Chemical Nat Bank of Chicago v. Hartford Deposit Co

• Decision Date: 03 February 1896
• Docket Number: No. 735,735
• Citation: 40 L.Ed. 595,161 U.S. 1,16 S.Ct. 439
• Parties: CHEMICAL NAT. BANK OF CHICAGO v. HARTFORD DEPOSIT CO
• Court: U.S. Supreme Court

161 U.S. 1

16 S.Ct. 439

40 L.Ed. 595

CHEMICAL NAT. BANK OF CHICAGO

v HARTFORD DEPOSIT CO.

No. 735.

February 3, 1896.

This was an action of assumpsit brought by the Hartford Deposit Company against the Chemical National Bank of Chicago and the receiver of the bank in the superior court of Cook county to recover damages for a failure to pay rent alleged to be due, under a written lease, from August 1, 1893, to April 30, 1894. The cause was submitted to the court for trial on a stipulation as to the facts, of which the lease formed a part. The issues were found in favor of defendants, and judgment was rendered accordingly. Plaintiff took the case to the appellate court for the First district of Illinois, which affirmed the judgment as to the receiver, but reversed it as to the Chemical National Bank, and entered judgment for the sum of $9,000. 58 Ill. App. 256. An appeal was prosecuted to the supreme court of Illinois, and the judgment of the appellate court affirmed. 156 Ill. 522, 41 M. E. 225. This writ of error was thereupon brought.

The facts were thus stated by the supreme court:

'The Chemical National Bank of Chicago entered into a lease, dated November 18, 1892, with the Hartford Deposit Company, of a banking office of a certain building owned by the said Hartford Deposit Company. In accordance with its terms, the bank paid $2,500 on the delivery of said lease. The term was for a period of five years, from May 1, 1893, at an annual rental of $12,000, payable in equal monthly installments of $1,000, in advance, exclusive of and in addition to said first payment of $2,500. The bank entered into and took possession of said premises on May 1, 1893, the first day of said term, and the first installment of rent fell due and was payable on that day. This installment was not paid when due, nor had it, or any part of it, been paid when, on May 9, 1893, the bank became insolvent and a national bank examiner took possession of its assets and of said premises. On July 21st a receiver was duly appointed, and on July 27th he notified the Hartford Deposit Company of his election to terminate said lease after July 31, 1893, so far as he, as receiver, was concerned. On the same day, namely, July 27th, said receiver paid to the Hartford Deposit Company the sum of $2,709.68, which was, as agreed, the ratable amount of rent due for the period to July 31st, inclusive. No other or further rent was paid under said lease, by any other person or at any other time. The premises remained vacant until May 1, 1894, when they were relet at a reduced rental.'

Hiram T. Cilbert, for plaintiff in error.

Charles H. Baldwin, for defendant in error.

Mr. Chief Justice FULLER, after stating the facts in the foregoing language, delivered the opinion of the court.

It is not claimed that the express covenant to pay rent was released by the insolvency of the lessee merely, nor that the election of the receiver not to accept the lease had any effect on the contract between the lessor and the lessee, nor that the lessor had done anything itself to terminate its rights under the lease. But it is argued that no judgment could be rendered against the bank, because the appointment of a receiver amounted to its dissolution, and because the rent in question was not a demand existing at the date of the bank's suspension, and therefore not a claim entitled to be proven up and paid out of the assets of the bank or carried into judgment. The state courts ruled both branches of this contention adversely to plaintiff in error.

Granting that, in the absence of statutory provision to the contrary, suits cannot be maintained and judgments rendered against corporations whose chartered existence has terminated, it is not pretended in this case that that event had taken place by lapse of time, by judicial proceedings, or otherwise, unless, as is insisted, the appointment of a receiver in itself put an end to the bank as a corporate entity.

The general rule is that the legal existence of a corporation cannot be cut short in this way, and we can find nothing in the statutes in relation to insolvent national banks which gives that effect to such an appointment, or justifies any distinction in that regard, as between them and other insolvent corporations.

By section 5136 of the Revised Statutes it is provided that every national bank, duly incorporated, shall have succession for the period of 20 years from its organization, 'unless it is sooner dissolved according to the provisions of its articles of association, or by the act of its shareholders owning two-thirds of its stock, or unless its franchise becomes forfeited by some violation of law.'

A receiver may be appointed upon the occurrence of the particular defaults enumerated in sections 5141, 5151, 5191, 5195, 5201, and 5205, not in question here.

Section 5151 provides, 'The shareholders of every national banking association shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such association, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares.'

Sections 5220 and 5221 provide for the voluntary dissolution of these associations, and sections 5226 and 5227 for the pro- test of their circulating notes, on failure to redeem, and the appointment of a special agent to ascertain the fact.

Sections 5228, 5234, 5236, and 5239 are as follows:

'Sec. 5228. After a default on the part of an association to pay any of its circulating notes has been ascertained by the comptroller, and notice thereof has been given by him to the association, it shall not be lawful for the association suffering the same to pay out any of its notes, discount any notes or bills, or otherwise prosecute the business of banking, except to receive and safely keep money belonging to it, and to deliver special deposits.'

'Sec. 5234. On becoming satisfied, as specified in sections fifty-two hundred and twenty-six and fifty-two hundred and twenty-seven, that any association has refused to pay its circulating notes as therein mentioned, and is in default, the comptroller of the currency may forthwith appoint a receiver, and require of him such bond and security as he deems proper. Such receiver, under the direction of the comptroller, shall take possession of the books, records, and assets of every description of such association, collect all debts, dues, and claims belonging to it, and, upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts, and, on a like order, may sell all the real and personal property of such association, on such terms as the court shall direct; and may, if necessary to pay the debts of such association, enforce the individual liability of the stockholders. Such receiver shall pay over all money so made to the treasurer of the United States, subject to the order of the comptroller, and also make report to the comptroller of all his acts and proceedings.'

'Sec. 5236. From time to time, after full provision has been first made for refunding to the United States any deficiency in redeeming the notes of such...