ARMSTRONG 11. SCOTT.
63
ARMSTRONG V. SCOTT
et at
(Oircuit 00urt,8. D, Ohio, W; D. September 8, 1888.) 1. BANKS 'AND BANKING-NATIONAL BANxs-!NSOLVENoy-'AcTIONS ,AND COUNTElt-CLAIM. ' , ,,
R13v.St. U,.S. {:\ 5242, makes payments of money by an insolvent national bank to shareholders or creditors, with a view to preference. or to evading' the disposition of assets as ).'equired by statute, null and void. Sections 5234 and 5236 require the receiver, after collecting debts, etc., to turn over all money to the United States treaaurer for a ratable distribution among creditors. Held, thatf\lnds re,ceived on the discounting of a note, and deposited with the discounting bank, subject to the check of the depositor, and which had been drawn upon by him, but were intended bl him to meet the note when due, cannot be pleaded as a set-off in an actIOn on the note brought bv the receiver of the discounting bank, who received the note before maturity; and this conclusion is not affected by the provision of Oode Civil Proc. ,Ohio, which provides that across-demand which might be pleaded as a couJlter· claim or set-off shall not,1Je llxtinguished as such by the assignment or death of either party;, as this provisi\;ln does not apply to the assignment of a demand before maturIty. ' 2.NEGOTIABLElNSTRUMENTS-AcCOQO))ATION
The, fact, that one who signed as maker of a note was, in fact only an accom·' modation maker, and signed, without consideration, in order that the indorser, who was really the principal debtor, might get the note discounted, and that these facta were known,to the bank which dIscounted the note at the time of discounting, is no defense for such accommodatioJl maker in an action on the note. ' An agreement, made prior to the signing of a note, that the 1;lanJ!: discount· ing the note would regard it as ,the obligation of the indorser, and would lpok only to the Indorser for payment, is no defense for the principal on the note in an action thereon. both because the agreement was prior to the signing., and also was in conllict with the note.
Oll' ]rIAKKK.
8.
SAliK-AGREEMENTS PRIOR TO EXECUTION.
At Law. E. ,W. Kittredge and W. B. Burnet, for plaintiff. Paxton k Warrington, for defendants. SAGE, J. ' The plaintiff's action is upon a promissory note for 810,000. made by the defendant Scott, and discounted by the Fidelity National Bank for aCCQunt of the indorser. the defendant the Farmers' & Medlanics' State Bank. The note carne to the of the plaintiff before its maturity. The amended answer of Scott is that, at the request of his co-defendant, he being its cashier, he signed the note p.s maker, without consideration, solely to enable his co-defendant to have it discounted, all which was at the time Ifnown to t?e Fidelity Bank. In other words, Scott was an accommodatIOn ml;tker, and that fact was at the known tQ the Fidelity National Bank. This is no defense. The answer also sets up that the Fidelity Bank took note under an iagreementthat it WIlS the obligation of the defendant bank j a:nd that the Fidelity Bank would lookto said bank only for payment. But it appears answer thltt this agreement is evidenced. by correspondencebetwElen the Bank ltnd the bank, prior to the signillgof! the note,' is fatal to the plea, as is also the fact that
64
FEDERAL REPORTER.
the agreement is in conflict with the note. The amended answer of the defendant bank sets up the facts pleaded by its co-defendant Scott, who, it alleges, signed the note as maker, "without consideration, and merely for the purpose of complying with a. custom of the Fidelity National Bank, requiring two names upon paper discounted." These allegations establish, as against'the demurrer, that the defendant bank is the principal debtor, aJ:ld that Scott,although the maker, is only a surety. The answer further sets up that the proceeds of the discount of the note were placed by the Fidelity Bank to the credit of the defendant bank, subject to check or draft, "and to pay and meet said note when the same became duej" that the defendant bank drew upon said proceeds for $1,009.23, leaving a balance 'of $8,809.94, which has not been drawn against, and that at the maturity of the note defendant tendered to the plaintiff the sum of $1,190.06, the balance due on the note, after deducting said sum of $8,809.94, which "was permitted to remain with said Fidelity National Bank to meet a like amount to become due,upon said note." The tender was refused, and the defendant now brings into court said balance for the plaintiff, and prays that the $8,809,94 may be allowed by way of set-off agllinst the note. '1'he plaintiff demurs to each of these answers for in, sufficiency. The questidn suggested upon the argument of the demurrer, whether the defendant bank, being the indorser, is entitled to plead the set-off, is disposed of by the finding already made, that the defendant bank is, in fact the principal debtor. It is contended for the defendant bank that the receiver took the note suhject to all equities. That is true as to all equities in favor of the defendant bank and against the note at the time when the receiver took possession. The note was not then due. When it was delivered to the Fidelity National Bank, and the proceeds credited to the defendant hank, the note and the proceeds thereby hecame at once separate, distinct,and altogether independent each of the other. The fact that the defendant bank voluntarily left the greater portion of the proceeds on deposit to be applied towards payment of the note did not create any equity against the note, for the defendant reto draw out the entire balance at any time. In Hade tained v. McVay, 31 Ohi08t. 231, the supreme court of Ohio holds that the receiver of a nati(mal bank holds to the bank and its creditors the relation, sUbstantialiy; of a. statutory assignee, and that "a right of set-off, perand available against the bank at the time of his appointment as receiver, is not affected by the bank's insolvency. He succeeds only to the rights of the bank existing at the time it goes into liquidation." The provision of the Ohio Code of Civil Procedure that, "when cross-demands have existed between persons under such circumstances that if one had brought an action against the other a counter-claim or set-off could have been'set up, neither can be deprived of the benefit thereof by the assignment or death of the other, but the two demands must be deemed compensated so far as they equal each other," does not apply to the assignment of a demand before its maturity. Mr. Pomeroy, in his work on Remedies and Remedial Rights, says, at section 163: i
ARMSTRONG f1. SCOTT.
