Cooper v. O'CONNOR

• Decision Date: 15 May 1939
• Docket Number: No. 7219.,7219.
• Citation: 105 F.2d 761,70 App. DC 238
• Parties: COOPER v. O'CONNOR, Comptroller of Currency, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

70 App. DC 238, 105 F.2d 761 (1939)

COOPER v. O'CONNOR, Comptroller of Currency, et al.

No. 7219.

United States Court of Appeals for the District of Columbia.

Argued March 9, 1939.

Decided May 15, 1939.

Rehearing Denied June 14, 1939.

George B. Fraser, Robert H. McNeill, and Kelly Kash, all of Washington, D. C., for appellant.

Brice Clagett and Charles E. Wainwright, both of Washington, D. C., for appellees.

Before GRONER, Chief Justice, and EDGERTON and VINSON, Associate Justices.

GRONER, C. J.

This is a suit brought by appellant as president, director, and stockholder of Continental Trust Company and of Commercial National Bank, both of Washington City, in his own behalf and in behalf of others similarly situated, against O'Connor, individually and as Comptroller of the Currency; Bryan, formerly receiver of Continental; and Baldwin, formerly receiver of Commercial.

There was no service of process on either Bryan or Baldwin, and the suit was prosecuted against the Comptroller alone.

The bill averred that in 1930 Continental had sold its deposits and goodwill to Commercial and delivered to the latter as security its receivables, including a valuable piece of real estate in Fauquier County, Virginia, known as Manor of Leeds Orchard; that in 1933 upon insolvency of the banks Baldwin was appointed receiver of Commercial and Bryan of Continental; that O'Connor subsequently became Comptroller of the Currency; and that in 1934 the Comptroller and the two receivers agreed to sell and did sell the orchard property for approximately $15,000 — "an infinitesimal fraction of its real value". And in an amended bill appellant averred that the orchard property at the time of the sale had a reasonable value in excess of $100,000, which was either known or in the exercise of proper diligence should have been known by the receiver and the Comptroller; that the sale was recommended by the receivers and approved by the Comptroller; but that the receivers' petition to the court for authority to sell was not known to appellant, as the result of which he had no opportunity to object to the sale. The bill does not allege actual fraud, collusion, or bad faith, but does allege that in making the sale the defendants by gross negligence and lack of care failed to obtain a fair or reasonable price; and that they likewise failed to secure appraisals or inventories or to procure valuations from persons engaged in the orchard business in the vicinity of the property; and that as the result of their negligence the price received was so inadequate as to shock the conscience of the court and amount to fraud in law upon appellant's rights and the rights of the banks "for which said defendants were acting as trustees". The bill prayed that the defendants be required to account, and that judgment be rendered against them and each of them for the difference between the sale price and the actual value of the property.

The Comptroller answered the bill and amended bill, and also filed a motion to dismiss on points of law.

Upon argument the court below sustained the motion and dismissed the bill, and this appeal was taken.

Passing by the question whether appellant as a stockholder had a right to bring the suit in his own name (cf. Davis Trust Co. v. Hardee, 66 App.D.C. 168, 85 F.2d 571, 574, 107 A.L.R. 1425), we are of opinion that the action of the court below was correct. Enough has been said to show that the bill alleged the sale was made by the receivers with the recommendation of the Comptroller and the approval of the court of proper jurisdiction. Sec. 5234 of the Revised Statutes¹ authorizes the Comptroller of the Currency, upon the insolvency of a national bank, to appoint a receiver and to require of him such bond and security as he deems proper. Upon his appointment the receiver, under the direction of the Comptroller, is authorized to take possession of the bank and "upon the order of a court of record of competent jurisdiction, to sell or compound all bad or doubtful debts, and, on a like order, to sell all the real and personal property of such association, on such terms as the court shall direct". Congress in the enactment of the National Banking Act, 12 U.S. C.A. § 21 et seq., has established a full and complete system for the administration of national banks, including their liquidation in insolvency. Cook County Natl. Bank v. United States, 107 U.S. 445, 2 S.Ct. 561, 27 L.Ed. 537. The receiver is the Comptroller's agent, and like the Comptroller himself, is an officer of the United States. They may be held liable in a suit for accounting only in the event of fraud in the administration of their official duties. Cooper v. O'Connor, 69 App.D.C. 100, 99 F.2d 135, 118 A.L.R. 1440; Kendall v. Stokes, 3 How. 87, 11 L.Ed. 506; De Arnaud v. Ainsworth, 24 App.D.C. 167, 5 L.R.A.,N.S., 163; Mellon v. Brewer, 57 App.D.C. 126, 18 F.2d 168, 53 A.L.R. 1519.

In Baker v. Schofield, 243 U.S. 114, 37 S.Ct. 333, 61 L.Ed. 626, the Supreme Court held a receiver liable where he had secretly purchased the property of the bank through the...