Becker v. Amos

• Decision Date: 19 April 1932
• Citation: 105 Fla. 231,141 So. 136
• Parties: BECKER v. AMOS, State Comptroller, et al.
• Court: Florida Supreme Court

141 So. 136

105 Fla. 231

BECKER v. AMOS, State Comptroller, et al.

Florida Supreme Court, Division B.

April 19, 1932

Suit by Louis O. Becker against Ernest Amos, Comptroller of the State of Florida, and another. From a decree for defendants complainant appeals.

Affirmed. Appeal from Circuit Court, Dade County; Paul D Barns, Judge.

COUNSEL

T. E Price, of Miami, for appellant.

Hudson & Cason, of Miami, for appellees.

OPINION

DAVIS J.

The appellant in this case, by his bill of complaint filed in the court below, alleged that he was a depositor in the Southern Bank & Trust Company of February 6, 1928, upon which date the said Southern Bank & Trust Company closed its doors; that he had on deposit at that time the sum of $3,428.21; that subsequent to the closing thereof he entered into a contract agreeing with the Southern Bank & Trust Company for the reopening of the bank under certain terms and conditions embraced in this contract, which was attached to the bill of complaint.

The Southern Bank & Trust Company, having been closed by the comptroller, later was reopened in accordance with chapter 14487, Laws of Florida, Acts of 1929, under a 'freezing' agreement, accompanied by a 100 per cent. stock assessment. The 'freezing' agreement provided, in substance, that each depositor should be paid 5 per cent. of his deposit on the reopening of the bank; that each depositor should receive a certificate of deposit payable on or before 42 months after reopening for 55 per cent. of the deposit; that 40 per cent. of each deposit should be frozen and set aside to the liquidation of 'slow and doubtful' paper; and that moneys deposited after the reopening of the bank should not be affected by the 'freezing' agreement.

Thereafter, upon reopening, the bank paid 5 per cent. of each depositor's account in cash. It also issued to each of its depositors a special certificate of deposit for 55 per cent. of his deposit, payable 42 months after date, as well as a further certificate showing 40 per cent. of his deposit set aside for an indefinite period as 'a subordinated demand.' At divers times after the bank reopened, it made payments of dividends on its 55 per cent. deposit agreements which had been made payable in full 42 months after date, so that the aggregate of these dividends so paid on the 55 per cent. deposit agreements amounted to 20.685 per cent. of the total thereof.

Divers depositors, creditors, and holders of the 55 per cent. deposit certificates failed to call for their dividend checks which had been made out and kept available for delivery to them, with the result that on September 5, 1931, when the bank closed a second time, the Southern Bank & Trust Company had on hand, and turned over to its liquidator, the sum of $28,221.22 which had been set aside and kept on hand by the bank to provide for the payment of those who held certified checks, cashier's checks, 55 per cent. deposit certificates, and other unpaid payable claims against the bank.

On September 9, 1931, the appointment of E. P. Duncan, as liquidator of the bank after its second closing, was confirmed by the circuit court.

Shortly after this, the complainant, taking the position that the $28,221.22 fund above referred to was an asset of the bank which should be prorated for the benefit of all the creditors, and that he as a creditor was entitled to participate therein, filed his bill of complaint against the liquidator and comptroller, seeking injunctive relief to that end.

By his amended answer, the liquidator proposed a plan of his own for the disbursement of the bank's assets. This plan, in substance, was as follows: (1) That the liquidator would use the funds in his hands, after paying the expenses of liquidation, for the payment of such claims as were legally proved and established, and which were not barred by the statutes, in the following order: (a) All unpaid obligations incurred by the bank between its reopening on April 30, 1928, and its second closing on September 5, 1931, out of the assets acquired by the bank between such reopening and final closing; (b) the claim of each depositor who had not been paid his 5 per cent. dividend in cash alon with other depositors when the bank reopened, with a like dividend to be paid to those who held cashier's checks and certificates of deposit as creditors of the bank at the time it reopened; (c) that he would equalize dividends on the 55 per cent. 42 months' deposit certificates issued under the freezing agreement, by paying to each holder of such certificates not already paid that amount thereon, a sum sufficient to pay 20.865 per cent. of the face of all outstanding certificates of that character; (d) that he would make payment, so far as remaining funds should be available, ratably, on the unpaid balances due depositors on their 55 per cent. certificates. (2) That if any funds remained after making the payments hereinbefore mentioned, he would make payments, as far as funds should be available, ratably, on all the 40 per cent. 'subordinated claim' certificates, which had been issued to depositors under their 'freezing' agreement, with the understanding that same should be held as a subordinated claim to be realized out of the liquidation of 'slow' and 'doubtful' paper.

