remains exempt from taxation un-
der state laws. Rosenblatt v.
Johnston, 104 U. S. 462, 26 L. Ed.
832. This is because the cor-
porate capacity of the bank does
not cease on the appointment of
a receiver. First Nat. Bank of
Bethel v. National Pahquioque
Bank, 81 U. S. (14 Wall.) 383, 20
L, Ed. 840; Kennedy v. Gibson,
75 U. S. (8 Wall.) 498, 19 L. Ed.
476; National Bank of Metropolis
V. Kennedy, 84 U. S. (17 Wall.)
19, 21 L. Ed. 554. The right of
set-off exists in favor of a defen-
dant against whom a receiver is
proceeding to make a debt due
from him to the bank. Armstrong
V. Warner, 49 Ohio St. 376, 17
L. R. A. 466, 31 N. E. 877. The
closing of a bank by order of the
examiner, the appointment of a
receiver, and its dissolution by
decree of a circuit court neces-
sarily transfers the assets of the
bank to the receiver. The re-
ceiver takes the assets in trust
for creditors and in the absence
of a statute to the contrary sub-
ject to all claims and defenses
that might have been interposed
against the insolvent corporation.
The ordinary equity rule of set-
off in case of insolvency is that
where the mutual obligations have



.grown out of the same trans-
action, insolvency on the one hand
justifies the set-off of the debt
due on the other, and this rule ap-
plies to insolvent national banks,
and it is held that the closing of
a national bank by order of the
examiner, the appointment of a
receiver, and its dissolution by de-
cree of the circuit court, neces-
sarily transfer the assets of the
bank to the receiver who holds
the assets in trust for the credi-
tors, and in the absence of a stat-
ute to the contrary, subject to all
claims and defenses that might
have been interposed against the
insolvent corporation. Scott v.
Armstrong, 146 U. S. 499, 36 L. Ed.
1059, 13 Sup. Ct. 148.

5 The receiver of a national
bank is entitled to a surrender of
such property as has been pur-
chased with money of the bank.
If it can be shown that money in
a general fund belonged to the
bank, and was appropriated to buy
property, it may be reached.
Peters v. Bain, 133 U. S. 670, 33
L. Ed. 696, 10 Sup. Ct. 354.

The receiver of a bank who has
succeeded to all its rights and
interests may move to set aside
an attachment against such prop-
erty on the ground of irregularity.
Bowen v. First Nat. Bank, 34 How.
Pr. (N. Y.) 408.

A transfer of securities by a
national bank, if made in contem-
plation of insolvency, is fraudu-
lent under the statute, although
there was no such intention on the
part of the receiving bank or even



BANKS AND BANKING MATTERS.



1301



suspicion that the transferring
bank was insolvent or contem-
plated insolvency. National Se-
curity Bank v. Butler, 129 U. S.
223, 32 L. Ed. 682, 9 Sup. Ct. 281.

Receivers of a bank may under
proper circumstances stop in
transit, and take possession of,
money and bullion consigned to
a correspondent bank. Dexter
Horton Nat. Bank of Seattle,
Wash. V. Hawkins, 193 Fed. 363,
113 C. C. A. 287.

In National Bank of Metropolis
V. Kennedy, 84 IT. S. (17 Wall.)
19, 21 L. Ed. 554, it is held that a
receiver of a national bank ap-
pointed by the comptroller of the
Currency under the 50th section
of the National Banking Act, may
sue for demands due the bank, in
his own name, as receiver, or in
the name of the bank, and is not
obliged to get an order from the
comptroller for such purpose. Ken-
nedy v. Gibson, 75 U. S. (8 Wall.)
498, 506, 19 L. Ed. 476, 479; First
Nat. Bank of Bethel v. National
Pahquioque Bank, 81 U. S. (14
Wall.) 383, 20 L. Ed. 840.

A suit by a receiver to collect
indebtedness due his insolvent
bank may be brought properly in
a state court. Piatt v. Crawford,
8 Abb. Pr. N. S. (N. Y.) 297. To
the same effect are Case v. Ber-
win, 22 La. Ann. 321; Brinckerhoff
V. Bostwick, 88 N. Y. 52; Acker-
man V. Halsey, 37 N. .7. Eq. 356.
Tn this case it was held that where
a receiver of an insolvent bank
refuses to bring suit, a creditor
and stockholder may, for the ben-
efit of himself and for such other
creditors and stockholders as elect
to join, maintain a suit against the
president and directors for gross



official neglect and mismanage-
ment, whereby the bank was
ruined.

