If, now, we turn to section 5190, of the United States Revised Statutes, we find it enacted that "the usual business of each national banking association shall be transacted at an office or banking house located in the place specified in its organization certificate." Under this section it certainly would not be competent for a national bank to provide for the" cashing of checks upon it at any other place than at its office or banking house. Whatever risk there Was ill the defendant's business of cashing of checks upon the Fidelity devolved, therefore, necessarily upon the defendant, and not upon the Fidelity. So far as the Fidelity was concerned, the checks were not cashed until they were presented and accepted at its, banking house. They were not so presented until the morning of the 21st of June, after the bank had passed into the, control of a government officer, and after insolvency of the bank had made it unlawful under section 5242, Rev. St., to either cash the checks on account of the defendant, or to gi\"e the defendant credit for them. The questions wbich were argued with reference to the defendant's answer, treatingit as aooullter-elaim, or regarding it in the nature ofa counter-claim, are covered, in the opinion of the court, by Armstrong v. Scott, 36 Fed. Rep. 63. ,The judgment ,will be for the plaintiff for the amount claimed, with interest.
GoULD ". HEAD
May 81, 1889.)
(Circuit (Jourt, D. (Jolorado.
.AJo:nrcAN CATTLlIl TRUST-CORPOnATIONS.
The American Cattle Trust, a voluntary association organized fn New York to c,on,tr,01 corpora,tions, en,gag,edin,live-stock business, having obtained the stock of the Phcenlx Farm & Ranch Company, a New Mexico corporation, has no power to sell or in any manner alienate'such stock, as such an act is incoDl>istent with the,purposes of its'ereatioa. "
(8zI11abm by tJi8 ,(Jourt.)
In Equity. Bill for injunction. Rogerl1 & Cuthbert, for complainant. Hugh Butler, for defendants. HALLETT, J. This controversy relates to the capital stock oftbe Phrenix Farm & Ranch Company, a corporation organized under the laws of the, territory of New Mexico. Complainant obtained the stock of the American Cattle Trust, a voluntary association 'of 13 persons made in New York on the 5th day of January, 1887. At the hearing Of the 1110. tion. for injunction defendant Head made affidavit that he was unable to produce the articles of association of the American Cattle Trust, and gave his recollection of the nature of the organization, from which it appeared that it received the stockas trustee for the original owners, and was with-
GOULD tI. HEAD.
out authority to sell or transfer the same. As this was a material point affecting complainant's title to the shares of stock, and his right to main,tain this suit, it was deemed advisable to contiIlUe the hearing with a view to examine the articles of association of the cattle trust; and they are now presented. It will not be necessary to consider at length the -peculiar powers of this association. The second paragraph of the articles is as follows: "l'he general object contemplated by the parties who unite in the establishment of this trust is to encoumge, develop. and secure improved methods allll economies in the production. transportation, distribution, handling. and sale cattle. sheep, hogs, and other animals. and of the food and other products produced or manufactured from them, 01' any or all of them. in the United States or elsewhere, and to transact any and all other business incident thereto, growing out of, or connected therewith, or with any or all of them. " , The fifth paragraph is as follows: method adopted by the parties hereto and the acting under the trust agreement for accomplishing the objects hereinbefore stated is the acqllisition by purchase, exchange. or otherwise, and the holding. management. and disposition of shares of the capital stock of companies, corporations, Bnd joint-stock associations organized for any of the purposes hereinbefore named in the second article of this agreement, in the states and territories of the, United States and in the District of Columbia. 8S well as in any other , , And among the powers and duties of the trustees the following are enumerated': , "To acquire, receive, hold, and dispose of the title to shares of the capital 'stock of companies, corporations, and joint-stock associations organized and engaged in any of the lines or branches of business hereinabove desc,ibed, or in any businessl"elating to or connected therewitl:\, or in any degree nertinent ,orauxUiary thereto. _ collect To that may be declared anti profits that may accrue to, upon. and favor of said shares of capi,tnl stock of 'said companies. corporations, and joint-stock associations. and of the holders thereof, to invest, dispose of. and reinvest the same, and all accumulations , thereof. or additions thereto, in the stocks. bonds. and other securities or obligations of companies, corporations, or associations engaged in allY of the lines -or branches of Qusiness above described, or in any business relating thereto. connected thereWith. or in any way auxiliary thereto, or in the funded. debt of the United States or of any state, county, ormunicipaJity thereof. or upon any other security deemed 'Sufficient, as from time to time the said trustees in their absolute di!lcretion may deem prUdent investments for the benefit -of the trust. To issue trust certificates for property or for cash in parts or shares. which for the purposes of this trust agreement shall be valued atone hundred dollars each, representing the equity of the property _ held by the trustees to any total and upon any terms to be agreed on as hereinafter 1D0re specially dese,tibed and set forth." Without quoting further from the articles of association, it may be was to sesufficient to state that the general pUrpose of the cure contl'ol of oorporations and perhaps voluntary in live-stock businessj and thus unite the manageJllent of all such, com!)anies in the hands of the trust.: Aa stated ,ia' the affidavit of .Qharles W. Gould"chairman of the trust,""""
"It was hoped and believed t.hat, by associating a number of live-stock properties in different sections of the country, advantage could be taken of favoring circumstances possessed by these different properties, but not common to all; ...... ... that, in short, by uniting the different properties, putting' them under a common management, introducing economy, husbanding resources, the live-stock business could be profitably conducted; that in order tosecure efficient management thereof the entire property thus associated and the absolute control of the same was vested in a uoardof trustees." The corporations thus associated renounced autonomy, but not their existence. They committed their affairs into the· hands of the trust, because they could be better 'managed by the trust than by themselves.They still lived and owned their property, but the trust was a ;regency of their own creation, with absolute and irrevocable power over all their concerns. Ten corporations are mentioned in the affidavits thus united in the trust, not by the direct act of the corporations, but by transfer of their stock to the trust, or to persons holding in its interest. And is urged that by some general expressions in the arti.cles of association the trust was given absolute authority to sell and dispose of the stock in its discretion. But this interpretation is not in accord with the purpose for wl;lich the trust was organized. The stock was transferred to the trust, not for the purpose of being sold, but to give control of the corporationjtomake the officers puppets in the hands of the trust, and thus substitute the latter as the governing body of the corporation. In other words, the purpose of the association was, not to and control buy and sell corporations in open market, but to them. In this view it is clear enough that the sale of the stock by the trust was wholly inconsistent with the scheme of its organization. The doctrine leads to jelo de ae. If by selling the stock of one corporation, and thus parting with its control over it, the trust may renounce its function, the same course maybe pursued as to all the corporations in its control.. This cannot be. It is absurd to suppose that the projectors of the scheme. would thus implant in it the seeds of dissolution. So that, if we accept the articles ofassociation for all that they purport to . be, there was in the trust no power to sell the stock of the corporations which it held. Furthermore, the transfer of stock to the trust was without consideration. The trust had, no property and 110 expectation of acquiring any. As before stated, it was organized for controlling corporations, and not for holding or acquiring property in its own right. The certificates of the trust issued in exchange for the stock of the Phcenix Farm & Ranch Company were on their face "shares in the 'equity to the property· held by the trustees of the American Cattle Trust," and did not convey any property whatever. The stock thus obtained was given to complainant in exchange for other certificates of the trust, which he says he had previously purchased for a valuable consideration. To allow the trust to acquire stock from some of its members and transfer it to others by issuing and canceling certificates in this manner would be nothing less than common jugglery. Upon all tbat. appears in the record, it must be said that the trust was without authority to alienate any of the stock of the several corporations in its cont.rol,