Roseville Trust Co. v. Mott

• Decision Date: 23 December 1915
• Docket Number: No. 238.,238.
• Citation: 85 N.J.Eq. 297,96 A. 402
• Parties: ROSEVILLE TRUST CO. v. MOTT et al.
• Court: New Jersey Court of Chancery

96 A. 402

85 N.J.Eq. 297

ROSEVILLE TRUST CO.

v. MOTT et al.

No. 238.

Court of Chancery of New Jersey.

Dec. 23, 1915.

Bill by George M. La Monte, as Commissioner of Banking and Insurance, in behalf of and in the name of the Roseville Trust Company, against Harvey Mott and others. Application to strike out the bill denied.

Roger Hinds, of Newark, Wm. A. Kirk, of East Orange, and Edward E. Clark, of Newark, for complainant. Otto A. Stiefel and Abram H. Cornish, both of Newark, for defendants.

STEVENS, V. C. This is a bill filed by George M. La Monte, as commissioner of banking and insurance, on behalf of and in the name of the Roseville Trust Company. It charges that the commissioner, as such, having concluded that it was unsafe and inexpedient for the company to continue its business, took possession of its property and business pursuant to the provisions of an act entitled "An act concerning trust companies" (Revision of 1899) as amended by chapter 171 of the Laws of 1913. It charges further that the company was insolvent and that the insolvency was produced by the criminal negligence of its directors.

The application is to strike out the bill on the grounds: (1) That the commissioner of banking is without right or title to bring this suit, the act of 1913, under which he is proceeding, being unconstitutional; (2) that the commissioner has released certain of the directors and that his release has inured to the benefit of all; (3) that the allegations of the bill are not sufficiently specific and that they do not state a cause of action.

The first objection is grounded upon the idea that the act of 1913 is unconstitutional, in that it authorizes the commissioner to take possession of the property and business of the company and to collect and distribute its assets on his own motion and without judicial warrant. The act (P. L. 1913, p. 282) provides, inter alia, that whenever it shall appear to the commissioner that any trust company has violated its charter or is conducting its business in an unsafe or unauthorized manner, "the commissioner may forthwith take possession of the property and business of such trust company and retain such possession until such trust company shall resume business or its affairs be finally liquidated as herein provided. * * * Upon taking possession of the property and business of such trust company, the commissioner is authorized to collect moneys due to such trust company and do such other acts as are necessary to conserve its assets and business and shall proceed to liquidate the affairs thereof as hereinafter provided. The commissioner shall collect all debts due and claims belonging to it" and "may in the name of such trust company prosecute and defend any and all suits and other legal proceedings." The act further provides that whenever the company, of whose property and business the commissioner has taken possession, deems itself aggrieved thereby, it may at any time within 10 days after such taking possession apply to the Court of Chancery to enjoin further proceedings. This it has not done.

Assuming that the defendants are in a position to make the objection, it is a very narrow one. By the terms of section 22 of the act of 1899 (Comp. Statutes, p. 5054), under which the company was incorporated, the commissioner was authorized to take the same possession for the same reasons. In the event that he found after investigation that a certain condition of things existed, possession of the company's property and business was to pass from the directors to himself. This was part of the contract impliedly incorporated into the charter. The precise objection must therefore be that the Legislature had no right by amendment, after the trust company had been organized, to provide that to the possession and business so taken should be added the right to preserve it by reducing choses in action into possession and by enforcing other claims. Such an insistment does not seem to me to be even plausible. The company is not thereby deprived of its property without due process of law, or at all. On the contrary, the property is all the better secured when those who owe it debts or duties are made to pay or perform them. A similar act has been sustained by the New York Court of Appeals. Carnegie Trust Co. v. Kress, 215 N. Y. 706, 109 N. E. 1068.

But the defendants are in no position to raise the objection. The property taken is the company's, not the defendants'. If anybody is aggrieved, it is the company, and the company does not complain. If it had felt itself...