Robinson v. Gardiner
| Citation | 59 Va. 509 |
| Parties | ROBINSON & als. v. GARDINER & als. |
| Decision Date | 09 May 1868 |
| Court | Virginia Supreme Court |
1. Upon the true construction of the act of February 12th, 1866 Sess. Acts 1865-66, p. 204, entitled " An act requiring the banks of this Commonwealth to go into liquidation," all the creditors of a bank, not having a specific lien upon property of the bank, are placed upon the same footing, and are entitled to share the assets ratably.
2. The General Assembly having reserved the right to alter or repeal the charter of the bank, the act is not obnoxious to the charge of interfering with vested rights or impairing the obligation of contracts.
3. A deposit of money in bank is a loan, and not a bailment.
After the termination of the late war, the banks of circulation in the State were insolvent; their remaining assets were not sufficient to discharge their indebtedness; and their capital stock was worthless; they, therefore, generally commenced to wind up their affairs. To facilitate this process, and also to regulate it, the General Assembly, on the 12th of February, 1866, passed an act entitled " An act requiring the banks of this Commonwealth to go into liquidation." See Sess. Acts 1865-66, p. 204. The first section of this act provides, that the president and directors of any bank of circulation chartered by the General Assembly of Virginia may make a deed, conveying to such persons as they may select all the assets, real and personal of the bank, providing in such deed that the proceeds of said assets shall be distributed amongst all persons, corporations and associations entitled to share in such distribution according to the legal rights and priorities of such persons corporations and associations at the time such deed shall be executed. The other material provisions of the act are stated by Judge Joynes in his opinion.
On the 19th of January, 1867, the president and directors of the Farmers' Bank of Virginia executed a deed by which, after referring to the act of Assembly and reciting the first section, and reciting also, that the president and directors deemed it expedient and proper that a deed conveying all the assets of the said bank for the purpose in said act mentioned, should now be made, they conveyed to John M Goddin and Samuel C. Robinson all the assets, real and personal, of the Farmers' Bank of Virginia upon trust, after paying all costs and expenses, to apply the proceeds of said assets to the redemption of the outstanding circulation or notes of the said bank ratably among the holders thereof; providing that all the noteholders should be put upon the same footing: " Provided, however, that if, according to the proper legal construction of the aforesaid act of the 12th of February, 1866, a ratable distribution among all the creditors of said bank, not having specific liens on the property of said bank, be required, then the parties of the second part shall apply and distribute the proceeds of the said assets according to the requirement of said act, and shall not make or attempt any distribution giving preference or priority to the noteholders as aforesaid."
In March, 1867, George J. Gardiner instituted a suit in equity in the Circuit Court of the city of Richmond against the president and directors of the Farmers' Bank of Virginia, and the trustees Robinson and Goddin, and in his bill he alleged, that the bank was indebted to him in the sum of two thousand dollars, collected for him by the bank in April, 1861, and which had not been paid to him; he set out the deed aforesaid, and insisted that the bank was not entitled to prefer the noteholders; but that all the creditors of the bank were equally entitled to share ratably the assets. The president and directors answered, contesting the construction of the statute insisted on by the plaintiff, and insisting that it was their right, and that it was but just, to give preference to the noteholders. This was the only question in the cause.
The cause came on to be heard on the 30th of November, 1867, when the court held, that the act required a ratable distribution of the assets of the bank among all the creditors not having specific liens upon the property of the bank; and that the plaintiff and others, who made deposits prior to the 1st of January, 1862, were entitled as general creditors of the bank to share in the distribution of the assets under said deed in proportion to the amount of their respective credits as depositors with the said bank. And the decree was accordingly. From this decree Robinson and Goddin applied to this court for an appeal; which was allowed.
N. P. Howard and Macfarland, for the appellants.
Neeson and Spilman, for the appellees.
The only question presented by this appeal is, whether the president and directors of the Farmers' Bank had authority to convey the assets of the bank by the deed of January 19, 1867, in trust for the benefit of the noteholders, in preference to depositors and other general creditors of the bank.
The plaintiff claims to be a creditor of the bank by virtue of a general deposit. It is well settled, and the principle has not been controverted in this case, that a general deposit of money in a bank creates the relation of debtor and creditor between the bank and the depositor. Though we call it a deposit, it is a loan, and not a bailment. Commercial Bank v. Hughes, 17 Wend. R. 94; Marine Bank v. Fulton Bank, 2 Wall. U.S. R. 252; Pilling on Mere. Accounts 53; Downes v. Phoenix Bank, 6 Hill's R. 297.
It is contended for the appellants, that it was competent for the bank,...
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