Derscheid v. Andrew

• Decision Date: 11 September 1929
• Docket Number: No. 8437.,8437.
• Citation: 34 F.2d 884
• Parties: DERSCHEID et al. v. ANDREW, Superintendent of Banking of Iowa.
• Court: U.S. Court of Appeals — Eighth Circuit

34 F.2d 884 (1929)

DERSCHEID et al. v. ANDREW, Superintendent of Banking of Iowa.

No. 8437.

Circuit Court of Appeals, Eighth Circuit.

September 11, 1929.

Seth Thomas and John M. Schaupp, Jr., both of Ft. Dodge, Iowa, for appellants.

Ben J. Gibson, of Des Moines, Iowa (McGrath, Archerd & McGrath, of Eagle Grove, Iowa, on the brief), for appellee.

Before BOOTH, Circuit Judge, and SANBORN and DEWEY, District Judges.

DEWEY, District Judge.

Appellee, receiver of the Citizens' State Bank of Eagle Grove, Iowa, commenced this action on October 11, 1927, as a creditor of the First National Bank of Eagle Grove, Iowa. The suit was in the nature of a creditors' bill wherein judgment is asked against said national bank, the imposition of an assessment upon its stock, and a judgment in the amount of such assessment as against the individual stockholders.

During the month of January, 1924, the First National Bank of Eagle Grove, Iowa, hereinafter referred to as the national bank, became involved to such an extent that it was unable to continue in business. On January 21, 1924, the board of directors of that bank and the board of directors of the Citizens' State Bank of Eagle Grove, Iowa, hereinafter referred to as the state bank, each authorized their respective presidents to proceed with negotiations with the object of taking over the business of the national bank by the state bank.

On January 23, 1924, after the conference between the officials of the two banks, an oral agreement or arrangement was entered into by such officers whereby the state bank assumed and agreed to pay all the liabilities of the national bank and took over all of its assets.

On January 23, 1924, the board of directors of the national bank authorized an assessment of 100 per cent. on its stockholders and authorized its officers to turn over and deliver to the state bank all its assets, together with the proceeds of the assessment.

On January 26, 1924, at a called meeting of the stockholders of the national bank, notice of said meeting having been given to all of the stockholders, a resolution was passed placing the national bank in voluntary liquidation under the provisions of sections 5220 and 5221, U. S. Rev. Stat. (12 USCA §§ 181, 182) to take effect July 15, 1924; and L. G. Focht, L. J. Clark, and H. F. Wasen were appointed a liquidating committee to act under the supervision of the board of directors, and providing that a special meeting of the stockholders may be called at any time in the same manner as if the bank continued an active bank. A proposed contract between the state bank and the national bank was discussed, and the meeting adjourned until July 14, 1924.

At the adjourned meeting of July 14, 1924, the proposed contract was again discussed and accepted.

This contract was substantially the same as the oral contract entered into between the officials of the two banks on January 23, 1924. It recited that on January 23, 1924, an emergency existed in the conduct and operation of the national bank due to inability to realize upon bills receivable; and that the board, deeming that the resources of the national bank would be conserved thereby, and that such action was for the best interests of the depositors, entered into an agreement with the state bank which, due to the emergency then existing, could not be set forth in a formal contract, and submitted for authorization by the stockholders thereof, for the purpose of placing in written form said arrangement and to confirm the same in a formal contract, it is agreed as follows:

Paragraph 1 in general provides that the national bank has sold and transferred by indorsement to the state bank its bills receivable in the aggregate face amount of $313,967.18.

Paragraph 2 in substance provides that the national bank is to sell and convey (a) the banking house for the agreed sum of $18,600; (b) other real estate, net proceeds therefrom to be credited to the national bank as sold and converted into money.

Paragraph 3, sells and transfers the other property and assets (a) sheriff's certificates of sale; (b) bank furniture and fixtures; (c) overdrafts; and (d) cash.

Paragraph 4, the national bank to prepare all formal transfers and conveyances necessary.

Paragraph 5, the state bank agrees to pay as follows: (a) All depositors of the national bank; (b) all rediscounts and bills payable of the national bank.

