Bank of St. Marys v. St. John, Powers & Co.

1. The note-holders of a foreign banking corporation, which has suspended paymbnt and become insolvent, may, without first obtaining a judgment at law, proceed in equity against the bank, its directors, stockholders, and agents; charging them with fraud and misapplication of the assets, and seeking a discovery and account. Such a bill may be maintained under the general powers and jurisdiction of the court, which regards the capital stock of the company, and all its assets, as a trust fund for the payment of its creditors, and the directors, stockholders and agents as trustees. 2. As against the bank, if the bill is verified by affidavit, and alleges that the bank is located in another State, and has property and choses in action in this State, it may also be sustained under the attachment law of 1846; and if it further alleges that the notes were issued and put in circulation in this State by the president, who is charged to be the principal stockholder and a non-resident, it is also well filed against him under that act. 3. When a bill in equity is filed, under the attachment law of 1846, against a debtor who is alleged to be a non-resident, the defendant cannot deny his non-residence. 4. If the president of a foreign bank is required by its charter to be a resident of the State in which it is located, he cannot, when sued by its creditors here, be heard to deny the character in which he held himself out to the world, nor aver that he W'as not qualified to hold that office by reason of his residence in this State. 5. The surrender to a bank agent of its notes, and the acceptance from him of his draft on a third person, is but the substitution of one security for another, and does not extinguish the original liability on the notes, unless the draft is drawn in good faith, and accepted as an absolute payment and discharge of the notes; and even if it was, through the fraud of the agent, accepted as an absolute payment, the fraud would prevent it from so operating. 6. If the defendant, after an irregular decree pro confexso has been entered against him, appears by solicitor, and makes motions in the cause, without objecting to the irregularities in the decree, he will be held to have waived them, and cannot take advantage of them on error. 7. A decree pro confexso will not be set aside to allow a plea to be filed. 8. If a bank allows its stockholders to withdraw its funds to the amount of their subscriptions, and to use them, without security, in their private business, such conduct is a fraud on its creditors, which renders the directors liable in equity for the amount so withdrawn, and each agent who participated in the fraud individually responsible for the amount traced to his hands and all profits made from its use. Í). An officer or stockholder of a foreign banking corporation, who issues and puts in circulation in this State its notes, is individually liable for their payment. — Olay’s Dig., p. 133, § 3. 10. If a bank, on the eye of insolvency, having notes out which it cannot redeem, and a large claim on a solvent stockholder for money lent, extends his debt by taking his notes, payable at two and three years, with its president as sole surety, — this is a fraud on its creditors, and they may proceed in equity directly against such debtor, without a judgment at law or process of garnishment. 11. When a firm is conducted under the individual name of one of the partners, the others, although they have given public notice of their interest in the firm, and are active, managing members, are dormant partners, and as such not necessary parties to a bill filed by the principal partner to enforce the payment of a firm debt from a debtor who contracted in ignorance of the dormant partners. (Goldthwaite, J., dissenting.) 12. Stock in a plank-road company is a chose in action, which maybe subjected in equity under the attachment law of 184,6. 13. When a cause is submitted at a regular term of the court, and held under advisement until vacation on request of defendant’s solicitor, the defendant cannot complain on error that the chancellor rendered his decree in vacation. lá. When defendants are held liable on the original bank notes held by complainants, they are liable only for the amount ol the bills and interest, and not for statutory damages on a draft which was substituted for the notes, and was protested for non-payment.

Appeal from the Chancery Court of Mobile. Heard before the Hon. J. W. Lesesne. This bill was filed on the 24th April, 1852, by St. John, Powers & Co. and John Henley, against the Bank of St. Marys, a corporation chartered by and located in Georgia, John G. Winter, a citizen and resident of Georgia, Joseph S. Winter & Co., John C. Holcombe, L. B. Moody, and Tarlefcon & Whiting- It alleges that complainants are the holders and owners of a bill of exchange for $20,000, dated at Bank of St. Marys, Columbus, Ga., April 5, 1852, drawn by Geo. W. Winter, as cashier of said Bank, on said Holcombe, payable to the order of John D. Carter, and by him endorsed; that this draft was accepted by Holcombe before maturity, was duly presented for payment at maturity, and, payment having been refused, was protested for non-payment, of which the drawer and endorser were duly notified ; that complainants, about 5th April, 1852, were the holders of $20,000 in bills purporting to have been issued by the Bank of St. Marys, payable on demand ; that they