65
"If an insolvent bolder of a claim not yet matured assigns the same before maturing, and the debtor at the time of this transfer holds a similar claim against the assignor, which is then due and payable, his right of set-off against the assignee, when the latter's cause of action arises, is preserved and protected. "
Numerous cases are cited in support of this rule, which is said to be· founded upon equitable considerations, but it does not apply here, for the reason that the national bank law, recognizing only the government and the bank-note holders as preferred creditors, makes all payments of money by a national bank to its shareholders or· creditors after the commission of an act of insolvency, or in contemplation thereof, "with a view to prevent the application of its assets in the manner prescribed· by this chapter. or with II view to the preference of one creditor to another, except in payment of its circulating notes," utterly null and void. Rev. St.. U. S. § 5242. The of sections 5234 and 5236 require the receiver to take possession of the assets of the bank, collect all debts, sell all property, real and personal, and pay over all money so made to the treasurer of the United States, subject to the order of the comptroller, whose duty it is, after refunding to,the United States any deficiency in redeeming the notes of the bank, to make a ratable dividend of the money among the creditors. The unmistakable force and meaning of the law is to 'place all unsecured creditors upon the same footing of equality. When the plaintiff was appointed receiver, the defendant was in the list of unsecured depositors, to whom payment, the bank being insolvent, was prohibited. The defendant had then no right of set-off, nor any equity agai'llSt its note, not then matured, which passed to the receiver. To allow the set-off, now that the note has matured,and thereby make payment in full to the defendant in part discharge of its obligation to the bank, would be contrary, not only to the policy of the law, but also to the plain meaning of its provisions. See Bank v. Taylor, 56 Pa. St. 14. The demurrers are sustained. Judgment will be en· tered in favor of the plaintiff for the amount claimed in the petition, against the defendant bank as principal, and the defendant Scott as surety. The circuit judge concurs in the conclusions of this olJinion, which i3 in accord with his opinion in Bung 00. v. Armatrong, 34 Fed. Rep. 94. v.o6F.no.1-5
66 GREEN
et
'UX. 1.l. PENNSYLVANIA
R. CO.'
Oourt, E. D. Penn81/l1Jania. October 14,1887.) 1. CARRIERS PROACHES.
Oll' PASSENGERS -INJu:RIES TO PASSENGERS -
DANGEROUS AP-
Railroad companies are bound to keep in a safe condition all portions of their platforms and approaches thereto to which the pUblic do or would naturally resort, and all por.tions of their station grounds reasonably near to the platforms where passengers or those who have purchased tickets with a view to take passage on those cars would naturally be. 2 2.BAME-NEGLIGENCE.
It is negligence in a railroad company to leave unguarded a hole in a passage.way at a railroad station likely to be employed by persons going to and from the company's cars.' Where the injury inflicted is not the result of either wanton or willful wrong, only compensatory damages will be allowed. 8
B.
BAlfE-MEASURE OF DAMAGES-COMPENSATORY.
At Law. This is an action for damages for injuries alleged to have been received by. Mrs. Anna M. Green, wife of Hiram Green, of Camden, N. J., on October 12, 1882, at East Moorestown station, upon the Pennsylvania Railrq!td in New Jersey. Mrs. Green, then aged 23 years, married, and having one child,had, upon the day of the accident, l;men to the fair at Mount Holly, and had returned to East Moorestown station, near which she then lived, upon a train on the Pennsylvania Railroad, arriving between 7 and 8 o'clock in the evening. The night was very dark and misty. She was accompanied by, her little boy aged four or five years. Upon alighting at the station she found herself near the east end of the station building, and, wishing to take a stage from .the station to her home at once, .and without pausing on the platform, went, leading the child with her right hand, down a dark passage-way upon the east side ofthe station, in order to reach the rear of the building, where the stages usually stood, turned sharply to the right, and went along the rear of the station. About midway the rear of the station she fell into an opening constructed in the ground to form an entrance to the basement of the station. 'l'heuncontradicted evidence showed that the entrance-way was in the condition in which it had been originally constructed; that there was no light at the east end of the station, in the eastern passage, or in the rear of the station; that stages were usually to be found standing in the rear of the station outside a line of posts, and that it was necessary to go along Chester avenue to go to Moorestown. The evidence was contradictory as to the existence of a railing along the top of the posts, and 1 Reported by C. Berkeley Taylor, Esq., of the Philadelphia bar. 'Respecting the duty of railroad companies, as carriers ·of passengers, to maintain safe and proper station accommodations and approaches to trains, and their liability for injuries caused by defects therein, see Ryan v. Railroad Co., 1 N. Y. Supp. 899, and cases cited in note. 8As to when punitive damages may be allowed in actions for personal injuries, see Railroad Co. v.Roberts, lKy.) 8 S. W. Rep. 459 and note; Railroad Co. v. Arnold,(Ala.) 4 South. Rep. 359.