fate flf JSmtfj) Carolina, - CHARLESTON COUNTY. IN THE COMMON PLEAS, SITTING IN EQUITY. DABNEY, MORGAN & COMPANY, 1 VS. THE PRESIDENT AND DIRECTORS ■f-'i OF THE " ., V; CHARLESTON COUNTY, S. C. DABNEY, MORGAN & CO. vs. THE PRESIDENT AND DIRECTORS OF THE BANK OF THE STATE OF SOUTH CAROLINA, BAR- ING BROTHERS & CO., et al. Report of James W. Gray, Special Referee. To the Honorable the Judge of the Cireuit Court: The bill in this case was filed by Messrs. Magrath & Lowndes, Solicitors for Dabney, Morgan & Co., on the 30th day of Octo- ber, 1867. It sets forth, in substance, the charter of the Bank of the State of South Carolina, adopted by the Legislature of South Carolina in 1812, states the election, by the Legislature of the President and Directors, the acceptance by them of the charter, the supply of the capital by the State, and the fact of the issuance from time to time of notes or bills of the Bank re- deemable in specie. It charges that the Bank is insolvent, and claims in the alternative, first, that the capital and all assets and property of the Bank are primarily liable to the holders of the bills issued, and that these billholders are entitled to payment in full before the claims of other creditors can be considered, or, failing in this, secondly, that billholders are entitled to share the assets or property of the Bank pari passu, with other credi- tors. It refers to the act of 1838 for rebuilding the City of Charleston, and recites the 10th, 11th and 12th sections of said act. The bill of complaint alleges that the two millions of dollars added to the capital of the Bank by the loan effected under said act of 1838 are subject to the same conditions with the original 2 capital. It denies that the holders of the fire loan bonds and stock are properly "creditors" of the Bank at all under the act of 1838, or, if creditors, that they are entitled to any preference oyer other creditors, and least of all to any preference over bill- holders. The bill charges that the 11th section of the act of 1865, di- recting that the assets of Bank should be held " especially ap- " propriated, first, to the principal and interest of the bonds " known as the fire loan bonds payable in Europe; second, to " the payment of the principal and interest of the fire loan " bonds payable in the United States; and third, to the redemp- " tion of the outstanding notes hitherto issued by said Bank " is unconstitutional and void; first, as impairing the obligation of the contract raised by the charter of 1812; second, as violating the bankrupt act passed by Congress in 1866. „ The bill prays that " the President and Directors of the "Bank" as a corporation, and Charles M. Furman and Thomas R. Waring as individuals, answer the premises, and that they account for the capital, assets, and property in their possession. It prays further that the Court take possession of the said capital, assets and property, and distribute the same among the creditors, claiming priority for billholders. The President and Directors of the Bank of the State of South Carolina by their Solicitors, Hayne & Son, on the 3d day of February, 1868, filed their answer to the above. They answer, admitting the charter of 1812, its acceptance, the receipt of their original capital from the State, and the issuance from time to time of bills or notes made payable in gold or silver coin, and that the holders of bills are creditors. They deny that they are preferred creditors. They deny that the present holders re- ceived these notes " as money " or " in the expectation or hope " that they would be paid in coin." They allege that these notes were bought on speculation, after the insolvency of the Bank, and with the full knowledge of this insolvency. The answer alleges that the Bank, (being insolvent, and the assets being insufficient to pay all indebtedness,) when said assets are to be distributed by the Court of Equity, the billholders, as 3 creditors, can rightfully claim only in proportion to the amount actually paid for the bills. The answer further alleges that the said billholders, as well as other general creditors, are, however, postponed to the two first named classes of creditors, to whom preference was given by the act of 1865. It claims that a lien was created by the act of 1838 in favor of these classes, but that even if the " pledges " contained in the act of 1838 do not con- stitute a " lien " giving them a priority, to the exclusion of other creditors, that act certainly constitutes these classes, to wit: the fire loan bondholders in Europe, and the fire loan stockholders in America, " creditors " of the Bank. The answer refers to the endorsement on the bonds by the President of the Bank guaran- teeing, in the name of the Bank, the payment of principal and interest, in proof that these preferred classes were creditors, and creditors having peculiarly strong claims both on the State and the Bank. The bondholders and stockholders being bona fide creditors, the answer alleges that the Bank was under the then existing laws, authorized at its discretion, to assign its effects for the benefit of creditors giving a preference to these creditors over others. It alleges that the act of 1865, adopted by the Bank, or ac- cepted by the preferred creditors, was a statutory assignment. It alleges that such preferences impair no contract, and being consummated before the passage of the bankrupt act could not be affected thereby. The answer claims that the President and Directors of the Bank should be allowed to go on with the execution of the statutory assignment. The answer further suggests that the State should be made a party through the Attorney-General, and that the preferred creditors should likewise be brought in to defend their interests. C. M. Fur man and Thos. P. Waring, by Hayne & Son, Solici- tors, filed their respective answers on the 3d day of February ? 