Elmira Sav. Bank v. Davis

• Decision Date: 05 June 1894
• Citation: 37 N.E. 646,142 N.Y. 590
• Parties: ELMIRA SAV. BANK v. DAVIS.
• Court: New York Court of Appeals Court of Appeals

142 N.Y. 590

37 N.E. 646

ELMIRA SAV. BANK

v.DAVIS.

Court of Appeals of New York.

June 5, 1894.

Appeal from supreme court, general term, fourth department.

Submission without action of a controversy between the Elmira Savings Bank, as plaintiff, and Charles Davis, receiver of a national bank, as defendant. From a judgment of the general term (26 N. Y. Supp. 200) in plaintiff's favor, defendant appeals. Affirmed.

Chas. H. Peck and Edward Winslow Paige, for appellant.

Edward G. Herendeen, for respondent.

GRAY, J.

The defendant is the receiver of an insolvent national bank, and the plaintiff, a savings bank, created under the laws of this state, claims, with respect to its deposits theretofore made with the former, to be entitled to be preferred in payment, under section 130 of the banking law of this state. Laws 1892, c. 689. The circulating notes have been provided for, and all other conditions of the banking law have been complied with, so as to entitle the claim to be allowed, if not in conflict with the provisions of the national banking law. The state banking law permits the trustees of savings banks to keep an ‘available fund * * * on hand or deposit in any bank in this state, organized under any law in this state or of the United States,’ etc. Section 118. Section 130 provides as follows: ‘All the property of any bank or trust company which shall become insolvent shall, after providing for the payment of its circulating notes, if it has any, be applied by the trustees, assignees or receiver thereof, in the first place, to the payment in full of any sum or sums of money deposited therewith by any savings bank, but not to an amount exceeding that authorized to be so deposited by the provisions of this chapter, and subject to any other preference provided for in the charter of any such trust company.’ The sole contention is whether this provision can be given effect in the distribution of the property of insolvent national banks. The appellant insists that it conflicts with certain provisions of the national banking law, which were framed to prohibit preferences, and relies upon the following sections of the Revised Statutes of the United States:

‘Sec. 5236. From time to time, after full provision has been made for refunding to the United States any deficiency in redeeming the notes of such association, the comptroller shall make a ratable dividend of the money so paid over to him by such receiver on all such claims as may have been proved to his satisfaction or adjudicated in a court of competent jurisdiction, and, as the proceeds of the assets of such association are paid over to him, shall make further dividends on all claims previously proved or adjudicated; and the remainder of the proceeds, if any, shall be paid over to the shareholders of such association, or their legal representatives, in proportion to the stock by them respectively held.’

‘Sec. 5242. All transfers of the notes, bonds, bill of exchange, or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void, and no attachment, injunction or execution shall be issued against such association or its property before final judgment in any suit, action or proceeding, in any state, county, or municipal court.’

The provisions of the federal law as to national banks constitute a complete system for their establishment, government, and winding up. Cook County Nat. Bank v. U. S., 107 U. S. 445, 2 Sup. Ct. 561. As agencies of the government, in the administration of a branch of the public service, the states are without authority to exercise any control over them, or to affect their operation (except so far as congress may permit), where the legislation will conflict with the national law, or will tend to impair or destroy their utility and efficiency in performing the functions by which they are designed to serve the government. National Bank v. Com., 9 Wall. 353;Bank v. Dearing, 91 U. S. 33;Waite v. Dowley, 94 U. S. 527;W. U. Tel. Co. v. Attorney General, 125 U. S., at page 551, 8 Sup. Ct. 961. If the state banking law, in these provisions which we are considering, comes into conflict with the operation of the federal law, the former must be held ineffectual to impede the due execution of the latter in all respects therein intended and provided for. Is that the case here? We are not now concerned with questions of the propriety or justice of the state law in directing the claims of savings banks to be preferred in payment over those of other depositors. That is the law of the state, enacted acted by its legislature, in furtherance of the protection and...