Attorney Gen. v. Union Guardian Trust Co., 6

CourtSupreme Court of Michigan
Writing for the CourtEDWARD M. SHARPE
Citation273 Mich. 554,263 N.W. 866
Docket NumberJune Term.,No. 6,6
Decision Date10 December 1935

273 Mich. 554
263 N.W. 866


No. 6, June Term.

Supreme Court of Michigan.

Dec. 10, 1935.

Suit by Patrick H. O'Brien, Attorney General, in his official capacity, and on the relation of Rudolph E. Reichert, Commissioner of Banking, and another, against the Union Guardian Trust Company for reorganization, in which Robert Oakman and Robert Oakman Land & Mortgage Company and Joseph Hirschfeld filed objections. From an order approving the plan of reorganization, claimants Oakman and the Oakman Land & Mortgage Company appeals, and claimant Hirschfeld cross-appeals.


WIEST, J., dissenting.

Appeal from Circuit Court, Wayne County, in Chancery; Adolph F. Marschner, Judge.


Edward B. Benscoe, of Detroit (Albert McClatchey, of Detroit, of counsel), for appellant Hirschfeld.

Harry S. Toy, Atty. Gen., Edmund E. Shepherd, Asst. Atty. Gen., and Shaeffer & Dahling, of Detroit, for appellee Union Guardian Trust Co.


This is an appeal from the decree of the circuit court of Wayne county, in chancery, confirming the reorganization of the Union Guardian Trust Company. At the beginning of this action this trust company had been and was in the hands of a conservator, appointed by the banking commissioner with the approval of the Governor in accordance with the provisions of Act No. 32, Pub. Acts 1933, as amended.

[263 N.W. 867]

On February 1, 1934, the Attorney General of the state of Michigan, acting in his official capacity as such and in behalf of the banking commission of Michigan, filed a petition for reorganization of the trust company in accordance with the provisions of Act No. 32, Pub. Acts 1933, as amended, particularly section 7a of Act No. 95, Pub. Acts 1933, together with Act No. 8 First Extra Session of 1932.

Section 7 of Act No. 95, Pub. Acts 1933, provides that the banking commissioner, with the approval of the Governor, may reorganize any bank or trust company, while section 7a of this act provides for the formation of a depositor's committee by the state banking commission, and that, when a depositor's agreement is signed and approved by depositors representing at least 65 per cent. of the deposit liability, the trust company shall be reorganized in accordance with the provisions of sections 65a, 65b, and 65c of Act No. 66, Pub. Acts 1929, as amended.

Section 7 of the act above referred to provides that the details of the plan of reorganization are to be posted and advertised. In the instant case all of the above steps were taken and the petition filed in the circuit court of Wayne county. The testimony taken at the hearing showed that the book value of the assets of the trust company was approximately $44,000,000, with liabilities of approximately $34,000,000, and that the took equity of $10,000,000 had no value, that the total separate trust accounts exceed 6,000, with earnings in 1932 of over $1,000,000, and that, in the event of receivership, this fiduciary business would be of no value.

The plan in a general way provides that certain of the assets, namely, $800,000, are retained by the company to constitute its capital, while the balance of the assets are transferred to a trust to be liquidated under court supervision for the benefit of creditors and depositors. All dividends and stock assessments under the statutory double liability are to be delivered to the trust for the benefit of creditors and depositors.

The stock of the reorganized company is to be held by five general trustees selected by the depositor's committee and approved by the banking commissioner. Prior to February 11, 1933, it was the policy of the trust company to segregate trust funds and place them in separate bank accounts and earmark them as ‘trust funds, Class A. of the trust company.’ The aggregate of these funds amounted to about $4,593,00 and had been deposited in various banks. The plan also provides for the filing of claims with the liquidating trustees who pass upon them and report their findings to the court; dissatisfied claimants having the right to petition the court for a different disposition of their claims. After all claims have been finally determined, certificates of indebtedness are issued to general creditors, other certificates to preferred creditors, and certificates of participation to claimants for specific funds. All claims carry interest at the rate of 5 per cent., and, after all creditors and claimants are paid in full, the balance of the assets of the trust is distributed among the stockholders.

