Wyman v. Wallace/Opinion of the Court
A matter of jurisdiction is first presented. The note, which is the foundation of plaintiff's suit, is one made by the American bank to the Union bank, both located in Nebraska, and, under the statute, for the purpose of jurisdiction, to be considered citizens of Nebraska. 25 Stat. at L. 436, chap. 866, § 4 (U.S.C.omp. Stat. 1901, p. 514). The plaintiff is a citizen of New Hampshire. He could not maintain an action against the maker of the note, although a citizen of a state other than that of the maker and payee. 25 Stat. at L. 434, chap. 866, § 1. But if diverse citizenship was the sole basis of the jurisdiction of the circuit court, the decision of the court of appeals would be final and there would be no appeal to this court. 26 Stat. at L. 828, chap. 517, § 6 (U.S.C.omp. Stat. 1901, p. 549). But the jurisdiction of the circuit court was not invoked on the ground of diverse citizenship,-at least, not on that alone. The case presented was one arising under the laws of the United States. It was a suit to enforce a special right given by those laws. Section 5220, Rev. Stat. (U.S.C.omp. Stat. 1901, p. 3503), reads: 'Any [national banking] association may go into liquidation and be closed by the vote of its shareholders owning two thirds of its stock.'

By § 5151, Rev. Stat. (U.S.C.omp. Stat. 1901, p. 3465), stockholders in national banks are made liable for 'all contracts, debts, and engagements of such association, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares.' Section 2 of the act of June 30, 1876 (19 Stat. at L. 63, chap. 156, U.S.C.omp. Stat. 1901, p. 3509), is as follows:

'Sec. 2. That when any national banking association shall have gone into liquidation under the provisions of section five thousand two hundred and twenty of said statutes, the individual liability of the shareholders provided for by section fifty-one hundred and fifty-one of said statutes may be enforced by any creditor of such association, by bill in equity in the nature of a creditor's bill, brought by such creditor on behalf of himself and of all other creditors of the association, against the shareholders thereof, in any court of the United States having original jurisdiction in equity for the district in which such association may have been located or established.'

More than two thirds of the stock voted, on February 25, 1896, for a voluntary liquidation, and on April 27, 1896, the Comptroller of the Currency formally approved the liquidation and notified the cashier of the American bank to that effect.

In proceeding, therefore, by this suit to enforce, in behalf of himself and all other creditors of the American bank, the extra liability imposed by Rev. Stat. § 5151, a case was presented arising under the laws of the United States, and of which, independently of the matter of diverse citizenship, the circuit court had jurisdiction.

The bill is not multifarious. 'The two subjects of applying the assets of the bank and enforcing the liability of the stockholders, however otherwise distinct, are by the statute made connected parts of the whole series of transactions which constitute the liquidation of the affairs of the bank.'  Richmond v. Irons, 121 U.S. 27, 50, 30 L. ed. 864, 871, 7 Sup. Ct. Rep. 788, 798.

It is suggested that no judgment had been obtained upon the note prior to this suit in equity, but as one object of the suit was to subject to the satisfaction of the debt certain property conveyed to a trustee as security therefor, no judgment at law was a prerequisite. Day v. Washburn, 24 How. 352, 16 L. ed. 712; Case v. Beauregard (Case v. New Orleans & C. R. Co.) 101 U.S. 688, 691, 25 L. ed. 1004, 1005, in which the court said:

'Without pursuing this subject further, it may be said that whenever a creditor has a trust in his favor, or a lien upon property for the debt due him, he may go into equity without exhausting legal processes or remedies.  Tappan v. Evans, 11 N. H. 311; Holt v. Bancroft, 30 Ala. 193.'

We come, then, to the final question in the case, and that is whether the notes executed by the American bank were its valid obligations. And in reference to this question these are the significant facts: The demands against the American bank were pressing. It had not the money with which to meet them. It arranged with the Union bank to advance the money for the payment of all its outstanding obligations. When the Union bank paid these obligations of the American bank it was the same as though it advanced money to that bank to pay them. To reimburse and secure the former the latter bank turned over certain property, and executed these notes for the balance, securing them by a pledge of all its other assets, which were placed in the hands of its president, as trustee.

All the stipulations and agreements made by the directors of the two banks were carried out in good faith; and, with full knowledge of what had been done, the stockholders voted for a voluntary liquidation. The borrowing of the money by the American bank did not necessarily put it into liquidation. It had a large amount of assets, and if the real had equaled the nominal value of these assets, it would have been enabled, after discharging its obligation to the Union bank, to continue business. But, on an examination, the stockholders felt that it was wiser to stop at once. But that decision did not at all impugn the wisdom or bona fides of the transaction by which the money was obtained to pay off the pressing demands of the American bank. The question, therefore, is, whether a national bank, finding itself embarrassed, with a large amount of assets, much in excess of its obligations, yet without the cash to make payment of those which are due and urgent, can borrow to meet those pressing demands. A very natural answer is, why not? It is not borrowing money to engage in a new business. It simply exchanges one creditor for others. There may be wisdom in consolidating all its debts into the hands of one person. At least such a consolidation cannot be pronounced beyond its powers. When time is obtained by the new indebtedness (in this case a year) it gives the borrowing bank and its officers and stockholders time to consider and determine the wisdom of attempting a further prosecution of business. In the case of an individual it would be a legitimate and often a wise transaction. It is not in terms prohibited by the national banking act. Aldrich v. Chemical Nat. Bank, 176 U.S. 618, 44 L. ed. 611, 20 Sup. Ct. Rep. 498, is very clearly in point. The opinion in that case is quite lengthy and considers many authorities, but the gist of the decision is expressed in these words (p. 635, L. ed. p. 617, Sup. Ct. Rep. p. 505):

'Without further citation of cases we adjudge, both upon principle and authority, that as the money of the Chemical bank was obtained under a loan negotiated by the vice president of the Fidelity bank, who assumed to represent it in the transaction, and as the Fidelity bank used the money so obtained in its banking business and for its own benefit, the latter bank, having enjoyed the fruits of the transaction, cannot avoid accountability to the New York bank, even if it were true, as contended, that the Fidelity bank could not, consistently with the law of its creation, have itself borrowed the money.'

We are of the opinion that the notes given by the American bank for the money advanced by the Union bank were its valid obligations, and can, therefore, be enforced against its stockholders.

The decree of the Circuit Court of Appeals is affirmed. 

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