Opinion by
Keller, J.,
This action in assumpsit was brought by the appellant against the Sixth National Bank of Philadelphia, a national banking association, and its conservator duly appointed by the Comptroller of the Currency of the United States, to secure a preference for a savings fund deposit which he had made in said bank and attempted to withdraw after thirty days ’ notice of withdrawal. He appeals from the order of the court below refusing judgment for want of a sufficient affidavit of defense.
The facts appearing from the pleadings may be summarized as follows:
Plaintiff was a depositor in a savings fund account in defendant bank. Under the bank’s rules he was required to give thirty days ’ notice of withdrawal before he could obtain the money. On January 30, 1933 he gave written notice to the bank of his desire to withdraw the whole of said account. The deposit, under said rules, was withdrawable on March 1, 1933. On that day he went to the bank, which was open for the receipt of deposits and demanded payment of his sav
ings fund account, which was refused because the directors of the -bank, with the approval of the Comptroller of the Currency, had, on February 28, 1933, restricted the payment of all deposits, including saving fund deposits, which were in said bank at the close of business on February 28, 1933; and that thereafter said defendant bank was open for business only as respects receiving new deposits and paying out the same. This action was taken pursuant to the authority given by Congress on February 25, 1933, (47 Stat., c. 126; U. S. Code Title 12, ch. 1, sec. 15-1 — Mason’s U. S. Code Annotated — 12 U. S. C. A. sec. 1, Note — ).
Subsequently pursuant to the authority given by Act of Congress of March 9, 1933, 48 Stat. c. 1, Tit. II, par. 203; U. S. Code, Title 12, sec. 203,
a conservator of the bank was appointed, who, under the supervision of the Comptroller of the Currency, took control of
the bank and was in charge at the time of bringing this action. In the meantime, on February 27, 1933, the General Assembly of this State passed a concurrent resolution authorizing the Secretary of Banking of the Commonwealth, under certain conditions, not to take possession of banking institutions under his supervision which were unable to pay deposits in full, but to permit them to remain open on a restricted basis, which was duly approved by the Governor the same day, (Resolution of February 27, 1933, No. 4, P. L. 1546);
and in confirmation of such action, the
Act of March. 8, 1933, P. L. 9,
known as the Sordoni Act, was enacted, the preamble of which recognized the grave banking crisis, which had existed when the said resolution was passed and still existed at the passage of the act.
There is nothing in the Federal Constitution which prevents Congress, in legislating on matters within its sphere, from incorporating into an act a reference to the laws of the several states; or conferring upon the Comptroller of the Currency the same powers, with respect to national banking associations in any state, as are possessed by the state officials having supervision of banking institutions in that state, without enumerating them. The wisdom and necessity of such grant of authority is evident; for without it, national banking associations would be subjected to runs by depositors at a time when state banking institutions were on a restricted basis and not subject to such runs; and Congress had the power to grant the Comptroller such authority.
As to the general powers of the Comptroller of the Currency with respect to national banking associations, see Acts of Congress of December 23, 1913, c. 6, sec. 10, 38 Stat. 261; June 30, 1876, c. 156, sec. 1, 19 Stat. 63; R. S. sec. 5235; R. S. 5236; U. S. Code Title 12, sees. 1, 191, 193, 194. The powers of the Sec
retary of Banking with respect to banking institutions under his supervision are likewise very broad. See Acts of June 15, 1923, P. L. 809, secs. 20, 21, 22, 27, 29, 31, 36; May 5, 1927, P. L. 762, sec. 7.
Upon the Comptroller of the Currency authorizing a national banking association to go upon a restricted basis, in the same manner as a state banking institution located in the same state was authorized to do, the national bank, as respects its restricted deposits, was thereafter acting under the orders of the Comptroller and, to a limited degree, may be said to be under his control. The purpose of the enactment, — in conformity with the national banking system, (Davis v. Union Savings Bank, 161 U. S. 275, 284)— was to prevent any priority or preference among depositors; to secure to all depositors — in view of the bank’s immediate inability to pay depositors in full — a just and equal distribution of its assets, and prevent the very thing appellant is, seeking to secure by this action, to wit, payment in full to some and corresponding loss to others; and yet, at the same time, not absolutely close the bank’s doors and destroy its business and good will; in the hope that when the crisis was past and confidence restored and normal values were established, the bank could open generally and all depositors be paid in full.
