Fed. Deposit Ins. Corp. v. Falk (In re Oconto Cnty. State Bank)

• Decision Date: 14 April 1944
• Parties: In re OCONTO COUNTY STATE BANK. FEDERAL DEPOSIT INS. CORPORATION v. FALK et al.
• Court: Wisconsin Supreme Court

245 Wis. 245

14 N.W.2d 3

In re OCONTO COUNTY STATE BANK.FEDERAL DEPOSIT INS. CORPORATION

v.FALK et al.

Supreme Court of Wisconsin.

April 14, 1944.

Appeal from an order of the Circuit Court, for Oconto County; Arold F. Murphy, Judge.

Affirmed.

A proceeding in the liquidation of the Oconto County State Bank of Oconto Falls, Wisconsin. On January 4, 1939, the bank was closed pursuant to law, and by vote of its board of directors all of its assets were turned over to the banking commission of Wisconsin for liquidation. It was an ‘insured’bank and a ‘state non-member bank’ under the provisions of the Federal Reserve Act. Its deposits were insured by the Federal Deposit Insurance Corporation to the extent provided by law. Thereupon, the Federal Deposit Insurance Corporation paid, under the provisions of the Federal Reserve Act, the claims of depositors.

On April 8, 1939, the Federal Deposit Insurance Corporation filed its claim in the sum of $283,310.15, which was the amount of insured claims paid by and assigned to it. On April 10, 1939, the banking commission allowed the claim. Thereafter, the Federal Deposit Insurance Corporation filed two additional claims, one in the sum of $4,375.73, the other in the sum of $34.19, which it had paid to depositors in addition to the aforesaid claim of $283,310.15. Said additional claims were allowed by the banking commission. The banking commission, as statutory receiver, approved the allowance of claims in the sum of $345,829.43.

On December 16, 1940, the Federal Deposit Insurance Corporation filed with the banking commission an additional claim in the sum of $9,664.35, as interest at six per cent. on the deposits paid from January 4, 1939, the date on which the commission took over the bank, to December 3, 1940, the date on which it received the last dividend. After paying all creditors and the expense of administration, the banking commission has on hand for distribution a sum in excess of $26,000.

The commission petitioned the court for authority to pay the corporation's claim for interest. The corporation filed with the court a petition, setting up in detail its claim. The directors of the bank in behalf of themselves and the stockholders, to whom the amount of the claim for interest will go if not allowed, demurred to the petition of the corporation on the ground that it appeared on the face thereof that the corporation was not entitled to any relief. The court sustained the demurrer and dismissed the petition. From an order accordingly entered, the corporation appealed. The decision on that appeal is reported under the title In re Oconto County State Bank, 241 Wis. 369, 6 N.W.2d 353,7 N.W.2d 602. The order was reversed and cause remanded for further proceedings as indicated in the per curiam opinion on motions for rehearing, 241 Wis. at page 377, 7 N.W.2d 602.

The instant appeal is from an order of the circuit court for Oconto county entered December 9, 1943, allowing respondent, Federal Deposit Insurance Corporation, interest at six per cent on all deposits from January 4, 1939, the date on which the bank closed, to the date of repayment to said respondent by the receiver.

Lehner & Lehner, Adolph P. Lehner, and Howard N. Lehner, all of Oconto Falls, for appellants.

G. F. Clifford, of Green Bay, Francis C. Brown, of Washington, D. C. and John H. Russell, of Chicago (James M. Kane and John S. Cavanaugh, both of Chicago, Ill., of counsel), for respondent.

MARTIN, Justice.

On the former appeal, on rehearing the court said, 241 Wis. at page 377, 7 N.W.2d at page 602:

‘* * * the instant petition states a case for allowance of some interest even if the six per cent. demanded is not allowable. At any rate the question of what interest is allowable has not been adequately briefed. * * * In this situation, we treat the opinion heretofore filed as merely holding that some interest is allowable and leave the precise basis of the allowance to be determined by the trial court upon the facts shown by the proofs or the stipulation of the parties.’

The respondent's claim is based on 12 U.S.C.A. § 264(l)(7), which provides that:

‘In the case of a closed national bank * * *, the Corporation, (F D I C) upon the payment of any depositor * * *, shall be subrogated to all rights of the depositor against the closed bank to the extent of such payment. In the case of any other closed insured bank, the Corporation shall not make any payment to any depositor until the right of the Corporation to be subrogated to the rights of such depositor on the same basis as provided in the case of a closed national bank under this section shall have been recognized either by express provision of State law, by allowance of claims by the authority (commission) having supervision of such bank, by assignment of claims by depositors, or by any other effective method. In the case of any closed insured bank, such subrogation shall include the right on the part of the Corporation to receive the same dividends * * * as would have been payable to the depositor on a claim for the insured deposit, * * *: Provided further, That the rights of depositors and other creditors of any State bank shall be determined in accordance with the applicable provisions of State law.’

Sec. 220.082, Wis.Stats., declares that the Federal Deposit Insurance Corporation's rights to subrogation in the case of a closed insured state bank are the same as its rights in the case of a closed insured national bank. Upon payment of the depositors, the respondent took from each insured depositor an assignment which contained the following provision:

‘For the purpose of subrogating the Federal Deposit Insurance Corporation to all of claimant's rights against said closed insured bank arising out of the insured deposit in the amount show above, claimant hereby assigns, transfers and sets over unto said corporation all claims against said closed insured bank and its stockholders arising out of said insured deposit, together with all evidences of such indebtedness held by claimant. Claimant hereby acknowledges receipt from the said corporation of the amount of said insured deposit.’

The court found that the amount of demand deposits at the time the bank closed were $161,582.79, and that the savings and time deposits were $160,049.77. The savings and time deposits bore interest at two per cent.

Appellants concede that when the bank closed its doors on January 4, 1939, such was tantamount to refusal to pay, and that demand depositors were entitled to six per cent interest from that date until payment was made. There are, therefore, only two questions for our consideration: (1) The rate of interest allowable on the savings deposits and certificates of deposit; and (2) the date from which interest should be computed.

Appellants contend that after the bank suspended business and went into liquidation interest should be allowed on the ‘time’ deposits at the contractual rate of two per cent, not only to the maturity date of the respective deposits but until they were repaid. Appellants' argument proceeds upon the theory that the claims of the depositors and the Federal Deposit Insurance Corporation, as the assignee of the insured depositors, when...