A bank is insolvent when it is unable to meet its obligations out of its assets in the due course of business.1 A general suspension of specie payments, or notorious and continued inability to pay its debts, is insolvency,2 but not necessarily a suspension in a sudden crisis.3 When a bank suspends or is insolvent, the assets are not so much a trust fund that the bank, where permitted to make such an assignment at all, cannot make an assignment with preferences.4 But an assignment for creditors or a suspension is proof of insolvency, or any other, admission by the corporation of insolvency, even though the assets are sufficient to pay all the debts of the bank.5

Sec. 325. Assignments For Creditors

There is no doubt of the right of the directors of a bank to make assignments for creditors, unless such an act be forbidden by statute.1

6 See cases cited in note 9 to Sec. 321, ante.

7 See People v. Ridgley, 21 I11. 65; Commercial Bank v. Chambers, 8 Smedes & M. 9. Unless a trustee or receiver be appointed within the time after dissolution by forfeiture the bank's claim is extinguished at law. Conwell v. Pattison, 28 Ind. 509. See Bank of U. S. v. Leathers, 8 B. Mon. 127.

8 Bank of Montreal v. Fidelity Nat Bank, 1 N. Y. Supp. 852, 112 N. Y. 667. See also McCann v. Rogers, 15 Ky. Law R 127. The receiver may be substituted as a matter of course.

9 Nevitt v. Bank of Port Gibson, 6 Smedes & M. 513.

1 See Sec. Sec. 85, 90, ante, and see Har-manson v. Bain, 1 Hughes, 188; Exchange Bkg. Co. v. Mudge, 6 Rob. (La.) 387.

2 Godfrey v. Terry, 97 U. S. 171; In re Empire City Bank, 10 How. Pr. 498.

3 Livingston v. Bank of New York, 26 Barb. 304.

4Catlin v. Eagle Bank, 6 Conn. 233.

5 Dodge v. Mastin, 17 Fed. R 600; State v. Mechanics' Bank, 35 La. Ann. 562.

1 Union Bank v. Ellicott, 6 Gill & J. 363; Town v. Bank, 2 Doug. 530; Chew v. Ellingwood, 86 Mo. 260; Haxton v. Bishop, 3 Wend. 13; Farmers' Bank v. Willis, 7 W. Va.

There is also no doubt of the bank's right to prefer creditors where such an act is not forbidden by statute.2 Whether such preferences are valid or invalid in the absence of a prohibitory statute must depend upon the rule held in the particular jurisdiction as to such assignments. It is not our purpose to examine that question, nor the other question as to whether the assignment is void. But there are two cases peculiar to banking law which ought to be noticed. A bank on the eve of insolvency extended a debt owed by a stockholder by taking his notes due in two and three years, with the president of the bank as sole surety. The act was held to be fraudulent, and that the bank could proceed directly against the debtor in equity, without a judgment at law or a garnishment.3 This case is called oneof preference, but it is really an act to hinder and delay creditors, and therefore a fraudulent conveyance. In another case it was held that a power given to the assignee to pledge the assets of the bank did not render the assignment fraudulent at law.4 Certainly, however, such a power would be void, whatever might be held as to the fraud in the assignment. Assuming, however, that the assignment is a valid one, a court will not take the assets from the assignee and give them to a receiver afterward appointed.5 The court, however, in the exercise of a chancery jurisdiction, might, if the receiver

81. But an assignment made after the appointment of a receiver, or proceedings therefor, is not good. State v. Bank of New England, 55 Minn. 139. But see, in Pennsylvania, In re Banking Co., 12 Phila. 469.

2 Preferences may be either expressly or impliedly forbidden. Compare Dana v. Bank of U. S., 5 Watts & S. 223; Bank Commissioners v. Bank of Brest, Har. 100; Shryock v. Bashore, 11 Phila. 565; Exchange Bank v. Knox, 19 Grat. 739, 8emble; Ex parte Conway, 4 Ark. 302.

3 Bank of St. Mary's v. St. John, 25 Ala. 566.

4 Montgomery v. Galbraith, 11 Smedes & M. 555. The reservation of a surplus after paying creditors is lawful. Dana v. Bank of U. S., 5 Watts & S. 223.

5 Garden City Banking Co. v. Geil-fuss, 86 Wis. 616. Under some statutes the approval of the court is required for the assignee's appointment. See Ex parte Banking Co., 84 Leg. Int. 204, 230, 12 Phila. 214, 469. When approved by the court, the receiver must turn over the assets to the assignee. In re Union was appointed and the assignee an improper person, substitute the receiver for the assignee, even though the assignment was not held to be fraudulent. But if the assignment was made after the appointment of a receiver or notice of proceedings therefor, the assignment would not prevail.6 The assignment, when expressed to be general, will convey all property of the bank, though it be not mentioned in the schedule.7 It transfers all the property of the bank, though checks are outstanding against the deposits, whether accepted or unaccepted;8 but in those states which recognize the presentation of a check as a sub modo assignment, the situation is peculiar. The courts speak of the check presented, where funds are to the credit of the drawer, as an assignment of the money. If that were true, the money in the bank to the amount of the check belongs to the holder of the check. But even an accepted check only creates the relation of debtor and creditor between the bank and the check-holder in these very states. So the relation of debtor and creditor must exist between the bank and the check-holder after presentation. Therefore the bank's assignment would transfer the money in the bank against outstanding checks in those states which speak of the check as an assignment.9 Under the national bank act an assignment for creditors by a national bank is a vain proceeding, because the comptroller at once takes possession.

Banking Co., 12 Phtta. 469. A stockholder may be assignee. Creditors may object, but cannot appoint. News v. Shackamoxon Bank, 16 Wkly. Notes Cas. 207.

6 State v. Bank of New England, 55 Minn. 139. '

7Eppright v. Nickerson, 78 Mo. 482. This is the general rule. This particular case is wrong in not admitting that the schedule is a part of the deed.

8Coates v. First Nat Bank, 91 N. Y. 20. This case was decided on the ground of an assignment, of which the check was considered merely a voucher. An accepted check dpes not appropriate any particular portion of the assets or create a special deposit. See note 4 to Sec. 163, ante.

9 This reduces the check to an assignment of a portion of a credit, or a partial assignment of a chose in action. This whole theory of the states spoken of above seems to be a case of what the biologist* call reversion to an antecedent type, to the idea that a depositor has money in the bank. This idea is noticed in daily speech. Thus, under bequests of ready money or money on hand, credit in the bank passes. Langdale v. Whitefield, 27.