US SUPREME COURT DECISIONS

In 1836, the Legislature of Arkansas incorporated a bank with the usual banking powers of discount, deposit, and circulation, the state being the sole stockholder.

The bank went into operation, and issued bills in the usual form, but in November, 1839, suspended specie payments.

Afterwards, the legislature passed several acts of the following description:

1843, January, continuing the corporate existence of the bank, and subjecting its affairs to the management of a financial receiver and an attorney, who were directed to cancel certain bonds of the state, held by the bank, for money borrowed by the state, and reduce the state's capital in the bank by an equal amount.

1843, February, directing the officers to transfer to the state a certain amount of specie, for the purpose of paying the members of the legislature.

1845, January, requiring the officers to receive the bonds of the state which had been issued as part a the capital of the bank in payment for debts due to the bank.

1845, January, another act, taking away certain specie and par funds for the purpose of paying members of the legislature, and placing other funds to the credit of the state, subject to be drawn out by appropriation.

1846, vesting in the state all titles to real estate or other property taken by the bank in payment for debts due to it.

1849, requiring the officers to receive in payment of debts due to the bank not only the bonds of the state which had been issued to constitute the capital of the bank, but those also which had been issued to constitute the capital of other banking corporations which were then insolvent.

Upon general principles of law, a creditor of an insolvent corporation can pursue its assets into the hands of all other persons except bona fide creditors or purchasers, and there is nothing in the character of the parties in the present case or in the laws transferring the property to make it an exception to the general rule. For the Supreme Court of Arkansas has decided that the state can be sued in this case.

The bills of the bank being payable on demand, there was a contract with the holder to pay them, and these laws, which withdrew the assets of the bank into a different channel, impaired the obligation of this contract.

Nor does the repeal or modification of the charter of the bank by the legislature prevent this conclusion from being drawn. But in this case, the charter of the bank has never been repealed.

Besides the contract between the bill holder and the bank, there was a contract between the bill holder and the state, which had placed funds in the bank for the purpose of paying its debts and which had no right to withdraw those funds after the right of a creditor to them had accrued.

The state had no right to pass these laws under the circumstances either as a creditor of the bank or as a trustee taking possession of the real estate for the benefit of all the creditors.

The several laws examined.

The supreme court of the state held these laws to be valid, and consequently the jurisdiction of this Court attaches under the 25th section of the Judiciary Act. chanrobles.com-red

Page 56 U. S. 305