presented these bills for payment gt the said Bank, but payment was at first refused; that, 'after some negotiation with the officers of the Bank, they gave the said draft for the said notes, and the notes were thereupon surrendered; that the draft was received for the accommodation of the Bank, and on the express assurance of its officers that it would be promptly paid ; that said Holcombe was at that time the agent of said Bank, and of said Joseph S. Winter & Co., but his individual responsibility afforded no security ■whatever, and was not relied on by complainants in accepting said draft; that they accepted the draft on the positive assurance, and also on the expectation raised by the known relations subsisting between Holcombe and the other parties, that it would be paid out of the. effects in Holcombe’s hands, belonging either to the Bank or to Joseph S. Winter & Co. The bill further alleges, that the Bank of St. Marys was Chartered by the Legislature of Georgia in 1836, with a capital of $50,000, and located at St. Marys, a small town on the Atlantic coast, where it transacted business for several years; that while thus in operation it attracted the attention of John G. Winter, who in some way obtained control of its stock, and procured from the Legislature of Georgia a change in its location to Columbus; that, after its location at Columbus, its principal business was really conducted at Montgomery, Alabama, by John G. Winter and Joseph S. Winter & Co., in its name ; that John G. Winter is the president, has the entire charge and management of its affairs, and is the principal stockholder; that he has exercised his power and control over the Bank to carry on his own individual business, and that of J. S. Winter & Co.; that they issue the notes of the Bank at Montgomery, in all the operations of their business, and redeem them there at a small discount; that it is publicly known and understood that any business with the Bank can be transacted at Montgomery through the firm of J. S. Winter & Co.; that there are now in circulation in this State, of the notes thus issued at Montgomery, from the best information complainants can obtain, at least $500,000. It further alleges, that the charter of the Bank requires seven directors to be chosen, four of whom make a quorum, and limits the debts to three times the amount of capital paid in, and makes the directors individually responsible for any excess ; that it requires an annual election pf directors, who must be residents of the State of Georgia, and from them the president must be chosen ; that no election of directors has been known to have been held for several years past, and no board of directors has been summoned or consulted by the president for more than two years; that the president exercises an unlimited and unrestrained discretion in the management of all its affairs, and has used the name of the Bank as a device by which he could carry on the business of banking, and issue' bills for circulation in this State, against the policy and statutes of the State ; that the notes of the Bank held by complainants were issued by J. S. Winter & Co. at Montgomery, and were acquired by complainants in the regular course of business ; that the president and cashier of the Bank, at the time said draft was drawn on Holcombe, knew that it had no funds with him, and that J. S. Winter & Co., after the draft was drawn but before its maturity' withdrew from him all the effects which were standing in their names ; that John G. Winter and Joseph S. Winter & Co., through the means aforesaid, have acquired a large property in real and personal estate, stocks, &c., while the Bank has suspended payment, and become insolvent; that they are legally responsible for the debts of the Bank, because they have long since withdrawn from it whatever capital the Bank may have once had ; that they knew long since that the Bank had a fictitious basis, and that it would never redeem the notes which they were putting in circulation; that they are also liable to the creditors of the Bank for the sums which they have withdrawn from it, and for which they have never accounted; and that they have become legally and equitably bound to pay the said debt. It is further alleged, that the Bank of St. Marys is located in Georgia, and that John G. Winter also resides there ; that Holcombe, Moody, and Tarleton & Whiting reside in Alabama, and have effects of John G. Winter in their hands ; that Jos. S. Winter & Co. reside in Montgomery, and have effects of the said Bank in their hands, “ and are also liable to pay complainants’ debt, in the manner above stated, as parties and partners directly interested and concerned in the circulation of the bills of said Bank, as having used them for their own emoluments, without accountability or control, and as debtors of the Bank.” The Bank, John GL Winter, and Joseph S. Winter & Co. are particularly interrogated as to all the transactions between them, and the other matters charged in the bill; and the prayer is, “ that an attachment may issue to seize the effects that may be found in this State, either of the said John GL Winter or the Bank of St. Marys, in the hands of the parties to this bill, or elsewhere; that Joseph S. Winter & Co. be enjoined from disposing of the effects in their hands, or under their control, cither of the said John GL Winter or the said Bank; that the said Holcombe, Moody, and Tarleton & Whiting be placed under a similar