In this cause, appellant Hirschfeld filed a paper objecting to the plan of reorganization and petitioning for recovery of the amount due him and for a receiver, while appellant Robert Oakman and Robert Oakman Land & Mortgage Company raised objections to the plan proposed. During the hearing, the trial court refused appellants the right to introduce testimony showing the solvency or insolvency of the trust company. On April 16, 1934, an order was entered approving the plan of reorganization, and on May 3, 1934, Oakman and Oakman Land & Mortgage Company filed a claim of appeal, and on May 11, 1934, appellant Hirschfeld filed a notice of appearance and notice of cross-appeal. In June, 1934, Oakman and Oakman Land & Mortgage Company filed a motion for rehearing which was denied October 20, 1934, while on November 9, 1934, appellant Hirschfeld filed a paper entitled ‘supplemental claim of appeal.’

It is contended by appellant Hirschfeld that Act No. 32, Pub. Acts 1933, is unconstitutional, in that it embraces more than one object contrary to article 5, § 21, of the Constitution of the state of Michigan, and for the further reason that it attempts to confer judicial power upon the banking commissioner of the state of Michigan.

Section 21 of article 5 of the Constitution of Michigan provides that: ‘No law shall embrace more than one object, which shall be expressed in its title.’

In Board of Supervisors v. Reed, 243 Mich. 120, 219 N.W. 656, 657, was said (quoting from syllabus): ‘While the object of an act must be expressed in the title, it is to the body of the act that the

[263 N.W. 868]

court must look to determine whether it embraces more than one object. The object of a law is the aim or purpose of the enactment, and it may authorize the doing of all things which may fairly be regarded as in furtherance of the general object of the enactment.’

See, also, People v. Mahaney, 13 Mich. 481;Commerce-Guardian Savings Bank v. State of Michigan, 228 Mich. 316, 200 N.W. 267;People v. Monroe, 349 Ill. 270, 182 N.E. 439, 85 A.L.R. 605.

Nor does the fact that the regulations affect more than one type of corporation or industry make the statute unconstitutional as containing more than one subject. Toledo, A. A. & G. T. Ry. v. Dunlap, 47 Mich. 456, 11 N.W. 271.

In Jenking v. Secretary of State, 79 Mich. 305, 44 N.W. 787, we said: ‘We think the act of 1885, so far as it authorizes the formation of corporations for manufacturing or mercantile purposes, or of any union of the two, is valid legislation. It is not open to the objection that the title embraces more than one object. Any corporation created under this law can be created for all of its purposes. It is common knowledge that in this state, since 1855, all of our mining and manufacturing corporations were organized under an act the title of which authorized incorporations for mining and manufacturing purposes.’

In Hansen v. Harris, 145 Or. 487, 28 P.(2d) 649, 653, the court said: ‘The title to 1917 Session Laws (Washington) c. 80, p. 271, which is the one which the defendant criticizes, is: ‘An Act relating to banking and trust business; the organization, regulation, management and dissolution of banks and trust companies, providing penalties and repealing certain acts and declaring an emergency.’ The appointment of receivers is not the objective which the act seeks to achieve, but is merely one of the means or instrumentalities by which the real objective is attained; that is, the preservation of the solvency of banks and the protection of those who are interested in them. Hence, since the title mentions the dissolution of banks, it was not necessary to mention receiverships in the title. 59 C.J., statutes, p. 814, § 394; 25 R.C.L. Statutes, p. 858, § 104; Idleman v. State of Oregon [146 Or. 13],27 P.(2d) 305. We find no merit in this contention.'

See, also, In re Estate of Wellings, 192 Cal. 506, 221 P. 628.

In the instant case the object of Act No. 32, Pub. Acts 1933, is the regulation of banks and trust companies; and, while the object is the regulation of two types of corporations, both have in the past been subject to the same type of regulation by the same state banking commissioner.

Act No. 108, Pub. Acts 1889, requires trust companies to report their condition to the commissioner of the state banking department and are subject to its supervision and inspection. Moreover, under certain conditions the banking commissioner may file a bill in chancery for the appointment of a receiver to wind up the affairs of such a company. These same provisions are retained in Act No. 67, Pub. Acts 1929. The powers granted to trust companies in Act No. 108, supra, are similar to the powers granted in Act No. 67, Pub. Acts 1929, except that the latter act authorizes the trust companies to apply to the banking commissioner for authority to engage in a general commercial...

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