American Bank & Trust Co. v. Hon

• Decision Date: 28 March 1931
• Docket Number: No. 4444.,4444.
• Citation: 48 F.2d 588
• Parties: AMERICAN BANK & TRUST CO. v. HON.
• Court: U.S. Court of Appeals — Seventh Circuit

48 F.2d 588 (1931)

AMERICAN BANK & TRUST CO. v. HON.

No. 4444.

Circuit Court of Appeals, Seventh Circuit.

March 28, 1931.

Harry W. Lippincott, Charles S. Deneen, and Roy Massena, all of Chicago, Ill., for appellant.

Louis J. Behan and William J. Corrigan, both of Chicago, Ill., for appellee.

Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.

SPARKS, Circuit Judge.

The State Commercial & Savings Bank and the Milwaukee-Western State Bank, hereinafter referred to respectively as savings bank and state bank, were Illinois banking corporations, and on June 5, 1928, the name of the state bank was changed to American Bank & Trust Company.

Appellee, on June 8, 1922, filed suit in the District Court against the savings bank, which resulted in a judgment by that court, on February 1, 1928, against the savings bank for $8,200. Execution was issued on that judgment, and was returned not satisfied in any part. In 1924, during the pendency of that action, proceedings were instituted in the circuit court of Cook county on relation of the auditor of public accounts of the state of Illinois against the savings bank, and a receiver was therein appointed who took possession of the property of the bank. On December 15, 1924, the state bank submitted to the receiver a proposal to purchase the assets and property of the savings bank, and as a consideration therefor it agreed to assume and to pay all liabilities of the savings bank, and to pay all costs of administration, receiver's fees and expenses, and attorneys' fees. By order of the court, of December 15, 1924, the receiver was authorized to accept such proposal and to comply with its terms, and thereupon an order was entered dissolving the savings bank. On January 6, 1925, the receiver reported to the court that he had complied with the proposal by assigning and delivering to the state bank all the property and assets of the savings bank except $32,600, which he retained as fees and expenses of the receiver and his attorneys. He further reported that the state bank had assumed the liabilities and obligations of the savings bank, and that, because of such assumption of liability, he did not give notice to the creditors of the savings bank to present their claims against it.

The court thereupon approved and confirmed the transaction in all respects.

The instant bill alleges that appellee's judgment is a liability assumed by the state bank, and that, because of the transfer of the assets to the state bank, appellee is unable to collect his judgment by legal process; that the savings bank has no assets subject to execution, by reason of which appellee has no adequate remedy at law. The prayer is that the American Bank & Trust Company, which is the present name of the state bank, be directed to pay appellee's judgment, with interest, costs, and attorneys' fees, and, failing to do so, that execution issue therefor.

Appellant filed its motion to dismiss the bill for the reason that appellee has an adequate remedy at law, and for the further reason that the judgment is void and unenforceable. This motion was overruled, and thereupon appellant filed its answer, in which it admitted the proceedings in the circuit court of Cook county against the savings bank, but alleged (1) that the liabilities of that bank which were assumed by the state bank, exclusive of appellee's claims, exceeded the value of the assets received by more than $58,000, which appellant has paid; (2) that no claim of appellee was included in the statement of liabilities furnished to the state bank by the receiver; (3) that neither the state bank nor appellant has possession of any assets of the savings bank; (4) that the proceedings in the circuit court of Cook county were prosecuted in strict conformity with the Illinois statutes with relation to notice to creditors; (5) that appellee's judgment is void for the reason that it was entered after the savings bank had been dissolved by the decree of the circuit court of Cook county.

The District Court rendered judgment for appellee, directing appellant to pay appellee's judgment, with interest and costs, within twenty days, that execution issue, and that jurisdiction be reserved for the purpose of enforcing the decree by such proceedings as may be deemed proper; and it is from this decree that the present appeal is prosecuted.

It is contended by appellant that appellee's judgment against the savings bank, having been recovered after that bank had been dissolved by order of the Cook county circuit court, is void, and cannot form the basis of the instant action.

In passing upon this controversy, this court will be governed by the laws and declared public policy of Illinois in so far as they are not inconsistent with the basic law of the United States. New York Life Ins. Co. v. Cravens, 178 U. S. 389, 20 S. Ct. 962, 965, 44 L. Ed. 1116; McClain v. Provident Sav. Life Assurance Soc. (C. C. A.) 110 F. 80, 91; Bucher v. Cheshire Railroad Co., 125 U. S. 555, 8 S. Ct. 974, 31 L. Ed. 795; Blackwell v. Southern Pac. Co. (C. C.) 184 F. 489, 495.

In the case of New York Life Ins. Co. v. Cravens, supra, the court, referring to the meaning which the Supreme Court of Missouri had given to a statute of Missouri, said: "Our review is only invoked of that part of the opinion which decides that the Missouri statute is the law of the policy, and which annuls the provisions of the policy which contravene the statute. And even of this part our inquiry is limited. If we are bound by the interpretation of the statute we need not review the reasoning by which that interpretation was reached. And we think we are bound by it. * * * The interests of the state must be deemed to be expressed in its laws. The public policy of the state must be deemed to be authoritatively declared by its courts. Their evidence we cannot oppose by speculations or views of our own. * * * Against them no intention will be inferred or be permitted to be enforced."

In the case of McClain v. Provident Sav. Life Assurance Society, supra, the court said: "In extending the judicial power of the United States to controversies between citizens of different states, the only purpose indicated by the constitution was to provide another forum than that of the state, not another law than that of the state. In this case the court below was exercising a jurisdiction concurrent with that of the court of the state of Pennsylvania. It was administering the law of that state, and was as much bound by its statute and common law, and its declared public policies, as would be the state courts in a like case."

In the case of Blackwell v. Southern Pac. Co., supra, the court said: "* * * the matter for decision involving no federal question, the case being here merely by reason of diversity of citizenship, this court will adopt the declared policy of the state in which it sits, as found either in its statutes or the decisions of its highest tribunal."

The decree, by virtue of which appellant claims that the savings bank was completely dissolved, provides, among other things:

"Third: That upon the filing with this court of a report by said Receiver setting forth the execution of such deeds and the making of such transfer, conveyance and assignment by either said Bank and its officers or directors or said Master in Chancery, as the case may be, said State Commercial and Savings Bank be dissolved and all of its corporate rights, privileges and franchises declared forfeited and terminated, and all of its powers extinguished and terminated forever."

"Fifth: That * * * the Receiver heretofore appointed * * * be, and he is hereby, authorized and directed * * * to institute and prosecute in his own name as such Receiver, or otherwise, all such suits and proceedings of every kind and nature, * * * as he may deem necessary, proper or advisable for the collection of moneys now due or which may hereafter become due said State Commercial and Savings Bank * * * and that * * * he be...