Broderick v. McGuire

• Citation: 174 A. 314,119 Conn. 83
• Court: Supreme Court of Connecticut
• Decision Date: 27 July 1934
• Parties: BRODERICK, N.Y. Superintendent of Banks, v. McGUIRE et al.

174 A. 314

119 Conn. 83

BRODERICK, N.Y. Superintendent of Banks, v. McGUIRE et al.

Supreme Court of Errors of Connecticut.

July 27, 1934

Appeal from court of Common Pleas, New Haven County; Walter M Pickett, Judge.

Action by Joseph A. Broderick, Superintendent of Banks of the State of New York, against Mary McGuire and others, to recover assessments against defendants as stockholders of the Bank of the United States. From a judgment, entered for named defendant on plaintiff's failure to plead further after such defendant's demurrer to the complaint was sustained plaintiff appeals.

Error judgment set aside, and case remanded.

Frank Rich and George Dimenstein, both of Stamford, and Arthur Ofner and Carl J. Austrian, both of New York City, for appellant.

Benjamin Slade, Joseph Shelnitz, and Alfred C. Baldwin, Jr., all of New Haven, for appellee.

Argued before MALTBIE, C.J., and HAINES, HINMAN, BANKS, and AVERY, JJ.

MALTBIE, Chief Justice.

This is an action brought by the superintendent of banks of the state of New York, who had taken possession of the business and property of the Bank of United States, a New York banking corporation, under authority of the statutes of New York, to recover from the defendants, stockholders in the bank, assessments made by him, as necessary to satisfy the claims of creditors of the corporation. The writ named some hundred defendants, and the complaint claimed damages from each defendant severally in an amount varying from $250 to $650. The trial court sustained a demurrer to the complaint filed by one of the defendants. Thereafter, in order to simplify the case for presentation to this court, a substitute demurrer was filed designed to raise all questions as to the legal sufficiency of the complaint advanced by any of the defendants. The trial court then ruled specifically upon the various grounds stated, sustaining some and overruling others. In so far as the grounds of demurrer were sustained, the plaintiff has appealed to this court; and the defendant has brought before us by bill of exceptions the decision of the trial court in so far as it overruled certain of the grounds. Aside from matters of procedure, the underlying issue is as to the right of the plaintiff to enforce in the courts of this state payment of the assessments made by him against the defendants, stockholders in a banking corporation of which he has taken possession, under the provisions of the statutes of New York.

The demurrer does not raise any question as to the legality of the acts of the plaintiff in taking possession of the business and property of the bank, nor is it claimed that, in making the assessments, he did not proceed strictly in accordance with the procedure established by the New York statutes. It is not, therefore, necessary to refer in detail to the provisions of the statutes governing these matters. Section 7 of article 8 of the Constitution of New York provides that the stockholders of every corporation and joint-stock association for banking purposes shall be individually responsible, to the amount of their respective share or shares of stock in any such corporation or association, for all its debts and liabilities of every kind. The provisions of the statutes relevant to the issues before us are, briefly, as follows: Whenever the superintendent of banks has taken possession of the property and business of a banking corporation, has duly notified creditors to present claims and the time within which such claims are to be presented has expired, and he has determined from his examination of the affairs of the bank that the reasonable value of its assets is not sufficient to pay its creditors in full, he may enforce the individual liability of stockholders. He is required to make written demand upon each stockholder by registered letter stating the total amount assessed against the stockholders and the equal and pro rata share assessed against each for each share of stock he owns. If the assessment is not paid within the time fixed in the notice, the superintendent is specifically given " a cause of action," in his name as superintendent, against each stockholder, either severally or jointly with others, to recover the amount of the assessment with interest. The statutes provide that the written statement of the superintendent, under his hand and seal of office, reciting his determination to enforce the individual liability, or any part thereof, of such stockholders, and setting forth the value of the assets of the corporation and the liabilities thereof, as determined by him after examination and investigation, shall be presumptive evidence of the facts stated. When the superintendent has taken possession of a bank, all actions to enforce the liability of stockholders to the assessment must be taken and prosecuted in his name, unless after request he refuses to act. Banking Law of New York (Consol. Laws, c. 2) § § 57, 72, 79, 80. If, after the legal demands of creditors have been satisfied, any assets remain in his hands, they are required to be distributed, under order of court, among the stockholders in proportion to their stockholdings. Banking Law, § 120; Broderick v. Aaron; 147 Misc. 854, 264 N.Y.S. 15, 18.

