."
WELLJlB,'
which action was affirmed by the supreme (,(lllrt. Neither: In Union Trust Co. v. ,IUinoi8 Midland Rauway Co., 117 U. S. 479, 6 Sup. Ct. Rep. 809, it was held that car rentals which accrued before a receiver wasappointed were not entitled to. be first paid out of the. corpus of the erty. .';l'he equipment embraced in the car-trust agreement is the property of the petitioner, and on its demand possession will be surrendered within a reasonable time; and, if the amount which the receiver has thus far paid for his use of the equipment is not a fair rental. on a quantum meruit, the court will order further payment on proper showing.
of these cases jUiltify the contention of the petitioner.·
BOOTH
et al.
'/I. WELLES.
N. D. Iowa, E. D. Aprll16,1890.) BANKS AND BANKING-NATIONAL BANKS-INSOLVlI:NCY.
The comptroller having notified a national bank that its capital was impaired, It. was agreed .that it might continue business oli the directors putting in $100.000 in cash; and retiring that amount of objectionable securities. That sum was contril>.. 'Ured; the account being opened with trustees appointed by the directors to manage the fund, with full power, II,s far as the bank was concerned, and to account therefor W the contributors in such manner as to protect the eqUIties of each individual and the bark, in relation to the bank and its legal rights. It was tween. the' trustees and the.examiner that the securities to be retired were to be dE'signa\;Gd by.the .comptroller or examiner,but there was no such understanding witll the comptroller. The amount of objectionable securities had not been S80 . lected and given to tlle trustees when the bank was closed, the receiver taking and proceeding to collect tlle Whole' assets. 'Held, tbat the receiver was not reqUired to account for the balance of the $100,000 as a special fund, but merely as a debt.
In Equity. Bill to enforce the proper application of an alleged trust fund. , . . McC!ehey & O'Donnell, Henderson, Hurd, Daniels & Kiesel, Fouke &: J. H. Shields, R. W. Stewart, and Adams&: Mathew8, for·complainants. Wm. Graham, for defendant. SHIRA8, J. Upon the filing of the opinion of this court in the case of Welle,,, v. Stout; reported Fed. Rep. 807, the present bill in equity wasfiled,.in acCordance with the suggestion therein made; and the question lert undecided in that case is now presented fQrdetermination. The evidence in this causeshows thatthe complainants herein contriblited thesuIn' of $100,000 to' be used. in restoring the solvency Commercial National Bank, which was placed in the bank; being opened upon the books'in the names of J. K:Graves and John R. Waller, trustees. WMh '{llehank closed its doors; in March,' 1888, the account showed a balance in favor of the trustees of $35,811.41,'and it irfelainied.on behalf thatthis balance i bank asu,specialor trust Nridi it did,not form part of the tQ:e1)ank;.Jhat the receivC;lr is chargeable with notice of the natu.re:oHhe
t-a.
FEDERAL REPORTER,
vol. 42.
