231 F. 556 | E.D.N.C. | 1916
The facts appearing upon the record disclose this case: The stockholders of the National Bank of Lillington, on the 22d day of January, 1912', adopted a resolution, pursuant to the provisions of section 5220 of the National Banking Act, 5 Fed. Stat. Anno. 166, 167, to place the bank in liquidation, and appointing J. R. Baggott, Esq., liquidating agent, or liquidator. The resolution was duly certified to and approved by the Comptroller of the Currency. The liquidator qualified, took into his possession the assets of the bank, and proceeded to wind up its business in accordance with the provisions of the statute. Subsequent to the appointment and qualification of the liquidator, J. B. Lanier, to whom said bank was indebted, on account of a balance due him as a depositor, instituted an action against the bank in the superior court of Harnett county, securing service of the summons on the liquidator, and recovered judgment for the sum of $1,491.44, together with interest and cost, which judgment was docketed January 12, 1914, in the superior court of the county of Harnett and of the county of Lee. L. D. Burwell recovered judgment on February 2, 1914, against the bank in a justice’s court for $120, which was duly docketed in said counties. '
On the 20th day of February, 1914, a suit in equity was instituted in this court by the Merchants’ National Bank of Richmond, in behalf of itself and all other creditors of the National Bank of Lillington, alleging that the bank was insolvent, and that its assets in the hands of the liquidator were not being properly administered, etc. A decree was passed, March 2, 1914, appointing John H. Boushall and R. B. Teague receivers, and directing the liquidator to turn over and de
“We see nothing in the act inconsistent with the continued existence of the bank as a corporation for the purposes of liquidation. Indeed, it seems to confirm the idea that for the purpose of being sued, in order judicially to determine the question of disputed liability, it continues to exist, and the remedy against the shareholders is added as a means of execution, in case the corporate assets have, in the meantime, been otherwise applied” or otherwise appropriated.
This case is cited with approval in Chemical Bank v. Hartford Deposit Co., 161 U. S. 1, 16 Sup. Ct. 439, 40 L. Ed. 595, in which a receiver had been appointed by the Comptroller. The conditions existing here are very similar to those in the case of Richmond v. Irons, 121 U. S. 27, 7 Sup. Ct. 788, 30 L. Ed. 864. There, the bank had gone into voluntary liquidation and, pending the collection of the assets, a creditor filed a bill in equity, in behalf of himself and all other creditors, charging that the proceedings were not being properly conducted, asking for the appointment of a receiver, etc. The court permitted amendments to the bill by which the stockholders were brought in and a decree asked against them for unpaid subscriptions, etc. A number of exceptions were taken to the decrees of the court. Mr. Justice Mathews, in a very interesting discussion of the remedies
“By section 5220 it was also provided that ‘any association, may go into liquidation and be closed by the vote of its shareholders owning two-thirds of its stock.’ ”
He notes that no provision is made in the original act for enforcing the liability of individual stockholders when the bank goes into voluntary liquidation., After discussing the language of the act, he says:
'“It can hardly be supposed that .the omission in the statute to provide an express and specific course of proceeding, by way of judicial remedy, in case of voluntary liquidation, left the creditors of such an association in such circumstances without remedy against either a deficiency of assets or the results of a fraudulent maladministration.”
He reaches the conclusion that by the statute the liquidation agent is to be likened to the receiver appointed by the Comptroller, in respect to his powers and duties, and that the suit in equity was a continuation of the process of liquidation. It is an elementary and universally recognized principle in equity jurisprudence that the assets of an insolvent corporation, or association, is a trust fund and, immediately upon the appointment of a receiver, becomes subject to the payment of its debts pro rata, preserving, however, all valid liens existing at the time the receiver is appointed, or the court has, by injunction or otherwise, assumed control of the property, and that thereafter no liens can be created, either by the corporation or the rendition of judgments. Clinchfield Fuel Co. v. Titus, 226 Fed. 574, - C. C. A. -. So, in George v. Wallace, 135 Fed. 286, 292, 68 C. C. A. 40, 46, Circuit Judge Hook says:
“Tlie tangible assets of an insolvent national bank which, is in the process of liquidation constitutes, in the hands of the liquidating agent, a trust fund for the primary benefit of creditors, and so of the liability of the shareholders of a bank similarly circumstanced.”
The courts treat the action of the stockholders in appointing a liquidating agent, pursuant to the power conferred upon them by section 5220, as equivalent to and carrying all of the incidents in respect to the assets and the rights of creditors, as the making a voluntary deed of assignment would do. The bank ceases to be a “going concern.” If it be solvent, the proceeds of the sale and collection of the assets are, under the direction of the Comptroller, applied to the payment of the debts, and the balance, if any, is distributed among the shareholders. It would be impossible to comply with the statute and effectuate its equitable purpose, if creditors were permitted to secure priorities, or liens by attachment, or recovering judgments constituting liens upon the property. 2 Morse on Banks and Banking, 1389.
Assuming that the duty of the liquidating agent and the rights of the creditors are analogous to those of a receiver appointed by the Comptroller, we find the method of proving and paying the debts of the bank prescribed by section 5236, R. S.; 5 Fed. Stat. Anno. 176 (Comp. St. 1913, § 9823). The Comptroller is required to make a ratable dividend of the money paid to him, after providing for the redemption of the notes of the bank, on all such claims as may have