Paragraph 6, all adjustments of interest on the bills receivable and bills payable to be made as of January 23, 1924.

Paragraph 7, in case of renewals of bills receivable, the national bank to indorse renewal notes when taken on the forms of the national bank payable to it, and where the state bank elects to accept renewals upon its own forms payable to it the amount of all notes so renewed to be credited to the national bank.

Paragraph 8, property transferred to be held by the state bank together with indorsements of bills receivable, and together with a guaranty reserve fund until the state bank has realized the full amount of the obligations assumed.

Credits to be given the national bank as follows: (a) For the banking house $18,600 at once; (b) cash, upon receipt; (c) bills receivable, when paid; (d) bills receivable when renewed on state bank forms; (e) proceeds from the sale of other property when received.

Paragraph 9, by January 23, 1928, the state bank to furnish a list of bills receivable still held by it and not paid or renewed on its paper.

Agreed that the state bank will co-operate with the national bank and its liquidating committee to obtain security and assist in collections.

Paragraph 10, when assumed liability is terminated by payment, state bank is to surrender and transfer to the national bank or its liquidating agents all the remaining property; it being the intention that the state bank will receive out of the property transferred to it a sum equal to the obligations and liabilities assumed.

Paragraph 11, the capital stock of the national bank being $50,000, and believing that its capital is impaired, and that in due course an assessment will be ordered in accordance with law and the acts of Congress and that such assessment, if and when so lawfully imposed, will inure to the advantage and protection of the state bank because of the obligations assumed by the indorsement and transfer of the bills receivable; and because the state bank has assumed the liabilities of the national bank; and that by the agreement of January 23, 1924, a fund was created known as "reserve and guaranty fund" of about $42,000 by contributions made by various stockholders in sums equal to the amount of stock owned by them, it is agreed that said fund shall inure to and be held by the state bank and stand as security for all obligations of the national bank pending the imposition of an assessment upon the stockholders of the national bank to make good the impairment of its capital stock.

And the contract further provides that, in the event the assessment equals 100 per cent. as imposed in legal form, the stockholders contributing to the reserve and guaranty fund shall on the payment of such assessment be repaid by the state bank from such guaranty fund; and, in the event the assessment shall be made for less than 100 per cent., then a pro rata refund shall be made to those contributing to the guaranty fund.

Immediately following the oral agreement of January 23, 1924, the cash, cash items, and bills receivable were transferred to the banking house of the state bank, and an account opened by the state bank with the national bank, the notes and bills receivable being kept separate from the notes and assets of the state bank. Credit was given for the cash items on the account of the national bank, and credit was also given to the national bank of sums paid on the bills receivable to the state bank; and for all notes which were renewed, and such renewal taken on the forms and made payable to the state bank.

After the liquidating committee was appointed, one of its members, L. J. Clark, former cashier of the national bank, using one of the rooms of the state bank, had active charge of the collection of the bills receivable. He was paid by the state bank, but such payment charged against the account of the national bank. L. G. Focht, president of the national bank, also assisted for about a month under the same arrangement as that with Mr. Clark.

The guaranty fund referred to in the contract consisted of notes aggregating about $41,000 which were turned over by individual stockholders of the national bank to the state bank under the arrangement set out in the contract. On these notes the sum of $12,600 was paid, and when paid the state bank issued and delivered to the stockholders making payment a certificate of deposit in an amount equal to the sum paid by him.

At the time of the commencement of the suit after giving all credits allowed by the terms of the contract on the books of the state bank to the national bank, there remained due the state bank from the national bank the sum of about $90,000 according to the books of the state bank.

On these facts being presented to the District Court, a decree was entered wherein the court found, among other things, as follows:

That the amount advanced by the state bank was primarily a loan by it to the national bank, and to the extent of the amount of money so advanced the state bank became a creditor of the national bank; that the state bank has given full credit for every item for which it was agreed credit should be given, and that there remains due the state bank and its receiver the sum of $80,574.69; that certain of the stockholders of the national bank had paid on the assessment so agreed to be levied certain sums in cash aggregating $12,600, and that credit should be given upon the assessment levied by the decree for the amount of cash so paid to the persons so paying.

The court further found that the contract and...