73 So. 342 | Ala. | 1916
The question propounded by this appeal is this: Whether, in an action by the statutory receiver of an insolvent bank, on a note payable to the bank, the defendant may set off against the demand sued on the amount due from the bank to the defendant represented by an interest-bearing certificate issued by the bank to the defendant. The response to the inquiry depends upon the construction and the effect tó be given section 250 of the Constitution. That section is as follows: “Holders of bank notes, and depositors who have not stipulated for interest, shall, for such notes and deposits, be entitled in case of insolvency, to preference of payment over all other creditors: Provided, this section shall apply to all banks, whether incorporated or not.”
In Taylor v. Hutchinson, 145 Ala. 202, 208, 40 South. 108, it was affirmed with obvious correctness that the manifest intent of the section was to create a preference in favor of depositors who had not stipulated for interest; thus relegating to a secondary class all other creditors of the insolvent bank. And in further sound declaration of the section’s clear effect it was remarked, by way of argument, that the provisions of the section had “doubtless become a basis of credit of banks and to which depositors have looked as their protection in case of insolvency.” The status upon which the provisions of the section visit their conclusive, self-executing effect (Taylor v. Hutchinson, supra) are established by the relation assumed before insolvency by the bank, on the one hand, and, on the other hand, the depositors not stipulating for interest, or the holder of the bank’s note or the depositors who have stipulated for interest. The section creates two classes of creditors and ordains a preference in respect of the payment of the demands of one class over the other class. The preferred class is constituted of those who have not stipulated for interest. Those of this class have established for them a superior, a first right to have their demands against the insolvent institution satisfied out of its assets. Those of the class who have stipulated for interest are denied the right to have their demand which is predicated of an interest-bearing deposit paid in whole or in part until the demands of the creditors of the preferred class are satisfied. The effect of the organic law enters into, affects, and governs as to rights as well as otherwise every deposit in a bank in this state, whether the deposit is accompanied by a stipulation for interest or not. Its operation is
The appellee has cited the case of State v. Brobston, 94 Ga. 95, 21 S. E. 146, 47 Am. St. Rep. 138, as opposed to the conclusion above announced. That decision is without application. There the state of Georgia sought, by intervention, to assert its superior lien on the assets of the insolvent bank; the court holding that the right or lien of the state was effective upon the assets only, and that thé assets of the insolvent institution comprehended the balances between the bank and its creditors, thus affirming the right of set-off usually recognized and enforced between persons having mutual demands. But under section 250 of our Constitution the inquiry is one of contractually accepted preference or nonpreference among creditors of the institution in the event of its insolvency, and not, as in the Georgia case, as inquiry determinable by the ascertainment of what are the assets of an insolvent bank.
The trial court gave effect in its rulings on the pleadings to a different conclusion. The judgment is, hence, grounded in error. It is reversed, and the cause is remanded.
Reversed and remanded.