Receivers of national banking
associations as such have not the
privilege in all cases of being sued
in the United States courts and
can not remove such cases against
them from the state courts to the
United States courts. Bird v.
Cockrem, 2 Woods 32, Fed. Cas.
No. 1429.

In Hendee v. Connecticut & P.
R. R. Co., 26 Fed. 677, 23 Blatchf.
453, it was held that where a re-
ceiver of a national bank ap-
pointed by the comptroller has
possession of bonds pledged to the
bank for a debt and has obtained
an order for the sale thereof and
a suit is brought in a foreign
country against the receiver to
recover the bonds, such suit may
be restrained on a bill filed by
the receiver. Cf. Piatt v. Beach,
2 Ben. 303, Fed. Cas. No. 11,215

In Yardley v. Dickson, 47 Fed.
835, a receiver of a national bank
brought suit in the circuit court
to recover an indebtedness due the
bank without regard to the amount
involved.

A receiver of an insolvent na-
tional bank is, in the execution of
its duties, an agent and officer of
the United States, and actions
brought by him to recover assess-
ments upon stockholders for the
payment of debts of the bank are
suits at the common law brought
by an officer of the United States
under the authority of an act of
congress, of which cases the cir-
cuit court has concurrent jurisdic-
tion with the district court, without
regard to the amount sued for.
Price v. Abbott, 17 Fed. 506.



1302



LAW OF RECEIVERS.



In Frelinghuysen v. Baldwin, 12
Fed. 395, it is held that a re-
ceiver of a national bank is an
officer of the United States, and
as such may sue in the federal
courts in the district in which the
bank is located.

The appointment of a receiver
does not relieve the bank from a
suit against it. First Nat. Bank
of Bethel v. National Pahquioque
Bank, 81 U. S. (14 Wall.) 383. 393,
20 L. Ed. 840, 843.

In Movius V. Lee, 30 Fed. 298,
24 Blatchf. 291, it is held that a
receiver of a national bank has
power to enforce against its di-
rectors individual claims for
losses incurred through the non-
performance and the negligent
performance of their duties in the
district court of the United States.
A receiver of an insolvent bank
has no greater rights than the
bank in a fund against which the
bank had given a check which con-
stituted an equitable transfer or
appropriation of the fund. Fourth
Street Bank v. Yardley, 165 U. S.
634, 41 L. Ed. 855.

A receiver of a national bank,
appointed by the comptroller un-
der the national banking act may
sue for demand due such bank in
his own name, or in the name of
the bank. He is not required to
get an order of the comptroller
for such purpose. It is a part of
his official duty to collect the as-
sets. National Bank of Metrop-
olis V, Kennedy, 84 U. S. (17
Wall.) 19, 21 L. Ed. 554; First
Nat. Bank of Bethel v. National
Pahquioque Bank, 81 U. S. (14
Wall.) 383, 20 L. Ed. 840.

In Ellis v. Little, 27 Kan. 707,
41 Am. Rep. 434, a receiver ap-



pointed by the comptroller of cur-
rency was held to be the agent
of the United States, and is lim-
ited as to his functions by the
object of the receivership and the
duties it involves. Such a re-
ceiver, upon the order of a court
of record of competent jurisdic-
tion, may sell or compound all
bad or doubtful debts, and on a
like order may sell all the real
estate and personal property on
such terms as the court shall di-
rect; but he can not sell the prop-
erty of the bank in the absence
of such order, or upon terms in
conflict with the direction of the
order. He can not, as such re-
ceiver, charge the estate of the
bank with his executory contract
unless authorized so to do under
the provisions of the National
Banking Act and the order of a
court of competent jurisdiction
obtained under the terms of the
act. A receiver directed by a
court to sell the assets of a bank
"on such terms and in such man-
ner as in his judgment shall be for
the best interest of the creditors
and all interested in the bank and
its assets," is not empowered
thereby to exchange, barter, or
trade the property of the bank
for other or different property.
Persons dealing with the receiver
of a national bank in his official
capacity are bound in law to take
knowledge of his authority to act,
and where he acts in excess of his
authority, the persons with whom
he deals contract at their peril,
and the estate of the bank can not
be charged for the default or in-
ability of the receiver to perform
the contract.

