tion is that Mr. Seabrook cannot open the deI.ositions. This cannot be done except by the court. This is well taken. The court is always open for purposes like this. Application can be made. heard, and acted upon at any time by the court. The third objection is as to the packages in which the depositions came. Two of them are in gummed envelopes. and are not under the seal of the magistrate taking them. Every formality must be complied with in the taking and transmitting these depositions. One requirement is that when transmitted to the court "it must be sealed up, * * * and remain under his seal until opened in court." Section 865, Rev. St. Two are not so sealed.. They must be suppressed. One is sealed with the impress of the seal of the Adams Express Company, and across it is written the name of the commissioner. A person may adopt any seal as his own, or anything in place pf a seal. A· wafer, scroll, sometimes even a flourish, have been so adopted and recognized. This deposition cannot be ,suppressed, for the reason stated. The fourth objection is that the depositions· were not introduced in evidence within the time limited. Three of the depositions were taken and returned before November, 1886. They were taken after notice, in the presence of the attorneys. Those so taken were by Mr. Mitchell, and after the time within which Mr. Bryan could introduce testimony had expired. The stipulation was that the parties should close,that is, should not put in any 0ther evidence after the time limited. That the testimony was heard after that day does not violate the stipulation. It was within the time. No deposition taken after that time can be admitted. One deposition was taken during this present year, and is excluded. The course pursued by Mr. Seabrook in thus bringing before the court, pending a reference, questions which impede its progress, is approved. The court will always be open for the discussion and tlecision of these questions "by the way." The practice met the sanction of Judge STORY in GaBS v. Stinson, 2 Sum. 606, and commends itself. The case is recommitted to Mr. Seabrook for action under the order of reference.. The case has consumed much time. Let the report be filed at as early a day as is practicable.
CITIZENS' NAT. BANK V.
(Oire'Uit Court. E. D. North Carolina. June 21. 1888.)
BANKS AND BANKING-NATIONAL BANKS-INSOLVENCy-PRIORITY OF CLAms.
A creditor of an insolvent national bank. whose demand grows out ofa fraudulent transaction perpetrated by the officers of the bank in contemplation of the immediate wrecking of their corporation, does not thereby bl/come entitled to a preference over the general crediio.rs of the bank.
On tbe 22d and 28d of March plaintiff, a bank in Raleigh, N.'C·· received in the ordinary course of business checks drawn on the State Natio,n!ll Bank of that city. which. after deduction had been made 9f i,ts checks received by the latter bank, amounted to $17,000. It paid the same by its checks on a bank
CITIZENS' NAT. BANK 11. DOWD.
in New York. The president of the State National Bank knew when he signed such checks that they would not be honored, and was making preparations to abscond with the assets of his bank. Held, that plaintiff is not entitled to any preference over other unsecured creditors.
(Syllabu8 by the Oourt.)
In Equity. Battle & Mordecai, for plaintiff. F. H. BU$bee, for defendant. SEYMOUR, J. The defendant is receiver of the State National Bank of Raleigh, which was closed on Monday, the 26th of March uIt. The plaintiff, the Citizens' National Bank, asks for a decree giving its demand a preference over the general creditors of the bank, of which defendant is receiver. The facts upon which it bases its claim are as follows: On Thursday, the 22d of March, 1888, the plaintiff received in the ordinary course of business, checks drawn on the State National Bank for a large sum, and upon an exchange of checks between the two banks there was found to be due to the plaintiff the sum of$1O,008.66, for which, on the following day, defendant's bank gave to plaintiff a check on the Na· tional Park Bank of New York, signed by its president. On Saturday -of the same week, upon a similar transaction, defendant's bank gave. plaintiff Ii like check for $7,603.75 for the balance of the previous day. For some days prior to March 24th, and as early as Thursday, the 22d .()f March, aforesaid, the late president and cashier of the State National Bank were preparing to abscond, and on Saturday, the 24th, did abscond, and betake themselves to Canada. Their fiight was discovered -on the following Monday, whereupon the bank closed. It appears as a fact from what is admitted by the defendant that the Park National Bank had not funds to pay the two drafts in question, nor, in the opinion of the court, had the officers of the State National Bank any reason to expect, or actual expectation, that the checks given by them to plaintiff would be paid. Such checks were, as matter of fact, duly presented and protested. It is admitted that defendant's bank was actually insolvent for six months prior to the flight of its officers. 1. Plaintiff's demand grew out of the receipt by it of checks on the .debtor bank. This was but an ordinary dealing in the transaction of business between banks residing in the same place. If the plaintiff' was defrauded, the fraud consisted in the fact that the insolvent bank continued to do business after its hopeless insolvency was known to its offi.cars, and was one by which all the bank's depositors suffered, as well as .did the plaintiff. It could not, therefore, be a ground for granting plaintiff a preference over them. It is contended, however, that the fact that ihis transaction occurred after the president and cashier of the debtor bank had determined to abscond, makes a difference. Before that time it might be that there was a reasonable expectation that the bank would be able to recover itself, and continue business. The fraud, it is said, .consists, not in doing business after the bank was insolvent, but in doing it after it was hopelessly insolvent, and in the expectation of bankruptcy.
