Ralph J. Baker


Insolvency, no less than natural death, is a tragedy which comes into the midst of business transactions, fixing the claims of parties, and calling for the application of legal principles to determine the nature and extent of their rights. Perhaps no business relationship is more frequent than that of banker and customer or depositor. And while insolvency of banking institutions is happily less frequent than in the ordinary business, it is not so uncommon that questions therein are not often in the courts for adjudication. It would, therefore, be a natural deduction that the legal principles applicable should be comparatively certain, and the rights of bank depositors subject to automatic adjustment when occasion arises. However, a short time spent in looking into the books and cases shows that not only are the decisions at great variance, and the jurisdictions at wide points of difference, but a confusion of thought exists as to the proper principles to be applied. Certainty is essential, and it seems imperative that some general principles should be established to meet the questions which come from the incidence of insolvency at various stages in the completion of the transaction. It will be presently attempted to look into some of the many cases on a particular class of these transactions to see if some principles cannot be deduced upon which to rest a greater certainty of statement of rule.