The opinion of the Court was delivered by
Moses, C. J.The decree of the Circuit Judge presents the issues on which his judgment was rendered, and the notices furnish the grounds of appeal on which its reversal or modification is asked. The question submitted for our consideration involves the mode in *147which the assets held by the Receiver appointed by the Court, for and on account of the corporation lately existing as the Bank of the State of South Carolina, admitted to be insolvent, are to be distributed among its creditors, and these may be divided into four classes:
First, the holders of the bonds issued under the Act of June 5th, 1838, for rebuilding the City of Charleston; second, the holders of the 6 per cent, stock, claiming by virtue of the same Act; third, the billholders of the said corporation; and, fourth, the depositors and general creditors.
The case has been ably and elaborately argued, and has received all the consideration which was demanded, more from a deference to the zeal with which the various claims have been pressed, than from any serious difficulty on the part of the Court in arriving at what it regards a just conclusion. It will be necessary, before proceeding further, to refer to so much of the history of the institution as relates to its establishment, and to the character of the claims which are before us for adjudication.
By the Act of 1812, 8 Stat., 24, a bank was established “on behalf of and for the benefit of the State.” All the stocks then owned by the State, of any description whatsoever, and enumerated in the Act, the unexpended money in the Treasury, and all the taxes to be thereafter collected on account of the State — the last subject to the drafts on the part of the State, authorized by legal appropriation— were to constitute and form its capital, and was vested in the President and Directors to be elected by joint ballot of the Legislature. It was made a corporation and body politic, “and the faith of the State was pledged for the support of the said bank, and to supply any deficiency in the funds specifically pledged, and to make good all losses arising from such deficiency.” The corporation had the right to hold property, and the same to convey at pleasure; to sue and be sued. All the powers usually enjoyed by banking corporations were vested in the President aDd Directors. The whole capital having been contributed by the State, it was the sole owner and stockholder. By the charter, the income of the bank was to be a part of the revenue of the State, and the bills or notes of the corporation originally made payable, or which shall have become payable on demand in gold or silver coin, were to be receivable at the Treasury, either at Charleston or Columbia, and by all the tax collectors and public officers, in all payments for taxes or other moneys due. It is not necessary for the solution of the several questions *148before us, to refer to the subsequent Acts of the Legislature, which, from time to time, increased the capital of the bank, by requiring all public officers to deposit their receipts therein, or created loans upon which the corporation was to bank, except the Act of June, 1838, 7 Stat., 156, on which the fire loan bond and stockholders found their claim to a specific lien on the assets of the bank, which now alone consist of real estate, bonds, stocks and outstanding personal debts. The charter was to continue until May 1st, 1835. In December, 1833, 8 Stat., 67, it was extended to May 1, 1856, and in December, 1852, again extended to January 1, 1871, 12 Stat., 151.
By the Act of June, 1838, (7 Stat., 156,) entitled “An Act for rebuilding the City of Charleston,” the Governor was directed, “ in the name of the State, to issue bonds or other contracts, to be countersigned by the Comptroller General, not to exceed two millions of dollars — one million to be payable at the expiration of twenty years, and the other million at the expiration of thirty years — at a rate of interest not exceeding six per cent., for the purpose of procuring a loan, on the credit of the State, to re-build that portion of the city of Charleston then lying in ruins,” and it was enacted by the first Section thereof, “ that the faith and funds of the State of South Carolina be, and the same are hereby, pledged to secure the punctual payment of the said bonds or contracts, with the interest thereon.”
By the second Section, the Governor was authorized and directed to commission such agent or agents as the President and Directors of the Bank of South Carolina should appoint, which agent or agents were empowered to receive the said bonds and contracts, and to make all such arrangements as in his or their judgment may be deemed expedient for procuring the said money, and placing if to the credit of the State, subject to the draft or order of the President of the bank.
By the third Section, it was enacted that “ the money, when realized in Charleston, shall be deposited in the Bank of the State of South Carolina, and shall become a part of the capital thereof.”
The tenth, eleventh and twelfth Sections are quoted in full, as the Eire Loan bond and stockholders rely on them as creating a trust on their behalf, attaching on the assets now held for appropriation and distribution.
“Sec. X. It shall be the duty of the President and Directors of the Bank of the State of South Carolina to make proper provisions or the punctual payment of the interest of such loan as may be *149effected upon the credit of the State under the provisions of this Act, and also for'the ultimate payment of the principal thereof.
“ Sec. XI. It shall be the duty of the President and Directors of the Bank of the State of South Carolina to cause to be opened on 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 first day of October, in the year of our Lord one thousand eight hundred and thirty-nine, and with all the future profits of the said loan, as the same shall hereafter be annually declared, which said fund, with its annual accumulation, shall be considered solemnly pledged and set apart for the payment of the interest on the said loan, and the final redemption thereof; and it shall be the duty of the President and Directors of the said bank annually to report to both branches of the Legislature the exact state of that fund.
“Sec. XII. When the profits of the said Bank of the State of South Carolina shall have paid the interest of certain stocks for which they have heretofore been pledged and set apart, the said profits shall also be considered solemnly pledged and set apart for the payment of the interest on the said loan, and the final redemption thereof.”
