I. The provision contained in the trust deeds, that the trustees should hold the securities assigned to them, in trust for the company, until default should be made in the payment of its bonds, was not in contravention of the provision of the revised statutes, which declares, that all deeds of gift, assignments; &c. made in trust for the use of the person making the same, shall be void as against the creditors, existing or subsequent, of such person. (2 R. S. 135.) (1.) It presents a different case from that which the statute was intended to provide against. (2.) The creation of a trust in its favor was not the principal object which induced the company to execute the trust deeds ; it was not even one of the objects. It was rather one of the incidental consequences of a transaction which, in itself, was legal. The bonds were not to be transferred until after the execution of the trust deeds ; and, until such transfer, the company must have had a resulting interest in the securities assigned. (3:) As soon as the bonds were transferred, the holder of them acquired an interest under the trust deeds, and the trustees became bound to hold the assigned property for the benefit of such holders, until the payment of the bonds. Before that event occurred, the trustees could not re-transfer the securities to the company. (4.) The object of the statute was to prevent the creation of a ndminal title in the grantee, where the *374real title was in the grantor, and it was intended to apply to casos where pretended titles were created for the purpose of avoiding the claims of creditors. According to its true spirit and meaning it does not, and was not intended to apply to a case in which the resulting trust is merely an incident, arising out of the nature of a transaction in itself legal and proper, and in which there is neither bad faith, nor fraudulent intent.
II. The trust deeds were not made with the intent to hinder, delay or defraud creditors, and are not void under the provisions of section one, title three, chapter eight, part two of the revised statutes. (2 R. S. 137.) The evident object and intent of the company was to enable itself to raise money to pay its debts ; and neither the assignor, nor the trustees, nor the cestuis que trust intended to hinder, delay or defraud the creditors of the company. The mere reservation of an interest in the securities assigned until default should be made in the payment of the bonds, does not, either by itself, or in connection with the facts of the case, show a fraudulent intent.
III. The trust deeds are not fraudulent and void under section four, title two, chapter seven, part second of the revised statutes. (2 R. S. 136.)
IY. At the time of the execution of the trust deeds the company was not insolvent within the meaning of the provisions of section nine, article one, title two, chapter eighteen, part one of the revised statutes. (1 R. S. 591.) (1.) The rule as to what constitutes insolvency under this statute, must, in some measure^ be governed by the circumstances of the particular case. The party making the assignments, irf this case, was a voluntary banking association. It had commenced its business upon a new system, with a very small and inadequate cash capital, tinder these circumstances it became necessary to obtain cash funds to enable itself to carry on a banking business. In order to do this, it resorted to means which its officers supposed would remedy the defects inherent in its organization, but which, as the result shows, proved ineffectual. Whenever its debts became due it was obliged to resort to loans, or other similar means, for the purpose of meeting them. This was the case from the *375beginning. But, although it had not available cash capital, it had securities upon which it could borrow, and had borrowed money sufficient to enable it to discharge its accruing liabilities. Such being the case, the same rule ought not to be applied to it for the purpose of testing its solvency, in the legal sense of the term, as would be applied to a merchant or trader’. It had succeeded in meeting its engagements up to the time of the execution of the assignments in question, and the proofs do not show that its assets were not sufficient at that time to pay all its debts. It was still carrying on its business, and it is evident that its officers had the confident expectation that it would be able to continue to do so. The letters of some of its officers which were relied upon to establish a different conclusion, contain earnest appeals to their foreign correspondents to assist the company in carrying out the scheme which it had adopted for the purpose of raising cash means, but they do not show that insolvency was contemplated. There was. no necessity for these appeals for assistance if the company had contemplated a state of things which would render such assistance of no avail.