injunction as to all the effects of the said Bank or John GL Winter, either individually or as a member of said firm ; that the said Bank of St. Marys and John CL Winter be decreed.to pay complainants’ draft out of effects attached under this bill, and if they are insufficient, that other process may issue to seize other effects of the said parties ; and that such other and further relief be granted as may be consistent with the case made by the bill, and with equity and good conscience.” The bill was verified by the oath of Newton St. John, one of the complainants, and an attachment and injunction were granted according to the prayer of the bill. A decree pro confesso, on publication, was entered against the Bank and John CL Winter, on the 26th July, 1852 ; and on the same day John GL Winter and Joseph S. Winter filed their answers. John GL Winter alleges that he-was a citizen of Alabama at the time the bill was filed, and also sets this up as a plea; and further alleges that he was not indebted to the Bank, and had none of its property or effects in his hands, except that he was liable to the Bank, as surety of Joseph S. Winter, on certain notes executed about the 1st April, 1852, payable in two and three years, the aggregate amount of which exceeded $100,000. Joseph S. Winter & Co. answer that they were not indebted to the Bank, but on the contrary the Bank was largely indebted to their firm. Holcombe’s answer admits assets in his hands belonging to Joseph S. Winter & Co. to the amount of $18,911, to the Bank $510 25, and to John GL Winter $48 18. Tarleton & Whiting denied all indebtedness whatever. The Bank afterwards appeared by solicitor, and sued out a commission to fake its answer; and subsequently moved to set aside the decree pro confesso, and for leave to file its answer, in wbicb it sets up, by way of plea, that a suit was commenced against it in Georgia, by John Henley, on the said draft, which resulted in a verdict and judgment in its favor. An amended answer was subsequently filed by Joseph S. Winter & Co., in which they allege, as a newly discovered fact, that James Earley and Thomas J. Moulton were interested as partners in the firm of John Henley, and were therefore necessary parties to the suit. The testimony in the cause is very voluminous; such portions as are material to the points here presented are stated in the annexed arguments of counsel, and in the opinion of the court. The cause was submitted for final decree during term time, but was held under advisement by the chancellor, and the decree subsequently rendered in vacation. The chancellor held, that the bill was well filed; that the defence set up by John G. Winter, as to his residence in this State, was not sustained by the proof, and, even if it were proved, could not avail him, because the grounds on which the attachment was sued out are not traversable ; that Moulton and Earley were not necessary parties to the suit; and that the complainants, on the case made by the pleadings and proof, were entitled to the relief prayed. He therefore rendered a decree in favor of the complainants, against the Bank, John G. Winter, and Joseph S. Winter & Co., for the amount of the draft, with interest and five per cent, damages thereon, and condemned the assets and effects attached to its payment. On this decree, and the other proceedings in the cause, numerous errors are assigned, for which see the argument of the appellants’ counsel. To show error in the decree we make the following points : W e say that there is no equity in the bill of complaint, either upon general principles of equity jurisdiction, or under the statute of 1846. ' 1. As to the equity against thd*Bank, independent of the statute of 1846 : The bill of complaint seeks'a recovery on a bill of exchange for $20,000, and if this cannot be done, then it seeks a recovery on the bank bills, given for the bill of exchange. So far as tlie Bank of St. Marys is concerned, this is, unquestionably, merely a simple contract debt, a lia. bility on the bill of exchange or on the bank bills. There is no judgment against the Bank ; and the Bank has not been dissolved. There are no funds, assets, or other property of the Bank, upon which the complainants have any lien or trust given, either by express contract, or by operation of law. It is not shown that the transaction on which the bill is filed took place in this State, unless the receipt of the bank bills here is of that character. And as to this, the complainants allege that this was an illegal transaction, both by the laws of Alabama and Georgia, and without authority from the Bank, or its directors ; that John G. Winter and J. S. Winter ecause they cannot find any of the property of tlie Bank, and therefore seek to subject the property of its directors, as the opposing counsel seem to think ; but they insist that the defendants used the Bank “ as a mere machine,” misapplied its funds, and that they are directly liable to them for their debt, as individuals. The Bank is a non-resident, and that would of itself be a.sufficient reason to allow the complainants to come into a court of chancery and treat the defendants as trustees holding their funds, without first obtaining a judgment against the Bank. A holder of a note endorsed may sue the endorser without proceeding against the maker, if he be a non-resident. Second: The defendants say that Earley and Moulton ought to have been made parties to the suit. Now it is well