When a state bank acting under a statute of the state calls in
its circulation issued under state laws and becomes a national bank
under the laws of the United States, and a judgment is recovered in
a court of the state against the national bank upon such
outstanding circulation, the defense of the state statute of
limitations having been set up, a federal question arises which may
give this Court jurisdiction in error.
The conversion of a state bank in New York into a national bank,
under the act of the legislature of that state of March 9, 1865,
N.Y.Laws of 1865, c. 97, did not destroy its identity or its
corporate existence, nor discharge it as a national bank from its
liability to holders of its outstanding circulation, issued in
accordance with state laws.
The provisions in the statute of New York of April 11, 1859,
Laws of 1859, c. 236, as to the redemption of circulating notes
issued by a state bank and the release of the bank if the notes
should not he presented within six years do not apply to a state
bank converted into a national bank under the Act of March 9, 1865,
and not "closing the business of banking."
The Court stated the case as follows:
This is a motion to dismiss a writ of error to the Supreme Court
of the State of New York to review its judgment
Page 141 U. S. 521
against the plaintiff in error, with which is united a motion to
affirm that judgment if the motion to dismiss be denied.
The case arose upon a complaint filed in the supreme court of
New York June 4, 1886, by the defendant in error and another, as
administrators of the goods, chattels, and credits of James H.
Paine, deceased, against the plaintiff in error, the Metropolitan
National Bank, demanding judgment against the latter for $12,300,
and interest from May 21, 1886, that being the aggregate amount due
on 84 bank bills issued by the Metropolitan Bank of New York, for
the payment of which it was claimed that the plaintiff in error was
liable. The complaint alleged that at the time of the issue of the
bank bills sued upon, the Metropolitan Bank of New York was a state
bank, duly organized and doing banking business under the law of
the State of New York, having authority to issue such bills, and to
put the same into circulation as money; that from 1858 to 1861 it
issued each of the 84 bills therein described, and prior to 1862,
for a valuable consideration, delivered the same to James H. Paine,
the intestate of the plaintiffs; that the bills thereupon became
his property, and remained in his ownership and possession until
his death; that the plaintiffs, as administrators of his goods and
effects, duly appointed and qualified, having become the owners and
holders thereof, presented the same on the 21st of May, 1886, to
the Metropolitan National Bank, the plaintiff in error, for
payment, which was refused; that on the 14th of March, 1865,
pursuant to the Act of Congress of June 3, 1864, and the Act of the
legislature of New York of March 9, 1865, the said state bank
became and still is a national bank for carrying on the business of
banking under the name of the Metropolitan National Bank, and that,
by virtue of the laws of the United States and its own voluntary
action, the said Metropolitan National Bank, plaintiff in error,
received and became vested with all the assets of the Metropolitan
Bank of the state, and assumed and became liable to pay its
obligations, including the bank bills described in said
complaint.
Three defenses were set up in the answer to the complaint: (1) a
denial that the plaintiff in error had at any time assumed
Page 141 U. S. 522
or, by any of its acts, become liable to pay the bills of the
Metropolitan Bank of New York, which was a state bank doing
business under the laws of the State of New York; (2) that in 1865,
plaintiff in error became a national bank under the laws of
Congress, doing the business of banking, as such, by virtue of the
laws of the United States, under the corporate name of the
Metropolitan National Bank, and that the Metropolitan Bank of New
York (the state bank) went through certain proceedings, under the
New York statutes, of notice, publication, and deposit with the
superintendent of banking of that state, for the redemption of its
circulating bills, on the ground of its closing business, whereby
its liability and that of the plaintiff in error on these bills
(they not being presented for payment in due time) ceased six years
from March 14, 1867; (3) that the cause of action is barred by the
statute of limitations of the State of New York.
The action being at issue upon the pleadings, and having come on
for trial before the court without a jury, the parties having
expressly waived a jury trial, the court made a finding of facts
which substantially accorded with the averments of the complaint,
and rendered judgment in favor of the plaintiff below, the
defendant in error herein, for the sum of $12,300, and interest
thereon from May 21, 1886, and costs. 4 N.Y.S. 115. This judgment
was affirmed by the general term of the supreme court of New York,
10 N.Y.S. 165, and subsequently by the Court of Appeals of New
York, 26 N.E. 757. Hence this writ of error. The defendant now
moves to dismiss the writ on the ground that this Court has no
jurisdiction to review the judgment of the state court of New York
and that no federal question was raised or decided in the court
below or appears upon the record.
[The material part of the statutes of New York referred to will
be found in the margin.
*]
Page 141 U. S. 526
MR. JUSTICE LAMAR, after stating the case, delivered the opinion
of the Court.
The first assignment of error is as follows:
"That the Metropolitan National Bank, the plaintiff in error,
which was created under the act of Congress entitled 'An act to
provide a national currency secured by the pledge of United States
bonds, and to provide for the circulation and redemption thereof,'
approved June 3, 1864, is held liable to pay the bills described in
the complaint, which were made by the Metropolitan Bank, a
corporation created under the law of the State of New York,
entitled 'An act to authorize the business of banking,' passed
April 18, 1838."