In Barrett v. Henrietta Nat.



BANKS AND BANKING MATTERS. 1303

respect to property equitably belonging to third persons^
and such third persons may recover their property from
himJ

In other words the receiver of a national bank deals
with its assets and protects them for whom it may concern
including the stockholders.^ It has been held in Vermont
that the receiver of a national bank has by virtue of his
appointment under the Federal Banking Act the legal
title to the assets of the banks and that as a consequence
he may maintain an action at law in the state courts in
his own name to enforce stockholders' liability.^ Where
the receiver finds the affairs of the bank in confusion and
can not ascertain the nature of the pledge agreement
involved in regard to stock or paper pledged as collateral,
it is his duty to ascertain and assert fully the pledge
obligations and liabilities arising from the transaction.^®

The appointment of a receiver for a national bank does
not amount to dissolution of the corporation and the bank
continues to exist and may sue and be sued where it is

Bank, 78 Tex. 222, 14 S. W. 569, possession maintain an action of

it is held that the law regulating replevin. Corn Exch. Bank v.

the appointment of receivers of Blye, 101 N. Y. 303, 4 N. E. 635.

the property of national banks and s United States v. Weitzel, 246

declaring their powers and duties u. S. 533, 62 L. Ed. 872, 38 Sup.

does not recognize the existence Ct. 381.

of power in the receiver to con- 9 Fish v. Olin, 76 Vt. 120, 1 Ann.

tract with an attorney regarding cas. 295, 56 Atl. 533. The receiver

a mortgage held by the bank and jj^s been considered the statutory

give the attorney a portion of the assignee of the national banking

property or money realized. association. Kennedy v. Gibson,

6 Skud V. Tillinghast, 195 Fed. 75 U. S. (8 Wall.) 498, 19 L. Ed.
1, 115 C. C. A. 83. 476. And his title to the bank's

7 A person claiming title to assets has also been regarded
property in the possession of the similar to that of an assignee in
receiver of a national bank which bankruptcy. Casey v. La Societe
came into his possession together <ie Credit Mobilier, 2 Wpods
with other property, may on the (U. S.) 77.

refusal of the receiver to deliver 10 Wise v. Williams, 162 Fed. 161.



1304



LAW OF RECEIVERS.



necessary that its corporate name be used in closing up
its business. ^^

§ 452. Embezzlements by Receivers of National Banks.

The receiver of a national bank appointed by the Comp-
troller of the Currency under the National Banking Act
is an officer of the United States and not an agent of the



11 Camp V. First Nat. Bank of
Ocala, 44 Fla. 497, 103 Am. St. Rep.
173, 33 So. 241; Moss v. Goodhart,
209 Fed. 102.

The appointment of a receiver
for a national bank does not
amount to a dissolution of the
corporation such as will prevent
the rendition of a judgment
against it. Chemical Nat. Bank
V. Hartford Deposit Co., 161 U. S.
1, 40 L. Ed. 595, 16 Sup. Ct. 439;
Rosenblatt v. Johnston, 104 U. S.
462, 26 L. Ed. 832.

In First Nat. Bank of Bethel v.
National Pahquioque Bank, 81
U. S. (14 Wall.) 383, 20 L. Ed.
840; Oklahoma City Nat. Bank v.
Ezzard, 58 Okla. 251, 159 Pac. 267.

In New York Security Bank v.
Commonwealth Nat. Bank, 2 Hun
(N. Y.) 287, it is held that where
a receiver of a bank has been ap-
pointed under the National Cur-
rency Act the bank still continues
to exist and a suit is properly in-
stituted against it and the defense
is made by it.

In Central Nat. Bank v. Con-
necticut Mut. L. Ins. Co., 104 U. S.
54, 26 L. Ed. 693, it is held that a
national bank in voluntary liquida-
tion under the statute is not
thereby dissolved as a corpora-
tion and may sue and be sued by
name for the purpose of winding
up its business.