settled, that the holder of negotiable paper may sue in the name of a person having no interest therein; he may be regarded as a trustee. — Gage v. Kendall, 15 Wend. 640. It is no defence to an action, tha,t the property of the note is in a third person; unless the possession is mala fide, and may work prejudice to the defendant, the latter is not entitled to be heard on the subject. — Guernsey v. Barnes & Graves, 25 Wend. 411; 2 Sandf. Sup. C. Rep. 188. Nor is it a sufficient objection that the plaintiff in the record is not the party beneficially interested. — 9 Mete. 436. The holder of the paper has a right to write, over a blank endorsement, &c. — 11 Peters 84. It is the decision of our own Supreme Court, in Sawyer, adm’r, v. Patterson, that it is unnecessary to fill up the blank endorsement, even when the description of the declaration is that the note is endorsed to plaintiff. — 11 Ala. 526. The statute of 1837 does not extend to blank endorsements. See, too, 15 Ala. 834. The principle applies to proceedings in equity, as well as at law. Our proceeding is in some sense a proceeding at law ; we hold a negotiable' paper, and sqek to collect it; it does not lose its commercial character because we avail ourselves of a remedy in chancery. Besides, there were no equities between Moulton and Farley and the defendants; and if there had been, the complainants would have represented them. They were dormant partners, and need not have been joined. — Oollyor on Part. 4 ; Story on Part. 380 ; 3 Taunt. 34 ; 2 Verm. 65 ; Desha. Smith & Co. v. Holland, 12 Ala. 513. Third: John G. Winter answers that he is a citizen of Alabama. The allegations of the bill as to the non-residence of Winter are not traversable. The complainants having made the required affidavit, and given the necessary bond, are entitled to the extraordinary process of attachment, of which they cannot be divested. Bouvier defines an attachment to be “ a writ authorizing the officers of the law to seize the property of the defendant.” This is an attachment, whether granted by a court of law or equity. Then the decision of our Supreme Court in Middlebrook v. Ames, 5 Stewart & P. 158, and our statute of 1837, affirming that decision, must govern the attachment writ granted in this case. The statute applies to all attachments. The practice in our courts of law and of equity ought to harmonize. See the reasoning in the case of Kirkman et al. v. Vanlier, 7 Ala. 227. The statute of 1845-6 grants an attachment in chancery. Even if he could traverse the grounds of attachment, as to his non-residence, the proof is against him. Ho cannot do this — he must rely upon his bond if he is wronged ; but if he could, the proof is decidedly against him. Winter (John G.) answers that he resides in Montgomery. Even his own witnesses do not say that. Moody, his confidential agent, says either Montgomery or Coosa. His letter tp his son Joseph is adduced — carefully sealed up by a notary and laid away — and that some two years or more before the failure of the Bank, while he is acting as its president, under its charter, and in the face of the penal laws of Georgia. J. G. Winter was actually in Columbus at the time the bill of exchange was given to complainants, when the Bank suspended, and when the 'bill was filed and attachments issued, acting as its president; and we had the right to treat him as a citizen of Georgia. Fourth : A judgment is set up which was obtained in Georgia : 1st, the Bank qo right to offer the plea — it was ip contempt; 2d, the answers of defendants nowhere allege the judgment, and of course they can offer no such proof; 3d, the judgment was not final, and of course could not harm defendants, even if the plea was improperly overruled. It would be a wrong without an injury. — Prince’s Dig. 426 ; 2 Kelly 339 ; 4 Ala. 9. Fifth: We rely too upon the statute of 1845-6. Our bill rests finally upon both grounds. The equity of the bill is clear. The statute of 1845-6 is ample. It authorizes a levy upon equitable interests, &c. Sixth : As to the decree being rendered in vacation : The statute clearly authorizes it; the chancellor has until the next term, and was prepared to render his decree earlier.— Besides, by the agreement of counsel, the decree was withheld, and defendants’ counsel actually requested the chancellor to delay it until they could furnish their brief. This cannot now be set up as error. Every consideration, legal, equitable, and moral, is in favor of the complainants. The proceedings of the defendants are marked with fraud : they owe . the money ; they have misapplied the funds of the Bank, and appropriated them to their own use ; and they merely criticise the regularity of some of the forms of the court. The country ought to be able to look with confidence to the courts, especially to the highest tribunals, and repose with security upon their decisions, satisfied that they will be governed by manly sense, and by an unswerving regard to right, while they respect necessary forms. P. HamiltoN and D. Chandler, on the same side : I. As to the defence set up by the defendants below : 1. They aver that John G-. Winter is a resident citizen of Alabama, and that fact is sufficient to defeat the suit as to him. The suit was begun under the law authorizing attachments in chancery. — Pamph. Acts 1845-6, p. 17. That act is modelled upon the system authorizing attachments at common law : so far as the organization and practice of the courts