UNITED STATES SUPREME COURT DECISIONS ON-LINE

Under the statute of Louisiana relating to pledges of negotiable and other securities, which was in force in the year 1873, when the transaction in this case took place, the actual delivery of such securities was sufficient to constitute a pledge.

The bill in this case was filed by Casey, receiver of the New Orleans National Banking Association, against Louis Schneider, George Jonas, and Patrick Irwin, the original defendants, who were trustees for the New Orleans Clearing-house, to compel them to deliver up notes and bills receivable and other securities to the amount of $223,677.25, and other assets to the amount of $57,500, which were pledged to the said trustees to secure the payment of clearing-house certificates issued to said bank to the amount of $199,000, from the 25th of September, 1873, to the time of its failure, Oct. 4 in that year, to enable it to settle its daily balances and exchanges with the other banks of the city represented in said clearing-house. These securities were delivered to the trustees in pledge as aforesaid at or before the issue of the clearing-house certificates which they were intended to secure; and said securities, or the proceeds thereof, were, until the bringing of this suit, kept by the trustees in their own possession for the purposes for which they had been pledged.

The articles of association or agreement under which this transaction took place were contained in an act passed before a notary public on the 24th of September, 1873, when the several banks temporarily suspended cash payments under the influence clubjuris

Page 96 U. S. 497

of the financial panic which then occurred. The following is a copy of the provisions of said act, which was signed and entered into by fifteen banks of New Orleans:

"Be it known that on this twenty-fifth day of the month of September, in the year of our Lord one thousand eight hundred and seventy-three, before me, Theodore Guyol, a notary public, duly commissioned and sworn, for the Parish of Orleans, State of Louisiana, and in the presence of the witnesses hereinafter named and undersigned, personally appeared the parties whose names are hereinafter subscribed, acting for and in the names of the banks and firms which they severally represent, who declared that in their several capacities they had made and entered into the following agreements and stipulations, which shall govern their mode of procedure for and during the thirty days ensuing the date hereof; Messrs. Louis Schneider, George Jonas, and Patrick Irwin are hereby appointed as trustees to act on behalf of the parties to this agreement, the said Louis Schneider to act as president of the said trusteeship. The said trustees are hereby empowered to issue certificates to each bank and banker, upon deposits of collaterals, to the extent of seventy-five percent of what the said trustees shall deem their par value, the said certificates to be called clearing-house certificates, and to be in sums of not less than $1,000, and not more than $5,000 each. The said trustees shall select a bank to deposit the collaterals lodged with them. The banks and bankers herein represented as parties to this act are hereby bound to issue only certified checks in payment of all sums over $25, and not to pay currency in sums exceeding $25 upon the checks of any depositor on the same day. The parties to this agreement shall use certified checks in the purchase of domestic or foreign exchange, and clearing-house certificates only in settlement of their daily exchanges and balances. All new deposits shall be payable in the same kind of currency as that deposited. The several banks and bankers herein represented are hereby bound not to increase their present line of discounts and to use all efforts to curtail their liabilities. In case, at the expiration of thirty days from this date, any of the parties to this act should fail to redeem the collaterals deposited by them as aforesaid, the said trustees are hereby authorized and empowered to sell and dispose of the said collaterals at private sale to the best of the interest of the parties interested and to apply the proceeds of such sales to the redemption of said certificates, the whole without any intervention of justice. This agreement being

Page 96 U. S. 498

made and entered into to prevent the drain of currency which would inevitably take place on the banks of New Orleans, it is understood that it shall not apply to gold deposits, which are to be paid and settled in the usual manner."

The court below dismissed the bill, and from that decree the receiver appealed here.