Federal Deposit Ins. Corp. v. Citizens State Bank

• Decision Date: 22 September 1942
• Docket Number: 12231.,No. 12229,12229
• Citation: 130 F.2d 102
• Parties: FEDERAL DEPOSIT INS. CORPORATION v. CITIZENS STATE BANK OF NIANGUA et al. CITIZENS STATE BANK OF NIANGUA v. FEDERAL DEPOSIT INS. CORPORATION.
• Court: U.S. Court of Appeals — Eighth Circuit

130 F.2d 102 (1942)

FEDERAL DEPOSIT INS. CORPORATION v. CITIZENS STATE BANK OF NIANGUA et al. CITIZENS STATE BANK OF NIANGUA v. FEDERAL DEPOSIT INS. CORPORATION.

Nos. 12229, 12231.

Circuit Court of Appeals, Eighth Circuit.

July 30, 1942.

Rehearing Denied September 22, 1942.

Jerome Walsh, of Kansas City, Mo., and John L. Cecil, of Washington, D. C. (Francis C. Brown, of Washington, D. C., on the brief), for Federal Deposit Ins. Corporation.

Charles W. Dickey, of Springfield, Mo. (Haymes & Dickey, of Springfield, Mo., on the brief), for Citizens State Bank of Niangua et al.

Before GARDNER, WOODROUGH, and JOHNSEN, Circuit Judges.

JOHNSEN, Circuit Judge.

The Federal Deposit Insurance Corporation seeks a declaratory judgment,¹ against the Citizens State Bank of Niangua, Missouri, in liquidation, and the Commissioner of Finance of the State of Missouri, in charge of the liquidation thereof, of its right to interest upon its claim as subrogee of the amount paid depositors pursuant to its insurance obligation under section 12B of the Federal Reserve Act as amended, 49 Stat. 684, 695, 12 U.S.C.A. § 264, sub. (l) (6) and (7), out of a surplus remaining in the Commissioner's hands after payment of the principal amount of all claims against the Bank. The proceeding was prompted by a threat of the Commissioner to turn this surplus over to the stockholders of the Bank, without payment of any interest to creditors for the period that their claims remained unsatisfied during the liquidation.²

The District Court was of the opinion, 40 F.Supp. 805, that, on the facts presented, the Corporation was entitled to interest from, but not before, the date that the Commissioner had formally approved the claim which the Corporation had filed. Such approval was not made for some months after the Commissioner took charge of the Bank, and payment of the claim was not made until several months later. The case is submitted here on a record consisting of the pleadings and a stipulation of facts.

The first question presented is as to the right of the Corporation to receive interest, under the provisions of 12 U.S.C. A. § 264, sub. (l) (7). The Commissioner contends that the language in that subsection, that the Corporation, "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" (italics added), prohibits the Corporation from receiving interest as a liquidation incident, and entitles it to reimbursement only for the sum which it has paid out, without the right to any interest, even though there is a surplus available for that purpose. We regard this as a strained and unreasonable construction. The expression "to the extent of such payment" is equivalent here to the term "pro tanto", or to the words "as to the portion of the deposit paid".³ The language of the statute in no way restricts the scope of the Corporation's pro tanto subrogation rights, but, on the contrary, it expressly provides that, to the extent of the payment made, or as to the portion of the deposit paid, the Corporation shall be entitled to "all rights of the depositor against the closed bank".⁴ This obviously includes the usual and inherent incident of interest for the period that the bank's obligation for the deposit remains unsatisfied as against the Corporation, if a surplus is available for that purpose.⁵ It must accordingly be declared and held that the Federal Deposit Insurance Corporation Act does not prohibit the Corporation from receiving interest upon its claim against a closed bank for the portion of the deposits which it has paid, but contemplates that the Corporation shall be entitled to collect, as part of its subrogation rights, such interest as is properly and ordinarily incident to the payment of claims of depositors in a bank liquidation, where there is a surplus available for this purpose.⁶

The remaining controversy between the parties relates to the right of a depositor generally to interest in a bank liquidation under Missouri law, and to the immediate right of the Corporation to interest in the present liquidation under the form of claim filed by the Corporation and under the form of approval made by the Commissioner and by the supervising State Circuit Court.

The Commissioner contends that, under Missouri law, regardless of whether there is a remaining surplus, a deposit claim is never entitled to interest during liquidation, although he is unable to find any statute that so provides or any decision of the Missouri appellate courts that so holds. The Commissioner further contends that the Corporation should in any event be held to be barred from receiving interest here, because it did not set out in its original claim statement the specific period for which it was asserting a right to interest, although the statement filed with the Commissioner made claim for the amount which the Corporation had paid to depositors and "for such interest as may be allowed by law", and although the liquidation statutes of Missouri appear to make no prescription for technical pleading formalities in a claim statement filed with the Commissioner. Again, the Commissioner contends that his approval of the Corporation's claim was specifically intended to deny the right and to preclude the payment of any interest,⁷ although his approval consisted merely in noting upon the claim, which was for $107,154.78 and such interest as may be allowed by law, the words "Approved in the amount of $107,096.35 — Rejected 58.43", and although he could not properly approve any definite or final interest allowance for the liquidation period, as a fixed liability or obligation of the receivership, until the principal of all claims had been paid and there was a remaining surplus. Finally, the Commissioner contends that the order of the Circuit Court confirming his approval of the Corporation's claim is res judicata that the Corporation is not entitled to interest, because this order also contains no specific provision for payment of any interest, although the order was primarily a general claim-allowance order made for the purpose of enabling payments or distributions to be made to creditors,⁸ and although the Circuit Court sits and "acts as a court of equity" in the liquidation proceeding and "has continuing power to make disposition of the funds which come into the hands of the Commissioner of Finance * * * and to see that the same is paid to those rightfully entitled thereto."⁹

But all of these questions, except the construction of the Federal Deposit Insurance Corporation Act, initially discussed, seem to us to be questions which arise out of and inhere in the proceedings previously had between the Corporation and the Commissioner, for the allowance of the Corporation's claim in the State Circuit Court having supervisory jurisdiction over the liquidation,¹⁰ and which, in their relation to the Corporation's right under Missouri law to receive interest as an incident of the claim-allowance order made, must be regarded as still controllingly pending in that court. Plaintiff's general claim, as has been indicated above, was submitted to the State Circuit Court for an allowance order under the Missouri statutes, and such an order was duly entered. That court clearly has continuing jurisdiction over the payment of the claims allowed, and it is its province and duty, in equitably supervising the distribution of the bank's assets, to enter any supplementary orders, in connection with plaintiff's claim and the allowed claims of other creditors, that may be necessary to compel the Commissioner to recognize the inherent incidents and distributive attributes of such claims, in effecting the ratable distribution of assets to creditors¹¹ which the Missouri statutes contemplate.¹²

The Corporation can readily file a petition in the State Circuit Court, which has already assumed jurisdiction to allow its general claim and which retains jurisdiction to see that such claim is fully paid in accordance with the order, to compel the Commissioner to make such further payments to it as are implied by or inhere in the original claim-allowance order under Missouri law. That court obviously will be required to pass upon the identical question in relation to the claims of other...