Argument for Plaintiff in Error. manner prescribed by Congress. There is a wide difference between the two, and that difference is effectual in favor of the contention of the plaintiff in error. We call attention with confidence to the case of Davis v. Elmira Savings Bank, 161 U. S. 275. In that case sections 5236 and 5242 of the Revised Statutes of the United States provided for the manner of the distribution of the assets of a national bank by the comptroller of the currency ratably among the creditors; but the State of New York, legislating upon the same subject-matter, provided by state statute for a different method of distribution, and instead of its being distributed ratably among the creditors, it provided for the preferential distribution under the law in certain cases. The court holds that there is a conflict between the spirit and letter of the two statutes, and that therefore the state statute must yield to the provisions of the paramount law. And, after a full citation of authorities and an exhaustive opinion, the court comes to the conclusion that the statutes of the State of New York conflict in letter and spirit with the statute of the United States, and therefore must yield. Now, it will be remembered that in section 5136 the language of the statutes may in some sense be called "general"; that is, it enables national banks "to make contracts," "to sue and be sued," "to complain and defend in any court of law and equity as fully as natural persons," "to elect or appoint directors," "to regulate the manner in which its stock shall be transferred," and other general matters relating to the powers of the bank; but when it comes to defining the kind of security that may be taken, the language ceases to be general and becomes specific, and, as has been shown above, every condition necessary to a valid conveyance is prescribed by the terms of the act itself. In this regard it is well said by Mr. Justice Field that in Cook County Bank v. United States, 107 U. S. 445, "everything essential to the formation of the banks, the issue, security and redemption of their notes, and the winding up of the institutions, and the distribution of their assets, are fully provided for." We respectfully submit to the court that in the case at bar Opinion of the Court. the provisions of the state law are much more antagonistic to the provisions of the statute of the United States, both in letter and spirit, than they were in the case of Davis v. Elmira Savings Bank. It might have been argued, and was argued, with equal force in that case, that the provisions of the statute of the United States were general in their character, and that the statute of the United States in making the distribution must have regard to the provisions of the state statute which gave savings banks, in certain cases, a preference. But the court held otherwise, and declared that there was a conflict in spirit, as well as in letter, between the two acts. How much more in the present case is there such conflict? As has been shown above, the provisions of the statute of the United States were not merely general but were specific in relation to security in land which a national bank might take and hold. The provisions of the state statute, if it is operative, forbid such holding in the cases pointed out in the insolvent law. Mr. William B. French for defendants in error. Mr. S. J. Elder filed a brief for defendant in error in No. 36. MR. JUSTICE WHITE, after stating the case, delivered the opinion of the court. Although these two cases were brought here by separate writs of error, they depend on the same facts and involve the same legal question, and were passed upon by the court below in one opinion. 159 Mass. 363. We shall, therefore, consider them together. The only Federal question for our consideration is whether there was conflict between the statutes of the United States and the provisions of the general law of the State of Massachusetts referred to and heretofore fully set out. Two propositions have been long since settled by the decisions of this court: First. National banks "are subject to the laws of the State, and are governed in their daily course of business far more by 362. Opinion of the Court. the laws of the Stned by the plaintiff in error amounts to the are governed and nal banks in virtue of the act of Congress and transfer of propy, as to all their contracts, from any and their liability to be su tate law. The argument that the conIt is only when the st discharging their duties bank for an antecedent debt, under part of a State to forbid the taking unconstitutional." Nationa be existence of a power in the Second. "National banks are of the proposition already l cases, begs the question, and eral government created for a pubiases already referred necessarily subject to the paramount authe States. It follows that an attempt by a State eting the national duties, or control the conduct of their affairs, is void, whenever such attempted exercise of authority expres conflicts with the laws of the United States, and either frustrates the purpose of the national legislation, or impairs the efficiencies of these agencies of the Federal government to discharge the duties for the performance of which they were created." Davis v. Elmira Savings Bank, 161 U. S. 275, 283. racts in gen invest These two propositions, which are distinct, yet harmonious, practically contain a rule and