Bates v. Farmers Sav. Bank of Ankeny, Federal Deposit Ins. Corporation, Interveners

• Court: Iowa Supreme Court
• Citation: Bates v. Farmers Sav. Bank of Ankeny, Federal Deposit Ins. Corporation, Interveners, 3 N.W.2d 517, 231 Iowa 1151 (Iowa 1942)
• Decision Date: 05 May 1942
• Docket Number: 45845.
• Parties: BATES, Superintendent of Banking, v. FARMERS SAV. BANK OF ANKENY (FEDERAL DEPOSIT INS. CORPORATION et al., Interveners).

3 N.W.2d 517

231 Iowa 1151

BATES, Superintendent of Banking, v. FARMERS SAV. BANK OF ANKENY (FEDERAL DEPOSIT INS. CORPORATION et al., Interveners).

No. 45845.

Supreme Court of Iowa

May 5, 1942

Carr, Cox, Evans & Riley, of Des Moines, and John L. Cecil and Francis C. Brown, both of Washington, D C., for cross-appellant Federal Deposit Insurance Corporation.

Bump Graeser, Shaw & Bump, of Des Moines, for appellants intervening stockholder petitioners.

Robert D. Jackson, of Des Moines, for appellee.

WENNERSTRUM Justice.

This appeal has developed by reason of an application made by the superintendent of banking, as receiver of the Farmers Savings Bank of Ankeny, Iowa, in the receivership proceedings pertaining to that bank for instructions and directions as to the distribution of the remaining assets of the receivership after all the creditors, including all depositors, have been paid the face value of their respective claims. The receiver particularly asked the court to determine whether or not the depositors should be paid interest on their deposit claims or the remaining assets be distributed to the preferred stockholders of the bank. The court held that, after the payment of all debts and general claims of the receivership, the remaining assets should be used to pay interest on the preferred claims, the claims of depositors and general claims against the bank, at the rate of 5% per annum. The court further held that interest on these claims should be computed from the date or dates when such claims were allowed by order of court. The preferred stockholders of the bank, who had intervened in these proceedings, appealed from the order of the court allowing the interest on the depositors' claims and from the denial of their application that the surplus assets be distributed to them. The Federal Deposit Insurance Corporation, which had insured the deposits of the bank to the extent provided by the federal act and who had also intervened in these proceedings, has appealed from the order of the trial court refusing to allow interest from the date of the closing of the bank rather than from the date of the allowance of the claims of the Federal Deposit Insurance Corporation.

Issues before this court for determination may be summarized as follows: (1) Should the Federal Deposit Insurance Corporation (hereinafter referred to as the FDIC) as assignee and subrogee and, therefore, successor in interest to the rights of the depositors whose insured deposits it had paid, be allowed interest from the date of the bank's closing, and, in this same connection, should interest be allowed to depositors whose individual claim exceeded the amount of the insured deposit from the date of the bank's closing; (2) or should the surplus, in the hands of the receiver, be distributed to the preferred stockholders.

The Farmers Savings Bank of Ankeny, Iowa (hereinafter referred to as the bank), was closed on May 19, 1938. Several years prior to the closing of this bank there had been a re-organization of the bank and a refinancing of its capital structure and, in this connection, there was issued, and paid for in cash, $6,000 of preferred stock. This amount of preferred stock was outstanding at the time of the closing of the bank.

The record discloses, as previously stated, that the receiver has on hand a sufficient amount to pay all creditors, including the FDIC and the depositors whose deposits exceeded $5,000, the full amount of their claims. After the payment of all claims, there will remain a surplus of approximately $3,384.84. The question as to the manner in which this surplus should be distributed has occasioned this litigation.

Certain of the provisions in the Federal Deposit Insurance Corporation Act, U.S. C.A. title 12, § 264 (l), (6) (7), are as follows:

"(6) Whenever an insured bank shall have been closed on account of inability to meet the demands of its depositors, payment of the insured deposits in such bank shall be made by the Corporation as soon as possible, subject to the provisions of paragraph (7) of this subsection, either (A) by making available to each depositor a transferred deposit in a new bank in the same community or in another insured bank in an amount equal to the insured deposit of such depositor and subject to withdrawal on demand, or (B) in such other manner as the board of directors may prescribe: Provided, That the Corporation, in its discretion, may require proof of claims to be filed before paying the insured deposits, and that in any case where the Corporation is not satisfied as to the validity of a claim for an insured deposit, it may require the final determination of a court of competent jurisdiction before paying such claim.

"(7) In the case of a closed national bank or District bank, the Corporation, upon the payment of any depositor as provided in paragraph (6) of this subsection, shall be subrogated to all rights of the depositor against the closed bank to the extent of such payment. In the case of any other closed insured bank, the Corporation shall not make any payment to any depositor until the right of the Corporation to be subrogated to the rights of such depositor on the same basis as provided in the case of a closed national bank under this section shall have been recognized either by express provision of State law, by allowance of claims by the authority having supervision of such bank, by assignment of claims by depositors, or by any other effective method. In the case of any closed insured bank, such subrogation shall include the right on the part of the Corporation to receive the same dividends from the proceeds of the assets of such closed bank and recoveries on account of stockholders' liability as would have been payable to the depositor on a claim for the insured deposit, but such depositor shall retain his claim for any uninsured portion of his deposit: Provided, That the rights of depositors and other creditors of any State bank shall be determined in accordance with the applicable provisions of State law."

In this connection it should also be noted that section 9283-g3, 1935 Code of Iowa, which was in force at the time of the closing of the bank, is as follows: "Whenever the federal deposit insurance corporation shall pay, or make available for payment, the insured deposit liabilities of any closed state bank, trust company, bank and trust company, banking association or stock savings bank, it shall be subrogated to all rights of the depositor to the extent of such payment. Such subrogation in the case of any closed state bank, trust company, bank and trust company, banking association or stock savings bank shall include the right to receive the same dividends from the proceeds of the assets of said closed bank as would have been payable to such depositor on a claim for the insured deposit, such depositor retaining his claim for any uninsured portion of his deposit." I. The particular question as to the right of the FDIC to receive interest on their claim, where a receivership has paid all claims in full, has not heretofore been before this court. We find, however, that we have heretofore given consideration to this problem in a general way in the case of Leach v. Sanborn State Bank, 210 Iowa 613, 615, 231 N.W. 497, 498, 69 A.L.R. 1206, where we said: "Three rules governing the payment of interest on claims against receivers would seem to be in force generally in the federal and state courts: (a) That interest will not be allowed on the claims of creditors, Hinrichs v. [ E. B.] Higley & Co., 199 Iowa 765, 202 N.W. 746, unless (b) the assets of the estate in the hands of such receiver are sufficient to pay all of the claims adjudicated against it, together with interest and costs of administration, Hinrichs v. [ E. B.] Higley & Co., supra; (c) * * *." (Italics supplied).

In 9 C.J.S., Banks and Banking, p. 1011, § 527, the following statement is made: "According to the rule which would seem to be more generally accepted in the state and federal courts, interest will not, in the absence of a statutory provision therefor, be allowed on claims of creditors of the bank unless its assets in the hands of the receiver are sufficient to pay all of the claims adjudicated against it, * * *." (Italics supplied).

In 7 Am.Jur 536, par. 744, "Banks", in commenting upon the question now under consideration, the following statement is made: "* * *. Accordingly, the general rule is that interest on general claims against an insolvent bank will not be computed for...