Barber v. Bryan
| Decision Date | 19 July 1932 |
| Docket Number | 28353 |
| Citation | 243 N.W. 834,123 Neb. 566 |
| Parties | WILLIAM G. BARBER, APPELLANT, v. CHARLES W. BRYAN, GOVERNOR, ET AL., APPELLEES |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Lancaster county: FREDERICK E SHEPHERD, JUDGE. Affirmed.
AFFIRMED.
Syllabus by the Court.
1. Under the Nebraska statute, an insolvent state bank closed by and in possession of the department of trade and commerce may be reorganized, recapitalized, restored to solvency and reopened.
2. In the reorganization and reopening of an insolvent state bank pursuant to statute, the change in capitalization, officers and management does not create a new or dissolve the old corporation.
3. A reorganized insolvent state bank operates under the original charter with the identity of the corporation unchanged.
4. An insolvent state banking corporation survives for the purpose of liquidation or reorganization.
5. Under the Nebraska statute, reorganization, recapitalization and reopening of an insolvent state bank in possession of the department of trade and commerce do not result in the dissolution of the old bank by liquidation or in the creation of a new bank.
6. Reorganization contract held to obligate the re organized bank to pay assessments levied in favor of the bank guaranty and final settlement funds before reorganization and to require a reserve fund created from old assets retained by the reorganized bank to meet the obligation, this requirement being a prerequisite to the reopening thereof.
7. An insolvent state bank openly receiving deposits and otherwise transacting a general banking business held liable for assessments levied during that period in favor of the bank guaranty and final settlement funds.
Appeal from District Court, Lancaster County; Shepherd, Judge.
Suit by William G. Barber, for himself and for and on behalf of all holders or owners of depositors, trust certificates of the Bank of Florence of Omaha, against Charles W. Bryan, as Governor of the State of Nebraska, and others. From a judgment in favor of defendants, the plaintiff appeals.
Affirmed.
E. C Finlay and Robert M. Cordill, for appellant.
C. A. Sorensen, Attorney General, and L. Ross Newkirk, contra.
Heard before GOSS, C. J., ROSE, DEAN, EBERLY and DAY, JJ., and DICKSON and TEWELL, District Judges.
This is a controversy over unpaid assessments aggregating $ 7,215.06, which the department of trade and commerce levied at different times in favor of the bank guaranty and final settlement funds against the Bank of Florence while it was conducting a commercial banking business at Omaha under a charter from the state.
When insolvent May 9, 1930, the bank was closed by the department of trade and commerce after the assessments were levied, but it was never in charge of a receiver for purposes of liquidation. By virtue of a contract between creditors and reorganizers for the reopening of the bank when restored to solvency, it was regularly reopened for general banking June 21, 1930, under new management with the approval of the department of trade and commerce. As indemnity against the unpaid guaranty fund assessments, the reorganized bank, as a prerequisite to reopening, was required to enter and maintain on its books a reserve of $ 7,215.06, a fund created from assets in possession of the bank when reorganized. Under the reorganization agreement the depositors and unsecured creditors devoted 60 per cent. of their respective claims to the purchasing of slow, doubtful and worthless bank assets which were assigned or transferred to trustees for the benefit of the purchasers. The trustees were charged with the duty of liquidating the purchased assets and of distributing the net proceeds to the beneficiaries of the trust. The remainder of the claims for deposits and unsecured credits, or 40 per cent., were held by depositors and unsecured creditors as unpaid obligations of the reorganized bank. To the extent of 60 per cent. of each deposit and of each unsecured claim a trust certificate of the bank was issued to each depositor and to each unsecured creditor. William G. Barber, plaintiff, received a trust certificate for $ 935.65 and brought suit for himself and for all other certificate holders.
The Bank of Florence and the officers who control the department of trade and commerce and who are custodians of the bank guaranty and final settlement funds are defendants.
Plaintiff prayed for a decree that the reserve fund of $ 7,215.06 in possession of the reorganized bank does not belong to the state guaranty fund or to the final settlement fund; that neither the bank nor plaintiff nor any other creditor became liable for the assessments aggregating $ 7,215.06; that the reserve fund and the assets comprising it belong to plaintiff and other depositors and creditors who are certificate holders and beneficiaries of the trust in their favor; that the officers in control of the department of trade and commerce be enjoined from collecting the assessments.
The state officers sued by plaintiff did not challenge the petition by answer. The reorganized Bank of Florence, defendant, denied liability to the bank guaranty and final settlement funds for the assessments, but prayed, in the event of a judicial decision to the contrary, for permission to pay the assessments with the reserve fund or assets retained in its possession for that purpose.
The district court heard the controversy on the pleadings, the reorganization contract, the facts stipulated by the parties and the arguments of counsel. From a judgment dismissing plaintiff's petition and declaring the assessments valid obligations of the reorganized bank, which the latter is entitled to discharge with assets retained in its possession, plaintiff appealed.
In presenting assignments of error, plaintiff argued that reorganization pursuant to statute is a step in the liquidation of an insolvent bank and does not make the new bank liable for obligations of the old; that the officers of the department of trade and commerce permitted the bank to remain open with knowledge of its insolvency long before the assessments were levied, without any entry of the statutory reserve on the bank books, thus creating an estoppel to enforce collections; that the assessments were void because they were illegally assessed against an insolvent bank solvent banks only being subject to such burdens; that in exacting...
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