1868, denying any interest except as President and Cashier of the Bank, and adopting as their own the answer of the Bank. On the 25th day of February, 1868, a petition was filed by Hayne & Son, Solicitors, in behalf of Baring Brothers & Co., of 4 London, England, praying that they should be let in as parties defendants, and it was so ordered. On the 3d day of March j 1868, at the February term of the Court of Equity the follow- ing decretal orders were entered in the cause: " Upon hearing the bill and answer in this case, and 011 mo- tion of Magrath & Lowndes, complainants' Solicitors, and with the consent of Hayne & Son, Solicitors of the President and Di- rectors of the Bank of the State of South Carolina and of Baring Brothers & Co., and of I. W. Hayne and James B. Campbell, Solicitors for Maria Simons and Jane V. Bowly, Ex- ecutrix of Jane V. Hey ward, and Thomas Y. Simons, Solicitor of Arnold us Vanderhorst Dawson, holders of fire loan stock: It is ordered that the bill be amended by making the Attorney- General, in behalf of the State of South Carolina, he being now in Court and consenting, a party defendant, for the purpose of sustaining the validity of the act of 1865, referred to in the pleadings, and, also, by making parties defendant the firm of Baring Brothers & Co., who have obtained leave to answer as such, and, also, Arnoldus Vanderhorst Dawson, Maria Simons, Jane V. Bowly, Executrix of,Jane V. Heyward, holders of fire loan stock payable within the United States and as representing that class of creditors, and that upon the coming in of the answers of the Attorney-General in behalf of the State of South Carolina, and of Baring Brothers & Co., and of the aforesaid holders of the fire loan stock, made parties defendants, or an or- der obtained that the bill be taken pro eonfesso against them, the case at and after the first day of June next be referred to Mr. Tupper, one of the Masters, to inquire into and report on the matters set forth in the pleadings, and to take such evidence as the parties may offer in support of the matters charged in the bill, or denied in the answers, with leave to report any special matter. " 2. That the said Master, by public advertisement in one or more leading newspapers in the Cities of Charleston, Cincinnati, New Orleans, New York, and Augusta, call in any person or persons claiming to be creditors holding bills or notes of the cor- poration known as ' The President and Directors of the Bank of 5 the State of South Carolina' to make proof of their claims on or before the first day of June next ensuing. Also notifying by said advertisement all creditors residing in the United States holding State stock for which said corporation has been made liable by law, said stock being described in the pleadings as fire loan bonds ' owned in the United States/ to make proof -of the same within the same period. " 3. In all cases of persons claiming, whether said claims con- sist of bonds, fire loan stock or bank bills, due notice of the ap- plication to make proof shall be given to the parties to the bill and answers in these proceedings, or their Solicitors, and in all such cases where parties claiming shall hold or be possessed of any securities given and accepted as security for the claims by him or them made, such party or parties shall on presentation of such claims make a statement of such securities and their proba- ble value, and also a statement of the time when the claim or claims presented came into his, her or their possession, and the consideration paid therefor, that the same may be considered by this Court in determining the amount of such claims and the dis- position of such securities. "4. It is further ordered that upon the coming in of the answers of the Attorney-General in behalf of the State of South Carolina, of Baring Brothers' & Co., and of such parties in the United States holding fire loan stock as shall have answered in this case on or before the 1st day of June next, or upon order obtained against any such last mentioned parties, that the bill be taken as confessed, after service of process, to answer then the said 'The President and Directors of the Bank of the State of South Carolina,' Charles M. Furman, President, and Thomas R. Waring, Cashier of the said Bank, do account before Mr. Tup- per, one of the Masters, for the capital, property and assets of said corporation in their hands, under their control, (under such regulations as the said Master may prescribe,) to the end that the case may as speedily as possible be prepared for a hearing. "5. It is further ordered that to avoid multiplicity of suits and waste of the fund, until such hearing can be had and a de- cree rendered in this case, all the creditors of the said corpora- 6 tion, whether billholders, bondholders or claimants in any other form, are enjoined from all proceedings in law or equity against such corporation, its property or assets, except as par- ties to these proceedings. " 6. It is further ordered that in consideration of said injunc- tion of the creditors of said corporation from bringing suit against the same, the said corporation and the said Charles M. Furman and Thomas R. Waring are hereby enjoined, until the said hearing and decree shall be had and rendered, from paying over any portion of the assets (moneys deposited since Decern- ber, 1865, excepted,) of said corporation except for current ex- penses, including counsel fees and expenses of conducting the defence of this suit, to any creditors of the same, unless by special order of the Court, without prejudice, however, to the right of these parties to collect debts of the corporation and to change the form of assets in possession. " 7. It is further ordered that the parties to these proceedings now before the Court and those who may hereafter be made parties, have leave to apply to this Court for any additional order or orders, or any modification of the above orders which may become necessary in the progress of this cause, the above orders not being intended to conclude or in any way preclude the rights or equities of the parties to this suit. (Signed,) J. P. CARROLL. March 3, 1868." On the 25th day of March, 1868, a dedimus potestatem was issued to take the answer of Baring Brothers & Co. On the 3d day of April, 1868, the answer of Isaac W. Hayne, then Attorney-General of the State, was filed vindicating the propriety and constitutionality of the act of 1865, preferring certain creditors. On the 15th of April, 1868, the answer of Maria Simons and others was filed by their Solicitors, Hayne & Son, alleging that they were owners of certain stock of the State, issued under the 7 act of 1838, which, under the provisions of said act, was guar- anteed by the Bank, and claiming the benefit of said act as well as of the act of 1865. On the 20th day of May, 