Bancoky. Co's Rec'R v. Nat'L Bk. of Ky.'s Rec'R
| Citation | 281 Ky. 784 |
| Parties | BancoKentucky Co.'s Receiver v. National Bank of Kentucky's Receiver, and four other cases. |
| Decision Date | 27 October 1939 |
| Court | United States State Supreme Court (Kentucky) |
2. Banks and Banking. — In proceedings for liquidation of national bank and bank's holding company, on claim against bank's receiver for amount paid to bank by holding company for worthless assets, wherein persuasive equities opposed each other in that the purchase of worthless assets was authorized by members of the interlocking directorate with good faith intention of benefiting both bank and company, but such purpose was not accomplished and insolvency of both institutions shortly followed, liability was determined by the application of strict legal principles.
3. Corporations. — A general manager of corporation has implied power only to do what is usual and customary in business.
4. Bank and Banking; Corporations. — The purchase for $600,000 of national bank's assets, which were known to be "slow" and actually were worthless, was not within by-law of bank's holding company providing that company's president should have "general supervision over the business and affairs of the corporation," and hence purchase of such assets by president was a mere "gift" under the circumstances, and company's receiver could recover and purchase price from bank's receiver.
5. Corporations. — The fact that bank's directors, who passed resolution authorizing request that bank's holding company purchase certain assets from bank, were also directors of holding company and that bank's officers were officers of holding company, was additional ground for authorizing recovery from bank's receiver when the assets purchased turned out to be worthless.
6. Corporations. — Generally, where good faith of transactions between corporations having interlocking directorates is questioned, those who would sustain such transactions must show their fairness.
7. Corporations. — One who was president both of national bank and of bank's holding company, and acted in negotiating holding company's purchase of slow assets from bank, acted as a dual agent, and hence owed both institutions the duty of disclosing all facts which might reasonably affect the judgment of each.
8. Corporations. — In proceedings for liquidation of national bank and bank's holding company, on claim against bank's receiver for amount paid by holding company for worthless assets, evidence held to establish that person who was president of both institutions failed in his duty to both institutions by not disclosing the identity and character of the assets and by failing to disclose to holding company that the transaction was contemplated.
9. Corporations. — Where officers of national bank's holding company who were also officers of bank, did not have power to purchase large amount of bank's assets for holding company, the purchase was invalid though bank's directors, constituting less than a majority of the holding company's directors, adopted a resolution authorizing bank to request the holding company to purchase.
10. Receivers. — In proceedings for liquidation of national bank and bank's holding company, wherein bank's receiver filed claim against holding company's receiver, holding company's receiver could file exceptions alleging the facts involved in bank's sale of assets to holding company and claiming set-off against the bank's claim on ground of worthlessness of such assets, since all questions of law and fact affecting claims filed could be raised either by answer or by exceptions.
11. Limitation of Actions. — In proceedings for liquidation of national bank and bank's holding company, wherein company's receiver filed pleading purporting to be "objections and exceptions" to bank's claim, but actually asserting counterclaim based on bank's sale of worthless assets to the company, was amended and styled "amended answer, counter-claim and set-off" without stating a new ground of relief, the amendment related back to the filing of the original pleading as respects running of limitations (Ky. Stats., secs. 2515, 2519).
12. Election of Remedies. — The doctrine of election is based upon the assumption of an inconsistency between two proceedings, in that litigant is not permitted to invoke the court's aid upon two contradictory theories based upon the same facts.
12. Election of Remedies. — The filing, by receiver of national bank's holding company, of suit against company's directors for alleged fraud in consummating purchase of worthless assets from the bank, was not inconsistent with recovery of the purchase price from the bank's receiver in liquidation proceedings, on theory of fraud or ultra vires, and hence did not bar such recovery on ground of election of remedies.
14. Banks and Banking. — The receiver of national bank's holding company did not waive claim against the bank for purchase price of worthless assets sold to company by the bank, nor ratify the purchase, by alleging in petition for advice on whether to accept compromise offered by the holding company's directors of claim against them for negligence in the transaction, that he was of opinion that directors were not guilty of negligence or wrongdoing.
15. Compromise and Settlement. — The facts that receiver of national bank's holding company accepted compromise settlement of claims against the company's directors for alleged fraud in arranging for purchase of worthless assets from the bank, and that compromise judgment was entered pursuant thereto, did not preclude recovery on claim against the bank's receiver for amount paid for such assets.
16. Pleading. — In suit by holding company's receiver against directors for mismanagement, wherein petition complained of the directors' having arranged for purchase of worthless assets from bank, the filing of receiver's petition for advice alleging that in his opinion the directors were not guilty of negligence or wrongdoing in the transaction was in effect an amendment of the petition, abandoning cause of action against the directors on such items, though not styled an amendment.
17. Judgment. — In determining effect of judgment entered pursuant to compromise of holding company's claim against its directors, as precluding holding company's receiver from attacking transaction effected by the directors, it must be assumed that the court, as it approved the compromise, also approved and accepted statement in receiver's petition for advice on whether to accept the compromise, that in his opinion directors were not guilty of negligence or wrongdoing and permitted the consent judgment to be entered on the basis that directors were not liable on the transaction.
18. Banks and Banking. — Where securities belonging to national bank's holding company came into possession of bank's receiver upon appointment, merely because holding company had no separate place of business and kept its securities on the bank's premises, bank's receiver had no lien on proceeds of sale of such securities by virtue of the company's collateral-form demand note granting a lien on all of the company's money in the bank to secure every liability of the company.
19. Banks and Banking. — The rights given by a pledge to bank under collateral-form demand note giving bank a lien not only on collateral attached thereto but on all of maker's money in the bank, to secure every liability of maker, apply only to obligations incurred by the maker and to property coming into bank's custody in the regular course of business.
20. Limitation of Actions. — Where agreement to waive the running of limitations referred specifically both to the four-month limitation under Bankruptcy Act and to the six-month period of limitation during which preferences may be avoided, such agreement remained operative after expiration of time for filing petition in bankruptcy (Ky. Stats., sec. 1911).
21. Contracts. — An agreement to waive the statute of limitations on a particular cause of action was valid when made after the cause of action had already accrued (Ky. Stats., sec. 1911).
22. Receivers. — In proceedings for liquidation of national bank and bank's holding company, wherein bank's receiver presented claim against the company's receiver for stockholder's liability in informal manner, the company's receiver thereby became entitled to counterclaim concerning all matters connected with the subject matter of the action, including his right to collect assets belonging to the holding company and misappropriated by bank's receiver (Civil Code of Practice, sec. 96).
23. Set-Off and Counterclaim. — A counterclaim may only be filed by a defendant against a plaintiff or against him and another (Civil Code of Practice, sec. 96).
24. Receivers. — In proceedings for liquidation of national bank and bank's holding company, where bank's receiver presented claim against holding company's receiver to enforce statutory stockholders' liability, he thereby became entitled to an adjudication without petition or other formal pleading, and thereby submitted himself to the receivership court's jurisdiction to adjust all matters connected with collection and distribution of the estate.
25. Equity. — Generally, and especially in the settlement of insolvent estates, courts of equity having jurisdiction of the parties will decide all matters in dispute and decree complete relief.
26. Receivers. — The equity court has inherent power in the distribution of an insolvent estate to require a claimant, as a condition precedent to...
To continue reading
Request your trial