Incorporated banks are peculiarly the subject of supervision by government. Laws regulate their incorporation, their receipt of deposits, their reserves, their conduct; provide for a preference of deposits over general debts; and, on insolvency,, or inability to pay all depositors on demand, secure the equal treatment of all depositors and prevent preferences in favor of some to the injury of the rest.
If the General Assembly — or the Congress, as the case may be, — in the banking crisis which existed in February and March, 1933, deemed it advisable to per
mit banking institutions, which, in the opinion of the Secretary of Banking — or, as respects national banks, the Comptroller of the Currency — were only temporarily embarrassed and not hopelessly insolvent, and were likely under favorable conditions to be able to resume normal business, to remain open only for the receipt and payment of new deposits, but to restrict temporarily the withdrawal of their existing deposits, it could lawfully do so. Such action, having in view the just and equal distribution of the bank’s assets among all its depositors, in the language of Chief Justice Fuller, in Merrill v. Nat. Bank of Jacksonville, 173 U. S. 131, 147, “involves no invasion of prior contract rights of any such creditor.”
If the defendant bank had closed its doors on February 28, 1933, and been taken over by the Comptroller of the Currency, the appellant would have had no preference over other depositors by reason of having given notice of withdrawal of his deposit.
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Opinion by
Keller, J.,
This action in assumpsit was brought by the appellant against the Sixth National Bank of Philadelphia, a national banking association, and its conservator duly appointed by the Comptroller of the Currency of the United States, to secure a preference for a savings fund deposit which he had made in said bank and attempted to withdraw after thirty days ’ notice of withdrawal. He appeals from the order of the court below refusing judgment for want of a sufficient affidavit of defense.
The facts appearing from the pleadings may be summarized as follows:
Plaintiff was a depositor in a savings fund account in defendant bank. Under the bank’s rules he was required to give thirty days ’ notice of withdrawal before he could obtain the money. On January 30, 1933 he gave written notice to the bank of his desire to withdraw the whole of said account. The deposit, under said rules, was withdrawable on March 1, 1933. On that day he went to the bank, which was open for the receipt of deposits and demanded payment of his sav
ings fund account, which was refused because the directors of the -bank, with the approval of the Comptroller of the Currency, had, on February 28, 1933, restricted the payment of all deposits, including saving fund deposits, which were in said bank at the close of business on February 28, 1933; and that thereafter said defendant bank was open for business only as respects receiving new deposits and paying out the same. This action was taken pursuant to the authority given by Congress on February 25, 1933, (47 Stat., c. 126; U. S. Code Title 12, ch. 1, sec. 15-1 — Mason’s U. S. Code Annotated — 12 U. S. C. A. sec. 1, Note — ).
Subsequently pursuant to the authority given by Act of Congress of March 9, 1933, 48 Stat. c. 1, Tit. II, par. 203; U. S. Code, Title 12, sec. 203,
a conservator of the bank was appointed, who, under the supervision of the Comptroller of the Currency, took control of
the bank and was in charge at the time of bringing this action. In the meantime, on February 27, 1933, the General Assembly of this State passed a concurrent resolution authorizing the Secretary of Banking of the Commonwealth, under certain conditions, not to take possession of banking institutions under his supervision which were unable to pay deposits in full, but to permit them to remain open on a restricted basis, which was duly approved by the Governor the same day, (Resolution of February 27, 1933, No. 4, P. L. 1546);
and in confirmation of such action, the
Act of March. 8, 1933, P. L. 9,
known as the Sordoni Act, was enacted, the preamble of which recognized the grave banking crisis, which had existed when the said resolution was passed and still existed at the passage of the act.
There is nothing in the Federal Constitution which prevents Congress, in legislating on matters within its sphere, from incorporating into an act a reference to the laws of the several states; or conferring upon the Comptroller of the Currency the same powers, with respect to national banking associations in any state, as are possessed by the state officials having supervision of banking institutions in that state, without enumerating them. The wisdom and necessity of such grant of authority is evident; for without it, national banking associations would be subjected to runs by depositors at a time when state banking institutions were on a restricted basis and not subject to such runs; and Congress had the power to grant the Comptroller such authority.