1868, the answer of Arnoldus Van- derhorst Dawson was filed by Simons & Siegling, Solicitors, to the same effect. The answer of Baring Brothers & Co., having been returned from Europe, was filed by Hayne & Son, Solicitors, on the 26th of May, 1868. This answer being on file and printed copies ready to be furnished to the Court and to all the parties inter- ested, it is deemed unnecessary to state its contents at length. It substantially confirms and amplifies the preceding answers, recites the 10th, 11th and 12th sections of the act of 1838, which reads as follows, to wit: " Sec. 10. It shall be the duty of the President and Directors of the Bank of the State of South Carolina to make proper pro- vision for the punctual payment of the interest of such loan as may be effected upon the credit of the State, under the provi- sions of this act, and also for the ultimate payment of the prin- cipal thereof. "Sec. 11. It shall be the duty of the President and Directors of the Bank of the State of South Carolina to cause to be opened in the books of the said Bank an account in which they shall debit themselves with the profits arising out of the additional capital created out of the two millions loan aforesaid, for the year ending on the 1st day of October, A. D. 1839, and with all the future profits of the said loan, as the same shall be herein- after annually declared, which said fund, with all its accumula- tions, shall be considered solemnly pledged and set apart for the payment of the interest on the said loan, and the final redemp- tion thereof, and it shall be the duty of the President and Di- rectors of the said Bank annually to report to both branches of the Legislature the exact state of that fund. "Sec. 12. When the profits of the said Bank of the State of South Carolina shall have paid the interest of certain stocks aud redeemed the said stock, for which they have heretofore been pledged and set apart, the said profits shall also be considered a solemnly pledged and set apart for the payment of the interest on the said loan and final redemption thereof." And said answer sets forth the form of the fire loan bonds, of the coupons attached thereto, and of the endorsements thereon as follows, to wit: "UNITED STATES OF AMERICA, 1 State of South Carolina, j £1,000 f Loan under An Act for Rebuild- <£1,0001 or ■< ing the City of Charleston. or > Stg. <£500 Five per cent. Stock. .£500 j No. By His Excellency Pierce M. Butler, Governor and Com- mander-in-Chief in and over the said State. " Be it known that there is due from the State of South Caro- lina to the President and Directors of the Bank of the State of South Carolina one thousand pounds (or five hundred pounds) sterling, lawful money of Great Britain, which sum of money the said State promises to pay the said President and Directors of the Bank of the State of South Carolina, or their assignees in London, on the surrender of this certificate on the first day of July, in the year of our Lord one thousand eight hundred and sixty-eight, (one thousand eight hundred and fifty-eight,) with interest thereon at the rate of five per cent, per annum, payable semi-annually from the date thereof, as it becomes due, on pre- senting the several warrants hereunto annexed, at the 'banking house of Baring Brothers & Co., in London. (Signed,) PIERCE M. BUTLER, Governor. (Countersigned by) Wm. Edward Hayne, Comptroller-General" [seal.] To the bonds were attached the following coupons, signed by the Cashier of the Bank, to wit: 9 " SOUTH CAROLINA STATE STOCK, Under an Act ratified 1st June, 1838. Baring Brothers & Co., London : Pay to bearer, on 1st July, 1839, twenty-five pounds (or twelve pounds ten shilings) sterling, being a half year's interest on Bond No. for XI,000 (or X500) sterling. (Signed,) C. M. FURMAN, Cashier of Bank of State of South Carolina." X25 or 1 Q, .612.108. }Sterh"g- On the bonds was the following endorsement, signed by the President of the Bank, to wit: u In pursuance of and by authority of an act of the Legis- lature of the State of South Carolina, ratified on the first day of June, one thousand eight hundred and thirty-eight, the Presi- dent and Directors of the Bank of the State of South Carolina, with a capital of three millions one hundred and fifty thousand dollars, (including the present loan,) for value received assign and transfer the within bonds to or bearer, and hereby guarantee the punctual payment of the principal and interest of the said bond, as it becomes due, at the place specified within. (Signed,) C. J. COLCOCK, President of the Bank of the State of South Carolina." The answers being now all in, a reference was called before James Tupper, Master, in accordance with the decretal order of Chancellor Carroll. Mr. Tupper is since dead. The following is an extract from his diary : "DABNEY, MORGAN & CO. vs. THE BANK OF THE STATE OF SOUTH CAROLINA. 1868. February 27—Proposed order of referew ;■ and to call in cred- itors reserved by Chancellor. March 3—Order to call in creditors and of reference. 2 10 March 16—Reference.—Advertisement under decree prepared for creditors to prove claims. March 17—First claims presented, through Solicitors. Inserted notice to creditors in papers, as required by decree. May 16—Reference.—Considered scheme of Master's report as to amendment to decree. May 18—Reference.—Report read and filed. May 19—Report submitted. Amended order granted by Chancellor. May 20—Reference.—Conference and conclusion on notice under amended order, and employment of Cashier of Bank to count and assort bills—6 Ref. B, 340, to wit: Mr. Hayne pre- sented order amending decree of 3d March, 1868. Following matters agreed upon : 1. That Master advertise in some papers the amended order of 19th May, 1868. 2. That Master employ T. R. Waring, Cashier Bank of State, to count and assort bills until 1st June and pay him $250. 3. That Bank advance costs incurred by Master for adver,- tising. Conference with Mr. Waring. He accepts above, he to give certificate to Master of amount presented; Master upon receipt of certificate to give claimant acknowledgment of deposit; state- ment of time and consideration to be filed with the Master. June 13—Reference.