The second defense set up in the answer, as we have seen, is
that the defendant below -- the plaintiff in error -- became a
national bank under the authority of the act of Congress of 1864,
entitled "An act to provide a national currency secured by the
pledge of United States bonds, and to provide for the circulation
and redemption thereof," and thereby acquired immunity from
liability for the bank bills issued by the state bank. The court
found that the plaintiff in error did become a national bank, doing
a banking business under the laws of the United States, but decided
that it did not thereby acquire an immunity from liability to pay
the bank bills of the Metropolitan Bank of New York, upon the
ground that the proceedings set up in the answer did not terminate
the existence of the state bank, but simply effected a continuation
of the same body under a changed jurisdiction. In this we think the
record presents a claim for federal immunity raised by the
plaintiff in error, and denied by the court, which brings the case
within the jurisdiction of this Court, and upon the authority of
McNulta v. Lochridge, decided at this term of the Court,
ante,
Page 141 U. S. 527
141 U. S. 327, the
motion to dismiss is denied. But as the record also shows there was
color for the motion to dismiss, it is proper that we should
proceed to a review of the judgment of the court below.
The question we are to consider here is did the court err in
holding that the plaintiff in error was not exonerated from
liability either by its becoming a national bank, or by the
proceedings for the redemption and retirement of its circulating
bills issued while a state bank, which proceedings, it was claimed,
were in strict observance of every requirement of the New York
statute of 1859 in relation thereto, or by the statute of
limitations of the State of New York? The court decided that the
New York statute providing for a redemption of circulating notes
and for releasing the bank if the notes were not presented in six
years applied alone to banks "closing the business of banking;"
that the change or conversion of the Metropolitan Bank into the
Metropolitan National Bank did not "close its business of banking"
nor destroy its identity or its corporate existence, but simply
resulted in a continuation of the same body with the same officers
and stockholders, the same property, assets, and banking business
under a changed jurisdiction; that it remained one and the same
bank, and went on doing business uninterruptedly, and that
therefore the statutory proceedings relied upon in the answer could
not operate as a bar to the liability of either bank to pay the
bills delivered by the Metropolitan Bank in 1861 to plaintiffs'
intestate.
This decision is so manifestly correct that it needs no argument
to sustain it. The judgment is therefore
Affirmed.
THE CHIEF JUSTICE, MR. JUSTICE BRADLEY, and MR. JUSTICE GRAY
took no part in the consideration and disposition of this
motion.
*
An act in relation to the bank department. Passed
April 11, 1859. Laws of 1859, c. 236, p. 503.
"1. Whenever any banking association, individual banker,
receiver of a banking association, assignee or assignees of an
individual banker, shall have given notice to the superintendent of
their intention to close the business of banking, or the trustees
or legal representatives of any incorporated bank whose charter has
expired, or the receiver of any incorporated bank, which shall have
been declared insolvent, shall have redeemed at least ninety
percent of their circulating notes, outstanding at the date of such
notice, expiration of charter, or declaration of insolvency, they
shall be entitled to deposit with the superintendent, and he is
hereby authorized to receive, a deposit of money equal to the
amount of the outstanding circulation at the time of such deposit,
to be placed by him in some bank in the City of Albany, in good
credit, upon the receipt of which it shall be lawful for the
superintendent to give up all other securities theretofore
deposited with him for the redemption of circulating notes issued
thereon."
"2. Upon the receipt of such deposit, the superintendent shall
immediately give notice in the state paper and at least one
newspaper in the county where such bank, banking association, or
banker shall have been located or doing business, which notice
shall be published at least once a week for six months successively
that the notes of such bank, banking association, or banker will be
redeemed by him at the bank where such deposit is made, at par, and
that all the outstanding circulating notes of such bank, banking
association, or banker must be so presented for redemption within
six years from the date of such notice, and all notes which shall
not be thus presented for redemption and payment within the time
specified in such notice shall cease to be a charge upon the funds
in the hands of the superintendent for that purpose."
"3. At the expiration of such notice, it shall be lawful for the
superintendent to surrender, and such bank, banking association,
banker, receiver, assignees, or trustees, or their legal
representatives shall be entitled to receive from him all the money
remaining in his hands after such redemption except so much thereof
as may be necessary to pay the reasonable expenses chargeable
against the said accounts, including the payment for the
publication of the above-mentioned notices."
"All circulating notes of such bank, banking association, or
banker which shall not have been presented for payment within the
period required by such notice shall, upon the expiration of such
period, cease to be a lien or charge upon the property and effects
of such bank, banking association, or banker in the hands of such
receivers, assignees, trustees, or otherwise, and all liability of
such receivers, assignees, trustees, banks, banking associations,
or bankers for or on account of any circulating notes which have
not been presented within the time aforesaid shall also cease."
An act enabling the banks of this state to become
associations for the purpose of banking under the laws of the
United States. Passed March 9, 1865. Laws of 1865, c. 97, p.
169.
"§ 2. Any bank incorporated or organized by authority of
this state which shall become an association for carrying on the
business of banking under the laws of the United States shall be
deemed to have surrendered its charter if it shall have complied
with the requirements of this act, provided that every such bank
shall nevertheless be continued a body corporate for the term of
three years after the time of such surrender for the purpose of
prosecuting and defending suits by and against it and of enabling
it to close its concerns and to dispose of and convey its property,
but not for the purpose of continuing under the laws of this state
the business for which it was established."
"§ 8. Nothing in this act shall be construed as releasing
such association from its obligations to pay and discharge all the
liabilities created by law or incurred by the bank before becoming
such association, or any tax imposed by the laws of this state up
to the date of its becoming such association, in proportion to the
time since the next preceding payment therefor."
