Bank Com'rs v. Granite State Provident Ass'n

• Decision Date: 15 March 1901
• Citation: 49 A. 124,70 N.H. 557
• Parties: BANK COM'RS v. GRANITE STATE PROVIDENT ASS'N.
• Court: New Hampshire Supreme Court

49 A. 124

70 N.H. 557

BANK COM'RS

v. GRANITE STATE PROVIDENT ASS'N.

Supreme Court of New Hampshire. Hillsboro.

March 15, 1901.

Proceeding by the bank commissioners against the Granite State Provident Association for winding up the affairs of the defendant as an insolvent corporation. Case discharged.

John Hatch, for plaintiffs. Taggart & Bingham, for assignee. Harry E. Loveren, Lexow, McKellar & Wells, and Harry S. Bandler, for New York receiver. Harry E. Loveren and Howard W. Hayes, for New Jersey receiver. Harry E. Loveren, for Michigan and Rhode Island receivers.

Drury& Hurd, for Maryland shareholders. Edward 1. Baker, for Cobe and others, assignees of certificate holders.

CHASE, J. The defendants were incorporated in this state in 1881, and were authorized, among other things, to carry on the business of a building and loan association. Laws 1881, c. 233. Upon petition of the plaintiffs, David A. Taggart was appointed assignee of their property and effects March 18, 1896, under the provisions of section 15, c. 162, Pub. St. He accepted the trust, and has substantially converted all the assets in his possession into cash. The defendants did business in 24 states, and ancillary receivers were appointed in 16 of them. These receivers have also substantially converted the assets received by them into cash. Some of them are ready and willing to remit their balances of cash above expenses, etc., to the assignee, some have refused to remit, and some are undecided whether they will remit or not. The assignee has on hand a sufficient sum of money to pay the expenses of administration in this state and the debts that have been proved here, and leave a balance for distribution among shareholders. The shareholders number over 26,000. More than 3,000 of them reside in New York. The defendants deposited $100,000 with the New York superintendent of banks, in compliance with the provisions of the banking law of the state, in order to secure the privilege of doing business there. An ancillary receiver in that state was appointed in an action brought by the attorney general, in behalf of the people, for the sequestration and preservation of the assets and property of the defendants in the state, and for an equitable distribution of the same among the persons entitled thereto. Taggart appeared in the action, and claimed that the funds collected by the receiver should be paid to him for distribution. The receiver has realized about $69,000 from the sale of real estate located there, and from collections upon mortgages and other obligations due from parties in that state, sent to him by the assignee under authority given by this court. He also has received from the superintendent of banks the $100,000 above mentioned. For convenience, the first-named sum is hereinafter designated as the "general fund," and the last-named as the "special fund." Creditors residing in New York have claims amounting to nearly $117,000, and the aggregate par value of the shares of shareholders residing there is upwards of $200,000. The court of that state has adjudged that the receiver pay to Taggart the general fund, less costs, etc., upon his giving an undertaking with sufficient sureties in a sum double the amount so paid, to pay the New York creditors and shareholders the same rates of dividend that are awarded to other creditors and shareholders throughout the country, without deduction on account of payments to the former of dividends from the special fund; or, in default of so doing, to return the general fund to the New York receiver. As to the special fund, the court decreed that, after deducting costs, etc., it should be applied first to the payment of the balance, if any, due New York creditors, and then to the payment of New York shareholders in proportion to their respective claims until paid in full, and, finally, if any balance was left, to pay it to the assignee.

1. One question raised relates to the effect of the decision in the New York case,—People v. State Provident Ass'n, 161 N. Y. 492, 55 N. E. 1053. Is this court bound to distribute the fund within its control so that New York shareholders shall receive the same percentage thereof that shareholders outside that state receive, notwithstanding the New York residents, according to that decision, are entitled to additional payments from the funds in that state? It has been decided by the United States supreme court that a judgment in a state court against a person appointed receiver ancillary to an appointment by a court of another state binds only the property that is in his custody as receiver within the state in which the judgment is rendered, the court in which primary administration was had retaining the custody of the remainder. Reynolds v. Stockton, 140 U. S. 254, 11 Sup. Ct. 773, 35 hi Ed. 464. In the opinion it is said (page 272, 140 U. S., page 778, 11 Sup. Ct., and page 470, 35 L. Ed.): "Whatever orders, judgments, or decrees may be rendered by the courts of another state in respect to sc much of the estate as is within its limits must be accepted as conclusive in the courts of primary administration; and whatever matters are by the courts of primary administration permitted to be litigated in the courts of another state come within the same rule of conclusiveness. Beyond this the proceedings of the courts of a state in which ancillary administration is held are not conclusive upon the administration in the courts of the state in which primary administration is had. And this rule is not changed although a party whose estate is being administered by the courts of one state permits himself or itself to be made a party to the litigation in the other." This court, then. Is bound by the New York decision so far as it relates to the property within the limits of that state, and no further. The appearance of the assignee in the action did not enlarge its binding effect here, for the reason, if for no other, that the issue alleged, heard, and decided in the action related solely to the rights of the parties in the property located in that state. The decision as to the general fund was that all the creditors of the corporation, wherever residing, are entitled to have it distributed among them "upon principles of perfect equality." Upon this point, the court say, citing Blake v. McClung, 172 U. S. 239, 19 Sup. Ct. 105, 43 L. Ed. 432, in support of the proposition: "The courts of one state have no right to favor domestic creditors in the distribution, but it must be made upon the principle that equality is equity." The decision as to the special fund was that it was a trust fund set apart by the defendants for the benefit of the creditors and shareholders residing in New York. The decision is based upon the provisions of the local statute, in compliance with which the defendants deposited the fund with the superintendent of banks to obtain the privilege of doing business in the state. The court say that: "By the act of the corporation itself in availing itself of the benefit of the statute it has devoted this fund to the benefit of the domestic creditors and shareholders, at least so far as to enable them to receive payment upon all their obligations in full. Therefore the application of the fund to their benefit in the first instance does not infringe upon the provision of the federal constitution that citizens of each state shall be entitled to all the...