—Conference on means to pay Master for his advances. August 5—Thos. R. Waring handed in schedule of claims presented." The following are the report and order made and filed on the 19th May, 1868, alluded to in Mr. Tupper's diary: 11 "DABNEY, MORGAN & CO. vs. THE PRESIDENT AND DIRECTORS OF THE BANK OF THE STATE OF SOUTH CAROLINA. In Equity.—Report op James Tupper, Master in Equity- To the Honorable the Chancellors: Under the decretal order of Chancellor Carroll, filed in this case on the 3d March, 1868, all persons claiming to be creditors holding bills or notes of the Bank of the State of South Caro- lina have been called in by public advertisement in Cincinnati, New Orleans, New York, Augusta, and this city, to make proof of their claims on or before the first day of June ensuing. In response to this call claims to a large amount have been presented, and vouched b}T the production of the bills of the Bank. It has been submitted that this proof on the part of the bill- holders is not a sufficient compliance with the order of the 2d March, which order, it is claimed on the part of the Bank, re- quires each billholder to accompany his claim with a statement of the time when the bills were received by him and the con- sideration paid therefor. This construction is manifestly not the one placed upon the order by the claimants now before the Master, inasmuch as no one of these has presented proof of the time when he received the bills or of the consideration paid for them. The Master being himself doubtful whether the construction of the Bank is the correct one, submits respectfully the question to the Court. Should it be held that the time and consideration must be proved, then it would seem to be proper that the period be ex- tended, within which the said proof is to be rendered. (Signed,) JAMES TUPPER, Master in Equity. May 18, 1868. "On reading the report of Master Tupper in the above case, dated May 18, 1868, and it appearing that the notice of the motion has been given to the Solicitors of the billholders, on motion of Hayne & Son, for defendant, it is ordered that 12 with a view to remove the ambiguity suggested in the Master's report and to make it explicit, the true intent and meaning of paragraph 3 of the decretal order, signed by Chancellor Carroll 3d March, 1868., and referred to in the Master's report, the last provision of said paragraph, beginning with the words "and also," be amended to read as follows: "All persons presenting claims in the above case, including the holders of bills or bank notes, are required in addition to the proof of the claims to ren- der into the Master's office a statement, verified by affidavit, of the time when the same came into the possession of the holder, and the consideration paid therefor. It is further ordered that all parties who have presented or shall present their claims be- fore Master Tupper before the 1st of June shall be allowed until the 1st day of July next within which to supply the statement as to the 'time' the claims were acquired, and the ' consideration' paid for them. But nothing in the order con- tained shall be construed as extending the period for presenting claims beyond the 1st day of June. "It is further ordered that notice of the amended order and the extension of time be published by the Master in all the gazettes in which he has published the original order, and that he further give notice that neither the amended order or the order hitherto made are intended to conclude or in any way prejudge the rights or equities of the parties to this suit. (Signed,) HENRY D. LESESNE." May 19, 1868. The advertisements referred to were as follows published in the Charleston Courier, Cincinnati Commercial, New Orleans Picayune, New York Journal of Commerce, and Augusta Con- stitutionalist: The State of South Carolina, Charleston District.—Dabney, Morgan & Co. vs. the President and Directors of the Bank of the State of South Carolina. , In Equity. Upon hearing the bill and answers in this case it is ordered: 13 2. That the said Master, by public advertisement in one or more leading newspapers in the City of Charleston, Cincinnati, New Orleans, New York and Augusta, call in any person or persons claiming to be creditors holding bills or notes of the corporation known as " The President and Directors of the Bank of the State of South Carolina/"' to make proof of their claims on or before the first day of June next ensuing. Also notifying, by said advertisement, all creditors residing in the United States holding State stock for which said corporation has been made liable by law, said stock being described in the plead- ings as " Fire Loan Bonds," to make proof of the same within the same period. 3. In all cases of persons claiming, whether said claims con- sist of bonds, fire loan stock, or bank notes, due notice of the application to make proof shall be given to the parties to the bill and answers in these proceedings, or their Solicitors, and in all such cases where parties claiming shall hold or be pos- sessed of any securities given and accepted as security for the claims by him or them made, such party or parties shall on pre- sentation of said claims make a statement of such securities and their probable value, and also a statement of the time when the claim or claims presented came into his, her, or their possession, and the consideration paid therefor, that the same may be con- sidered by this Court in determining the amount of such claims and the disposition of such securities. (Signed,) J. P. CARROLL. March 3, 1868. Office of the Master in Equity, \ Charleston, March 16, 1868. J In pursuance of the order of Chancellor Carroll, made in the above stated case, extracts of which are now set forth, all per- sons therein referred to are hereby notified to make proof before me of their respective claims on or before the 1st day of June next ensuing, at my office in the City of Charleston. JAMES TUPPER, Master in Equity. 14 second advertisement. Bills of the Bank of the State of South Carolina.—Dabney, Morgan & Co. vs. the Bank of the State of South Carolina. Office of Master in Equity, \ Charleston, May 20, 1868. f The attention of parties who have presented or may hereafter present to this office bills of the Bank of the State of South Carolina is specially called to the following extract from an amendatory order made in the cause on the 19th May, 1868: 1. All persons presenting claims in the above case, including the holders of bills or bank notes, are required, in addition to the proof of the claims, to render into the Master's office a state- ment verified by affidavit of the time when the same came into the possession of the holder and the consideration paid therefor. 