201 U.S. 230 (1906), 131, Wyman v. Wallace

Docket Nº:No. 131
Citation:201 U.S. 230, 26 S.Ct. 495, 50 L.Ed. 738
Party Name:Wyman v. Wallace
Case Date:April 02, 1906
Court:United States Supreme Court

Page 230

201 U.S. 230 (1906)

26 S.Ct. 495, 50 L.Ed. 738




No. 131

United States Supreme Court

April 2, 1906

Submitted March 6, 1906




Where a national bank has gone into liquidation under § 5220, Rev.Stat., and one holding its notes seeks to enforce the additional liability imposed by § 5151, Rev.Stat., against a stockholder by a suit in the nature of a creditor's bill on behalf of himself and all other creditors, a case is presented under the laws of the United States giving the Circuit Court jurisdiction independently of diverse citizenship, and the decree of the circuit court of appeals is not final, but an appeal therefrom will lie to this Court.

It is not necessary in order to maintain such a suit that the creditor should first obtain judgment on the notes.

A national bank, finding itself embarrassed though possessed of a large amount of assets apparently in excess of its obligations, is not prohibited

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by the National Banking Act from borrowing, and it has the power to borrow, money to meet pressing demands which it has not the cash to meet, and to give its time obligations therefor, secured by all of its assets, and if it subsequently goes into liquidation, and the collateral is insufficient to meet the obligations, the stockholders, both assenting and nonassenting to the liquidation, are subject to the additional liability to the extent imposed by § 5151, Rev.Stat., and the holder of the notes can enforce the same by creditor's bill.

Prior to December 21, 1895, the American National Bank and the Union National Bank, hereinafter called, respectively, the American Bank and the Union Bank, were each engaged in business in the City of Omaha, Nebraska. During that month, the American Bank was in such financial condition that it became necessary for it to provide for the payment of a large amount of deposits on or about January 1, 1896, for though possessed of abundant nominal assets, it did not have sufficient cash to make such payment. It knew that a neglect to pay would precipitate a run and bring on a failure of the bank. Thereupon, in order to obtain the money necessary therefor, its officers and leading stockholders entered into negotiations with the Union Bank for the payment of its immediate obligations, and thus enabling it to secure an opportunity to realize upon its assets. As a result of such negotiations, a contract was entered into by and between the two banks through their boards of directors. By its terms, the Union Bank was to assume the payment of all the liabilities of the American Bank, receiving therefor cash and such bills receivable as it was willing to accept at par and without recourse. The difference between the amounts so received and the liabilities assumed was to be represented by three nonnegotiable promissory notes of the American Bank, the payment of which was to be secured by a pledge of all its remaining assets to Thomas L. Kimball as trustee. This contract was carried out. The Union Bank moved into and took possession of the offices of the American Bank. Upon adjustment, as above...

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