Cf. National Pahquioque Bank



v. Bethel First Nat. Bank, 36
Conn. 325, 4 Am. Rep. 80; Turner
v. First Nat. Bank, 26 Iowa 562.

In Turner v. First Nat. Bank, 26
Iowa 562, it was held, in a pro-
ceeding for the adjudication of a
claim against a national bank that
has suspended, that a bank and
receiver may both be sued jointly.

In Green v. Walkill Nat. Bank, 7
Hun (N. Y.) 63, it was held that
the appointment of a receiver of
a national bank did not dissolve
a corporation and that a suit
might be brought against both the
bank and the receiver, following
the decision in National Pahqui-
oque Bank v. Bethel First Nat.
Bank, 36 Conn. 325, 4 Am. Rep.
80; First National Bank of Bethel
V. National Pahquioque Bank, 81
U. S. (14 Wall.) 383, 20 L. Ed.
840. The appointment of a re-
ceiver by the Comptroller of the
Currency and placing him in
charge of its administration does
not extinguish the corporation or
work a forfeiture of its charter.
Hutchison v. Crutcher, 98 Tenn.
421, 37 L. R. A. 89, citing First Nat.
Bank v. National Pahquioque Bank,
14 Wall. 383, 20 L. Ed. 840; Cen-
tral Nat. Bank v. Connecticut Mut.
L. Ins. Co.. 104 U. S. 54, 26 L. Ed.
693; Rosenblatt v. Johnston, 104
U. S. 462, 26 L. Ed. 832; Chemical
Nat. Bank v. Hartford Deposit Co.,
161 U. S. 1, 40 L. Ed. 595.



BANKS AND BANKING MATTERS. 1305

bank within the federal statute making it an offense for
officers and agents of national banks to embezzle and
make false entries since the court will not by intendment
of statutes creating and defining crimes make them more
comprehensive than the legislature has done by the lan-
guage employed in the statute, even though there would,
witliout such construction, be no statute applying to em-
bezzlement by such receivers.^

§ 453. Litigation by Receiver to Collect Assets.

Under statutes providing that under certain circum-
stances the affairs of a bank shall be turned over to the
superintendent of banks, who is authorized to collect its
assets, he has power to sue in the name of the bank to
avoid a fraudulent transaction of its officers.^ Litigation
commenced by a receiver of a bank in his efforts to re-
duce its assets to possession is under the control of the
receivership court. The court may refuse to allow the
receiver to discontinue an action even though the re-
ceiver becomes of the opinion that he has insufficient evi-
dence to maintain it,^ and the court may direct the re-

1 United States v. Weitzel, 246 by them as receivers will have the

U. S. 533, 62 L. Ed. 872, 38 Sup. same effect as if recovered in the

Ct. 3810. name of the bank, and will bar the

1 Montgomery Bank & Trust Co. action in another state. Bank of
V. Walker, 181 Ala. 368, 61 So. 951. North America v, Wheeler, 28

2 People V. Bank of Staten Isl- Conn. 433, 73 Am. Dec. 683.

and, 124 N. Y. Supp. 474. The receiver is under the con-
Leave of the commissioner of trol of the court, as is the prop-
banking to sue a receiver of an erty of which he is receiver, and
insolvent bank, appointed by him, while the court will not permit
is not necessary in order to main- any interference with such prop-
tain a suit against him. Alleman erty without its leave, neither will
V. Sayre, 79 W. Va. 763, L. R, A. it withhold such property from
1917D, 1002, 91 S. E. 805. one who shows that he is entitled
The receivers may bring suits, to it. De Forrest v. Coffey, 154
either in their own names or in Cal. 444, 98 Pac. 27.
the name of the bank, in law or The receivership court may re-
equity, on claims in favor of the fuse to allow a claim on the assets
bank, and a judgment recovered in its custody to be litigated in an



1306



LAW OF RECEIVERS.



ceiver to sue all parties who are indorsers on a note
instead of one only, in order to avoid a multiplicity of
suits. ^ The court may approve or ratify a compromise
of an indebtedness or claim belonging to the estate and
when such a compromise is made by the receiver he can
not afterwards set up its invalidity.^ The receiver in his
eiforts to recover the assets of the bank is generally
bound by the estoppels which would be existent as
against the bank.^ Where the bank would be bound by



independent action, and may ad-
just tlie matter in ttie receivership
proceeding. State v. State Banlc
of Circleville, 84 Kan. 366, 114 Pac.
381.