an exception, the rule being the operation of general state laws upon the dealings and contracts of national banks, the exception being the cessation of the operation of such laws whenever they expressly conflict with the laws of the United States or frustrate the purpose for which the national banks were created, or impair their efficiency to discharge the duties imposed upon them by the law of the United States. The provisions of the statutes of the United States upon which the plaintiffs in error rely are as follows: "A national banking association may purchase, hold and convey real estate for the following purposes, and for no others: * * * * * "Second. Such as shall be mortgaged to it in good faith by way of security for debts previously contracted. "Third. Such as shall be conveyed to it in satisfaction of Opinion of the Court. of its dealings." mits national banks therefore the Massa i property, with a view where the transferee has the provisions of the state law are much ́ the provisions of the statute of the Unit and spirit, than they were in the case ings Bank. It might have been ar equal force in that case, that the the United States were general i e transferrer is insolvent or statute of the United States ir have regard to the provision in no way controls the consavings banks, in certain c al bank. But this position denies held otherwise, and decl~erred to, and amounts to asserting as well as in letter. where a national bank is empowered to in the present, such contract is not subject to the state law. above, the in hand there is no express conflict between the not of power by the United States to the bank to take real estate for previous debts, and the provisions of the Massachusetts law, which, although allowing as a general rule the taking of real estate, as a security for an antecedent debt, provides that it cannot be done under particular and exceptional circumstances. Nor is there anything in the statutes of the State of Massachusetts, here considered, which in any way impairs the efficiency of national banks or frustrates the purpose for which they were created. No function of such banks is destroyed or hampered by allowing the banks to exercise the power to take real estate, provided only they do so under the same conditions and restrictions to which all the other citizens of the State are subjected, one of which limitations arises from the provisions of the state law which in case of insolvency seeks to forbid preferences between creditors. Of course, in the broadest sense, any limitation by a State on the making of contracts is a restraint upon the power of a national bank within the State to make such contracts; but the question which we determine is whether it is such a regulation as violates the act of Congress. As well might it be contended that any contract made by a national bank, within a State in violation of the state laws on the subject of minority or coverture, was valid because such state laws were in conflict with the act of Congress or impaired the power of the bank to perform its functions. Indeed, reduced to its last analysis, the Opinion of the Court. position here assumed by the plaintiff in error amounts to the assertion that national banks in virtue of the act of Congress are entirely removed, as to all their contracts, from any and every control by the state law. The argument that the concession of a right on the part of a State to forbid the taking of real estate by a national bank for an antecedent debt, under any circumstance, implies the existence of a power in the State to forbid such taking in all cases, begs the question, and amounts simply to a restatement of the proposition already answered. As long since settled in the cases already referred to, the purpose and object of Congress in enacting the national bank law was to leave such banks as to their contracts in general under the operation of the state law, and thereby invest them as Federal agencies with local strength, whilst, at the same time, preserving them from undue state interference wherever Congress within the limits of its constitutional authority has expressly so directed, or wherever such state interference frustrates the lawful purpose of Congress or impairs the efficiency of the banks to discharge the duties imposed upon them by the law of the United States. It is said that section 98 of the Massachusetts statute is in conflict with the statutes of the United States in so far as it provides that, "If such sale, assignment, transfer or conveyance is not made in the usual and ordinary course of business of the debtor, that fact shall be prima facie evidence of such cause of belief," that is, the belief on the part of the creditor of the insolvency of the debtor by whom the transaction was made. The reasoning is that as the United States law allows the taking by a bank of real estate for an antecedent debt, and the state statute makes such taking of real estate prima facie evidence of a reasonable belief on the part of the bank of the insolvency of the debtor from whom the real estate is so taken, therefore the state law violates the national bank law, since it attributes to the doing of the act which the national bank law authorizes, a presumption which virtually annuls the contract, unless proof be made to the contrary. But this view gives to the words "ordinary course of business" in the state statute a strained and unreasonable con |