Though the bank was established “on behalf of and for the benefit of the State,” which held the relation to it as a sole stockholder, its obligations and responsibilities to its creditors are to be measured by the same standard which would be applied if it constituted a company representing the interests of individual stockholders. It can demand no privilege, immunity, or exemption by reason of its connection with the State, nor is it subject to a higher responsibility because it represents a State-as its only stockholder. In regard to its creditors, it can occupy no other position than a corporation composed of private citizens.
It is claimed for the Fire Loan bond and stockholders that the 11th and 12th Sections of the Act of 1838, create a prospective lien upon the “fund” pledged in Section 11, and upon the profits in Section 12, to wit: the profits arising from the original capital of the bank after payment of certain debts for which said profits had been previously pledged, and which have been fully satisfied. It is not to be denied that a pledge maybe created by written directions to hold property to meet a specified demand, or to devote to a special and stated purpose the rents and issues of a particular estate. In fact, any contract, in writing, by which one engages, for a con*150sideration, that another may have the income or yield of either real or personal property, (in proper form to affect such property) or the profits of his stock, or other moneyed investment, will amount to such a devotion of that so set apart as the principal from which the rents, income, or profits were to accrue, as in equity will constitute a charge upon it. The principle, as in the case of a technical pledge, is not restricted to such property as may be in existence, but will extend to future earnings and income. The authorities referred to in the argument, leave no doubt of the position. It is necessary, therefore, to inquire, assuming that some pledge was thus made by the said Act, what was its character and extent ? • The word “fund” is used only in the 11th Section. The bank was required to debit itself with the profits arising out of the additional capital of the said two millions loan for the year ending on the first of October, 1839, and with all the future profits of the said loan, as the same should thereafter be annually declared, which said fund and its accumulations were solemnly set apart for the payment of the interest on the said loan, and the final redemption thereof.
The additional capital was not to remain in the bank, but was to be engaged in its usual business, the bank, however, being required to loan the applicants, for the purpose of rebuilding in the city of Charleston, the same amount of money, if so much was required. It was the profits arising out of the additional capital for the year ending October 1st, 1839, with all the future profits of the said loan, as the same shall be annually declared, which were to constitute the “fund.” These were not known, and could not be anticipated, and the bank was, therefore, properly directed to keep them in a distinct form, that their amount might at once be capable of ascertainment. The 12th Section gives the same direction as to the general profits of the bank, after the redemption of certain stocks for the payment of which they had been previously set apart. The fire loan bond and stockholders, however, contend, that even if the two million additional capital, under the construction to be given by the Court to the said Sections, cannot be included in the fund pledged for their debts, then, that the remaining assets of the bank represent its profits during its existence, and are covered by the lien of the fire loan debt, which must be wholly satisfied before any other creditor can have any share of them. The argument proceeds upon the ground that a pledge of the profits is a pledge of that out of which the profits are to arise: authorities are referred to for the purpose of showing that a devise of rents and profits is *151a devise of the land itself, and will carry the legal as well as the beneficial interest therein.
The application of the principle to devises, proceeded from the disposition of the Courts not only to effect, if possible, the purpose of the testator, but to give the devisee the bounty intended for him in a shape in which he could enjoy it, and to place at his command the direction and control of the very fund to the profits of which he was entitled. When the rents and issues are only given for a limited time, the rule does not seem to apply, for the reason of it ceases.—Earl vs. Grim, 1 John. Ch., 499. The doctrine has been extended to legacies and dividends, and interests instock and funds. It was held in Philips vs. Chamberlain, 4 Ves., 51, that where trustees were directed by a will, to pay the dividends and interests of certain stock and funds to the legatees, share and share alike, and the survivors of them, as they attained the age of twenty-one, &c., the whole interest passed to them. The rule has also been applied to deeds, as in Legrand vs. Hodges, 3 Brown C. R., 531, where it was held that “a covenant to appropriate one-third of the produce of a real estate to raise a sum of money, is not a mere personal covenant, suable at law, but creates a lien upon the land, and the covenantees are entitled to have it specifically performed.” In all the cases where the principle is enforced, it is with the view of giving effect to the intention of the instrument, by requiring that.the right and use under it may be co-extensive with the design implied from its terms. It would, however, be difficult here to infer, that in an Act when the Legislature employed both the words “capital” and “profits,” apparently having in mind the well-established difference in their import, the use of the latter word in the said Sections was intended to convey, by way of pledge, not only the profits, but the capital itself. The rule is never so enlarged as to include that which is not covered by the immediate grant. If “an agreement, as to the produce of land, affects the land itself,” can it be so amplified as to include land of which the produce is not conveyed or pledged? So if the pledge insisted on under the Act of 1838, of the two million capital, or the profits which it has yielded, cannot be redeemed for want of a fund which can properly represent either, can the holders of the fire loan bonds and stock claim, by virtue of their lien, the assets now held for the bank, unless it can be shown that they are of the profits so pledged to them ?