lundHhat, when the receiver was placed in control 'oltha bank, this balance came into his hands impressed with the trust originally pertainmgthereto; and that he must account therefor to the complainants. To properly determine the rights of the parties, it must be ascertained for what purpose and under what circumstances this fund of $100,000 was contributed by the complainants. The evidence shows that in 1887 fhecomptroller had notified the bank that its capital was impaired, and on the 1st day of July, 1887, he addressed a letter to the bank setting forth various items which it was claimed should not be counted in the statement of assets,and further notifying the bank that an assessment of 45 per cent. upon the capital stockbad been ordered for the purpose of making good the losses enumerated. To avoid the necessity of making this assessment upon the stockholders, the directors assumed the raising of the sum named, the larger part of which was subsequently paid in. This contribution, however, proved insufficient to fully restore the impairment of the capital and standing of the bank; and on the 3d day of January, 1888, the comptroller again the bank, calling attention to the large amount of overduEiand 'uncollected paper, and stating thatbetween your 'Graves family interests are such as exist, and must not continue. .r must respectfully insist either tbat",the:,manllgement of your bank be COnfined to the law, or that you benefits andprivilf'ges of the national banking system. These give reported to amount to $267.149. * * * The examinerreporq.; 'tba.t you contempl&te putting tWO.OOO in cash into the bank during this month, retiring an equal amount of objectionable securities. On this account, 'he recommends that you be granted the time mentioned in which to get.tlie,li'ffairs of the bank in proper I:londition. In acting upon his suggestiOll. YOU;ll,re respectfully informed that,r cannot allow such flagrant violation of law to continue. and you will be expected to use your best efforts to place :lJ-:fi'aixs, of bank in proper that time. " To this letter the directors replied, under date of January 25, 1888, as fC111ows: "inl'eply to your letter of 3d inst., we would respectfully state that, of the $45.000 contributed. as advised j'Oll, July,ll, '87, the sum of $30.000 has been paid in cash. The directors have, since the receipt of your lettpr. contribute.d $100,000 In cash. anll as good paper as can be made to the bank,with which to; securities; Mr.H. L. Stout acting for his son F. n; 'Stout in bis absence. You will re.call, that it was our own suggestion. made to Eicanl'lnet Storie, that we would contribute $lOQ·.OOO to put Lhe bank in sound conditioti. and much more than covers possible loss. * ... *" It further appears that., in carrying out, the proposition for .contribut,R. ing the$100,QOO for the purpose Ilameq, J. K. Graves and \Valler 'were selected to act all trustees in ?onnection with said fund; and on' Jan:uary, 1888, the followfIlg l'esol.ution was adopted by the directOrs':" . in carrying out the of the comptroller of the currency ilontribuLing $100,000. to 'take. up objectionable assets of this bank, MeoSs'tsi,'J.R. Waller and J. K. Graves ate hereby appointed; jointly, to aetas truatees, in the handling and management of said $100,000 fund, with
BOOTH IJ. WELLES.
full power, so far as this bank is concerned, according to their best judgment. and to account therefor to the parties contributing said fund as individuals in such manner as to protect the equities Qt each individual and the bank, ill relation to the bank and its legal rights, and without other responsibility on their part than to act as their judgment dictates." As already stated, the parties named deposited the $100,000 in the bank, and an account was opened with them as trustees. From the testimony ofJ. R. Waller and George A. Stone, the bank eXaminer, it would appear that, while there was no express agreement to that effect, it was understood that the objectionable securities to be retired were to be designated by the comptroller, or by the examiner in his stead. It thus appears thai, as between the comptroller and the contributors of the' iund,the understanding was that if, during the month of January, 1888, the sum of $100,000 should be contributed to put the bank in sound condition, there being retired, in place thereof, an equal amount of jectionable securities, the comptroller would not then put the bank intQ liquidation. As betweE'n the bank and the contributors to the fund, the agr-eement was that the retired securities should be heW for the benefit of the contributors. But, as part of the objectionable securities was paper of; some of the' contributors, it was not intended that the retirement thereof: should release the parties liable thereon; and hence, in the resolution of January 24th, the trustees were charged with the duty of protecting the equities and rights of the bank, and of the individual contributors. The trustees were thus charged with a double duty in regard to this matter. On the one hand, they were to appropriate the $100,000 to the purpose for which it was raised, according to the understanding between thEr comptroller and the directors; and, on the other, they were to receive and properly manage the retired paper according to the rights and equities existing between the bank and the individual contributors to the fund. The trustees, in fact. placed the $100,OOO:in the bank, and thereby performed their duty in that particular.. 'fhe account opened with them as trustees, but the mere form of the account did not affect or. change the relation of the parties to the fund, or their rights therein. The money was placed in the bank for the purpose of strength_ ening it, according to the understanding with the comptroller, and thereby afurtherlease of corporate life was secured. In plaaing the money in the bank, the trustees did not make it a special deposit, nor in any manner restrictthe use thereof by the bank. There was no agreement or understandingwith the comptroller that he was to select out,' and furnish to the contributors for their protection, any of the objectionable paper. The rights of the contributors in that regard grow out of the arrange-t ment between the bank and the contributors, which it does not appear· was ever made known to the comptroller. There is nothing, therefore" shown in the evidence, which justifies the conclusion that the fund went into the bank charged with any condition or trust whatever, so far as the comptroller was concerned, other than that it was a fund raised to strengthen the bank. As between the bank and the contributors, the latter had the right to demand the turning over to the trustees of the ob-
nDERALREPORTERjVol. )
42.