State courts have concurrent
jurisdiction with the federal courts
in an action brought by a receiver.
Thompson V. Schaetzel, 2 S. D. 395,
50 N. W. 631.

3 Citizens' Trust Co. v. Ward,
195 Mo. App. 223, 190 S. W. 364.

4 Walker v. Mutual Alliance
Trust Co., 196 Ala. 154, 71 So. 697.

But the receiver of a national
bank will not be authorized to
compromise the liability of the
stockholders of such bank who
have fraudulently put away their
property for the purpose of avoid-
ing their liability as stockholders,
although by such compromise a
larger sum can be realized for the
fund. Re Certain Stockholders of
California Nat. Bank, 53 Fed. 38
(see U. S. Rev. Stat. §5234); In
re St. Albans First Nat. Bank, 49
Fed. 120, it is held that a receiver
will not be allowed to accept a
proposal to compromise claims for
and against a bank by surrender-
ing all the remaining assets in
consideration of money sufficient
to make a certain dividend, the
claims in favor of the bank appear-



ing to be valid and enforceable to
a much greater amount than those
against it. A receiver of a national
bank on order of a court of record
of competent jurisdiction may
compound all bad or doubtful
debts. U. S. Rev. Stat. § 5234. See,
Re Piatt, 1 Ben. 534, Fed. Cas.
No. 11, 211; Kennedy v. Gibson,
75 U. S. (8 Wall.) 498, 19 L. Ed.
476.

The receiver may, with the con-
sent of the court, compromise a
disputed or doubtful claim. Brooks
V. Neal, 223 Mass. 467, 112 N. E.
78; Re Croton Ins. Co., 3 Barb. Ch.
(N. Y.) 642.

But where the litigation has pro-
ceeded to the point that a question
of preferred claims is involved and
a creditor has a right to appeal
from a decree allowing the claim
as preferred, the receiver can not
compromise with the successful
claimant without the consent of
his aggrieved creditor. Empire
State Surety Co. v. Carroll County,
194 Fed. 593, 114 C. C. A. 435.

5 American Exch. Nat. Bank v.
Council, 146 Ga. 580, 91 S. E. 554;
First Nat. Bank v. Bennett, 111
Miss. 26, 71 So. 169; Rhodes v.
Guhman, 156 Mo. App. 344, 137
S. W. 88; Harwood v. Ft. Worth
Nat. Bank (Tex. Civ. App.), 205



BANKS AND BANKING MATTERS.



1307



the acts of its officers tlie receiver will likewise be bound,
and where the acts of the officers are of such a nature
that no imputation of knowledge will be implied to the
bank, the receiver will also benefit in that same respect.®
Where the statute authorizes the receiver to sue or
compound all doubtful debts and sell the personal prop-
erty of the bank on such terms as the court may direct,
the authority includes indebtedness from persons which



S. W. 484; Benedum v. First Citi-
zens' Bank, 72 W. Va. 124, 78 S. E.
656.

It is held that the receiver in,
actions by him occupied no better
position and had no better right
than the corporation over whose
property he was appointed. In
Cutting V. Damerel, 88 N. Y. 410.

A receiver of a bank, appointed
by virtue of the state banking
laws, has no power superior to
those of an assignee appointed by
private contract, so far as con-
cerns the relations of the bank
with its customers. Williams v.
Johnson, 50 Mont. 7, Ann. Cas.
1916D, 595, 144 Pac. 768.

6 Godding v. Hall, 56 Colo. 579,
140 Pac. 165; Ward v. Oklahoma
State Bank, 51 Okla. 193, 151 Pac.
852; Fowler v. Peet, 170 Fed. 620;
Harriman Nat. Bank v. Seldom-
ridge, 240 Fed. Ill, 153 C. C. A.
147; Pettingill v. MacWilliams, 26
Ida. 344, 143 Pac. 524; People's
Nat. Bank v. Cramer, 90 N. J. L.
655, 101 Atl. 204; Pemiscot County
Bank v. Wilson-Ward Co., 135
Tenn. 426, 186 S. W. 598.

