283 Mass. 423 | Mass. | 1933
The receiver of the State National Bank in Lynn, a national banking association located in Lynn in our county of Essex, seeks by this proceeding to establish a claim against the defendant in possession of the Lawrence Trust Company, a banking institution duly organized under the laws of this Commonwealth, with a principal place of business at Lawrence in our county of Essex. The case has been reserved for our determination upon the pleadings and an agreed statement of facts.
The comptroller of currency of the United States, by virtue of powers conferred upon him by law, took possession of the State National Bank in Lynn, hereafter called the bank, on December 15, 1931, and appointed the petitioner its receiver. The bank was then and has since continued to be insolvent and is now being liquidated by its receiver. On the same date, the defendant, the commissioner of banks of this Commonwealth, acting under G. L. c. 167, § 22, took possession of the property and business of the Lawrence Trust Company, hereafter called the trust company. The trust company was then and has since continued to be insolvent and its affairs are being liquidated by the defendant as required by law. The trust company was authorized to transact a general commercial banking business and it maintained also a savings department. See §§ 31-48, 60-72, of G. L. (Ter. Ed.) c. 172, which is the general law governing trust companies. The trust company is the owner of one hundred shares of the capital stock of the bank purchased in 1927 at a price of $150 per share, and paid for by check drawn on funds of its savings department. The stock has since been held as an asset of its savings department and dividends totalling $3,100
The statute governing the transaction of business by trust companies (G. L. [Ter. EdJ c. 172) establishes a clear line of demarcation between their commercial departments and their savings departments. Such companies are not required to maintain savings departments. They may conduct a purely commercial business. §§ 31-48. It is wholly optional with each trust company whether it shall undertake the kind of business which requires a savings department. When the kind of business described in § 60 is transacted by a trust company, a savings department becomes imperative under the law. Numerous provisions of the general law here relevant then become operative. By § 61 all deposits in a savings department are special and must be invested strictly in accordance with the law governing the investments of savings banks. By § 62 such
These provisions taken as a whole disclose a legislative purpose to require rigid separation of the savings and commercial departments in every particular, except management by the officers of the same corporation. This mandatory segregation includes funds, investments, credits, accounts, and securities. It embraces each branch of the activity of the savings department in its every ramification. It prohibits every encroachment "upon assets of the savings department and their specified investments. It permits charges against those assets only for expenses and losses incurred in their management, for depreciation in the value of securities, and other losses therein. The natural import of these provisions is that a savings department shall bear out of its own resources all expenses, losses and depreciation of securities connected with its maintenance and manage
Shares of capital stock in the bank were a legal investment for the funds of the savings department of the trust company. G. L. (Ter. Ed.) c. 172, § 61; c. 168, § 54, Seventh. There is not here involved any reprehensible manipulation of the funds of the savings department such as has been disclosed in several cases arising in the liquidation of trust companies. Purchase of such shares of capital stock was on its face made in the course of legitimate management of the savings department. It was said in Matteson v. Dent, 176 U. S. 521, 526, purporting to quote from Richmond v. Irons, 121 U. S. 27, 55, 56: “Under the national banking act the individual liability of the stockholders is an essential element of the contract by which the stockholders became members of the corporation. It is voluntarily entered into by subscribing for and accepting shares of stock. Its obligation becomes a part of every contract, debt and engagement of the bank itself, as much so as if they were made directly by the stockholder instead of by the corporation. There is nothing in the statute to indicate that the obligation arising upon these undertakings and promises should not have the same force and effect, and be as binding in all respects, as any other contracts of the individual stockholder.” These words are of broad sweep. They include corporations as well as individuals. There is no exception in the national banking laws exempting State banks from liability to assessment if they lawfully become stockholders in a national bank. On principle we are unable to perceive any reason why a savings department of a trust company owning stock in a national bank should not
It becomes unnecessary to consider whether a statute of the Commonwealth would be valid, undertaking to make payment in full of deposits in the savings department of a trust company a preference above all its debts, including an assessment such as here is in issue. There is no such statute. See Cameron’s Account, 287 Penn. St. 560; affirmed in Littrell v. Cameron, 276 U. S. 592.
The contention of the defendant that, upon taking possession of the property and business of the trust company, he had a right to abandon its contracts or assets which might be burdensome or unprofitable cannot be supported. The obligation of the trust company as a stockholder of the bank to pay assessments, if and when lawfully levied on such stock under the law, sprang into existence when it became stockholder and it had no right to escape that obligation. That follows from Matteson v. Dent, 176 U. S. 521. The principle as to refusal by a receiver appointed by a court to fulfil burdensome contracts is not applicable to the case at bar. So also the principle that a trustee in bankruptcy may refuse to accept title to property likely to become a burden rather than a benefit is inapplicable. The underlying purpose of receiverships and bankruptcy proceedings permits an element of choice on the part of a receiver or a trustee in bankruptcy in certain instances. Commonwealth v. Franklin Ins. Co. 115 Mass. 278. Cunningham v. Commissioner of Banks, 249 Mass. 401, 423. Commissioner of Banks v. McKnight, 281 Mass. 467, 475. Dushane v. Beall, 161 U. S. 513, 515. Glenny v. Langdon, 98 U. S. 20, 30-31. Smith v. Cordon, 6 L. R. 313, 317. Streeter v. Sumner, 31 N. H. 542. In re Webb, 54 Fed. Rep. (2d) 1065. Mills Novelty Co. v. Monarch Tool & Manuf. Co. 49 Fed. Rep. (2d) 28, 31-32. It is not necessary to consider whether that principle would apply to shares of stock in a national bank where assessment has been made, held by an estate in the hands of a receiver or by a bankrupt. We are of opinion that that principle is not controlling in the case at bar, where the defendant was
The result is that a decree is to be entered directing that the assessment made upon the Lawrence Trust Company by virtue of its being a stockholder in the State National Bank of Lynn be paid out of the assets of the savings department of the trust company.
Ordered accordingly.