permitted, the systems are the same. The non-residence of a debtor, when certified by affidavit, authorizes attachment from either court. The abuse of the process, ip either case, is guarded against by bond and security: the levy upon property by the sheriff, its sale, the issue of garnishment, and similar incidents, attach to each system. — Pamph. Acts 11; Clay’s Dig. 61. Under the earlier laws on this subject, it was indeed held, that the averment on which the attachment issued, might be traversed by the defendant. — 3 F'tew. B. 226. This decision was not unanimous, and was soon overruled. — Middle-brooks v. Ames, 5 Stew. & P. 168. This last decision was made al June term, 1833; subsequently, in 1831, the attachment law was amended, and the right to traverse was specifically denied : being a legislative approval of the decision of this court. The case, (5 Stew. & P. 158), then, becomes an authority for the construction of the act of 1846, and the traverse of the allegation on which the attachment issues, (in this case the non-residence of John G. Winter,) is not admissible. The defendant’s remedy is on the bond which the plaintiffs have given. In this view, the pleas and answers of John G. Winter, both to the original and amended bill, (for to both the answers are the same,) are inadmissible : they traverse an averment not traversable. The depositions offered by the defendants, were, for the same reason, objectionable, — they are confined to the point of non-residence. But, if material, the answers are not sustained. He asserts his residence to be in Montgomery county; the testimony, if admissible, shows his residence to be in Coosa county. The depositions of Joseph •S. Winter, George W. Winter, and Moody, are inadmissible: they are stockholders in the Bank of St. Marys, and are charged with participating in the frauds alleged to have been committed in its management. They are incompetent from interest. The weight of proof is in favor of the non-residence of the defendant. It comes from old and well-known citizens of Montgomery: while that of defendant comes from his sons, and employees, his cashier, his partner, his agent, his bookkeeper, and his lawyer ; and consists of his declarations, and a letter said to have 'been written, and which remains in his own custody or in such keeping that he can produce or suppress it; and the original of that has never been produced,, even to the commissioner who took the affidavit of the witness. There is no proof of actual residence in Alabama. No one swears to being at the house of John G. Winter in Alabama, or that he has ever seen it. — 11 Ala. 698. The answer is disproved in any event; for not a particle of proof exists in the record, that John G. Winter ever resided at Montgomery. When there he was merely a sojourner, either at an inn, or at the house of one of his sons. It may be that he had two domiciles: certainly one in Georgia, which the plaintiffs are justified in regarding as his residence. He had for years been a house-holder there, and engaged in agriculture, as well as in other business, located there ; he held an official position under laws of Georgia, which those laws declared could -be held only by a citizen of Georgia. — Prince’s Dig. Laws Ga. 138. He is estopped from denying that lie is a citizen of Georgia. — Ex parte Straffon’s Ex’rs, 10 Eng. Law & Eq. Rep. 279 ; 2 Conn. R. 223 ; 18 Conn. R. 153, 443. He acted as President of the Bank St. Marys, and complainants were authorized to take it he was rightly so ; and that involved citizenship in Georgia. — 3 J. J. Marsh. R. 700. At the time the bill was filed, he was in Georgia, and actively engaged about the business of the Bank, as its president. 2. After the case was prepared for hearing upon the answers first filed-, and the testimony all taken, the Winters obtained leave from the register to file an amended answer. This answer avers that Thos. Moulton and Jas. Earley were copartners with Henley, and interested in the bill of exchange sued on, under the style of “John Henley,” and should have been made co-complainants. Was it error to proceed to trial without making them complainants ? Appellees contend that Moulton and Earley were dormant partners. If dormant partners, though they might be proper, they are not necessary parties. — 11 Ala. 603; 12 ib. 513; 4 Cowen’sR. 717; 4 Wend. 628; Edwards on Parties, p.46, § 24, p. 56, § 47; Story’sPart. § 241, p. 374, n. 2; Story’s Eq. PI. § 241, n. 3; Coll, on Part. § 660-1, notes and authorities. The names of Moulton and Earley did not appear in the style of the firm, and there was no word of company attached to the name of John Henley, to indicate that others were concerned with him; they were dormant partners. — 2 Har. & Gill R. 159, 171; 5 Cowen534; Story on Part. § 80. In this case we have the assertion of these defendants, that they did not know these parties were interested in the bill of exchange. As to them, then, Moulton and Farley were dormant partners, within the strictest letter, and should not have joined in the suit. — 11 Ala. 603 ; .3 ib. 733; 6 Pick. 348. Further, to obviate any objection of this kind, it is submitted, the endorsement of the bill of exchange may be filled up at any time before or after suit brought, to any party, and thereby a sufficient interest will pass to sustain the suit (11 Pet. R. 81, 84) ; and the filling up need not actually be made ; it is sufficient that the right exists. — 8 Ala. 628 ; 15 ib. 834, 838 ; 11 ib. 523, 521; and see 9 Mete. 434, 436 ; 15 Wend. 640; 25 ib. 411; 2 Sandf. S. C. R. 188; 9 Martin 344. And as to the right of the party who has thus undertaken to sue, the defendants have no concern. — 9 Mete. 436; 2 Sandf. 