By the 11th Section of the Act a distinct account of the profits of the additional capital was directed to be kept, which said fund, and *152its annual accumulations, were to be considered solemnly pledged and set apart for the payment of the interest on the said loan, and the final redemption thereof. So far from this having been done, according to the testimony of Mr. Waring, -the Cashier, although the requirement was brought to the notice of the President, it was purposely avoided. Though the net profits of the bank were annually ascertained, the practical sources from which they arose could not be distinguished. Before, therefore, these holders of bonds and stock under the fire loan could enforce their claim against the existing assets, it,would be incumbent on them to shew, that they in some way represent the profits pledged to them by the said 11th Section. If they cannot be distinguished, it is beyond their ability to do so. What practical advantage can they derive from the 12th Section, which they aver gives them a lien on all the profits of the bank, “when they shall have paid the interest of certain stocks and redeemed the stocks for which they have heretofore been pledged and set apart,” admitting that such payment had been made.
The bank is insolvent. Its capital is gone, and all that the corporation holds are the assets already referred to. In what view can they be considered as the representative of profits? Were they so regarded by the bank? In 1821, Stat. 6, 665, the Legislature provided “a sinking fund for the redemption of the 6 per cent, stock of the State,” and the bank was required to open an account in which it should debit itself annually with the profits, and the fund and its accumulations were set apart for its redemption. In 1852, 12 Stat., 150, the profits of the bank were directed “to be carried to the credit of the sinking fund,” and the account of the fund was to “be kept in such a manner as to shew, at all times, what particular bonds, notes, stocks and other securities, belong to the said fund.” Not only did the bank fail to keep such an account, but the sinking fund has never been distinguished from the capital, and was banked on in common with it.—Report of Comp. Gen. Harrison, Bk. Comp., 692; Report of President Elmore, Ib., 533; Report of Invest. Com. of Legislature, 1841, Ib., 225; Report of President Furman, Reports and Resolutions of Session of 1863, 72, 73.
Notwithstanding the insolvency of the bank, it is yet claimed that all which remains in the shape of property to this once great moneyed institution, whose capital is not only gone, but whose assets are inconsiderable, when compared with the extent of its indebtedness, represent its profits.
There would, as it appears to us, be something anomalous, if not *153contradictory, in holding what may be left of value to an insolvent corporation as the representative of profits. If there were profits, no matter how small, how could there be insolvency?
“The word insolvent, unless controlled by the context, means unable to pay debts, in the ordinary acceptation of the phrase.” 2 Lindley on Partnership, 695. Le Blanc, J., in Bayley vs. Schofield, 1 M. & S., 353, says: “ I take it, insolvency, as it respects a trader, to mean that he is not in a situation to make his payments as usual, and that it does not follow that he is not insolvent because he may ultimately have a surplus upon the winding up of his affairs.” Here, unfortunately, this long continued litigation in regard to all that is left of this corporation, plainly concedes the sense in which the term is to be applied. Its liabilities are largely in excess of its means to meet them.
The word profit presupposes an excess of the value of returns over the value of advances.— Lindl., 11. If the amount of the capital invested in a particular business is returned to its owners, while there is no gain, there is no loss. If it is returned increased, there is profit; but if it is swallowed up in the speculation in which it has been employed, though there may be assets left which were held while the capital was in active employment, still, if they are not sufficient to meet the engagements contracted in the enterprise to which the capital was employed, they can, in no sense, be taken as standing in the place of profits, which could never result from a profitless employment.
“In ascertaining the profits of a business, the value of the partnership property is to be found, and the original capital, with interest, (if necessary,) is to be deducted: the residue will represent the profits.”—Dunham vs. Bradford, 5 L. R. Ch. Appl. Cases, 519.
What are the remaining assets of the bank to be considered ? When a corporation is insolvent, as we have said in the State vs. Bank of the State of South Carolina, 1 S. C., 76, the fund supplied as capital no longer remains, that is to say, the amount which the stockholders advanced as capital is not in a shape or form to which the term, in its proper significance, can apply.
If A invests his whole estate of $10,000 in trade, and on winding up his affairs, finds that he owes $15,000, and has assets in value equal only to $5,000, the fund which constituted the capital of the business is exhausted, although the assets on hand were derived from the operations in which it was employed. We should, however, be rather inclined to the conclusion, that they represented the *154money of liis creditors which had been used for their acquisition. If it is asked, how can this apply to the State bonds lodged with the bank, as collateral security for the repayment of money advanced by the bank for the new State House, and the shares of the Charlotte & South Carolina Railroad, lodged also as security for advances made by the bank to pay the subscription of the State to that Railroad, the answer is, that the money used by the bank for such advances was of the funds for which it now stands liable to its creditors. In no case can they be considered the profits of the bank.
If a pledge was given by the Act of 1838, amounting to a specific lien, the subsequent legislation of the State, in 1839 and 1852, by appropriating the subject-matter already pledged to the fire loan, could not affect its validity. If the pledge amounted to a contract, it would be no sufficient answer, when its bond or stockholders sought to enforce it, that the debtor had pledged the same security to another creditor. Nor can the failure of the holders to take action be construed as an acquiesence on their part with the new direction of the fund already pledged to them.
The conceded solvency of the bank, with its prospect of so continuing, made it an object of little moment to the creditor how the Legislature interfered in the disposition of its funds, and no want of good faith can be attributed to the State, in attempting to divest securities already appropriated, for, by the charter, “ the faith of the State was pledged to the support of the bank, and to supply any deficiency in the funds specifically pledged, and to make good all losses arising from such deficiency.”
