Gibbes v. Zimmerman

• Decision Date: 04 December 1933
• Docket Number: No. 117,117
• Citation: 78 L.Ed. 342,54 S.Ct. 140,290 U.S. 326
• Parties: GIBBES v. ZIMMERMAN et al
• Court: U.S. Supreme Court

290 U.S. 326

54 S.Ct. 140

78 L.Ed. 342

GIBBES

v ZIMMERMAN et al.

No. 117.

Argued Nov. 17, 1933.

Decided Dec. 4, 1933.

Appeal from the Supreme Court of the State of South Carolina.

[Syllabus from 327 intentionally omitted] Mr. D. W. Robinson, of Columbia, S.C., for appellant.

Mr. Irvine F. Belser, of Columbia, S.C., for appellees.

Mr. Justice ROBERTS delivered the opinion of the Court.

This appeal brings here for review an order of the Supreme Court of South Carolina prohibiting the further prosecution of a bill in equity seeking the appointment of a receiver for the Central Union Bank. An Act of the General Assembly approved March 9, 1933 (38 St. at Large S.C. p. 1174), was held to forbid the maintenance of the proceeding. The appellant, who was plaintiff in the suit asserts that the act impairs the obligation of contract in violation of the Constitution of the United States. We cannot consider this contention since in his pleading the appellant relied solely on the provisions of the state Constitution (art. 1, § 8) with respect to the obligation of contracts, and made no reference to section 10, of article 1 of the Federal Constitution; and the Supreme Court, in disposing of the case, did not mention or discuss that section. Rev. St. § 709, U.S.C. tit. 28, § 344 (28 USCA § 344) Chicago & Northwestern Ry. v. Chicago, 164 U.S. 454, 457, 17 S.Ct. 129, 41 L.Ed. 511; Levy v. Superior Court, 167 U.S. 175, 177, 17 S.Ct. 769, 42 L.Ed. 126; Miller v. Cornwall Railroad Co., 168 U.S. 131, 134, 18 S.Ct. 34, 42 L.Ed. 409; Bowe v. Scott, 233 U.S. 658, 665, 34 S.Ct. 769, 58 L.Ed. 1141.

The statute was also assailed below and is challenged here as depriving the appellant of the due process guaranteed by the Fourteenth Amendment. A brief statement of the facts is requisite to an understanding of appellant's argument. Prior to March 9, 1933, the statutory provision as to state banks was, in summary, this: A state official, known as a bank examiner, had general supervision of the operation of these institutions. If a bank became embarrassed or insolvent he might, upon an order of a court, take possession of the assets and business for a period of thirty days, during which time no suits could be brought against the bank. He might restore the bank to the management of its officers, or, if liquidation were required, apply to a court for the appointment of himself or another as receiver. The affairs of the bank were then to be liquidated by the receiver under the suppervision of the court. Stockholders were liable to creditors other than depositors only to the extent of any unpaid balance on their shares; but to depositors, in an amount equal to the face value of their shares. It was the duty of the receiver to demand and collect for the benefit of creditors and depositors the amount due from stockholders, and, if necessary, to sue the stockholders individually and collectively therefor.¹

Shortly after the declaration of a banking holiday by the President on March 4, 1933, the Governor of South Carolina issued a proclamation temporarily closing the banks in that state. The General Assembly passed, and on March 9 the Governor approved, an act suspending for eighteen months legislation then applicable to the conduct and liquidation of banks, vesting in the Governor plenary power over state banks, empowering him to extend the time for payment of deposits as the condition of each institution might require; to direct the creation of special trust accounts for receipt of deposits, which should be held separate from other assets and be subject to withdrawal on demand; to determine whether the overhead expenses of any bank exceed its net income, and, if so, to compel it to reduce the expenses or to order immediate liquidation, as might best serve the depositors' interests; and to make all necessary rules and regulations to carry out the intent of the act. The examiner was prohibited from taking possession of any bank unless authorized so to do by the Governor, and all persons were forbidden, while the Governor remained in control of the banks, to institute any action against a bank, except by the Governor's consent. The Governor was authorized to appoint a board of bank control, with whom he might advise and consult, and to whom he might delegate powers under the act. Pursuant to this legislation the Governor appointed a board of bank control and promulgated regulations which provided, inter alia, that upon advice of the board he might, where necessary, appoint a conservator for any bank to conserve its assets for the benefit of depositors and creditors, who should posses himself of all books, records, and assets, and take all necessary action to preserve the property, 'pending further disposition of its business as provided by law.' The regulations provided: 'Such conservator * * * shall have all the rights, powers and privileges now possessed by or hereafter given Receivers of insolvent state banks. * * * During the time that such conservator * * * shall remain in possession of such bank, the rights of all parties with respect thereto shall, subject to the other provisions of this order, be the same as if a receiver had been appointed therefor.' Further regulations dealing with the reopening of solvent banks and reorganization of banks were promulgated, but these are irrelevant to the present case.

The appellee Zimmerman was appointed conservator of the Central Union Bank and entered upon his duties. The appellant, on behalf of himself and other depositors, filed a...