188; 15 Wend. 610; 15 Ala. 839; 3 Madd. R. 91-8. 3. Another defence attempted to be made, is found in the pleading tendered in behalf of the Bank St. Marys, to-wit, that in a suit on this bill' of exchange, in the name of John Henley, against the Bank St. Marys, in Muscogee county, Ga., a verdict was rendered in favor of the Bank. This attempted defence of the Bank is destroyed by the transcript of the proceedings in that case, introduced by the complainants. That transcript shows, that while such a judgment was in fact rendered, its operation as a judgment was neutralized by an appeal as provided by the laws of Georgia. The provision of the law of Georgia is found in Prince’s Dig. 426. The operation of an appeal is to remove the whole cause to the appellate tribunal, with all its incidents: the former judgment has no force for any purpose (1 Bouv. Law Die., tit. Appeal; 2 Gall. R. 230; Conkling’s Aclm. 835; 17 Pick. 142; 20 Pick. 510); and so is the law of Georgia. — 2 Kelly’s R. 329. The complainants have therefore overthrown the defence proposed to be made by the Bank, or in its name ; so that, whether the chancellor erred or not, in refusing to receive that answer, it is shown neither the Bank nor any of the defendants have suffered any injury of which they can complain in this court: even if an error, it is error without injury. But it was no error. The bill was filed in April, 1852 ; the time to answer expired in June; it was extended by consent thirty days. A decree pro confesso was applied for in July. The bill was amended, and publication against the Bank applied for in August, 1852. Decree pro confesso on the amended bill was obtained in October, 1852. On the 21st January, 1853, the pleas of the Bank, which had come in under a commission, were opened by order of the court, and the Bank by its counsel moved that the decree pro confesso might be set aside, and offered the pleas as a compliance with the rule of practice. The court will observe, that the paper tendered by the Bank consists of two pleas, averring in substance the judgment of the Inferior Court of Muscogee county, Georgia, as a defence to the bill: not a single allegation of the bill is answered ; and the defence is offered solely in the form of a plea. It is the furthest removed from a full and complete answer; such as contemplated by the rule. — Clay's Dig. 351, § 39. A partial answer may, in some instances, be filed; but only in peculiar cases, where of necessity the complainant’s suit must fail. But in no case, after decree pro confesso, can a mere plea setting up a technical defence, not favored by courts of equity, be received — 22 Ala. 819. II. As to the case of the complainants : The case made by the bills original and amended, is entirely undefended, so far as merits are concerned. The defendants have chosen to rest upon such objections as they could pick up in the course of the suit; they have not attempted to shield themselves from the serious charges in the bill. As to them, by all the rules of equity pleadings, they stand confessed; there is not the first attempt at the denial of a single allegation in the bill. The proceeding was commenced under the act of 1846. — Pamph. Acts 17. The Bank is confessedly nonresident — is located in Georgia, and is indebted to citizens of this State. John G. Winter, was also a resident of Georgia, or must be taken as such for the purposes of this suit. The other defendants are before the court, as garnishees of the Bank, or its debtors; John G. and Joseph S. Winter are charged as being immediately liable to pay this debt, by reason of their connection with the* Bank in Georgia. It is contended, the bill is clearly sustainable under the statute authorizing attachments in chancery. The complainants go further, and assert that their case also falls within the ordinary jurisdiction of courts of equity ; and that they are entitled to decrees against the Winters individually, without reference to the mere fact of their being debtors of the Bank ; that the Winters are debtors of the Bank, and should be so held in a court of equity ; but that, in the eye of the law as administered in that court,, they will be held to be the Bank itself, and chargeable with the payments of the debts of the Bank, created as this debt was. The bill charges on these parties a course of dealing with the Bank, its issues, assets and credits, utterly regardless of any thing, other than their own private emolument; wherein the interest of the public was never thought of; and their own position, influence and advantages as trustees of a public institution, were perverted to' private ends ; the laws of this State disregarded and contemned, and the creditors defrauded. The proof sustains all the charges of the bill. The Bank of St. Marys, and John G-. Winter and Jos. S. Winter & Co., were one and the same thing. The Bank was moved to Columbus in 1845. The firm of Jos. S. Winter & Co. were established at Montgomery 'in 1845. The suspension of the Bank and the suspension of the active business of the firm were simultaneous. Of the $225,000 of capital stock, upwards of $180,000 stood in the name of John G. Winter ; how much of the remainder was held by him in other names does not appear. He