It is intimated, however, that the bondholders, under the fire loan, are not creditors of the bank. That its guaranty of the bonds, by the statement which appears upon them, must be referred to the power conferred on the bank by the Act, and whoever accepted them, did so with the limitation imposed on the extent to which the bank could guarantee them. We say intimated, because the objection was not pressed with an apparent confidence in its soundness.
It was competent for the bank to incur an obligation in the legitimate course of its business. It was incident to its powers, as a body politic, to enter into contracts not inconsistent with the purposes for which it was organized, unless forbidden by the charter. To say that it was restricted to those created by the issue of notes, would have so cramped and encumbered its administration that the *155end for which such corporations are generally organized, would, to a large extent, have been defeated. No one would doubt the right of the bank to transfer a note made payable to its order, and yet such an act would create a liability on its part. Here the loan to be raised was to be added to its capital, and it was to its interest to lend its name, as a guarantor, to effect a purpose which promised profits in its employment. But even if the guaranty was originally without authority, its recognition by the State, at various times, and on various occasions, has placed its validity beyond dispute.
Before we consider the effect of the Act of 1865, on the claims of the several classes of the creditors of the bank to the assets now held on its account, it is proper that we dispose of so much of the appeal on the part of the fire loan bondholders as submits error in the decree, in deciding “ that the Act of 1838 created a lien on the assets of the bank in favor of the fire loan stockholders, equal in all respects with the lien given by the Act to them.” While we hold' that by the terms of that Act neither the said bond or stockholders are entitled to the said assets under any appropriation or contract which confers a lien, we can distinguish no difference in their rights growing directly out of the Act itself.
The character of the fire loan stock is not to be determined by the fact that the money raised through it was never appropriated to the purpose which the Legislature contemplated. It constituted a part of the two millions directed to be borrowed, and if there were any assets which could be held subject to a lien, by the force of the Act, in favor of the bondholders, we do not see how the holders of the stock could be placed on any different footing in regard to them. The difficulty with those who hold that portion of the loan, which was issued in the form of stock, is, that they have no contract with the bank. It never guaranteed the payment of the stock, which, though “ a contract” under the Act, entered into by the Governor on behalf of the State, imposed no liability on the bank. In all the legislation of the State, in the reports of the President and Directors and of the investigating committee appointed by the General Assembly, it has been recognized as issued under the fire loan Act, and therefore protected by its provisions* The Act of 1840, 11 Stat., 130, refers to the stock “ as issued in virtue of the said Act of 1838,” and the certificate of it is required, upon its face, to exhibit that such stock has been issued under the provisions of said Act. Although not a debt against the bank, it w'ould have been entitled equally with the bondholders to the benefit *156of any assets which could be referred to the pledge under which both classes now prefer a claim.
If the Act of 1838 can not be held to establish a lien on the assets in the hands of the Court for distribution, then the bondholders claim that the 11th Section of the Act of 1865, 13 Stat., 267, is in itself a valid assignment of the effects of an insolvent debtor, and that by its terms they have a preference to the said assets. This is resisted by the fire loan stockholders, the bill owners and depositors. The said Section, after directing that the branches and agencies shall be closed, and that the principal bank at Charleston shall cease to be a bank of issue, authorizes and requires the President and Directors “ to collect the assets and property of the bank, and hold the same specially appropriated: first, to the payment of the principal and interest of the bonds, known as the fire loan, 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 redemption of outstanding notes hitherto issued by said bank.”
The legal title to the property of the bank was in the corporate body, the President and Directors. The sole stockholder is the State itself. The property, if not bound by a valid lien, may be disposed of by the bank in its corporate capacity. It is, however, but the agent of the stockholder, bound to execute his directions in the disposition of the fund which it holds, by and under his appointment.
A corporation has the same right to deal with its property through a conveyance, whether by actual sale or assignment for the benefit of the creditors, as an individual has. It is a right incident to ownership, and its exercise is not trammelled with any other conditions or restrictions than those which the law imposes. A preference, if fair and honest, may be given by an insolvent person to one creditor, to the exclusion of all others, and this right is not denied to a corporation, though without means to meet all its liabilities. “ A corporation, unless restricted by its charter, or prevented by the operation of some bankrupt or insolvent law, may, by virtue of its general power to contract, make an assignment of its effects, entire or partial, with or without preferences, if made bona fide for the payment of its debts.”—Abbot’s Digest Law of Corp., cases there cited ; Angell and Ames on Corporations, 155 and 156.
