Bank of Montreal v. Fidelity Natl. Bank — 17 N.Y. St. Rep. 88

Majority

p. 88

Bank of Montreal, Resp’t, v. The Fidelity National Bank, App’lt.

(Supreme Court, General Term, First Department,

Filed June 19, 1888 .)

Headnote

1. National bank—Effect of dissolution by foreign tribunal on" REMEDIES OF CREDITORS IN THIS STATE—ATTACHMENT.

An attachment was granted in this action upon the ground that the defendant was a foreign corporation having certain property within this state, which was levied upon under the attachment. On a motion to vacate the attachment for the reason that since the granting thereof the defendant had been dissolved by a decree- of the Federal court, Held, that however fatal the adjudication in a foreign tribunal may he to the existence of the defendant corporation in that "state, it cannot deprive the creditors of remedies afforded by other forums against its property.

2. Same—Creditors retain liens—Actions already commenced continue UNDER SAME TITLE.

Notwithstanding the dissolution, the corporation is deemed to live, at least to such an extent as to permit creditors who have acquired valid liens-

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to maintain them, and the action to continue in form by its present title as though the defendant had an actual legal existence.

3 Same—Attachment cannot issue against national bank out oe STATE COURT.

An attachment cannot be issued from a state court against national banks. Following Pacific National Bank v. Mixter, 134 U. S. 731 .

Appeal from an order of the special term denying the motion of the receiver of the defendant to vacate an attachment.

Stephen A. Walker, for rec’r; John B. Whiting, for resp’t.

The attachment in this action was granted on the 18th day of June, 1887, upon the ground that the defendant was a foreign corporation having certain property within this state, which was levied upon under the attachment. David Armstrong, who intervenes for the purposes of this motion, was appointed receiver of the defendant on the 27th day of June, 1887. His motion was originally based upon the allegation that, since the granting of the attachment, the defendant had been dissolved by a decree of the federal court. But this is not a reason for granting the motion.

It was held in the case of the Hibernian National Bank v. Lacombe ( 84 N. Y., 367 ), that however fatal the adjudication in a foreign tribunal may be to the existence of the defendant corporation in that state, it cannot deprive the creditors of remedies afforded by other forums against its property. Notwithstanding the dissolution, the corporation is deemed to live, at least to such an extent as to permit creditors who have acquired valid liens to maintain them, and the action to continue in form by its present title, as though the defendant had an actual legal existence. Another question is whether or not the defendant was. at the time of the service of the attachment, insolvent, within the meaning of the national bankrupt law. By section 5242 of the Revised Statutes of the United States, all transfers or evidences of debt owing to any national banking association, or 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, or with a vieAv 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.”

It is firmly established by the evidence before us that at

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the time of the granting and of the service of the attachment, neither the plaintiff nor its agent had any knowledge, suspicion or belief that the defendant was in an insolvent condition; on the contrary, Mr. Lang, the plaintiff’s agent; testified that he believed the defendant to be wholly solvent. It further appeared that the defendant continued in business, after the granting of the attachment on the 18th and 20 th days of June (the 19th being Sunday), and was not closed by the banking department until the 21st day of that month. Hence, so far as appearances go, irrespective of the stopping of the payment of checks, the defendant was not within the meaning of the federal statute insolvent. If the defendant was in fact insolvent, such knowledge was possessed only by the officers of the bank, for, as has already been pointed out, it continued business for two days thereafter, paying out money and receiving deposits in the usual and ordinary course of banking business, though it subsequently turned out that the bank was at the time of the issuing of the attachment, in fact insolvent, that is to say, in the sense that it did not at that time have sufficient property with which to pay all of its debts. Such insolvency, standing alone, unaccompanied by any act, omission or purpose, is not what is contemplated by the provisions of the federal statute. The language of the statute is not broad enough to cover such a case. On the contrary it is not restrictive in its terms as to the meaning which shall be given to the word “ insolvency.”

The construction of this statute, as it had been maintained up to the time of the argument of this cause, was to the effect that an attachment might be issued, as was done in this case, provided no act of insolvency or bankruptcy had been committed by the defendant, if done without any knowledge or suspicion of the contemplation of insolvency and without any effort to get possession of the property of the defendant otherwise than under the laws of the state. The prohibition to the issuing of an attachment before final judgment was limited to cases only where there had been an act of insolvency or contemplation thereof, made with a view to prevent the application of the assets in the manner prescribed by the federal statutes.

But since the argument of this cause, the supreme court of the United States, in the case of the Pacific National Bank v. Mixter (124 U. S. R., 721), have announced a decision which renders further discussion unprofitable, and shows that the previously accepted views of the profession as well as the decision in this case, are erroneous. The court there says: “It stands now, as it did originally, as the paramount law of the land, that attachments shall not issue from state courts against national banks, and writes

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into all state attachment laws an exception in favor of national banks. Since the act of 1873, all of the attachment laws of the state must be read as if they contained a provision in express terms, that they were not to apply to suits against a national bank.”

Feeling ourselves bound by this decision, it follows that the order appealed from should be reversed and the attachment vacated, but under the circumstances it should be done without costs.

Bartlett, J., concurs in the result.