The chancellor sustained the contentions of the comptroller and liquidator as to the proper method of distribution of the assets and denied the injunction, from wich order complainant appealed.

We are of the opinion that the holding of the circuit judge was correct, and that the plan of distribution he has approved is in accordance with applicable provisions of law and should be affirmed.

In an able opinion which the chancellor filed at the time he denied the injunction and dismissed the complainant's bill, he said:

'It appears that this is a case wherein the Southern Bank & Trust Company was a going concern doing a banking business until 1928, at which time the assets and affairs of said bank were taken possession of by the Comptroller of the State of Florida pursuant to statute; that thereafter pursuant to statute, the depositor-creditors entered into a 'freezing' agreement pursuant to which the assets of said bank were turned back to the said Southern Bank & Trust Company for resuming business, acquiring assets and incurring new obligations, and in doing a regular banking business; that thereafter in the month of September, 1931, the Comptroller again took possession of the assets of the said Southern Bank & Trust Company for the benefit of administration of said estate for the benefit of the creditors of the said bank.

'It is apparent that after the Comptroller took possession of the 'bank' that he thereafter surrendered possession of it pursuant to chapter 11849, of the Laws of Florida, Acts 1927, which provides that after the Comptroller has taken possession of the bank because of its condition, etc., that he may:

"Upon conditions as may be approved by him, surrender possession of such bank for the purpose of permitting such bank * * * to resume business * * *'

'And further provides:

"that upon the petition and consent in writing of the representatives of an amount of the deposits of any such bank, banking company or banker, aggregating seventy-five (75%) per centum or more of the total deposits of such bank, banking company or banker, the Comptroller shall by order freeze all deposits of such bank, banking company or banker upon such reasonable terms and conditions as he may fix, as one of the terms of such resumption of business. * * *'

'The Act is subject to (the) construction, that the assets of said bank as of the time of 'freezing' are assets held by the Comptroller for the benefit of of the creditors of said bank, who thereupon become and are the cestui que trustents; that the Comptroller as trustee has the option of administrating said trust fund for the benefit of the beneficiaries, himself through his liquidator, or might surrender the bank upon conditions as might be approved by him, and in the event petition and consent in writing of those persons representing 75% of the total depositors of said bank, should order all deposits frozen upon such terms and conditions as he may fix; thereupon, instead of he, the Comptroller, the bank itself would become the administrator of said trust estate, with its clear duties as such, and upon the bank re-opening, then of course the new and subsequent creditors become such, with the right that they, the new creditors or depositors, will not be involved in anywise with said bank except in its new status, and with the right to look to the new assets as security for the new obligations, and free of the hazard of their new deposits being confounded and commingled with the old deposits, and with the clear right that, in case of default, the new depositors will have the right to look to the stockholders's liabilities with assessments in case such becomes necessary; that the old assets of the old creditors shall be considered as a separate and distinct estate with its beneficiaries, and that the banking business thereafter shall be considered separate and distinct and apart from and with a clear line of demarcation between the two sets of creditors and the two sets of assets.

'I am of the opinion that the * * * foregoing construction is the correct one in this case and in those cases wherein a 'freezing' agreement and re-opening occurred pursuant thereto, but that such might not be the law when there was no 'freezing' agreement, and the bank was surrendered pursuant to the first proviso of the act, to-wit: chapter 11849, Laws of Florida, 1927.

'It further appearing unto the Court that in and by said answer the said defendant (Comptroller and

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