Zimmerman v. Central Union Bank

• Decision Date: 26 March 1940
• Docket Number: 15046.
• Citation: 8 S.E.2d 359,194 S.C. 518
• Parties: ZIMMERMAN v. CENTRAL UNION BANK et al. ZIMMERMAN et al. v. STATE BOARD OF BANK CONTROL et al.
• Court: South Carolina Supreme Court

8 S.E.2d 359

194 S.C. 518

ZIMMERMAN v. CENTRAL UNION BANK et al.

ZIMMERMAN et al. v. STATE BOARD OF BANK CONTROL et al.

No. 15046.

Supreme Court of South Carolina

March 26, 1940

[Copyrighted Material Omitted]

The order of Judge Dennis follows:

This matter came on to be heard before me in open court upon a demurrer interposed by the State Board of Bank Control to the petition herein, together with the return of the said board to the rule to show cause heretofore issued herein by Honorable M. M. Mann, dated August 21, 1939. The demurrer raises the question whether the petition states facts sufficient to entitle the petitioners to the relief sought the grounds or reasons therefor being stated somewhat in detail. The Court is of the opinion that the demurrer is well founded and must be sustained and hence there is no necessity of considering the return also filed by the State Board of Bank Control.

The petitioner, S. J. Zimmerman, was appointed conservator of the defunct Central Union Bank of South Carolina on March 20, 1933, by the Governor, acting with the advice of the State Board of Bank Control, pursuant to the emergency banking laws of this State. Thereafter, on or about June 20 1933, the said bank was declared insolvent and ordered into liquidation by the Governor of the State, acting with the advice of the State Board of Bank Control. Thereafter the petitioner J. Roy Barron was appointed as coconservator by the Governor, acting with the advice of the said board.

Prior to the appointment of Mr. Barron, that is about June 26 1933, the petitioner, Zimmerman, as sole conservator instituted an action, as permitted by the emergency banking laws, in the Court of Common Pleas for Richland County to obtain the instruction of the Court on certain matters. This action was in the nature of a general creditors' bill and did not seek or purport to ask for the appointment of a receiver, the pleadings in the action setting forth that the said Zimmerman had already been appointed by the Governor pursuant to the provisions of the emergency banking laws above mentioned. The Court issued its decree requiring all creditors to come in and establish their claims or else be barred; and restricted the creditors and claimants from bringing any separate action or actions or proceedings against the bank or affecting its assets save by proceeding in the pending action, which was left open. The petition here involved is brought in that proceeding.

The petition, after alleging the appointment of Zimmerman as conservator, the ordering of the bank into liquidation by the Governor, with the advice of the State Board of Bank Control, and the bringing of the above mentioned suit by Zimmerman, then alleges that the petitioners, acting under the supervision and direction of this Court, have proceeded with the liquidation of said bank and that no interference with the administration of said receivership, nor any change in the petitioners' status or in the allowance on account of their compensation, was undertaken by the Governor of the State so long as his plenary power and control of the bank continued, nor by the State Board of Bank Control alone, until on or about March 10, 1939, the said Board issued instructions to the petitioners to make disposition of certain trust assets and to reduce the compensation which they were then receiving, and also directed the said petitioners to make a report to it as to their plans with reference to compliance with its said orders.

Petitioners further allege that both the Act of May 10, 1934, 38 St. at Large, p. 2275, which transferred the control and liquidation of state banks to the State Board of Bank Control alone, and the Act of May 9, 1936, 39 St. at Large, p. 1484, under which the present board was appointed, only conferred jurisdiction on the said board over banks then doing or thereafter authorized to do business, and therefore, did not extend the jurisdiction of said board to petitioners and their trust, but thereby petitioners and their trust were excluded from the jurisdiction of said board. Petitioners further allege that notwithstanding such alleged limitation of the board's jurisdiction and the exclusion of petitioners and their trust from its jurisdiction, the said present State Board of Bank Control has attempted to reduce the compensation to be paid to petitioners, and to direct petitioners to dispose of certain trust assets, all of which was and is in violation of this Court's jurisdiction and in excess of the said board's authority and without legal force and effect. Petitioners then pray that the Court issue its rule directed to the State Board of Bank Control to show cause why this Court should not exercise jurisdiction over the liquidation of said trust estate and the petitioners in the exercise of their duties therein, and why the petitioners should not be authorized and permitted to continue the liquidation of said bank and receive compensation therefor under the direction of this Court and why the petitioners should not be instructed from time to time by the Court as to their powers and duties in the normal and proper administration of their trust.