In an action by a bank receiver
on a note, a plea setting up that
the note was given for the accom-
modation of the bank's cashier to
enable him to pay a debt owed by



him personally to defendant, and
that the assistant cashier had
falsely stated to defendant that
the cashier paid the note, and that
thereafter defendant had on de-
posit in the bank more than
enough to pay the note, stated a
good defense. Davis v. McQueen,
144 Ga. 457, 87 S. E. 402.

Where the receiver in insolvency
of a bank did not succeed to the
rights of creditors of the bank,
he was not entitled to sue its ven-
dors to recover assets appropri-
ated by the former owners of the
bank. Harrington v. First Nat.
Bank, 58 Tex. Civ. 445, 125 S. W.
598.

A bank advancing money to an-
other on the order of a third bank,
indebted to one receiving the
money, has a claim therefor against
the receiver of the third bank, re-
gardless of consummation of nego-
tiations for sale of stock in the
bank receiving the money. Mc-
Kinney v. United States Nat.
Bank, 242 Fed. 48, 154 C. C. A. 640.

Facts showing knowledge or im-
putation of knowledge on the part
of the bank of tne fraudulent
character of a certified check is-
sued by the insolvent bank may be
shown as against the receiver.
Detroit Nat. Bank v. Union Trust
CO., 158 Mich. 557, 123 N. W. 28.



1308 LAW OF RECEIVERS.

the creditors have a right to subject to the payment of
their claims. Under such circumstances the receiver may
assign the choses in action and action may be maintained
thereon by the assignee.^

Where in the receivership of a trust company an order
was issued requiring payment of assets to the receivers,
a branch manager is guilty of contempt in paying a de-
positor's balance to her after notice of the order. ^

§ 454. Right of Receiver in Respect to Pledges and Collateral
Agreements.

The receiver takes the assets of the bank subject to
existing equities both in favor of and against the bank
of which he is appointed receiver. Hence he stands in
the shoes of the bank in respect to its rights, equities and
defenses respecting property or paper held by the bank
as collateral security.^

A temporary receiver of a bank has no power without
instructions of the court to surrender collaterals pledged
as security for a loan and to permit an otfset of the
amount on deposit in the bank.^

The receiver of a bank which is acting as liquidator of
another bank under a contract whereby it was to make
advances for that purpose and in return for such ad-
vances was to receive a pledge of all of its assets and
property of every name, nature and kind, is bound by
the contract and also entitled to avail himself of the
benefits of the pledge. The dissolution of the liquidating

7 United Securities Co. v. Osten- The receiver of a bank takes its
berg, 60 Colo. 249, 152 Pac. 1163. collateral burdened with the con-

8 Camden v. Virginia Safe De- ditions of the pledge. Pettingill
posit & Trust Corporation, 115 Va. v. MacWilliams, 26 Ida. 344, 143
20, 78 S. E. 596. Pac. 524.

1 Booth V. Atlanta Clearing- - People, etc., v. St. Nicholas

House Assn., 132 Ga. 100, 63 S. E. Bank, 76 Hun 522, 28 N. Y. Supp.
907; Northrup Nat. Bank v. Yates 114.
Center Nat. Bank, 98 Kan. 563, 159
Pac. 403.



BANKS AND BANKING MATTERS. 1309

bank is not tlie equivalent of a voluntary abandonment of
the task of liquidating.^

§ 455. Right of Receiver to Recover on Notes Given or Held
for Purposes of Deceiving Bank Examiners.

The receiver of a bank can not recover on a note
which was given to the bank solely as an accommodation.^
And where a note payable to the bank for the protection
of depositors was procured by fraudulent representa-
tions on its part and was not signed by all the parties
who were represented to the actual signers as signers
before it should become operative, the receiver will not be
allowed to recover on the note.^ In a recent case^ in the
federal court the court refused to allow the receiver of
a bank to recover on notes given for the palpable purpose
of deceiving the Comptroller of Currency and his exam-