McCallum v. Twiggs County Bank

Decision Date16 April 1931
Docket Number7073.
Citation158 S.E. 302,172 Ga. 591
PartiesMcCALLUM v. TWIGGS COUNTY BANK. [*]
CourtGeorgia Supreme Court

Syllabus by the Court.

United States Supreme Court's construction of federal act substantially similar to state act is entitled to great weight in construing state act (Laws 1919, p. 210, art. 19, § 46; 12 USCA § 91).

The provisions of section 46 of article 19 of the Banking Act of 1919 (Ga. L. 1919, pp. 135, 210) are substantially similar to those of section 5242 of the Revised Statutes of the United States (USCA title 12, c. 2, section 91); and the construction placed by the Supreme Court of the United States upon questions presented to this court is entitled to great weight.

Payment of check to depositor is not void if made in ordinary course of business shortly before bank closed, unless made in contemplation of insolvency or to prefer depositor, though bank officers knew bank was insolvent; petition to recover payment to depositor within three months before bank's failure is insufficient unless alleging payment was not in due course of business but with view to preference (Laws 1919, p. 210, art. 19, § 46).

Under the rulings of the Supreme Court of the United States construing section 5242 of the Revised Statutes of the United States (12 USCA § 91), in McDonald v. Chemical National Bank, 174 U.S. 610, 19 S.Ct. 787, 43 L.Ed. 1106, the mere fact that a bank is insolvent, and that this fact known to its officers and others charged with the duty of administering its affairs, will not render payment of a check of a depositor null and void, so as to authorize the recovery of the payment by the superintendent of banks, if such payment was made in the ordinary course of business and "an hour before the doors were closed," unless there is evidence to justify the inference that the particular payment in question was made in contemplation of insolvency or with a view to prefer the particular depositor. Consequently, a petition which alleged a payment to a depositor sued as defendant, with a view to prevent the application of its assets in the manner prescribed by the banking act, or with a view to the preference of one creditor over another, although such payment was made within three months prior to the failure of the bank, is insufficient to render such payment null and void without an allegation of facts showing that such payment was made, not in the due course of business, but with a view to a preference.

The petition in the instant case was properly dismissed upon demurrer, and the Court of Appeals erred in reversing the judgment of the trial court.

Certiorari from Court of Appeals.

Suit by the Twiggs County Bank, by A. B. Mobley, superintendent etc., against J. A. McCallum. Judgment for defendant was reversed by the Court of Appeals (39 Ga.App. 306, 147 S.E 129), and defendant brings certiorari.

Reversed.

J. D Shannon, of Jeffersonville, and L. D. Moore, of Macon, for plaintiff in error.

Jones, Jones, Johnston & Russell, of Macon, for defendant in error.

RUSSELL C.J.

On July 14, 1926, while the Twiggs County Bank (a banking corporation under the laws of Georgia) was open and transacting business, one of its depositors, J. A. McCallum, who had on deposit $860, withdrew that amount from the bank by check. On the same day the institution was closed and taken in charge by the superintendent of banks. Suit was instituted by the bank, through the superintendent of banks in charge thereof, to recover this amount from McCallum, as withdrawn at a time when the bank was insolvent, and with a view of preventing application of its assets in the manner prescribed in the banking laws, or with a view of giving a preference to one creditor over another. It was alleged that "the assets of said bank, together with the assessment made upon its stockholders, will not be sufficient to pay the creditors and depositors in full, and the payment of the said money to the said J. A. McCallum thus gave a preference to the said J. A. McCallum over its other creditors." The defendant demurred generally, because the petition set forth no cause of action in the plaintiff; because the facts alleged did not entitle plaintiff to recover; and because there was no allegation of any acts on part of the bank, or circumstances, showing an intent by the bank to create a preference in favor of the defendant, and no allegation of knowledge on part of defendant of insolvency of the bank. The judge sustained the general demurrer and dismissed the petition, and the plaintiff excepted. The Court of Appeals, 39 Ga.App. 306, 147 S. E.

129, reversed the judgment, ruling as follows: "Section 2360 of the Civil Code of 1910 is superseded by article 19, § 46, of the Banking Act, approved August 16, 1919 (Ga. L. 1919, p. 135 et seq.). Under this section of the Banking Act the payment by the bank of money which is on general deposit to the depositor is the payment of assets of the bank to a creditor; and when made after the insolvency of the bank, and with a view by the bank of preventing the application of the assets in the manner prescribed by the banking act, or with a view by the bank of preferring the depositor over other creditors, the payment is, under the terms of the act, 'null and void,' provided the payment is made within three months prior to the failure of the bank. It is not essential to the invalidity of the payment that at the time of payment the depositor to whom the money is paid shall have knowledge that the bank is insolvent."

In the petition for certiorari, complaint is made of various statements made in the opinion of the Court of Appeals; but the concluding division of the petition avers that the real question involved is this: "Can a payment made to a depositor of the bank while its doors are open and made in the ordinary course of its business be recovered back at the suit of the bank (through the superintendent of banks), unless it be shown that the customer of the bank at the time of the payment had knowledge of the insolvency of the bank, and knew that it was the purpose of the bank to create a preference by paying his check?" It is unnecessary to set out and treat separately the several errors complained of; the question to be decided consisting only of the correctness of the construction of article 19, section 46, of the Banking Act of 1919, p. 210, by the Court of Appeals in the case before us.

Section 46 of article 19 of "An Act to regulate banking in the State of Georgia; to create the Department of Banking ***; to provide penalties for the violations of laws with reference to banking and the banking business; and for other purposes," is as follows: "All transfers of notes bonds, bills of exchange, or other evidences of debt owing to any bank, or deposits to its credit; all assignments, mortgages, conveyances or liens; all judgments or decrees suffered or permitted against it; all deposits of money, bills or other valuable things for its use, or for the use of its stockholders or creditors; and all payments of money, either after insolvency or in contemplation of insolvency, with a view to prevent application of its assets in the manner prescribed in this Act, or with a view to the preference of one creditor over another, shall be null and void, provided such acts enumerated were committed within three months prior to the failure of such bank." It will be noted that the provisions of section 46...

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