Is the Act of 1865 such an assignment as conferred a vested right on the creditors which it proposed to prefer, and, therefore, irrevocable on the part of the State, the sole stockholder of the corpora*157tion ? If it amounts, as is contended, to a statutory assignment which transferred the assets from the State to the creditors in the order prescribed, then the creditors took a vested interest beyond the power of a subsequent Legislature, either as to repeal or modification. If the fund has been transferred by the agent to the hands or dominion of the creditor, such transfer would have operated to change the ownership, and the power over it would have passed from the principal. Before, however, any express act of transfer or change of control, the mere expression of willingness, on the part of the creditor, to accept the disposition intended by the principal, would not so affect the relation of the principal to the fund as to deprive him of all power over it. While in the hands of the agent, unless affected by words sufficient to create a vested right, it is within the discretion of the principal to revoke the order for its disposition, or entirely to recall it. In Story on Agency, Section 465, where the author treats of the revocation of authority to an agent, it is said: “ So if it has been in part put in the course of execution, but not to such an extent as to become obligatory between the parties, as if preliminary proceedings only have been instituted.” From the passage of the Act to March 3d, 1868, the date of the injunction granted in this case, no action was taken by the President and Directors which changed the legal or beneficial interest in the fund, nor, up to that time, was there such an acceptance of its provisions on the part of the creditors proposed to be preferred by it which amounted to a contract that would preclude the State from further intervention between them and the bank in the administration of the said assets. The Act of September, 1868, 14 Stat., 22, by its 11th Section, in express terms, repealed the said Section of the Act of 1865, and unless it can be held to have vested a right, or constituted a contract, on the part of the State, with the creditors named in it, it was within the power of the Legislature not representing the sovereignty of the State, but in its capacity as sole stockholder, to revoke the authority to its agent to perform an act, which, while it remained unexecuted, did not change its control over the property to which it referred.
The statute cannot have the force and effect which is claimed for it as an assignment. The title to the assets was not in the State but in the bank. The direction was not to the President and Directors to execute an assignment by which the legal title was to be transferred, but was “to hold the assets especially appropriated to the payment of” certain classes of the creditors in a named order. The *158State may, by Act of the Legislature, divest itself of property and vest it in another. There are here, however, no words which shew an intent to deprive itself of all control of the fund. Mr. Justice Story, in Furman et al. vs. Jackson, 5 Peters, 594, says: “Whatever may be the inaccuracy of expression, or the inaptness of the words used, in a legal view, if the intention to pass the legal title can be clearly discerned, the Court will give effect to it, and construe the words accordingly.” Is there anything in the language employed in the statute which denotes an intention to change the legal ownership, and if this is not accomplished by the terms of it, how can it be said to amount to an assignment ? The Act of 1865, until executed, was but the assertion by the State “of its proprietory rights over the assets,” but was neither in design or effect a contract with the fire loan bond or stockholders.
Even if the preference sought to be derived from, the Act could be ascertained as applying to the classes of claimants who are in fact creditors of the bank, what can be said of so much of it as undertakes to “appropriate” the property of the bank to persons who do not stand in the attitude of creditors to it?
We have already said that, in our judgment, the holders of the fire loan stock were in no way creditors of the bank while they are creditors of the State. The assets of the corporation must be held, first, applicable to the payment of its own creditors. When, therefore, the State undertook to appropriate the property of the bank to the payment of debts for which the bank was not liable, but which the State contracted, and in which it alone was the debtor, it brought itself within the principle announced in Curran’s case, 15 How., 304, and which was adopted by this Court in the State vs. The Bank of the State of South Carolina, before referred to. It was an attempt to divest the property of the bank from the reach of its creditors, and to devote it to the payment of a debt contracted alone on the faith and credit of the State — to abstract it from the debts of the bank, and dedicate it to a debt of the stockholder for which the bank was not bound. It is not of consequence to consider how far this attempt to invade the rights of the creditors of the bank, by applying its property to the payment of creditors alone of the State, might tend to invalidate so much of the said Section as was intended for the benefit of the bank creditors, for, according to our view, no rights vested under it, and the enquiry is therefore immaterial.
The conclusion at which we have arrived, as to the claim of the bond and stockholders of the fire loan, under the Act of 1838, and *159of their several preferences under that of 1865, renders unnecessary a consideration of the grounds of appeal submitted on behalf of the billholders and depositors, save the seventh, which is in the following words: “ That whatever may have been the claims of the holders of the fire loan bonds, if the addition to the capital of the bank arising from those bonds had been left with the bank, when the State withdrew from the bank the whole amount that had been so deposited with the bank, as between the State and the bank, the primary liability for these bonds was with the State, and should have been so decreed.” The claim of the holders of the fire loan bonds to a share of the assets does not arise, as we have said, by virtue of any lien or pledge made by the Act of 1838. The liability of the bank rests on the express contract it made with the bondholders, by which it guaranteed the payment of the principal and interest. The withdrawal by the State of the whole amount raised by the loan, and which had been added to the capital of the bank, cannot change the character of the guaranty, or release the bank from the obligation which it imposed. The State was the primary debtor, the bank the guarantor, and it is not easy to conceive of any proceeding or even contract between the original debtor and the guarantor, which, without the express or implied assent of the creditor, could discharge the guarantor from the liability which he has assumed.
The Attorney General, as “attorney for the President and Directors of the Bank of the State of South Carolina,” and “ as Attorney General of the State of South Carolina,” appeals from so much of the Circuit decree as is embraced in the following words, to wit: “ But if the assets shall be more than sufficient to pay the fire bondholders and the fire loan stockholders, it is further ordered and decreed that the remaining assets in the hands of the Receiver be applied pro rata to the payment of the holders of the bills issued by the bank, the depositors and other creditors of the bank, subject, however, to the modification hereafter made.” We have not had the benefit of any argument in support of the said ground, and cannot well conceive bow it can be taken on behalf of the President and Directors, who, in their answer, “admit their liability at law for genuine unpaid bills, and if in funds to pay all indebtedness, would not hesitate to pay them when presented.’’