2. It is further ordered that all parties who have presented or shall present their claims before Master Tupper before the 1st day of June shall be allowed until the 1st day of July next within which to supply the statement as to the time the claims were acquired and the consideration paid for them. But noth- ing in the order contained shall be construed as extending the period for presenting claims beyond the 1st day of June. 3. It is further ordered that neither the amended order or the orders hitherto made are intended to conclude or in any way prejudice the right or equities of the parties to this suit. JAMES TUPPER, Master in Equity. Exhibit A gives a list of billholders who proved their claims. Exhibit B gives a list of fire loan stockholders. Exhibit C gives a list of other creditors. Exhibit D gives the statement of " time" when received and the " consideration " paid for bank bills. On the 15th September, 1868, an act was passed by the Legislature, entitled an act to close the operations of the Bank of the State of South Carolina, which contained among other things the following provisions, to wit: " That the Governor of the State is hereby authorized and 15 required for and on behalf of the State to take possession of all the real and personal estate, assets, choses in action and books of accounts of the corporation known as 'The President and Directors of the Bank of the State of South Carolina,' in whose hands soever found, and sell at public auctidn, at such times and on such terms as he shall deem most advantageous to the State, all the real and personal estate, stocks, bonds of the cor- poration, and other assets of the said corporation, and the per- sonal bonds, notes and bills of exchange owned by said corpo- ration, and all debts and choses in action due the said corpora- tion, he shall place in the hands of the Attorney-General of the State with instructions to institute, in the name of the said cor- poration, legal proceedings to collect the amount so due as speedily as possible, and the proceeds of said sales, and all col- lections made by the Attorney-General shall be deposited in the Treasury of the State, subject to the order of the Governor, who shall keep a distinct account thereof separate and distinct from the other accounts of the State, and shall report the same to the next succeeding session of the Legislature. Provided always, that suits shall not be instituted upon any debts which in the opinion of the Governor and Attorney-General are valueless." A bill, I am informed, was on the 12th day of October, 1868, filed by Baring Brothers & Co. in the Federal Court, the pur- pose of which was to enjoin proceedings under this provision of said act. And a few days afterwards a rule was served on the President and Directors of the Bank of the State of South Car- olina to show cause why a mandamus should not issue against them, commanding them to deliver over the assets of the Bank to the Governor, according to the requirements of said act. This rule, upon argument before Associate Justice Willard, was ordered to be discharged, on the ground of the pendency of the suit of Dabney, Morgan & Co. in this Court. On the 13th October the American Bank Note Company, by C. II. Miles, Solicitor, filed their petition to be made parties defendant, with leave to file their claim for engraving notes, &c., and it was so ordered. 16 On the 10th and 19th days of November, 1868, Chancellor Lesesne at a regular term of the Court of Equity made the fol- lowing orders permitting certain parties to withdraw claims: " In Re—Dabqgy, Morgan & Co. vs. Bank of the State of South Carolina, et al. Ex parte—N. N. Marsh, M. Loth, M. C. Mordecai and the Graniteville Manufacturing Company. On motion of Porter & Conner, Solicitors for parties above named, it is ordered that the said parties have leave to with- draw the claims and proofs, and withdraw from the case, for the purpose of funding said bills under the act of 1868. It is further ordered that upon the withdrawal of the claims and proofs that Mr. Thos. R. Waring who holds the bills as custodian for the late Master in Equity, Mr. James Tupper, do deliver to the said parties, or their counsel, the bills filed in their cases respectively. We consent. (Signed,) Hayne & Son. HENRY I). LESESNE. November 10, 1868. Dabney, Morgan & Co. vs. the President and Directors of the Bank of the State of South Carolina. In Equity. The General Assembly having passed an Act ratified on the 15th day of September, A. D. 1868, whereby provision is made for the funding of certain bills of the Bank of the State of South Carolina. It is, on motion of Simonton & Barker, representing certain of the billholders in the cause, ordered that any persons who have proved .their bills, under the orders heretofore made" herein, have leave to withdraw the same, upon surrendering the receipt and certificate given them therefor to Thos. R. Waring, Esq., who has been made the special custodian of said bills, and that upon such surrender the said Thomas R. Waring do de- liver their bills to the persons requiring them. We consent. el. P. CARROLL. Hayne & Son." 17 On the 23d day of November, 1868, Chancellor Carroll made the following order transferring the case to Master Gray: " Dabney, Morgan & Co. vs. the President and Directors of the Bank of the State of South Carolina, Baring Brothers & Co., et al. Upon motion of I. W. Hayne and J. B. Campbell, Solicitors for Baring Brothers & Co., it is ordered that the case be trans- ferred from the office of the late James Tupper, Esq., to J. W. Gray, Esq., Master. It is further ordered that the said Master Gray report what has been done in the cause before the late Master Tupper, and that he do such other and further acts in the premises, and take such evidence as to the nature of the case may require and re- port thereon to the Court, with leave to report any special mat- ter. (Signed,) J. P. CARROLL." November 23, 1868. On the 30th day of November, 1868, Chancellor Carroll presiding at the same term of the Court made the following further decretal order, to wit: " Dabney, Morgan & Co. vs. the President and Directors of the Bank of the