Y. Assuming, as I think we are bound to do since the decision in the case of Gillet v. Moody, (3 Comst. 487,) that the provisions of the revised statutes in reference to assignments by moneyed corporations (1 JR. 8. 591, § 8) apply to banking associations, then the question arises whether the assignments called the million and first half million trusts were duly authorized by a previous resolution of the company. (1.) The resolution of the 6th January, 1840, was a sufficient authority for the execution of the million trust. (2.) After the passage of this resolution, it was deemed advisable, for good reasons, to make a change in the trustees, and to add the London trustees. This change was not inconsistent with the end and purpose of the original -resolution ;■ and, having been acquiesced in by all persons ■ interested in the company, and third persons having parted with their property upon the faith thereof, the receiver of the company should not be permitted to repudiate the acts of the trustees, and much less, to avoid the trust deed. (3.) The securities to be assigned were, by the resolution of the 6tli of *376January, 1840, to be selected, by the president, counsel, and second cashier of the company. Those officers were not limited as to the amount of securities, but were authorized to select an amount, “ as nearly equal to the amount of certificates as practicable,” which were to be held “ as an indemnity for the holders of the certificates.” The selection of a sufficient amount of bonds and mortgages to cover the difference of exchange between New-York and London, made, as appears, in entire good faith, was authorized by the true spirit and meaning of the resolution. The indemnity of the bondholders was the object of the assignment ; and if sufficient security had not been furnished to them, there would have been a want of good faith on the part of the company. (4.) But if there had not been a sufficient resolution of the board of directors, previous to the 30th of July, 1840, the resolution of that date made the assignment operative and valid from the time of its passage.
VI. The first half million trust was also duly authorized by the resolution of the 30th July, 1840, and became operative and valid from that date.
VIL The bonds of the company were not issued for the purpose of being loaned, or put in circulation as money, and are not within the prohibition of 1 R. 18. 719, § 7.
VIII. The act of 1840, (ch. 363, § 4,) which prohibits banking associations from issuing or putting in circulation any bill or note of the association unless the same be made payable on demand, and without interest, does not apply to the bonds which were negotiated in this case.
IX. The company had the right to borrow money, and to secure its payment, by giving its bonds in the manner that it did, secured by a pledge of its assets.
X. The company had the right to transfer its funds to Palmers & Go., in the manner that it did. (1.) The resolution under which the bonds were issued states that “ it is expedient, and the company are hereby authorized to issue nine hundred bonds,” <fcc. Xothing is. said about negotiating them ; and the recital in the trust deeds, that it was intended that they should be negotiated, did not require the company to negotiate them *377otherwise than it did. (2.) Beers and Murray had a right to, negotiate them; and having negotiated them for the company to its creditors, as security for their debts, such creditors are entitled to claim under the trust deed. (3.) The bonds were pledged with Palmers & Co., to secure them for advances made, and to be made, and as an inducement to them to make the advances. They were distinctly pledged by Murray, who was the general agent of the company, and was expressly authorized by the president to pledge them. The certificates of the company were falling due, and this was the only resource it had for discharging them. Palmers & Co. not only made advances, but they gave up state stocks. (4.) The pledge of the new bonds was in substitution for those which had been before pledged, and was legal, (5.) The pledge to Holford & Co. being for a debt due to them, and being made by Murray, the authorized agent of the company, was legal.
XI. The bonds ought not to be declared void on the ground of usury.
XII. There was a sufficient compliance with that provision of the statute which requires that a contract made by a banking association shall be signed by the president and cashier, in their signing the bonds without signing the indorsements.
XIII. The debts, for the security and payment of which the bonds were given, were valid. (1.) The fact that the money loaned by Palmers & Co. had .been secured by state stocks illegally purchased, or had been used to pay for such stocks, did not render their debt illegal. (2.) Neither the consent signed by Palmers & Co., nor the order made by the chancellor, precludes this court from inquiring into the validity of the debts of Palmer & Co.
XIV. The debts of the Philadelphia banks are valid.
XV. The million and first half million trust deeds, and the bonds mentioned in the original bill of complaint, are valid. The title and claim of the plaintiffs in the original bill in and to the mortgages and other property assigned to them by the said trust deeds, and to the avails and proceeds thereof, are valid. The holders of the bonds mentioned in the original bills. *378have a valid claim against the company, and are entitled to be paid the amount thereof, with interest, out of the securities assigned to the trustees. The trustees are entitled to a reasonable compensation for their services. The cross-bill should be dismissed. The costs of all the parties to the original and cross bills should be paid out of the securities and property assigned to the trustees, and a decree should be entered accordingly ; with such other provisions as shall be necessary to carry out the principles and conclusions above stated.
[New-York General Term, December 31, 1853.Edwards, Mitchell and Roosevelt, Justices.]