As to the general powers of the Comptroller of the Currency with respect to national banking associations, see Acts of Congress of December 23, 1913, c. 6, sec. 10, 38 Stat. 261; June 30, 1876, c. 156, sec. 1, 19 Stat. 63; R. S. sec. 5235; R. S. 5236; U. S. Code Title 12, sees. 1, 191, 193, 194. The powers of the Sec
retary of Banking with respect to banking institutions under his supervision are likewise very broad. See Acts of June 15, 1923, P. L. 809, secs. 20, 21, 22, 27, 29, 31, 36; May 5, 1927, P. L. 762, sec. 7.
Upon the Comptroller of the Currency authorizing a national banking association to go upon a restricted basis, in the same manner as a state banking institution located in the same state was authorized to do, the national bank, as respects its restricted deposits, was thereafter acting under the orders of the Comptroller and, to a limited degree, may be said to be under his control. The purpose of the enactment, — in conformity with the national banking system, (Davis v. Union Savings Bank, 161 U. S. 275, 284)— was to prevent any priority or preference among depositors; to secure to all depositors — in view of the bank’s immediate inability to pay depositors in full — a just and equal distribution of its assets, and prevent the very thing appellant is, seeking to secure by this action, to wit, payment in full to some and corresponding loss to others; and yet, at the same time, not absolutely close the bank’s doors and destroy its business and good will; in the hope that when the crisis was past and confidence restored and normal values were established, the bank could open generally and all depositors be paid in full.
Incorporated banks are peculiarly the subject of supervision by government. Laws regulate their incorporation, their receipt of deposits, their reserves, their conduct; provide for a preference of deposits over general debts; and, on insolvency,, or inability to pay all depositors on demand, secure the equal treatment of all depositors and prevent preferences in favor of some to the injury of the rest.
If the General Assembly — or the Congress, as the case may be, — in the banking crisis which existed in February and March, 1933, deemed it advisable to per
mit banking institutions, which, in the opinion of the Secretary of Banking — or, as respects national banks, the Comptroller of the Currency — were only temporarily embarrassed and not hopelessly insolvent, and were likely under favorable conditions to be able to resume normal business, to remain open only for the receipt and payment of new deposits, but to restrict temporarily the withdrawal of their existing deposits, it could lawfully do so. Such action, having in view the just and equal distribution of the bank’s assets among all its depositors, in the language of Chief Justice Fuller, in Merrill v. Nat. Bank of Jacksonville, 173 U. S. 131, 147, “involves no invasion of prior contract rights of any such creditor.”
If the defendant bank had closed its doors on February 28, 1933, and been taken over by the Comptroller of the Currency, the appellant would have had no preference over other depositors by reason of having given notice of withdrawal of his deposit. Its remaining open, with the approval of the Comptroller, but on a restricted basis, as respects deposits then existing, (see Com. ex rel. Attorney General v. U. S. Fidelity
&
Guaranty Co., 314 Pa. 140) did not give appellant a preference he, could not have had if it had closed, .nor secure him any advantage over other depositors existing at the close of business on February 28, 1933. The status of depositors at the close of business on February 28th remained the same after the opening on a restricted basis, pursuant to the authority of Congress of February 25th, extending to the Comptroller such powers as were conferred on the Secretary of Banking of this Commonwealth by resolution of February 27th.
That the action of the General Assembly of the State of Pennsylvania, which, by authority of Congress, the Comptroller was authorized to extend to national banking associations, was not an unconstitn
tional impairment of the obligation of contracts (Art. I, sec. 10) nor repugnant to the due process and equal protection clauses of the 14th Amendment of the Federal Constitution, is settled by the decision of the United States Supreme Court in Home B. & L. Assn. v. Blaisdell, 290 U. S. 398 (decided January 8, 1934, opinion by Chief Justice Hughes).
Furthermore, the record shows that the defendant bank is now,, and was at the time of bringing this action, in the custody and control of a conservator, an officer appointed by the Comptroller of the Currency, with the same powers as a receiver. The effect of such an appointment is equivalent to the appointment of a receiver. A state court has no jurisdiction to declare preferences as respects the moneys of a national banking association in the hands of a receiver or conservator. Upon the receivership of a national banldng association the federal law becomes the law of the distribution of the assets: 2 Morse on Banks and Banking, p. 1910 (6th Ed.); First Nat. Bank v. Selden, 120 Fed. 212; Steele v. Randall, (CCA 8th) 19 Fed. (2) 40.
The assignment of error is overruled and the order of the court below affirmed.