State of South Carolina. The present motion is submitted by the counsel of Baring Brothers & Co., representing the fire loan bondholders in Eu- rope, and Maria Simons and others, representing the fire loan stockholders in America, who constitute the largest number of the creditors of said Bank, with the exception of those holding the bills of that institution. It appears that the Plaintiff's So- licitors were notified that this motion would be made. These gentlemen have not appeared and make no opposition. The motion may be considered then at the instance of the creditors of the Bank, without opposition from the corporation, or from any other quarter, except the Attorney-General, who seems, upon the present state of the pleadings, to be a party defendant 3 18 merely for the purpose of sustaining the validity of the act of 1865, referred to in the pleadings, by which act the creditors who make this motion were preferred in the appropriation of the assets of the Bank, made by the said act. In Thompson vs. Palmer, 2 Rich. Eq. R. 36, it is said when an executor or administrator come for the aid of the Court in administering the estate in his hands the Court should be placed in possession of the fund to be administered. ' We should not be required/ adds the Court, 1 to enjoin creditors from proceed- ing elsewhere, unless we are placed • in possession of the funds to which the creditors are entitled, so as to enable us to satisfy all the just rights with which we have interfered. In the case cited the suit was for the administration of an insolvent estate, and the purpose of the bill here exhibited is to have adminis- tered the estate of and effects of an insolvent corporation. The usual decree for an account or qupd computet is sufficient to war- rant the interference with proceedings at law.' Such proceedings are enjoined by the Court, ' because it considers the decree it has made in the nature of a judgment for all the creditors, and having taken the fund into its own hands it will administer it equitably and not permit the executor to be pursued at law.' Thompson vs. Brown, 4 John. C. R. 643, 3 Dan'l Practice, 1717, and cases cited. It is very well settled, says the Court, that when a creditor files a bill for discovery of assets, whether specifically for himself or jointly for all the creditors, and the Court by that means gets possession of the assets, the possession draws after it the entire distribution of the fund. Manigault vs. Deas, Bailey Eq. R. 297. According to the course and prac- tice of this Court in many instances, and perhaps ordinarily in cases of this character the executor or trustee is not required to pay or transfer the moneys or assets in his hands to the Master or commissioner, or to a receiver. If parties interested in the assets and effects are satisfied of the executor's or trustee's effi- ciency and fidelity, and of their safety in his custody, and are content that they shall so remain, the Court will not of its own motion interfere. But undoubtedly in such cases the assets and effects are held 19 by the executor or trustee subject wholly and exclusively to the order and disposition of the Court. It appears certainly from the proceedings in the cause, which have been adverted to, that the Court has assumed the control of the fund and has entered upon its administration. ' It has tied up every hand that could intermeddle with it and opened the doors of controversy to all making claims against it.' The assets of the Bank are undoubtedly ' a fund in equity.' They have become so by order of this Court, made by consent of all parties interested. They have been permitted to remain in the custody of Charles M. Furman and Thomas R. Waring, against whom process was prayed individually and officially as parties in possession when the bill was filed. The object of the motion is to secure, until a hearing of the cause and a distribution of the assets, the same custody which has been approved by the creditors, who alone are entitled to the fund. In sheer justice to the creditors whom it has enjoined, and in order that effect may be given to its final decree when pro- nounced, the Court is bound to guard against the assets and effects of the Bank being withdrawn from its control. Charles M. Furman and Thomas R. Waring, whether as President and Cashier or individually, though defendants, have no interest official or personal which could influence the impar- tial discharge of their duties. It has not been intimated that the fund is not entirely secure in the hands of Messrs. Furman and Waring. Nor does it appear that the fund wTould be safer in the hands of the Master than in the custody of those defendants, both of whom have executed bonds with securities for the faithful performance of their duties as officers of the Bank. If a receiver were to be appointed upon the terms of his executing the usual bond with adequate sureties required in such cases, it might well be doubted, in consequence of the pecuniary ruin which over- spreads the State, whether any person could be found willing to accept the office upon such condition. It is not deemed necessary or advisable to pass the order pro- 20 posed, and its purpose may be sufficiently and effectually accom- plished by enlarging the terms and operation of the injunction to which Messrs. Furman and Waring are made subject by the sixth paragraph of the order of the 3d March, 1868. It is ordered and adjudged that the defendants, Charles M. Furman and Thomas R. Waring, be enjoined, until the further order of the Court, from aliening, transferring, assigning, dis- posing of, or in anywise parting with, the possession of any portion of the assets or property of the corporation known as ' The President and Directors of the Bank of the State of South Carolina,' unless by the special order of the Court, provided that nothing herein contained shall be construed as conflicting with the provisions of the sixth clause of the order hereinabove re- ferred to of the 3d of March last. (Signed,) J. P. CARROLL." November 30, 1868. On the 24th day of December, 1868, the following order was made: " Ex parte, J. B. Campbell. It is ordered that it be referred to Master James W. Gray, Esq., to ascertain and report a proper retainer and compensation for Mr. Campbell's services in defence of the fund in Court, (the property and assets of the Bank