In the order of the Court in this cause, of the 3d of March, 1868, the former Attorney General was made a party defendant “ in behalf of the State, he being in Court and consenting, for the purpose *160of sustaining the validity of the Act of 1805,” and, in the answer which he filed, says that “ the general obligation of the bank to redeem its bills is admitted,” while he claims that the bank is bound to carry out the provisions of the Acts of 1838 and 1865. Nay, the very Act of 1865, to sustain the validity of which the Attorney General was made a party, recognizes the billholders as creditors of the bank, by applying the assets of the bank to their payment, but postponing them to the bond and stockholders of the fire loan. If we properly appreciate the point raised by this ground of appeal, it denies the right of payment from these assets to all creditors of the bank save and except those under the fire loan. If, then, the assets shall be more than sufficient for their satisfaction, what is to become of the surplus? Is it to be enjoyed by the stockholder of the bank ? He can have no right but to what may remain after all the debts of the bank are paid. What then is to become of it ? “Equity regards the property of a corporation as held in trust for the payment of the debts of the corporation.” * * * “Stockholders are not entitled to any share of the capital stock, nor to any dividends of the profits until all the debts are paid.”—R. R. Co. vs. Howard, 7 Wall., 409.
It is not perceived upon what possible ground it can be pretended that the property of a corporation having a right by charter to issue bills, and the property not bound by any lien, can be exempt from liability to meet them. The charter, as if to give additional strength to the obligation on the part of the bank, incurred by its issue, declared, in the 6th Section, that “bills or notes which may be issued by order of the said corporation, signed, &c., promising the payment of money to any person or persons, his, or her, or their order, or to bearer, though not under the seal of the said corporation, shall be binding and obligatory upon the same, in like manner, and with the like force and effect, as upon any private person or persons, if issued by him, her or them, in his, her, or their private or natural capacity or capacities, and shall be assignable and negotiable in like manner as if they were so issued by such private person or persons.”
Throughout the whole argument on the part of the holders of the fire loan, although they set up> priority in the fund held for distribution, it was not pretended-that the bill holders, depositors and other creditors did not have a right to any of the portion which might remain, after first satisfying the claims in favor of which a preference was averred. We fail to discover a single argument *161upon which such a proposition as is submitted by the said ground, can be maintained.
For the reasons given in the decree, we concur with the Circuit Judge in holding that the claimants of bills are entitled to the full amount of the face of said bills, without any regard to the price at which they may have purchased them. As to such as may have been issued by the bank under circumstances which show that they were not issued on a specie basis, they must be subjected to the same rules which apply to contracts which practically amount to Confederate transactions.
Depositors are creditors of the bank. They part with the title to their money, and loan it to the bank.—Thompson vs. Riggs, 5 Wall., 678. There may be an express contract, or one may be inferred from the attendant facts, that the title to the money deposited remained with the depositor ; but if nothing is said, or done, which may vary the general rule, a mere naked deposit changes the title to the money, and at once establishes the relation of debtor and creditor. Having in view the periods at which it appears some of the deposits were made, a qualification must however be attached, that if the money deposited was not accepted by the bank, with reference to a specie basis, the depositor will be entitled, in National currency, to only so much as his deposit in such currency was worth at the time it was made.
On the part of the billholders and depositors, it is claimed, that the right of the bondholder, as creditor of the bank by reason of its guaranty, should be qualified: “ 1st. By compelling him to show that his claim against the State will be either delayed or denied; and, 2d. That whatever sum he takes from the assets of the bank, the other creditors will be subrogated for that sum, to the claim of the bondholder against the State.”
It does not appear to us that the principles which, either at law or in equity, govern the relation between the guarantor and guarantee, can be exacted or enforced when the original debtor is a State, and beyond the reach of the process of the Courts. If the guarantor can set up a defense by reason of some failure on the part of the guarantee to pursue his rights against the principal debtor, through which has ensued a loss of some security which the guarantee held for his debt, it is on the assumption that the law has afforded adequate means to avert or prevent such loss. The process of the law, however, is powerless against the State. If it is the debtor, the arm of the Court cannot reach it. The creditor *162has no security but in its faith and pledge in its sense of moral obligation and of honor.
We do not say this because we perceive that the holders of the fire loan bonds have done anything in regard to their debt against' the bank, which, in anywise, deprives them of the full benefit of their guaranty, but simply for the purpose of indicating their position as to the principal creditor against whom they are without remedy through the Courts. And the inquiry is rendered entirely unnecessary, when it is remembered that the principal is the sole stockholder of the very corporation which has guaranteed the bonds.
The second ground, on which the proposition is rested, tvould seem to imply that the billholders and depositors have no claim against the State for what may remain unpaid to them out of the assets of the bank, a position entirely inconsistent with.that assumed both iu the bill and throughout the argument. If they and the bondholders have-valid and subsisting demands against the State, for the amounts unpaid, by reason of the insufficiency of the bank assets to meet the whole, what additional security would the billholders and other creditors have by beirg subrogated to the claim of the bondholders for the sums which they may receive of the said assets ?
