Altman v. McClintock

• Decision Date: 21 May 1927
• Docket Number: No. 1653.,1653.
• Parties: ALTMAN v. McCLINTOCK et al.
• Court: U.S. District Court — District of Wyoming

20 F.2d 226 (1927)

ALTMAN v. McCLINTOCK et al.

No. 1653.

District Court, D. Wyoming.

May 21, 1927.

Joseph C. O'Mahoney, of Cheyenne, Wyo., for plaintiff.

Thomas Hunter, of Cheyenne, Wyo., for defendants.

KENNEDY, District Judge.

This is a suit in equity, in which the plaintiff seeks an accounting and permission to examine the books of an insolvent bank in the hands of one of the defendants. The suit was originally brought against the defendant McClintock as receiver, and the defendant McIntosh, as Comptroller of the Currency of the United States. In a hearing upon a plea to the jurisdiction of the court, the defendant McIntosh was eliminated from the suit by court ruling. The sufficiency of the bill entitling the plaintiff to the relief prayed for was also challenged as to the defendant McClintock by motion to dismiss, and that motion overruled; the reason of the court being set forth in the memorandum of the court under date of June 3, 1926. An answer was then filed, which was met on the part of the plaintiff by a motion to strike, and this motion by another on the part of the defendant that the motion to strike search the record to the first defect. Under this highly technical condition of the lawsuit when the hearing upon the motions was called, it being admitted by counsel that the controlling facts themselves were not in dispute, the court suggested that the matter be submitted upon an agreed statement of facts, which was accordingly done, and the case was then presented, argued, and submitted upon final hearing, in which situation it is now before the court for final disposition.

Inasmuch as the case is now at issue, and the substantive plea and prayer of the plaintiff is to the effect that he is entitled to a decree for an accounting, together with an order permitting him to examine the books of the bank in the defendant's possession, which alleged rights on the part of the defendant are challenged and denied, it may not be necessary to scrutinize the pleadings, for the reason that the legal situation may be ascertained from an examination of the facts. These appear to be substantially as follows:

That the First National Bank is a corporation organized under the laws of the United States; that the plaintiff is a citizen of the state of Wyoming, and that on July 9, 1924, he had on deposit in said bank approximately $75,000, upon which he has filed his proof of claim and the same has been duly allowed; that the plaintiff is the chairman of the depositors' committee of said bank, appointed at a meeting called for the purpose of adopting some plan for liquidation, but that no meeting of the depositors was ever held to authorize this suit; that the defendant McClintock is the duly commissioned, qualified, and acting receiver of said bank, which was found to be insolvent on July 9, 1924, he having been appointed as such by the Comptroller of the Currency on that day; that he gave a bond in the sum of $100,000, conditioned upon his obedience to the instructions of the Comptroller; that as such receiver he is now in possession and in charge of all books and records of said bank, for the purpose of liquidating its assets and winding up its affairs, and that such charge and custody is at all times subject to the directions and control of the Comptroller; that during the month of June 1924, a national bank examiner examined said bank, upon which he found that among the assets of said bank there was a large amount of notes which he considered unsatisfactory, and which he ordered to be taken out of the affairs of the bank, he believing the bank to be at the time in a precarious condition; that, in order to give the officers and directors of the bank an opportunity to meet his requirements, said examiner left Cheyenne on July 1, 1924, and returned about five days later, being recalled by the officers of the bank; that on July 8th the bank conducted its business in the regular order, but did not reopen on the morning of July 9th, it being temporarily in charge of said examiner until turned over to the defendant receiver; that one Abbott who was president of said bank, was also a member of the board of directors of the Wyoming National Bank of Casper, and that one Brooks, president of said Wyoming National Bank, was a stockholder of said First National Bank; that Brooks was present at a meeting of the officers of said First National Bank on July 1st when the affairs of the First National Bank were considered and discussed; that these banks were correspondent banks and that the credits to the account of the Wyoming National Bank in the First National Bank were reduced from some $273,000 plus on July 1st to some $2,000 plus on July 9th when the bank closed; that some of this reduction in account was caused by telegraphic instructions sent by officers of the First National Bank on July 7th to the Omaha National Bank to transfer $60,000 of its credit on the books of the Federal Reserve Bank of Kansas City to the Wyoming National Bank; that out of this controversy a suit arose in Omaha, in which the defendant receiver here was defendant there, and in which said suit a pleading was filed by counsel in his behalf, which pleading had never been seen by defendant, denying the legitimacy and legality of the transfer of funds aforesaid; that subsequently a compromise between the defendant receiver and the Wyoming National Bank was entered into with the approval of the Comptroller of the Currency, which was subsequently submitted to this court upon the facts and such compromise approved; that in the matter of said compromise the defendant receiver was represented by competent counsel, whose opinion was given that said agreement was an advantageous one for his receivership; that, if it should become material to the determination of this suit, the parties reserved the right to try out the legitimacy and legality of the compromise settlement; that prior to the institution of the suit at bar representations were made to the defendant receiver and the Comptroller of the Currency that circumstances gave good ground for suspicion that the law had been violated and the directors might be personally liable for negligence, and that a formal written demand was made upon the receiver for the right to examine the books and accounts of the bank, to determine whether or not the receiver should institute suit against the directors of the bank for individual liability for negligence, whether the receiver should not file proceedings to set aside the compromise heretofore referred to, whether illegal preferences were not allowed by officers of the bank after its insolvency was in contemplation, which should be made the basis of proper legal action, and whether, in the event of the refusal or failure of the receiver to initiate such proceedings, the depositors would be warranted in doing so; that this request was denied by the receiver and the Comptroller; that the receiver has not initiated suit against the directors, and has denied the depositors' committee an opportunity to examine the books of the bank; that the defendant receiver, in refusing the request of the plaintiff, has acted under instructions from the Comptroller, which are contained in general instructions issued by said Comptroller for the general guidance of receivers of national banks, among other things those instructions containing the provision that, if requests are made for data to the receiver, they should be referred to the department for proper consideration; that the requests and demands of the plaintiff were so referred to the Comptroller of the Currency, and instructions received by the receiver from the Comptroller to the effect that there would be employed at the expense of the insolvent bank a firm of competent accountants, to investigate the possible civil liability of directors and others, but that said accountants would be selected by the Comptroller and subject to his direction solely; that in the event it should be made to appear to the Comptroller's office that a civil action against the directors or others cannot be prosecuted to a successful conclusion, and in the event the Comptroller decides not to initiate action against them, then such part of the report as may be necessary will be made available to the depositors, in order to enable them to determine whether or not they would be justified in instituting such suit; that, as to the matter of allowing a representative of the depositors to be present during the course of the audit, the receiver was advised by the Comptroller that it was not believed that such representative could aid the accountants, and that for such reason such request should not be granted, but that the accountants would be glad to confer with the representatives of the depositors pertaining to any matters which should be presented to them during such examination; that in order to prevent confusion the audit would be under the direction of the Comptroller; that certain persons, naming them, were officers and directors of the First National Bank at the time of its suspension, and that two of such directors have since died; that on the morning of July 9, 1924, the janitor of the bank building in which the bank was located, at the direction of the cashier of the bank, caused to be removed from the basement of the building a quantity of books and papers and to have them burned on the city dump; that of this transaction the defendant had no knowledge until long afterward, and that the plaintiff has never been advised what books and papers were so destroyed; that during the course of the receivership many claims in favor of the bank have been compromised upon the authority of the Comptroller, all of which compromises, with the conditions surrounding the same, had been submitted to the proper court, but of which compromises the plaintiff or the depositors' committee were given no advance information; that at a meeting of the...