If this be so, it would render necessary an inquiry into tbe question of
when the hopelessness of its recovery became certain to the bank officers, and what degree of certainty of insolvency is requisite to make further conduct of business by a bank fraudulent. The inquiry would be difficult. A definite date would have to be fixed, and all debts contracted after that date would have to be given a preference over all before. It would, in practice, be impossible to draw such a line. Wherever drawn, injustice would be done. It is highly improbable that there was any precise date at which the officers of the ·bank became convinced of its insolvency. If there was any, it was probably long before they determined upon flight. Such a line no court, as far as we can discover, has ever attempted to draw. The plaintiff has cited Cragie v. Hadley, 99 N. Y. 131,1 N. E. Rep. 537 · A distinction is taken in that case between. the actual and the hopeless insolvency of a bank. The insolvent bank had received a check for collection, and had forwarded it to another bank, which had collected it. The contest was between the receiver of the insolvent bank and the owner of the check, for the money in the hands of the bank which had made the collection. The plaintiff was suing for his own money, which had never been mixed with the funds of the insolvent bank. The same question might arise here if, after the flight of its officers, but before the discovery of that lIight, a customer of the State National Bank had deposited a roll of bills therein, which had remained separate and capable of being identified when the bank came into the hands of the receiver; but it does not occur in the case before us. 2. It is claimed that giving the worthless checks on the Park Bank constitutes such a fraud as to entitle the plaintiffs to a preference. Al· though at the time those checks were given the plaintiff had taken the State National Bank's checks, it had not then finally charged itself with them, and it would, had not the debtor bank given these checks, have charged the checks on it to its own customers who had deposited them, and thus put the loss on them. This may be so. But the court knows of no principle upon which a general fraud gives the person defrauded a lien on a particular fund. The fraudulent giving of the checks on the, Park Bank has no more relation to the funds of the bank now in the hands of the receiver than any other part of the fraudulent conduct of the absconding officers. The only question is, has plaintiff any lien on the funds of the defendant's bank? It is plain that he has not, but is ouly a general creditor, who, both by the statute (Rev. St. § 5242) which forbids preferences, and the general law, must stand upon an equality with all the creditors of the State National Bank. The bill is dismissed, but without prejudice.
tI. COMANCmc CoUNTY.
MAy 81, 1888.)
COUliTIES- LIABILITIES AND INDEBTEDNESS,...-ORGANIZATION-ABANDONHBl('l'.
2. . S.UIE-POWERS
A county was organized under act Kan. 1872, providing for the presentment of a memorial to the governor, signed by householders of the county. and authorizing him to have a census taken, and if there were 600 inha.bitants, to appoint certain officers and. name a temporary county·seat. The memorial was pot signed by householders of the county. and the cen$US and affidavits in regard to the number of inhabitants were false, the whole proceeding be· ing in furtherance of a conspiracy to issue bonds of the county. After the bonds were issued, the officers and signers of the memorial decamped. and the county government was abandoned. but previously to the issue of the bonds the legislature had attached the county to another for judicial purposes. Held that, although the organization was fraudulent and void. it was made a as facto organization by legislative recognition, and such organization was thereafter valid. The Kan. St. 1868. p. 256. §\ 16. subd. 4. giving county commissioners power to borrow money on the credit of the county, for the purpose of meeting current expenses, when a deficit exists in the county revenue. only authorizes the commissioners to borrow money when the deficit has actually occurred. and not in anticipation of such event; and a recital on the bond that "this bond is executed and issued to meet current expenses of the county in case of a deticit in the connty revenue" does not bring 1t within the intent and meaning of said act, and the county is not estopped to show that there was no defiqiency in the revenue. or that there were no current expenses to meet, alt40ugh the bond had passed into the hands of an innocent purchaser without other notice than the recital on the bond. Where a statute of Kansas required a petition of one·fifth of the' voters of a eotintyasking for an election to vote bonds, the required number of petitioners to be estimated by reference to the poll·booksof the last general election. a holder of bonds issued by a county is not affected with notice that there had been no general electIOn in the county, at the time of the issue. since its organization. and that the required reference could nj}t have been made; but the recital of the commissioners that the bonds were issued in compliance with the statute is conclusive upon the
TO VOTE ON BONDS-RECITALS. OF COMMISSIONERS TO ISSUE BONDs-RECITALS.
Action by Charles E. Lewis against the commissioners of the county of Comanche upon coupons of bonds issued by the county· WilliamB & Dillon and R088ington & Smith, for plaintiff. G. O. Olemens and H. A. Smith, for defendant,
FOSTER, J, The plaintiff alleges in his petition that the defendant is a corporation duly organized under the laws of the state of Kansas; and on or about March 10, 1874, made and issued its certain bonds, payable 10 years after date, with 10 percent. interest, copies of which are attached; that said bonds had certain coupons attached for the interest to become due thereon, etc.; that the plaintiff is the holder and owner of . the coupons sued upon, and praying judgment for something over $30,· 000 and interest. The defendant denies, generally,the allegations of the petition, and specially denies that Comanche county was duly or.ganized·a.t the time said bonds were issuedj,that, on the contrary; it was notoJlganized until February, 1885, and di:lnies that it ever authorized