The right of a superintendent of banks to levy such an assessment as that here involved and, if it is not paid, to bring an action to enforce it, has been upheld by the courts of New York. Van Tuyl v. Scharmann, 208 N.Y. 53, 101 N.E. 779; Van Tuyl v. Sullivan, 173 A.D. 391, 156 N.Y.S. 309, affirmed 217 N.Y. 691, 112 N.E. 1078; Skinner v. Schwab, 188 A.D. 457, 177 N.Y.S. 143, affirmed 229 N.Y. 549, 129 N.E. 910; Van Tuyl v. Robin, 80 Misc. 360, 142 N.Y.S. 535, affirmed 211 N.Y. 540, 105 N.E. 1101; Broderick v. Adamson, 148 Misc. 353, 265 N.Y.S. 804. One ground of demurrer, however, attacks the statute as involving an unconstitutional delegation of judicial power to an administrative officer. In the Matter of Union Bank of Brooklyn, 176 A.D. 477, 483, 163 N.Y.S. 485, 490, it is said: " As I have said, the liquidation contemplated and authorized by the Banking Law is not the result of any action or proceeding in court. Liquidation does not necessarily require nor imply judicial proceedings. The appointment of an officer to act in liquidation outside of judicial proceedings or apart from the judicial branch of the government is not open to objection as vesting him with judicial power." See Isaac v. Marcus, 258 N.Y. 257, 179 N.E. 487. In Van Tuyl v. Scharmann, supra, the similarity of the scheme of the statute to that provided by the United States statutes in connection with the liquidation of national banks was pointed out; and the provisions of the federal law have been repeatedly sustained by the United States Supreme court. Kennedy v. Gibson, 75 U.S. (8 Wall.) 408, 505, 19 L.Ed. 476; Casey v. Galli, 94 U.S. 673, 677, 24 L.Ed. 168; Germania National Bank v. Case, 99 U.S. 628, 634, 25 L.Ed. 448; Bushnell v. Leland, 164 U.S. 684, 17 S.Ct. 209, 41 L.Ed. 598; In re Chetwood, 165 U.S. 443, 458, 17 S.Ct. 385, 41 L.Ed. 782. In the Bushnell Case, page 685 of 164 U.S., 17 S.Ct. 209, the very objection now made to the New York statute was expressly overruled as applied to the powers vested in the Comptroller of the Currency to enforce the liability of stockholders. While perhaps the precise objection now made to the New York statute has never been definitely ruled upon by the courts of that state, we entertain no doubt that, if presented, they would hold valid under the Constitution of that state the vesting in the superintendent of banks of the power to determine the necessity and the amount of assessment upon stockholders of a bank, of the business and affairs of which he has taken possession, in order to meet the claims of creditors. Broderick v. Adamson, 148 Misc. 353, 265 N.Y.S. 804; Broderick v. Betco Corporation, 149 Misc. 245, 267 N.Y.S. 139, 142. See Harris v. Briggs (C. C. A.) 264 F. 726; Hanson v. Soderberg, 105 Wash. 255, 177 P. 827; Tabler v. Higginbotham, 110 W.Va. 9, 156 S.E. 751; Davis v. Moore, 130 Ark. 128, 197 S.W. 295.

The principal question raised by the defendant is that the plaintiff should not be permitted to sue in our courts to enforce the assessment against stockholders resident in Connecticut. While a superintendent of banks, administering the affairs of a bank of which he has taken possession occupies a position in many respects analogous to that of a receiver appointed by a court he is in reality an administrative officer. Isaac v. Marcus, 258 N.Y. 257, 264, 179 N.E. 487; Matter of Broderick, 235 A.D. 281, 282, 257 N.Y.S. 382; Van Tuyl v. Sullivan, 173 A.D. 391, 396, 156 N.Y.S. 309, affirmed 217 N.Y. 691, 112 N.E. 1078; Matter of Union Bank of Brooklyn, 176 A.D. 477, 482, 163 N.Y.S. 485. In Clark v. Williard, 54 S.Ct. 615, 620, 78 L.Ed. 1160, the position of a similar officer of the state of Iowa was described as being " more closely analogous to that of a trustee under a voluntary general assignment for the benefit of creditors *** than to one deriving title under a decree in insolvency proceedings, *** yet it is stronger than either in that for many purposes the corporation under which he claims has passed out of existence." By force of the statutes of New York the plaintiff has at least an equitable title to the property of the bank. Lafayette Trust Co. v. Beggs, 213 N.Y. 280, 287, 107 N.E. 644; Matter of Broderick, supra. The right to levy an assessment for the benefit of creditors of the bank is not under the statute a right of the corporation, but is one which by express statutory provision is vested in the superintendent of banks for the benefit of creditors. He occupies, by force of the statutes, very much the same position with reference to the...