of the State,) in the matter of the application for a mandamus in behalf of the State, already heard before Mr. Justice Willard, and also a proper retainer in the matter of the writ of error before the Supreme Court, to be paid out of the said fund. HENRY D. LESESNE." December 24, 1868. On the 30th day of December the following report was made, in pursuance of said order, to wit: " Ex parte, James B. Campbell. To the Chancellors of the State: This case was referred to me to ascertain and report proper compensation for Mr. Campbell's services in defence of the fund 21 in Court, (the property and assets of the Bank of the State, valued at half a million dollars or more,) in the matter of the application for a mandamus in behalf of the State, already heard before Judge Willard, and also a proper retainer in the matter of the writ of error before the Supreme Court. I respectfully report that the late Master Tupper, in his life- time, certified that a proper general retainer to counsel for de- fence in the original suit was one thousand dollars. I should adopt his estimate for the special retainer in this new matter, which certainly involved not less of professional responsibility and skill. But it appears the President and Directors who then had the custody of the fund, while recognizing their duty to defend it and employ counsel, were timid about the payment. They preferred that Mr. Campbell's compensation should be contingent upon success before Judge Willard. If the defence failed he was to receive nothing; if it succeeded, then he was to be paid a sum equal to the value of his services and the risk he took of not being paid at all. This is what I understand by their agreement that Mr. Campbell's compensation should be contingent upon success, and I think, as he put at hazard the one thousand dollars he was entitled to, and the fund would have saved that amount if his defence failed, that he should be paid double—say two thousand dollars for this service. As to the proper retainer for the writ of error, I recommend that no further arrangement to make that contingent upon sue- cess be allowed, but that a proper retainer for this service be paid, which will be one thousand dollars. I therefore recom- mend that there be paid to Mr. Campbell out of the fund two thousand dollars in full for the contingent fee agreed upon for the case before Judge Willard, and that the sum of one thou- sand dollars be paid in like manner as a proper retainer on the writ of error in the Supreme Court. Respectfully submitted. (Signed,) J. W. GRAY, Master in Equity." December 29, 1868. 22 Upon the coming in of the above report Chancellor Lesesne made the following order: " Ex parte, James B. Campbell. On hearing the Master's report the same is, on motion of Mr. Campbell, confirmed, and Messrs. Charles M. Furman and Thomas R. Waring, the special custodees of the fund in this case, are hereby authorized and required to pay therefrom the sum of three thousand dollars, as recommended by the Master, taking receipt therefor. (Signed,) HENRY D. LESESNE." December 30, 1868. Filed December 31,1868. The next day the following order was made, to wit: "On motion of James B. Campbell, Esq., it is ordered that the order filed in this cause on the 31st inst., directing compen- sation to be paid to the said James B. Campbell be extended to his associate, Isaac W. Hayne, Esq., and that the said Isaac W. Hayne be paid the same amount and in like manner. (Signed,) HENRY D. LESESNE." December 31, 1868. On the 31st day of December, 1868, the following order was submitted and adopted: " On motion of Messrs. Hayne & Son, it is ordered that it be referred to Master Gray to tax the costs accrued in the above case up to this date, and that so much of the said costs as shall be found to be due to the offices of the Master and Register, which offices expire this day, be paid to them respectively, and that the taxation of costs for the Solicitors be filed with the pleadings, to wait the result of the suit. It is further ordered that the said costs of Master and Regis- ter be paid from the money, to wit, the J of 1 per cent, col- lected from parties withdrawing notes from the Master's office 23 for the purpose of funding them, provided the amount col- lected thus be sufficient, and, if otherwise, that the deficiency be paid from the fund in controversy. (Signed,) HENRY D. LESESNE." December 31, 1868. The taxation was made and the amount paid to Mr. Gantt, the Register in Equity, and to the representatives of the late JV{aster Tupper. On the day of , 1869, the following decision, I am informed, was announced by Chief Justice Moses in the case of mandamus against the President and Directors of the Bank of the State of South Carolina, to wit: "THE STATE OF* SOUTH CAROLINA.) In the Supreme Court. \ The State ex relatione the Attorney-General vs. the President and Directors of the Bank of the State. Mandamus. This cause came on to be heard on the transcript of the record from Associate* Justice Willard, sitting in Chambers at Charles- ton, and was argued by counsel, on consideration whereof it is now here ordered and adjudged by this Court that the rule for the mandamus be dismissed, because so much of the act No. 17, entitled 'An act to close the operations of the Bank of the State of South Carolina,y as authorizes and requires the Gov- ernor ' for and on behalf of the State to take possession of all the real and personal estate, assets, choses in action, and books of account of the corporation known as the President and Direc- tors of the Bank of the State of South Carolina, in whose hands soever found, and sell at public auction at such time and upon such terms as he shall deem most advantageous to the State all the real and personal estate, stocks, bonds of the corpo- ration, and other assets of said corporation, and the personal bonds, notes and bills of exchange owned by said corporation 7 24 is in conflict with article 1, section 10, paragraph 1 of the Constitution of the United States, which provides that no State shall pass any law impairing the obligation of contracts." On the 19th day of March, 1869, the following order was made by Judge Carpenter, sitting on the equity side of the Court of Common Pleas, to wit: " It appearing that Etienne Poincignon and Archibald S. Johnson, Trustees, have filed their bill of complaint in