Sacramento Bank v. Pacific Bank

GRAY, C. Appeal from judgment for plaintiff for the sum of $1,014.38 claimed to he due on the sixth dividend declared in favor of creditors by directors of defendant.

The appeal is taken on the judgment-roll, from which it appears that, when the defendant became insolvent and was placed in liquidation by proceedings of the hank commissioners in 1893, it was indebted to plaintiff in .the sum of $20,272.70 or thereabouts. The plaintiff presented its claim for that amount to the defendant and that defendant in due form allowed the [148]same. That from the defendant plaintiff has collected of this indebtedness, before the commencement of this suit, five dividends of five per cent each, or a total of twenty-five per cent of its original claim, amounting in the aggregate to about $5,071.-90; also from the solvent stockholders plaintiff recovered about $5,100, being the proportion of the remaining seventy-five per cent of plaintiff's claim due from them, leaving a little over $10,000 unpaid on plaintiff's original claim. After all these collections a sixth dividend to the creditors of five per cent was declared by the directors of the insolvent defendant, and the first question presented to the court in this case is, How should plaintiff’s right in that dividend be computed, and how much is plaintiff entitled to recover on account of such dividend? The trial court decided that plaintiff's share in the sixth dividend was the same as it had been in each of the first five dividends, and that it was entitled to five per cent of its original claim as it was before anything was collected. There is" no explicit statute or previous decision of this court to guide us in this matter, but I think the trial court reached a conclusion that is correct upon principle and is borne out by decisions of courts in other states on questions bearing a close analogy to those involved in this case. “If both the maker and indorser of a promissory note are declared bankrupts, the holder may prove the note for the full amount thereof against the estate of each, and the amount for which he may prove it against the estate of each cannot be affected by any dividends received from the estate of the other, except that the dividends received from the two estates will not in any event be permitted to exceed in the aggregate the amount of the note.” (In re Meyer, 78 Wis. 615; 23 Am. St. Rep. 435; Matter of Bates, 118 Ill. 524; 59 Am. Rep. 383.) In National Bank v. Porter, 122 Mass. 308, where the question was what the dividend against the indorser should be where the payee had already received fifty per cent of his note from the maker, the court says: “The plaintiff had received fifty per cent of his debt from the estate of the maker, but this was no reason why the defendants should not pay them the fifty per cent upon the whole debt as they had entered it upon their schedule. The plaintiff was entitled to the benefit of its double security. Where both maker and indorser are Hable,' the holder of a note may prove the