was the president. The board of directors consisted of him, his two sons, Jos. S. and Geo. W. Winter, Moody and Wildman. His son, George W., was cashier ; the directors received their stock from him. Simultaneous with the establishment of Jos. S. Winter & Co. at Montgomery, the issues of the Bank began to enter into the currency of the country, till they formed much the larger portion of the currency. The firm of Jos. S. Winter & Co. dealt entirely in this currency. Their clerks were instructed to issue it in preference to other notes. Millions of dollars in its bills were issued by the Winters ; they were the chief agents in its circulation ; large amounts were on deposit with them; notes apparently new were constantly issued by them; notes are proved to have been signed by the president at their office in Montgomery ; the cashier, Geo- W. Winter, admits it may have been done once or twice, or perhaps oftener, and that notes so signed had been handed over to the firm and issued by them. Jos. S. Winter & Go. sent for and received the notes of the Bank, whenever they wanted them ; sometimes they came by mail, sometimes by a messenger, but generally by the railroad conductor ; and for all these notes trusted with them, and issued by them, Jos. S. Winter & Go. are never known to have given any securities. The cashier of the Bank refuses to exhibit the accounts of the Winters with the Bank; but admits they had large discounts and were profitable customers. He cannot or will not show when the directors met, or that they ever had any meeting : no proof that the board knew of the resolution to suspend specie payment by the Bank — that any minutes were kept, or that they were ever consulted in any of the operations of John G-. Winter, the president, though those things were required by the charter. — Prince’s Digest, 153. The board of directors were chosen by John G-. Winter, and. looked upon as an incum-brance — barely tolerated to keep the Bank under organization. All the proof shows that John G. Winter was the manager and controller of the Bank, and he so held himself out. . The entries on the books of Winter & Co. were reversed as soon as made; but when correctly stated.always showing large debts due to the Bank, which were balanced by fictitious entries. The identity of the parties is shown in the evidence of Holcombe. The Winters instructed the Bank to whom- to send its business in Mobile. The Bank draws its bill of exchange, and the cashier writes he has directed Winter & Go. to provide for it. The Winters continued their active agency in issuing the notes of the Bank to the last moment, and after its bill on Holcombe had been protested. In short, the allegations of the bill arc fully proven ; sometimes as strongly by the significant silence of the witness, as by his direct answers (vide the interrogatories put to Geo. W. Winter, and the answers of that witness). And this proof is obtained mainly from the friends and agents of the Winters themselves. There is nothing to justify or excuse the failure of the Bank to meet its obligations, under the management of John G. Winter and his board of directors. No loss by the Bank is shown — all loss is denied. No account is.given of the assets of the Bank, yet the Bank refuses to pay its debts, and has become insolvent. In June, 1851, the president and cashier reported to the governor of Georgia, that the Bank had in cash, assets, say §271,000; exchange maturing, §852,000; notes discounted, $120,000 — 743,000. When it failed, its debts were, bills, $355,000 ; deposits, §90,000 ; protested drafts, $140,000 — $585,000 ; surplus, $158,000. And for some of the debts due at the time of its failure, the testimony shows that John G. Winter has arranged, and has recognized his individual liability. The ignprance of John G. Winter of the amount of the debt of his son Joseph S. Winter to the Bank, in liquidation of which he joined that son in executing notes to the Bank, is edifying. He neither knows the amount, nor any circumstance connected with the transaction, but the date of the notes. The fact he does know is striking. How came that settlement of Jos. S. Winter with the Bank to be so nearly simultaneous with this transaction with -the plaintiffs ? How came there an individual debt of Jos. S. Winter, in place of a debt due by Winter & Co. ? or that any settlement at all was had ? Winter & Co. are the parties that are shown to have dealt with the Bank and obtained discounts in|it; and this settlement so opportunely made is the first .of any kind that has been hinted at as being made with either of that firm.— Such items as have leaked out of the carefully guarded dealings of these parties, are suggestive of explanation, which the defendants have declined to give. From the proof, the complainants insist the charges of the bill are fully established, and a case is made out, of the use without stint, and without accountability or control, by John G. Winter and Jos. S. Winter & Co., its president and one of' its directors, of the assets, issues, credit and property of the Bank of St. Marys, for their private and individual gain, while other stockholders, if any, and the creditors have been defrauded of their property. This is a breach of their duty for which they are liable in their individual estates. The president and directors of a bank hold the position of trustees ; the assets and property of a bank or any moneyed corporation of that kind, form a trust