Bernardez v. Federal Deposit Ins. Corp.

• Decision Date: 09 August 1984
• Citation: 478 N.Y.S.2d 644,104 A.D.2d 309
• Parties: Francisco Fernandez BERNARDEZ, et al., Plaintiffs-Appellants, v. FEDERAL DEPOSIT INSURANCE CORPORATION, etc., Defendant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 644

478 N.Y.S.2d 644

104 A.D.2d 309

Francisco Fernandez BERNARDEZ, et al., Plaintiffs-Appellants, v. FEDERAL DEPOSIT INSURANCE CORPORATION, etc., Defendant-Respondent.

Supreme Court, Appellate Division,

First Department.

Aug. 9, 1984.

H.E. Cooper, New York City, for plaintiffs-appellants.

J.M. Epstein, New York City, for defendant-respondent.

Before MURPHY, P.J., and KUPFERMAN, SULLIVAN, SILVERMAN and FEIN, JJ.

MEMORANDUM DECISION.

Judgment, Supreme Court, New York County entered August 5, 1983, granting defendant's motion to dismiss the complaint as time-barred, affirmed, with costs and disbursements.

Section 625(3) of the Banking Law provides that an action by claimants against a receiver of a failed bank for recovery upon a non-approved claim must be filed "at the expiration of eighty days after the last date fixed by the Superintendent for the presentation of claims and at any time within six months thereafter." This requirement has been construed to be a condition precedent to the institution of an action rather than a statute of limitations. (Zuroff v. Westchester Trust Co., 273 N.Y. 200, 203, 7 N.E.2d 100.) Plaintiffs, whose timely action in the Federal courts for the same claim as is asserted here was dismissed because of lack of subject matter jurisdiction, claim that CPLR 205(a) permits the filing of a new action in the state court within six months after the termination of the prior action when the previous action was dismissed for, inter alia, lack of subject matter jurisdiction.

On that issue, however, Carr v. Yokohama Specie Bank, 272 App.Div. 64, 69 N.Y.S.2d 262 affd. 297 N.Y. 674, 76 N.E.2d 330 is dispositive. There, the court held that the ameliorative tolling or extension provisions of the then Civil Practice Act did not apply where the time period within which a claim must be filed is viewed as a condition precedent, rather than a statute of limitations. Conceding that the rule was drastic, and citing Zuroff, supra, the court stated, the "provision that the Superintendent shall have no power to accept any claim presented after the date specified operates as a prohibition." (Id., 272 App.Div., at 67, 69 N.Y.S.2d 262.) The court added that the legislature apparently intended to prevent a situation where a multitude of investors could not "obtain their liquidation dividends for a protracted length of time." (Id., 272 App.Div., at 69, 69 N.Y.S.2d 262.)

While, concededly, the availability of deposit insurance and the procedures now in place militate against the likelihood that depositors will remain without their funds for any significant period of time, the statute, when drafted, had a legitimate purpose, is free from constitutional infirmity, and must thus be enforced by the courts. If section 625(3) of the Banking Law no longer serves the purpose for which it was enacted that is a matter for the legislature, not the judiciary. (See Camarella v. East Irondequoit Cent. School Bd., 34 N.Y.2d 139, 142, 356 N.Y.S.2d 553, 313 N.E.2d 29.) George v. Mt. Sinai Hospital, 47 N.Y.2d 170, 417 N.Y.S.2d 231, 390 N.E.2d 1156, and Carrick v. Central General Hospital, 51 N.Y.2d 242, upon which the dissent relies, are inapplicable here, since they concern the statute of limitations and not a condition precedent. Finally, the courts have held, even where constructive notice is received within the applicable time period, that a failure to comply with a condition precedent is fatal. (See, e.g., Pugh v. Board of Educ. Cent. Dist. No. 1--Fayetteville--Manlius School Dist., 30 N.Y.2d 968, 335 N.Y.S.2d 830, 287 N.E.2d 621.)

All concur except KUPFERMAN, J., who dissents in a memorandum as follows:

I would reverse and deny the motion to dismiss the complaint under Banking Law § 625 for untimeliness. Plaintiffs should be afforded the six month grace period provided by CPLR 205 in which to commence this action after the Federal court dismissed their prior action for lack of subject-matter jurisdiction.

This litigation arises out of the collapse of the American Bank & Trust Co. ("ABT"). In 1976, the Superintendent of Banks of the State of New York took possession and control of the business and assets of ABT (see Banking Law § 606), and appointed the FDIC as receiver of ABT (see Banking Law § 634). Ultimately, Bank Leumi assumed all of the liabilities and succeeded to all of the assets of ABT. Pursuant to a collateral agreement, the FDIC, acting in its corporate capacity, indemnified Bank Leumi for any liability incurred in excess of the assets of ABT. This action seeks damages in the amount of $1,395,000 plus interest from 1976 against the FDIC, as receiver, for allegedly wrongfully disallowing plaintiffs' claim.

After the FDIC disallowed plaintiffs' claim in 1977, plaintiffs commenced an action in Federal court within the six month period set by Banking Law § 625(3) in which such actions must be brought. By...