Birdsey v. Commercial Nat. Bank of Macon
| Decision Date | 30 June 1915 |
| Parties | BIRDSEY v. COMMERCIAL NAT. BANK OF MACON ET AL. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
A state court has no jurisdiction to entertain a stockholder's suit for winding up the affairs of a national bank, where no other relief is prayed. Such actions must be brought in a court of the United States.
(a) Where the directors of an insolvent national bank undertook to liquidate its affairs and consolidate it with another national bank, by delivering its assets to such bank, which took over the business of the liquidating bank, a suit by a stockholder against the liquidating bank, its directors, and the absorbing bank, attacking the legality of such consolidation, praying no relief against the directors or the absorbing bank, but praying to wind up the affairs of the liquidating bank, must be brought in a federal court.
Error from Superior Court, Bibb County; H. A. Mathews, Judge.
Action by A. H. Birdsey against the Commercial National Bank of Macon and others. Judgment for defendants, and plaintiff brings error. Affirmed.
A. H Birdsey, a minority stockholder of the Commercial National Bank of Macon, Ga., a national bank organized under the laws of the United States, brought his petition against that bank its directors, and the American National Bank of Macon, Ga alleging, in substance, as follows: The Commercial National Bank was a going concern until Saturday night, August 1 1914, when, without notice to petitioner, its directors transferred and delivered all of its assets to the American National Bank. The deposits of the Commercial National were placed with the American National Bank to the credit of the depositors of the Commercial, and notice to this effect, signed by the Commercial National Bank, was published the next day in the daily papers of Macon. In the same issue of the papers the American National Bank published a notice to the depositors and customers of the Commercial National Bank, announcing the consolidation of the Commercial National Bank with the American National Bank, and that the American National Bank had taken over all the assets of the Commercial National Bank, and would in the future take care of all the business formerly handled by the Commercial National Bank. The transfer of the assets of the Commercial National Bank by its directors to the American National Bank, without the consent of its stockholders, was an attempt to liquidate its business by the Commercial National Bank, which was insolvent at the time of such attempted transfer. The plaintiff will suffer a special injury by this transfer, as under the national banking law stockholders are personally liable to creditors in a sum equal to the stock owned by them; and it is charged that a deficit existed when the consolidation between the two banks was attempted. The Commercial National Bank, recognizing the lack of power on the part of its directors to transfer its assets to another bank without the assent of the stockholders, subsequently to the attempted transfer called a meeting of them for the purpose of submitting to them the action of the directors respecting the merger and consolidation of the two banks. In the notice of the proposed stockholders' meeting, no statement of the condition of the bank is contained, nor is any information given upon which the stockholders could act. It is alleged:
That it would be more economical, and better conserve the interests of the Commercial National Bank, that its affairs be liquidated through a receivership than through a committee appointed for the liquidation of the bank by a majority of its stockholders, which the defendants are seeking to do. That the petitioner applied to the comptroller of the currency for relief, who, upon being informed that the depositors had been paid, declined to interfere or appoint a receiver. The prayers of the petition were for the appointment of a receiver to liquidate the business of the bank and to wind up its affairs and to enjoin the defendants from interference with such liquidation. No substantial relief was prayed either against the directors or the American National Bank. A rule nisi was issued, calling on the defendants to show cause why a receiver pendente lite should not be appointed. In response to the rule nisi, the defendants presented their respective demurrers, setting up, among other things, that the superior court of Bibb county was without jurisdiction to wind up the affairs of a national bank through a receivership, under the circumstances alleged in the petition. On the hearing the court refused to appoint a receiver, on the ground that the court was without jurisdiction. Exception is taken to this judgment.
Where directors of an insolvent national bank undertake to liquidate its affairs and consolidate it with another bank, a stockholder's suit attacking such consolidation, but praying no relief against the directors of the absorbing bank, though praying to wind up the affairs of the liquidating bank, must be brought in a federal court.
Feagin & Hancock and T. S. Felder, all of Macon, for plaintiff in error.
Jordan & Lane and Hardeman, Jones, Park & Johnston, all of Macon, for defendants in error.
EVANS, P.J. (after stating the facts as above).
There are some loose allegations in the petition about the mismanagement of the affairs of the banking association by its directors, but no specific charge of fraud or mismanagement is alleged. There is no contention that the American National Bank or the directors of the Commercial National Bank are wasting the assets of the liquidating bank included in the transfer of the 1st of August. No judgment or...
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