In marshalling securities, “ the general principle is, that if one party has a lien on, or interest in, two funds, for a debt, and another party has a lien on an interest in one only of tho funds for another debt, the latter has a right in equity to compel the former to resort to the other fund, in the first instance, for satisfaction, if that course is necessary for the satisfaction of the claims of both parties wherever it will not trench upon the rights or operate to tho prejudice of the party entitled to the double fund.”—1 Story Eq., § 633; Walker vs. Covar, 2 S. C., 16.
The reason of the rule ceases where both the parties have a like and equal claim to both the funds, and such we regard the condition of all the creditors of the bank.
By the charter of 1812, “the faith of the State was pledged for the support of the bank, and to supply any deficiency in the funds specifically pledged, and to make good all losses arising from such deficiency.” The pledge for the support of the bank involves an obligation on the State, which had the supervision and control of its management to hold its capital and profits always ready to meet the liabilities, which, by virtue of its establishment, it had a right to incur; the engagement “to supply any deficiency in the funds *163specifically pledged,” was an undertaking that, in the event of a failure of the capital furnished (and referred to by the designation of “ the funds specifically pledged,”) to respond to the debts incurred by its own corporation, the State would make good “ the losses ” which might ensue. As if to leave no room, to doubt the real purpose and intent of the pledges so made, the sixth Section of the charter, wherein the State limits the debts which the bank shall at any time owe, and makes the Directors, in whose term an excess may happen, liable in their private capacities, nevertheless provides that such liability of the President and Directors shall not be construed to exempt the bank, or its property, from liability for such excess, nor their insufficiency to exempt “the State of South Carolina from being also liable for, and being chargeable with, the said excess,” the State here actually announcing its liability for debts of the bank, contracted in express disregard and violation of the charter.
In the opinion of the Constitutional Court, delivered in 1822, in the case of The State vs. Billis, 2 McC., 20, it is conceded that the faith of the State is pledged by the charter, in case of the insolvency of the bank, for the redemption of its notes. From the day of its establishment to the present moment, there has never been evinced a disposition on the part of the State, even by intimation, to repudiate its liability for the debts of the bank. The whole course of its legislation exhibits a contrary intent.
The moneyed relations between the bank and the State might well be said to have identified them. In fact, the treasury played but a secondary part in the financial affairs of the State. The bank was its cashier. By the Act of 1819, 6 Stat., 136, all payments by the Treasurers of the Upper and Lower Divisions were to be by drafts or checks upon the bank, while, on the other hand, by the same Act, no payment of money was to be made by any public officer in any other manner than by check or draft on the bank, “ so as to make it indispensably necessary for such public officer to deposit his money in' such bank, or its branches, previous to his making such payment.”
The State, from time to time, raised loans, by the issue of stock and otherwise, and pledged not only its own faitli but the capital of the bank and its annual profits for the payment of the interest, and the final redemption of such debts.
To refer to the many reports of the President and Directors, and of the Committees of the Legislature appointed to examine into and *164report on the condition of the bank, which directly admit the liability of the State for the debts of this corporation, established “ on behalf of and for the benefit of the State,” would only encumber this opinion with a repetition of the acknowledgment, never questioned, denied, or even qualified by a single Act or Resolution of the General Assembly.
A reference to one or two will suffice, for as was said in the argument, “the language of one report is the language of all.” In the report of the Committee made to the Legislature in December, 1841, (Bk. Comp., 221,)it is said, “and the extraordinary security for the management of the bank is contained in these words, ‘the faith of the State is hereby pledged for the support of the said bank, and to supply any deficiency in the funds specifically pledged, and to make good all losses arising from such deficiency.’ Thus this institution has in reality the whole resources of the State as its stay and support. It cannot fail in any event, though the State may suffer.” In the report of the Committee made in 1847, (Bk. Comp., 311,) it is said, “ There are some very peculiar features in the constitution of this Bank of the State, which it seems to your Committee not amiss at this time to bring more particularly to the view of your honorable body. This bank is in many respects an independent treasury. The funds of the State are in effect kept by herself, or by a corporation entirely under her control; * * * * * her assets are in her own vaults, and only to be used, so far as the theory of the establishment is concerned, for the benefit and at the will of the State.” In the examination of the President of the bank, which accompanies the report, he says: “Beyond those resources which the bank has within itself to convert its notes into coin, the State has added its pledge, in case of its failing, that it will pay off all its liabilities.” The Legislature, by a Joint Resolution, approved September 25th, 1868, raised a Committee of three “to enquire into the assets and liabilities of the bank,” with instructions “ to enquire into and report for what debts of said bank the State is liable.”—14 Stat., 158-9. On December 18, 1868, the report was made, in which it says that “ it (the bank) really and in fact had no independent existence from the State, but was really subject to and controlled by it. Truly it had a legal entity for business purposes, but was really nothing more nor less than the State engaged in banking business. The debts, therefore, of the bank, created during as well as prior to the existence of the rebel*165lion, were liabilities incurred in the name and on behalf of the State.”—Rep. and Res. of 1868, 14 Stat., 221.