fund : and this fund, the directors or trustees are bound to administer for the use and benefit of the creditors and stockholders. This principle is fully sustained by the cases. — Wood et al. v. Dummer et al., 8 Mason’s Rep. 308, 311-313 ; Taylor v. The Miami Exporting Co., 5 Hammond 162 ; S. C. 5 Oond. Ohio Rep. 99, 101, 103 ; Robinson v. Smith, 3 Paige 222, 231,-2 ; Cunningham v. Pell, 5 Paige, 601, 612; Perry et al. v. Millaudon, 3 Louisiana, 568, 511, 585, 594. These are all cases of proceedings against the directors of corporations, to recover compensation for losses, caused by fraudulent or negligent management of the corporation funds — some are suits by creditors, others stiits by shareholders. Dudley v. Price, adm’r, 10 B. Monroe 84, 86, is a case by creditor against shareholder, for receiving dividends that should have gone to pay the plaintiff’s debt; the claim was sustained. The rule is, that the trust funds can be followed wherever they can be found — to whosesoever hands they may come, who had notice of the trust; directors and stockholders are chargeable with notice by virtue of their position. — 3 Mason 312 ; 10 B. Monroe 86; 1 Eng. Law & Eq. R. 234. The directors (says one of the cases) who willfully abuse their trust, or misapply the funds of the company, are personally liable as trustees to make good that loss, equally so, if they suffer the corporate funds to be lost or wasted by gross negligence. — 3 Paige 231 ; 5 ib. 612 ; 3 Louisiana 568; 2 Story’s Eq. § 1252 ; 2 Johns. Ch. 389 ; 1 Edward’s Ch. 513 ; ib. 84, 88. The bill is well brought in form. The Bank is made a party defendant, and the directors are alleged and proven to be still directors, holding office in the Bank — and are charged and proven to be the mere tools of John G-. Winter, and “men of straw” of his creation. The proper forum to administer relief in this case is a court of equity. — 15 Mass. 505, 522 ; 16 ib. 15 ; 12 Metcalf 371. If the case were, the Bank by new officers, in place of those charged with these breaches of trust, seeking to recover for the use of the Bank losses thus created, a court of common law might furnish relief. — 3 Wend. 130. But the same parties still remain in office and still control its assets. The stock of the Bank is shown to be almost exclusively the property of one man — and that man the party who has actually managed the corporation for the benefit of himself and his firm. Equity is the only tribunal that can administer adequate relief. — 3 Mason 310 ; 15 Mass. (522) 491. But in this case, the court, by the law under which it proceeds (attachment law of 1846) administers justice, according to the principles both of law and equity. . Certain facts give jurisdiction of the cause: these conditions do not -refer to the nature of the claim sought to be enforced, as legal or equitable, but authorize the court to administer a remedy, whether the claim on general principles be of legal or equitable cognizance.' — Act 1846, Pamp. Acts 17, 19. We have no special legislation on the subject of closing banks for breaches of.duty ; if such existed, .there is an abundance of facts to wind up the affairs of this Bank of .St. Marys over and over again.- — 6 Paige's R. 497, 509. Again; the bill charges, and the testimony sustains the charge, that John G-. Winter and his firm have engaged in the prosecution of a banking business, and in the issue and circulation of the notes of a foreign bank, in violation of the laws and policy of this State. Alabama has seen fit to declare that it shall not be lawful for any foreign bank. or corporation, by agent or otherwise, to- discount bills or promissory notes in this State (Olay's Dig., 133, § 1) except by the exclusive use of gold and silver coin, or bills issued- by domestic banks. — Act 1848, Pamp. Acts 81. She has also seen fit to forbid the issue of any notes for circulation as money by any company, or corporation, other than the chartered banks of the State.- — Acts 1839, p. $3. She has declared that “ every person who may be a partner or stockholder'' in such company or corporation, “shall be liable to the holder of any note, bill, bond or post note, issued, written or put in circulation,” by such company or corporation, for the amount of such note, bill, <fcc., which may be recovered by the holder before any court having competent jurisdiction.— Clay's Dig., 133, § 3. The answers of these defendants admit that they are the agents in this State of the Banb of St. Marys : the evidence is conclusive of their constantly and to large amounts issuing and putting -in circulation the bills of that Bank. They are confessedly stockholders and active managers of its affairs, and the. whole case shows such a connection of the Winters with the Bank, and such an agency about its business, that to hold them guiltless under the. law, would be to sanction a fraud upon tbe statute. It is contended, therefore, that these defendants, John G. and Jos. S. Winter, under the legislation of the State, and by their dealing with the issues of the Bank within this State, have made themselves personally liable to pay the debt, and that the decree was properly rendered by the chancellor declaring them liable. Atterberry v. Knox & McKee, 4 B. Monroe 90, 92, is an authority upon a statute of Virginia and Kentucky, similar to the Alabama statute, to show that the Bank of St. Marys falls within the prohibition of the law, and fixes the personal liability upon these defendants.