Mechanics' and Metals Nat. Bank of City of New York v. Ernst

Citations

• 231 U.S. 60
• 34 S. Ct. 22
• 58 L. Ed. 121
• 1913 U.S. LEXIS 2613

Syllabus

<p>National City Bank v. Hotchkiss, ante, p. 50, followed to effect that the delivery by the bankrupt of securities to a bank to secure a clearance loan constituted an illegal preference..</p> <p>This court approves the findings of the court below that the bank knew of the impending bankruptcy when it demanded and accepted security for an existing loan.</p> <p>An unusual proceeding in the banking business, such as an officer leaving the bank and going to the customer’s office and demanding additional security for a loan made' earlier the same day, indicates knowledge of the impending bankruptcy of such customer,</p> <p>A general promise to give security on demand puts the creditor in no better position than an agreement to pay money and does not justify a delivery of securities after knowledge of- impending bankruptcy. It is an illegal preference.</p> <p>A deposit made after the bank’s officers have forbidden payment of cheeks against the bankrupt’s deposit account is a payment and a preference and a set-off cannot be allowed.</p>