198 A. 286 | N.J. | 1938
The plaintiff, the trustee in bankruptcy of the estate of Kalman B. Mohel, appeals from a judgment of no cause of action. The defendant bank was closed by the commissioner of banking and insurance of this state December 31st, 1931. At the time of closing, the plaintiff, as trustee, had on deposit the sum of $10,018.50. The defendant was a depository designated by the United States District Court for the District of New Jersey, and had given a bond for the safety of funds of the bankrupt estates, pursuant to the statute and the rules of that court. During the time that the bank was being liquidated by the commissioner, a dividend was paid on the plaintiff's deposit in the sum of $500.93. He also received the sum of $4,970.02, his pro rata share of the recovery upon the bond mentioned. After the reopening of the bank on May 1st, 1933, pursuant to a plan approved by *123 the commissioner of banking and insurance, the plaintiff caused to be drawn a check to his order in the sum of $4,547.55, the precise amount of money to which he would have been entitled had the bank not closed or had it been liquidated completely by the commissioner of banking and insurance, and that official had been able to pay the depositors in full. The check not being paid, this action was brought.
Under the reorganization plan consummated, pursuant to chapter 116, Pamph. L. 1933, p. 241, as amended, and approved by the requisite number of depositors and stockholders, a certificate for thirty thousand shares of preferred stock was issued to a trustee for all depositors and other creditors of the bank. Each had a proportionate interest in this stock until the original liability of the defendant to each was paid in full, together with cumulative dividends at the rate of one-tenth of one per cent. per annum.
Section 6 of Pamph. L. 1933, p. 241 (at p. 243), is as follows: "Subscriptions to such preferred stock shall be paid for either in cash or by an offset in the same amount against any deposit balance or balances on the books of such bank, trust company or savings bank or partly by cash and partly by such offset against deposit balance or balances."
The situation on reopening of the bank was that without the consent of the plaintiff his account was charged by an offset in order to provide payment for his interest in the preferred stock issued under legislative authority. He, therefore, claims that the statute and the plan of reorganization adopted thereunder, in so far as it attempts to bind him, is unconstitutional and ineffective and that as a creditor of an insolvent corporation he cannot be compelled to take anything in lieu of his debt except money, and that he had a right to have the corporate assets sold and to receive a proportionate share of the money so received and that he cannot, because of his inactivity, be compelled to accept securities or an interest therein in lieu thereof. This undoubtedly is the rule in this state in the case of the winding up of the affairs of an insolvent business corporation.Lonsdale, c., v. International, c.,
The defendant, however, is incorporated under the Banking act of 1899, page 431, as amended (Pamph. L. 1913, p. 291), which permits the commissioner to take possession of the property of any bank that is in an unsound or unsafe condition, and to retain such possession until such bank shall, with his approval, resume its business or until its affairs be finally liquidated. Under the act of incorporation, banks and their contracts are subject to the control of the state.
Section 29 of the act, as amended, permits any creditor or stockholder of an insolvent bank to apply to the Court of Chancery for an injunction and the appointment of a receiver, upon the conditions in the act stated.
The plaintiff on the date of closing was entitled to liquidation of his claim, either at the hands of the commissioner or the Court of Chancery, but the bank might also, under the statute permitting its incorporation, reopen on some basis approved by the commissioner.
"The federal constitution does not undertake to control the power of a state to determine by what process legal rights may be asserted or legal obligations be enforced, provided the method of procedure gives reasonable notice and affords fair opportunity to be heard before the issues are decided." Honeyman v. Hanan, (No. 583, October term, 1937, Supreme Court, United States). Nor has a person, in the constitutional sense, a property right to liquidation of his claim at the hands of a particular state official. Gibbes v. Zimmerman,
Under the reorganization plan adopted, pursuant to the statute, the assets of the business were devoted without impairment or diversion to the payment of the existing debts. The commissioner after due consideration, having approved the plan, the reopened bank takes the place of the closed bank with the commissioner in charge for the liquidation of existing assets. A portion of every depositor's deposit is frozen in the form of a proportionate interest in the preferred stock issued to the trustee and the assets of the bank, when collected, are used to retire this stock. It is obvious that the depositor could obtain no more if the tedious liquidation of *125 the bank continued at the hands of the commissioner. Under the plan no asset in the bank at the time of closing was diverted to any other source. The writing down of the deposits and the writing up of the capital by the issuance of the preferred stock to a trustee were bookkeeping transactions made possible under the statute and plan to enable the bank to properly function and carry on present important public duties.
A Mississippi statute providing for the reorganization of closed banks by a method somewhat similar to that followed in this case was upheld in Doty v. Love,
The assets of the closed bank remained in the reopened bank to be liquidated as opportunity offered. The freezing of deposits and the issuance of the preferred stock was an equitable method to accomplish the reopening, and at the same time secure the collection of the assets for the old depositors' accounts. All that occurred was that for the proportionate shares of the assets which the depositor would have been entitled to on liquidation he received a proportionate share of the preferred stock which was held in trust for him and others so situated. When sufficient assets are collected by a going bank, the preferred stock will be retired and the depositor will be paid as far as possible. A new and better method of liquidation was provided — liquidation at the hands of active bank officers as against the old and often cumbersome process of liquidation by the commissioner or a receiver.
If it were necessary to pass upon the constitutionality of *126
the act of 1933, under which the bank was reorganized, then that which this court recently said in Bucsi v. Longworth Buildingand Loan Association,
In Shepherd v. Mount Vernon Trust Co.,
In Home Building and Loan v. Blaisdell,
Mr. Justice Roberts, in writing the opinion of the Supreme Court in State v. Brand,
In the present case the plaintiff, had the bank not reopened, would not have been entitled to the payment in full of his deposit, unless the course of liquidation yielded a sum sufficient for that purpose. By reason of the reopening of the bank, he can receive no greater advantage than those other creditors who consented to the plan. When liquidation, under *130 the plan adopted and approved, is completed he will receive that to which he would be entitled had there been no reorganization. In the meantime, he received certain present advantages and further by his inaction permitted a new situation to arise. It is now too late for him to complain when he availed himself of none of the remedies provided by law. The non-assenting depositor can have no greater rights than the assenting depositor where the plan of reorganization was in all respects fair and provided for payment of the plaintiff's claim as and when existing assets, if sufficient for that purpose, were collected.
Other points perhaps suggested or made in the argument or brief of counsel for the appellant have been considered, but do not possess sufficient merit to justify further discussion.
The judgment will be affirmed, with costs.
For affirmance — THE CHANCELLOR, CHIEF JUSTICE, PARKER, BODINE, DONGES, HEHER, PERSKIE, DEAR, WOLFSKEIL, RAFFERTY, JJ. 10.
For reversal — CASE, WELLS, JJ. 2. *131