this Court against the said the President and Directors of the Bank of the State of South Carolina, wherein they set forth a certain bond and mortgage held by them, executed by the said Presi- dent and Directors, and that a portion of said bond is now due and in arrear, and pray for a foreclosure of the mortgage and sale of the mortgaged premises, and that the proceeds of such sale be applied to the payment of the bond, and the costs of the proceedings thereon; and it appearing further that the said de- fendants, 'The President and Directors of the Bank of the State of South Carolina/ have filed a plea in bar to said bill of com- plaint, wherein they set forth the proceedings in the above en- titled case of Dabney, Morgan & Co., and the injunction therein, and that the said plea has been overruled and the defendants ordered to answer said bill of complaint. On motion of Hayne & Son, Solicitors for the President and Directors of the Bank of the State of South Carolina, Maria Simons, Jane Bowley and Edmund Bowley, her husband, and Baring Brothers & Co., defendants. It is ordered that it be referred to J. W. Gray, Esq., Special Referee, to take an account of the sum due and in arrear on the bond and mortgage aforesaid, as well as the sums to accrue thereon, and the time or times when the same shall fall due, and to report thereon to the Court, and that he report further whether it will not be to the advantage of all the defendants and creditors in this suit that Charles M. Furman and Thomas R. Waring, custodees of the fund, have leave to pay so much of the said debt as is now due and in arrear out of any of the funds or assets of the said ' The President and Directors of the 25 Bank of the State of South Carolina/ at this time, and that the sums which shall become due and in arrear hereafter shall also be paid in like manner when the same shall fall due, without a sale and foreclosure of the mortgage under the pleadings afore- said." (Signed,) R, B. CARPENTER." March 19, 1869. And on the 20th day of March, 1869, the following order was made, to wit: " Upon motion of Hayne & Son, Solicitors for ' The President and Directors of the Bank of the State of South Carolina,' it is ordered that the above entitled cause be referred to James W. Gray as Special Referee to ascertain and report what has been done in the same pursuant to the orders already passed thereon, and that the said Referee proceed with and complete the ac- counting ordered and begun under the said orders, and that espe- cially he take an account of the assets and credits of said Bank, with power to take testimony, and do and perform such other acts as may be necessary to prepare the cause for a final hearing and report thereon at the next regular (June) term of this Court. It is further ordered that the said Referee report a scheme for the sale and distribution of the fund in controversy among the creditors and claimants thereof, with leave to report any special matter. (Signed,) R. B. CARPENTER." March 20, 1869. I have thus recited, at length, all the proceedings in the cause, which appear to bear upon the questions made by the pleadings; but for the convenience of the Court and the coun- sel I append an exhibit marked E, taken from the file book of the Court, which cites all the papers filed in the cause to the date of the reference to me as Special Referee. Respectfully submitted with the schedules. (Signed,) JAMES W. GRAY, Referee. ' 4 26 EXHIBIT E. EXTRACT FROM FILE BOOK OF C. E. Dabney, Morgan & Co. vs. Bank of the State of South Caro- lina, et dl. October 30,1867—Bill for account, injunction and relief. Ma- grath '& Lowndes. January 24, 1868—Order pro confesso. Register Gantt. February 3, 1868—Order to set aside same. Ch. Carroll. Answer of President and Directors of the Bank of the State of South Carolina. Hayne & Son. Separate answer of C. M. Furman. Hayne & Son. Separate answer of T. R. Waring. Hayne & Son. July 22, 1868—Petition in re, ex parte Thos. J. McNesh and Joseph S. Baynard. Whaley, Mitchell & Clancy. July 25, 1868—Petition in re, ex parte Baring Brothers & Co. Hayne & Son. Order on above petition. Ch. Carroll. March 3, 1868—Order to amend and make parties of refer- ence and to call in creditors. Ch. Carroll. March 25, 1868—Order for dedimus potestatum. Master Tupper. April 3, 1868.—Answer of Attorney-General of South Car- olina. I. W. Hayne. April 16, 1868—Joint and several answers of Maria Simons, et at. Hayne & Son. May 18, 1868—Petition of Joshua and Thos. Green in re: May, 19, 1868—Report. Master Tupper. Decretal order. Ch. Lesesne. May 20, 1868—Separate answer of A. V. Dawson. Simons & Siegling. May 26, 1868—Dedimus potestatum and return answers of Baring Brothers & Co. Hayne & Son. October 13, 1868—Petition of American Bank Note Com- pany. C. R. Miles. Order on petition. Ch. Lesesne. November 10, 1868—Decretal order for several parties to 'withdraw their claims, &c. Ch. Lesesne. 27 November 19, 1868—Petition in re. Hayne & Son, Camp- bel.1 & Seabrook, and Simons & Siegling. Decretal order for withdrawal of claims. Ch. Carroll. November 20, 1868—Order to take petition off file. Ch. Carroll. November 23, 1868—Order transferring case to Master Gray. Ch. Carroll. November 24, 1868—Decretal order in case of M. Loth. Ch. Carroll. November 30, 1868—Decree on appointment of Receiver. Ch. Carroll. December 11, 1868—Ex parte Isaac W. Hayne, Trustee. Isaac Hayne. December 18, 1868—Order granting leave to Hayne to prov- claim. Ch. Lesesne. Decretal order ex parte Jno. English with affidavit. Ch. Lesesne. December 24, 1868—Decretal order ex parte Jas. B. Camp- bell of reference. Ch. Lesesne. December 29,1868—Proof of claim of fire loan. Isaac Hayne. December 30, 1868.—Decretal order ex parte Miles Moran. Ch. Lesesne. Report ex parte Jas. B. Campbell. Master Gray. Decretal order ex parte J. B. Campbell. Ch. Lesesne. December 31, 1868—Decretal order to pay I. W. Hayne, counsel fee. Ch. Lesesne. Decretal order for taxation costs. Ch. Lesesne. March 19, 1869—Order of reference. R. B. Carpenter. March 20, 1869—Order of reference. R. B. Carpenter. I hereby certify that the foregoing is a correct copy of the original report in this cause of file in [seal.] this office. Witness my hand this 9th October, 1868. A. C. RICHMOND, C. C. C. P., Charleston County. [End of Part I of Report of J. W. Gray, Special Referee.]