jSctiooable'paperthllit WBSl'to be retired, to be by them managed for the prote¢tion· of'the 'parties contributing the . . . .' of good tne unpaIred condItIon oithE;) bank, ,fl,l1d. thereby securmgthe oppar,tunity of continuing the business, instead of being forced into immediate liquidation.' The payment into the bank would secure this of life; and when this payment was madej and the lease oUife was secured, all controLover the fund so' contributed on part of the contributors or their trustees was at an The money, became part of the assets of the bank,i1mdwas no longer subject to the control of the trustees. The bank did not receiv.e the fund to beheld in trust, but received it just as it would'an assessment of an equal amount upon the stockholders; that, ia,as1wqney paid in as part of the general capital of the bank.. By the of the agreement between the bank and .the contributors, the latter were entitled to have delivered to the .trustees named the obJectionable ,p.per that was retired to ofl'SElt the fund contributed. This is a rip,t and ,equity which the contri,butors have not .lost, or been in any.,wa"deprived. Of.: Ris immaterial, in this respect, whether it was af.thebank officials or of the, comptroller to select out and designate particular paper to be retired. It appears from the evidence that:some'854.804 ofobjectionable paper had been selected out and deliveredi to the trustees before ,the final closing up of the bank. When the bank closed its doors: the trustees were entitled to receive some $35,OOOini the objectionable paper. If, before the bank ceased its business, this amount in objectionable paper had been deliver,edto the trustees, the fulLduty of the bank to the contributors would have been iperfoI'med. Having failed· to deliver over this paper, the bank hasndtrelieved itself to accounHorthe$35,OOO contributed to it. The receiver taken entire posseSsion oithe assets of the bank, and having proceededwiththe collectioollhereof, It is now impossible to carry out the agrecmentwith, the contllibutors by delilvering the full amount of the objectionablepaper.' Thisleavcs the bank liable fortne balance of the fund not, thus accounted. fot, but this liability is. in the' nature of .a debt·· ltcannot: be construed to be a trust which reaches fund itself as originallypaid.in. Toao treaUt would defeat, instead ofeffeetuating, the purpese ··foJ.l which it was origiuallycontributed;In effect, the only was with relation to the objectionable and this :was: not· of)such,fI,,'natnre as, roprevent the ,bank fromusiriRthe fund as of the·assetslof the bank as soon asit:was paid,injndrdoesit,nowen title thepi'bceeds from the assets ii.' flbereceiverwith atrustl so as to daima preferential righf ofpay.meat.theref"rom, .over other creditors. It follows :that· complaiu' an'ts'hillimpSt,be dismisSed, and it is 80 ordered. L, rr'i !'.
ii.,
i."
i i'; ;
!.
THE
Em.WNDSON: ISLAND
CASm
Fu:aGUSON V.HAMLIN.
(Oircuit,Oourt- D. MaryZand. February 4. 1890.)
L
'!
