Stewart v. National Union Bank of Maryland. nals before whom is now pending the question of the validity of the charter of the said railroad company, and the character of its stock. The preliminary injunction asked for in this case is refused. For authorities to sustain the view I have taken of the law governing this case, I refer to the following Bates v. Bank of Alabama, 2 Ala. 462; Magruder v. State Bank, 8 Ark. 9; Bank of Middleburg v. Bingham, 33 Vt. 636; Farmers' Bank v. Buechard, 33 Id. 348; and Rock River Bank v. Sherwood, 10 Wis. 230. Injunction refused. STEWART v. THE NATIONAL UNION BANK OF MARYLAND. Circuit Court, Fourth Circuit; District of Maryland, October, 1869. CREDITOR'S BILL.-POWERS OF NATIONAL BANKS.VOID CONTRACTS. By a creditor's bill it appeared that the judgment debtor had assigned certain assets, which complainant sought to reach, to a national bank, made a defendant, as collateral security for a loan, and had afterwards, but before the Bankrupt Act of 1867 took effect, made a general assignment to trustees for the benefit of creditors. The bill charged that the loan made by the bank was void for exceeding the corporate powers, and that the bank therefore acquired no title to the assets received as collateral. The general assignment was not Stewart v. National Union Bank of Maryland. assailed. Held, on demurrer, that the bill showed no right in the complainant to relief from the assets in question; for, if they did not vest in the bank by the assignment attacked by the bill, they must have vested in the trustees under the general assignment. A loan made by a national bank in excess of the restriction imposed by section 29 of the National Banks Act of June 3, 1864, 13 Stat. at L. 99,-which provides that the total liabilities to any banking association, of any borrower, shall not at any time exceed one-tenth of the capital stock,—is not void upon that account. The loan may be enforced; though (by section 53), the bank is exposed to forfeiture of its franchise, and the officers participating are declared personally liable.* Although a loan made by a corporation appear to be in excess of a limit imposed by statute, and therefore not enforceable, yet, if it has been executed by the parties, a court of equity will not interpose, at the suit of a creditor of the borrower, to cancel the transaction and compel a return of the securities, but will leave the parties where it finds them. Demurrer to a bill in equity. GILES, J.-The complainant in this case filed a general creditor's bill against the defendants, alleging, among other things, that he was and is a creditor of Bayne & Co. to a large amount; that Bayne & Co. are bankrupts; that the National Union Bank, the National Mechanics' Bank, and the National Exchange Bank are national banks, organized under the act of Congress entitled "An Act to provide a national currency," approved June 3, 1864; that section 29 of said act provides "that the total liabilities to any association of any person or of any company, corporation, or firm, for money borrowed, including in the liabilities of a company or firm the liabilities of the several members thereof, shall at no time exceed one-tenth part of the amount of the capital stock of such association actually paid; that on May 3, 1866, the loans to Bayne & Co. by the National Union Bank amounted to two hundred * See the preceeding case. Stewart v. National Union Bank of Maryland. and eighty-seven thousand six hundred and forty-one dollars and thirty-one cents; by the National Mechanics' Bank to three hundred and seventy-seven thousand four hundred and forty-four dollars and seventeen cents; and by the National Exchange Bank to one hundred and forty thousand four hundred and thirtyone dollars and twenty-nine cents; which loans were made with the knowledge and permission of the directors of said banks, and were not within the reservations or provisos of section 29; that the largest part of the assets of Bayne & Co. are deposited with and held as collateral security by said national banks, defendants, for the illegal loans, so made by them to Bayne & Co.; that of such collaterals, the National Mechanics' Bank held three hundred and eighty-five thousand eight hundred and sixty-four dollars, the National Union Bank three hundred thou. sand one hundred and thirty-nine dollars, and the National Exchange Bank one hundred and sixty-four thousand two hundred and fifty dollars; that the capital stock of the said National Mechanics' Bank is six hundred thousand dollars, of the said National Union Bank is one million two hundred thousand dollars, and of the National Exchange Bank four hundred thousand dollars; that the loans to Bayne & Co. by said banks were, on May 3, 1866, largely in excess of the ten per cent. of their respective capitals actually paid in, and therefore contrary to law, and a fraud on the rights of complainant and other creditors of Bayne & Co. The bill prays for a discovery of the amount and nature of said collaterals, also of all transactions between Bayne & Co. and the banks, and for an order of this court transferring the collaterals so held by the banks to the assignee in bankruptcy of Bayne & Co. for adjustment of rights between their creditors, for a decree in favor of complainant, and for general relief. Stewart v. National Union Bank of Maryland. To all that part of the bill which attacks these loans made by the banks on the ground that they are void by section 29 of the act of 1864, and prays for a decree of this court ordering them to be transferred to the assignee of Bayne & Co., the banks demur; and for cause of demurrer show "that according to the true construction of the act of 1864, the complainant has no right to call upon this court to examine into and decide upon the matters above demurred to, but the same are examinable only at the instance and suit of the government of the United States and its authorized officer, and in conformity with the provisions of said act." 'And that the said matters, as alleged, do not affect the validity of the said loan by these defendants to the said Bayne & Co., nor do they destroy, invalidate, or affect the title of these defendants to the said collaterals and securities." The issues raised by this demurrer are two. First, the right of complainant to the relief sought in his bill against the banks; and second, the validity under the act of Congress of the loans so as aforesaid made by the said banks to Bayne & Co. There is also a prayer in the bill for a decree for an account to be filed by Wm. Bayne, Allen A. Chapman, and Horatio R. Riddle, trustees under a deed of trust executed by Bayne & Co. on May 5, 1866; but with that part of the bill we have nothing to do at present. This case has been heard alone upon the bill of complaint, and demurrer filed by the banks, and the question to be now decided by the court is: Does the bill show such a case as entitles the complainant to the relief he seeks against the said banks? He prays for a. decree against the said banks compelling them to transfer and hand over to the assignee in bankruptcy of Bayne & Co. all the collaterals which the banks received from Bayne & Co., as security for the loans made to them from time to time by the banks. Now, Stewart v. National Union Bank of Maryland. could such a decree be passed by this court and such relief granted, in view of the fact that Bayne & Co. had by a deed of trust (as is shown), on May 5, 1866, conveyed all their assets, of whatever kind, to trustees for the benefit of their creditors, the deed being executed before the passage of the bankrupt act, and more than six months before Bayne, Hough, & Honeywell filed their petitions to be declared bankrupts. That deed has not been assailed, although allegations are made in the bill against the trustees, and they are charged with fraud and collusion. Now, it appears to me that if the complainant be right in his view and construction of section 29 of the general banking law of 1864, "that all loans made to any one beyond the amount prescribed in that section are absolutely void; and that the banks have no title to any collateral security given to them for such loans," yet he is not entitled to the relief he now seeks. Under such construction of the law, the title to these collaterals passed by the deed of trust, and if the trustees have failed duly to execute the trust confided to them, a court of equity would remove them and substitute others in their place; and, if the bill filed for that purpose made the banks parties, the court could decree such relief as would be equitable and just under the circumstances. This disposes of that part of the case now submitted to me, and I might rest my decision here; but as the second issue raised by the demurrer has been argued at length and with great ability by the complainant and the learned counsel engaged in the cause, and as I have carefully examined all the authorities referred to, I shall state briefly the conclusions to which I have arrived as to the true construction of section 29, and of the rights of the parties to such loans as are here alleged. Now, it is observable that this section only provides, "that the total liabilities to any association, of any person, or of any company, corporation, or |