The report proceeds to discriminate between the bills issued prior to and during the war, and as to the latter, holds them subject to the prohibition of the Constitution against “ debts contracted in behalf of the rebellion,” to which objection (passed upon by the Circuit decree) we shall hereafter refer. The General Assembly, by Act approved September 15, 1868, 14 Stat., 22, provided for the funding of the bills issued prior to December 20, 1860, in bonds of the State, with interest at 6 per cent., the interest payable semiannually, and the principal to be redeemed within twenty years after the date of the bonds, provided they were presented to the Treasurer before January 1, 1869. The decree pronounced in the case before us puts all the bills on the same footing, without regard to the date of their issue, holding that they are not affected by the amendment to the Constitution of the United States forbidding the payment by the seceding States of the debts contracted in aid of the war. If they are not subject in this regard to the prohibition in the amendment of the Constitution of the United States, they are free from the objection to the same effect in the Constitution of the State, and there being no appeal from so much of the said decree as holds them exempt from such inhibition it stands as the judgment of the Court.
The liability of the State for all the debts of the bank does not rest alone on its charter and the legislation which has so identified the State with the institution as to make it not only its monetary agent, with power to contract debts on its account, but its creature.
The Circuit decree rules as a question of fact, (and one which has not been disputed in the whole course of the long litigation,) “ that the State has drawn from the bank not only the whole amount arising from all sources which it ever contributed to its capital, with interest thereon, but is largely indebted to the bank besides.”
If the bank had been a corporation representing private stockholders, and on the dissolution, its stock, or the money arising from the sale and transfer of it, had been distributed among them, “ the established rule in equity is, that such holders take the fund charged with the trust in favor of creditors, which a Court of equity will enforce, and compel the application of the same to the satisfaction of their debts.”—Railroad vs. Howard, 7 Wal., 410, and the cases referred to. It is because the capital stock of a corpora*166tion constitutes a trust fund for the payment of its debts. If, then, the whole capital of this bank, with the interest on it, has not only been withdrawn from the corporation by the single stockholder, but he is found to be largely indebted to it, and the assets which remain are not sufficient to satisfy its outstanding liabilities, he must restore a sufficient amount to meet them. The property of the corporation must first respond to its debts.
The case of Curran vs. Arkansas, so often referred to in the argument, directly applies to the aspect of the case now under consideration. The other points made involved the question of preference among the creditors of the bank. This affects the relation of all of them to the stockholder, who has absorbed the whole capital, leaving them unpaid, and as was held in Curran vs. Arkansas, if the charter of a bank set apart a fund as capital, out of which debts are to be paid, it amounts to a contract with those who become creditors on the faith of it, that such fund thall not be diverted to other purposes.
That the State was the sole owner of the capital stock does not at all vary the relation of the bank to its creditors.
The State, as a stockholder, carried nó attribute of its sovereignty to this corporation, for whose engagements it became responsible.—The State vs. President and Directors of Bank of South Carolina, 1 S. C. R., 77. It is true that it is beyond the reach of any remedy that can be enforced by the process of the Courts, but this only adds additional weight to the moral obligation. In this case, it is not at least weakened by the fact that its own legal officer, with his consent, was made a party on behalf of the State, for the purpose of sustaining an Act by which the State undertook to dispose of the assets of the bank, its outstanding notes being specifically included among them, or that it afterwards admitted its liability for all the bills issued prior to December 20, 1860, in providing for their payment by its own assumption. The Circuit Judge, in his decree, says : “'In this case, the State has of its own will submitted to its Courts the decision of the issues involved. At the hearing, it was so announced by the Attorney General then representing the State.”
Not only has the present Attorney General directly, on the part of the State, submitted to this Court, by his appeal, errors in so much of the decree as directs the application of any of the assets of the bank, after paying the fire loan bond and stockholders, to the *167payment of the bills, but “an argument on behalf of the State” was heard from assistant counsel employed.
As was said by the Senior Associate, Mr. Justice Willard, in the case of the State vs. The President and Directors of the Bank of the State of South Carolina, to which Ave have referred, “ the State can neither be sued nor compelled to appear in its own Courts. When it enters the Court it does so voluntarily, and it is to be presumed, for the reason that some important object cannot be obtained except through the judicial arm of the Government.” The judgment of the Court cannot bind the State. It may be the medium, however, then the State is in the position of a party before it, of informing it of the rights which its own acts confer on others, and the obligations which, by reason thereof, rest upon it.
It is ordered and decreed, that so much of the Circuit decree as gives a preference to the fire loan bondholders and fire loan stockholders, in the payment to be made out of the assets of the bank, be set aside.
That the said assets be held for distribution among all the creditors of the bank in rateable proportion to the amount of their respective debts; any collaterals or securities held by any of such creditors, for or on behalf of the bank, to be accounted for by them.
That the claims by holders of bills of the bank, issued since Dec. 20, 1860, be subject to the conditions in this opinion expressed in relation to them.
That in taking the account of claims by depositors, the value in national currency to which they may be severally entitled, shall be assessed by the Circuit Court, not only Avith regard to the time at which the respective deposits Avere made, but to the facts and circumstances, (if any,) through Avhich any contract, express or implied, may have been created betAveen the bank and the depositors as to the money value for Avhich the bank was to be liable on account of such deposits.
That such parts of the Circuit decree as may not be inconsistent Avith the judgment of the Court, as expressed in this opinion, are confirmed.
That the case be remanded to the Circuit Court, for such orders as may be necessary to give effect to the judgment of this Court; the question of costs reserved for future decision by the Circuit Court.
Willard, A. J., and Wright, A. J., concurred.