Bradner v. Woodruff — 23 N.Y. St. Rep. 365

Majority

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Alonzo Bradner and ano., as Ex’r, etc., App’lts, v. Lamen C. Woodruff et al., as Surviving Trustees, etc., Resp’ts.

(Supreme Court, General Term, Fifth Department,

Filed April 12, 1889.)

Headnote

Banks and banking—When transfer of securities prohibited—Laws 1882, chap. 409, §§ 186, 187.

A transfer of the securities of a bank, made for the purpose of securing certain creditors of the bank whose claims had been long existing, and in '

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contemplation of the hank’s insolvency and without any authority from the board of directors, is void within the letter as well as the policy of the statute (Laws 1883, chap, 409, §§ 186, 187) relating to banks, banking and trust companies.

Appeal from an order of the special term, requiring the plaintiff (Bradner) to deliver to Reuben Whiteman, as receiver, etc., of the Bank of Dansville, certain bonds, coupons and promissory notes, the property of said bank.

J. A. Vanderlip, for app’lts; M. W. Cooke, for resp’ts.

Very little conflict respecting the facts of this case is disclosed by the motion papers, and it was correctly assumed by the court below that certain questions had been so far settled as to admit of no further discussion. One of the questions thus referred to is the fact that the corporation known as the Bank of Dansville was not dissolved by the adoption of a resolution to close its business, and the subsequent proceedings taken thereunder.

It seems to be equally well-established that at the time the receiver was appointed herein, to wit, May 19, 1884, the Bank of Dansville was insolvent, and that while in this condition the bonds and notes in question were transferred to the plaintiff Bradner, by Luther Grant, the cashier of the bank. The assignment of these securities was dated May twenty-first, but it is claimed that the arrangement for their transfer was concluded two or three days prior to the appointment of the receiver. This is a matter of slight consequence, however, inasmuch as the facts admit of no other conclusion than that the assignment was made in contemplation of the bank’s insolvency.

It is not claimed that this transfer was made in pursuance of any resolution of the directors of the bank, or that they, as a body, had any knowledge of it, and the only explanation offered for the cashier’s action is that the transfer was designed to secure certain creditors of the bank whose claims had been long existing.

Upon this state of facts, the special term held that, the assignment was void and transferred no title to the transferee.

It is now contended by the learned counsel for the appellant that the conclusion reached by the court below was based upon the erroneous assumption that section 4, of title 4, of chap. 18 of the Revised Statutes, was applicable to and decisive of the question there presented, whereas that section has been repealed by chapter 402 of the Laws of 1882. So "far as the repeal of the section referred to is concerned, the learned counsel is doubtless correct, but he appears to have overlooked the fact that the same legislature, which repealed that section, consolidated and revised

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the various statutes relating to banks, banking and trust companies, with the obvious design of framing a general banking act for the government of all banking corporations and institutions. Laws 1882, chap. 409.

Section 186 of this act provides that “no conveyance, assignment or transfer, not authorized by a previous resolution of its board of directors, shall be made by any such corporation of any of its real estate, or any of its effects, exceeding the value of one thousand dollars,” and by the succeeding section it is further provided that “no such conveyance, assignment or transfer, nor any payment made, judgment suffered, lien created or security given any such corporation when insolvent, or in contemplation of insolvency, with the intent of giving a preference to any particular creditor over other creditors of the company shall be valid in law; and every person receiving by means of any such conveyance, assignment, transfer, lien, security or payment, any of the effects of the corporation, shall be bound to account therefor to its creditors or stockholders, or their trustees, as the case shall require.”

The sections above quoted, prior to the act of 1882, formed a portion of the statute relating to moneyed corporations, and the question of whether or not they were applicable to banks or banking institutions was the occasion of much dispute and contrariety of opinion in the court of appeals.

In some of the earlier cases, no doubt seems to have been entertained but that they were thus applicable. Gillett v. Moody, 3 Comst., 479; Talmadge v. Pell, 3 Seld., 328; Gillett v. Phillips, 3 Kern., 114. This view of the question was subsequently reversed, however, in an elaborate opinion concurred in by a bare majority of the court, Leavitt v. Blatchford ( 17 N. Y., 521 ), and the doctrine of the last mentioned case has since been followed and approved. Belden v. Meeker, 47 K. Y., 307-311.

Had there been no intervening legislation affecting the subject we should, of course, feel constrained to follow these later decisions and hold, with the learned, counsel for the appellant, that there was no statutory provision which inhibited the transfer of the securities in question, but, as has already been suggested, the act of 1882 (chap. 409), was evidently designed to codify all the statutes relating to banks and moneyed corporations, and thereby to bring what was before fragmentary and disconnected into a harmonious whole. To this end all previous statutes bearing upon the various subjects mentioned in this chapter, including title two of chapter eighteen of part one of the Revised Statutes, which relates to moneyed corporations, were lepealed (chap. 402, Laws 1882, §' 1, sub. 3)9, and

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chapter 409 was substituted in lieu thereof. By the very-first section of this last mentioned chapter, the bank department, which previously had been charged with the execution of the_ laws relating to banks only (chap. 164, Laws 1851, § 1), is invested with jurisdiction relative to all other moneyed corporations, except insurance companies. Then again the sections of the entire chapter are numbered consecutively, and still other circumstances might be pointed out all tending to show an intention on the part of the legislature to bring the various provisions of the act into relation with each other. That, as thus amended and revised, sections 186 and 187 apply to banks, was assumed by this, court in a recent case. Atkinson, Receiver, v. The Rochester Printing Co. ( 43 Hun, 167 ; 5 N. Y. State Rep., 470), and a further examination of the question leads us to the conclusion that the assumption there indulged in was-correct.

It follows, therefore, that the transfer of the securities-in question having been made in contemplation of the bank’s insolvency, if not while it was actually in that condition, and without any authority from the board of directors, was void within the letter as well as the policy of the statute, and the order appealed from must consequently be-affirmed, with ten dollars costs and disbursements.

Barker, P. J., and Dwight, J., concur