 " RAISING MONEY BY CIRCULATION," as described by Adam Smith, 301 n. See Bills of Exchange, Fictitious Bills, Drawing and Re-Drawing. RECEIVERS of moneyed corporations, — their powers and duties, 59, 60, 68, 69, 161-170, 204, 232, 233 subject to order of Chancellor, . . . .73,136 power to refer controversies, .... 69 may hold real estate, 145 may sue in their own names, .... 145 duties as to the allowance and disallowance of claims against the fund 57 n., 60 n. represent the rights of creditors and stockholders, 68, 57 n. may repudiate illegal transfers, &c. of corporate effects, 57 n. suits commenced by a Receiver not abated by his death or removal, 230 their powers and duties under the Acts of April 5th, 1849, and March 15th, 1855, . . . 161, 205 See Act of April 26th, 1832, pp. 230, 231. See Act of March Idih, 1852, pp. 232, 233. See Insolvent Corporations, Chancellor, Banking Corporations, Injunction. REGISTERED NOTES may be issued in lieu of unregistered notes, 154 REGULATIONS of 1827 (Revised Statutes),— to prevent insolvency of moneyed corporations, . 1-17 such corporations shaU not make dividends, ex- cept from surplus profits, .... 3 nor pay any part of capital to stockholders, . . 3 nor reduce capital without consent of legislature, 3 nor discount notes in payment of installments on stock, 3 nor receive notes to enable stockholders to with- draw moneys paid for stock, .... 4 nor apply moneys, except surplus profits, to pur- chase shares of its own stock, .... 4 356 INDEX. Page. REGULATIONS— continued. nor receive such shares in payment of debts, ex- cept, &c 4 nor receive from other stock corporations in ex- change, &c. shares, &c. of such other corporations, 4 nor make loans, &c. exceeding twice and a half the capital 4, 36 nor make loans, &c. to directors exceeding one third of capital, 4:, 5 See Banking Corporations, Chancellor, Moneyed Corporations, Insolvent Corporations, Injunc- tion. REPORTS to Superintendent of Bank Department, . . 183 to be made quarterly, 138,183 New York city banks to publish in addition weekly reports, 195,196 what such reports shaU contain, 147, 148 penalty if not made, 149 to be published by superintendent, .... 139 RESTRAINING ACT of 1782 (obsolete) 233 of 1804 (obsolete), 234 of 1813 (obsolete), 236 of 181 8 (obsolete), 237 RESTRAINING ACT OF 1830 (Revised Statutes), . . 39^9 Revisers' notes on, 40, 41 n. § 6 in part repealed, Feb. 2, 1837, . . .42, 49 n. this repealing act not to apply to foreign corpora- tions, 49, 60 n. corporations, unless expressly authorized by law, forbidden to employ their effects for the purpose of making discounts, &c., § 3, . . . . 41 or to keep any office for the purpose of receiving deposits, &c,, § 6, 42 or for the purpose of issuing evidences of debt, &c., §6, 42 forbidden to issue notes,