The contention of the petitioners broadly stated is that the present State Board of Bank Control has no jurisdiction whatsoever over the liquidation of the Central Union Bank of South Carolina, and more specifically that the said board has no power or authority to fix or limit the compensation to be paid to the petitioners as conservators nor any right to supervise and control the liquidation of said bank, and particularly that the said board has no power or authority to direct the conservators to dispose of the remaining principal assets of said bank and to complete the liquidation thereof within a reasonable time.

The Court is of opinion that the legal questions attempted to be raised by the petition are no longer open to serious question and that the petition must be dismissed.

First. As to the compensation of the conservators. The Supreme Court at the instance of petitioners in the case of Dunlap & Dunlap v. Zimmerman, et al, 188 S.C. 322, 199 S.E. 296, 300, held that the "liquidating expenses" of the very bank here involved were within the exclusive jurisdiction of the State Board of Bank Control and that the Court may not interfere therewith, except under certain circumstances, which are not present here. The Court, after carefully considering all the emergency banking laws, including the Act of 1936 under which the present State Board of Bank Control was created, said:

"Is exclusive jurisdiction vested in the State Board of Bank Control under the Emergency Banking Laws, to fix or limit the fees of attorneys for an insolvent bank, in process of liquidation? ***

"We are of the opinion that the intent and purpose of the law was to give to the State Board of Bank Control exclusive jurisdiction in the first instance in fixing and limiting attorneys' fees, and may not be defeated or subverted by any party in interest by resort to the courts, unless such Board has refused to act, or has acted in such a way as results in an abuse of discretion. In such case the Courts of Common Pleas in this state would in a proper case have the power in the exercise of their equitable jurisdiction to review the action of the Board."

It cannot be questioned that the compensation of the conservator is a part of the "liquidating expenses". The Court has examined the record in the Dunlap case and that record, as well as the opinion of the Court, shows that Walter M. Dunlap was appointed associate counsel in 1933 by the Governor with the advice and consent of the then State Board of Bank Control. The record also shows that Mr. Dunlap died on January 15, 1934, and that his compensation was fixed and approved by the present State Board of Bank Control on August 14, 1936. The contention made by the attorneys for the conservators in the argument before this Court that the Supreme Court "apparently assumed that the Dunlap firm had been employed by the present bank board", is a mere assumption which has no foundation in fact.

A casual inspection of the record in the Dunlap case should convince the most skeptical or belated investigator that the very arguments now advanced were there urged upon the Court and held to be untenable.

Second. As to the broad contention of petitioners that the present State Board of Bank Control has no control or supervision over the liquidation of the bank of which they are conservators.

The Court is of the opinion that this contention is unsound in view of the conclusions reached by the Court in the Dunlap case. As already pointed out the jurisdiction of the present State Board of Bank Control over the liquidation of this bank was under consideration in the Dunlap case. The Court said:

"An examination of these Acts [referring to the emergency banking laws, including the Act of 1936] clearly shows that the legislature undoubtedly intended that the procedure looking toward the closing of insolvent banks and their liquidation was to be under the control and supervision of the Governor, acting with the State Board of Bank Control, and now vested in the State Board of Bank Control alone." (Italics mine.)

In my opinion it necessarily follows that the Supreme Court has definitely concluded that under the banking laws as they existed at the time of the Dunlap decision (1938) (and there has been no change since that time), the procedure looking towards the closing of insolvent banks and their liquidation is now vested in the State Board of Bank Control in those cases where the conservator had been appointed and the bank ordered in liquidation by the Governor, acting with the advice of the State Board of Bank Control under ...