, -';J;'he States, for the use of thefl.sli. commission, rentecl,an island in the Chesape,ake bay from whO,:was the owner by mesneconyeyances froJP tb6 l g'l.'antees nnder 'a patent from Maryland; The United States was already the ,ow*er,in fee by deed ofa illilaU areaotthe island. on wb.ich it'maintained a lighthouse., . ,During t.he tenancy certain exte.nilionsllnd were con!ltructE¥l We ''United States for the use of, the fish cottlmission,exte1\ding',out into tbe wa1i\:lrol1ithe nortll anq vO'elltof the island9 COIIsisting of aPout ha.lf an acre, wbtah Wall IlOlldly,filMd in, a,ud of,certain wllaryes, iJ1closures. ' Upon the 'termination of the lease the United Stateli removed; onto tht! newly-made land and all' the buUdipgs which it I:lad on tlie. island, for .the )llle of the , l1eh ,coIUIIlj.!l!lion, and refU.!l6d ,to give up p08!lell!lion thereto as B etructlirebuUt in tbe nll.vlgablewater of the Chesapeake baY' to protect the'light; """,d' conten,dell that the, plaintUf }lad notitllll on l:le,could;reclJOler c because of theJ,'estrictipn!l of Act14d: 1835, c. the el'terlt " tOW'hichtlie island lDight be extendoo;' Held, that by'the }!arjrl.aud' act 01' 1862 , 44. 45, Coae }fd.) the patentee I)f an Islandia waret"s.oHhe , a pght t? impr,?ve ,?u\< tn fl'QJ;lt of his lan!ls, prl!vide,d lmprovelpe,:\ts 'do not lliter'fere wlth naVigatIOn; thatlmprovements and extension!l made by such 1)y: his llelong to him,.although tllC\V IJlay,e1tiend further tibau'tl:le ,law they may 1>e"aba;ted. to ,the e:Jttent thattl:leY,!'rellnlawful,by proper proceedings, but the' oWnershlp cannot be wrell1\ed' froin hlm;' and the premilles »,1l,UfP.6,',4 a!lt4,Us,ed by a,n,o,t,h, ,: ttl,e, !lam, ,eru,le, ill apPli,',C,awe,It,'ltth,e, PoseQ the extension of,JWmond!lon'ltl!lland,by the AC,t J8&5. c.99. ,,:, ' : waterreCtuired for theprotectiou of the light-housel ttle UnitBd State!l roU!l6 the bed 'of 80 navigable_tel' wlthoutcom"pen!layionls ,to ,the,''U!les Of, comID;,erce and navig'atioll, it can us.ethe ten'siOh$ of this island made 1:)y it only so fM· all their use is neces!lary- to'm'libitain the light-liotiae; and tlot lor: the purpolJeoUhe fi!lh COmmi8!lion; and allit' aponly u!le of the exteJ;lsioJ;l1l1 Ilopd ,lltructuresin qJiestion, ,pears ,t,bat , 'With the lightrhOuse, is to defend It freshet!l ice, ,the UUlted Stil.tes;ts entitledito'maintain them fdr that purpo!le;and for no other; 'atl.chhat the: plaintiff, a!l, the owner of the,i!lland,.iil entitled,toisuch them as can, Pe 'm&de without interference w:ith the enjoYment of thateallement, by the t1utted StateE!-" atJ:Zd. that the plaintiJl', as the owner of thefee!lubjEict to this easement ,in the Uni1ied Stat!!!!, is entitled to maintlloin an action of, ejectlllE:lnt. and isC}utitied toa'verdict in b.is favor for tb.e locus in quo, subject to' t4e easement in, thllUhited States. lilt thil.ri:ghti of
RIPARIAN RIGRTB-IMPROVBMENTSIN NAVIGABLE STREAMS. '
,
d :'
,.', ',',: ' ",,', ' .' ".',., :' ,41tt4> the,tlt!e !let up by ,the United Stat$ to the,loCU8 in qu<). ,as a strllctnre mlL!'le
MAUD FOR P.&OTEOTION'OFLIQRT-HouSBc;.:,TITLB 'TO TilE FEE-
. , " "'j",
,C,
'
,,' , Ei8her. for plaintiff. .",.. TJuYlYuiB G. Hayes, V. Dist., Atty, , for defendant. BON;o.. and .MORRIS,.,TJ
',' ,
'J. This isa,n action of ejectment originally instituted in the ,for' Harford, county" Md.. The defenq,allt" William, Hamcircuit. lin, is ,the agent of the UnitedStates,'aI;ldupon his filing a petition in that c()lll:h; alleging that' the title to thepremiseg was in the United he was in possessioljl. employe,and that the United by, a .paramounttiileunqartbe constitution spd latw80f the Ca!le."was' .·