Giesy v. American Nat. Bank of Portland

• Decision Date: 31 December 1935
• Citation: 152 Or. 516,53 P.2d 20
• Parties: GIESY et al. v. AMERICAN NAT. BANK OF PORTLAND, OR., et al. [*]
• Court: Oregon Supreme Court

53 P.2d 20

152 Or. 516

GIESY et al. v. AMERICAN NAT. BANK OF PORTLAND, OR., et al. ^[*]

Supreme Court of Oregon

December 31, 1935

In Banc.

Appeal from Circuit Court, Multnomah County; Louis P. Hewitt, Judge.

Suit by Ida H. Giesy and others against the American National Bank of Portland, Ore., and another. From an adverse decree defendants appeal.

Affirmed as to defendant American National Bank, and modified as to defendant First National Bank of Portland.

RAND J., CAMPBELL, C.J., and BEAN, J., dissenting.

John C. Veatch and John M. Pipes, both of Portland (Joseph, Haney & Veatch, John M. Pipes, and Pendergrass Roehr & Zollinger, all of Portland, on the brief), for appellants.

John R Latourette, of Portland (Latourette & Latourette, of Portland, on the brief), for respondents.

BAILEY Justice.

The question involved in this litigation is whether the First National Bank of Portland, Ore., is liable to the plaintiffs, Ida H. Giesy and Ida Church Giesy and Paul C. Giesy, executors of the estate of Andrew J. Giesy, deceased, for rent of, and taxes and assessments against, certain real property situated in Portland, Ore., accruing subsequent to June 20, 1933, for which the American National Bank of Portland, Ore., was on that date primarily liable, by reason of the transfer by the American National Bank on said date, when it was insolvent, of all or practically all its assents to the First National Bank.

On June 20, 1933, the American National Bank and the First National Bank entered into an agreement whereby the American National Bank transferred and delivered to the First National Bank assets of the American National Bank amounting to $4,743,806.72 in consideration for the First National Bank's assuming all liabilities of the American National Bank, with the exception of the latter bank's liability, either actual or contingent, on a certain agreement of leasing which will hereinafter be referred to more specifically.

The assets so transferred consisted of cash, bonds, notes receivable, furniture, fixtures, stock of the American Safe Deposit Company, shares of stock in the Federal Reserve Bank, warrants and other items, all having a total estimated value in the above amount. A cash item of $1,619,506.48, included in the assets which the American National Bank agreed to transfer to the First National Bank, necessitated the former bank's supplying in addition to the money it then had on hand the sum of $804,344.45. This additional sum was raised by the bank by disposing of its assets other than those agreed to be turned over to the First National Bank and which had been rejected by that bank. Assets forming this group were, according to the resolution of the board of directors of the American National Bank, not here questioned, of much less value than the sum of $804,344.45 paid for them by a Portland man and his associates interested in having the First National Bank assume the then existing liabilities of the American National Bank. The obligations so assumed by the Fist National Bank, consisting principally of liability to depositors of the American National Bank, aggregated the entire estimated value of the assets transferred to the former bank.

The same individuals who paid $804,344.45 for the assets rejected by the First National Bank guaranteed the payment of notes of the American National Bank transferred to the First National Bank in the aggregate amount of $275,773.42, and also guaranteed to save the First National Bank harmless from liability as to any sum due or thereafter to become due, and from any and all liability on the lease hereinafter referred to in detail.

This agreement between the American National Bank and the First National Bank was approved by the Comptroller of the Currency of the United States before the parties thereto executed it. The assets were transferred, as agreed, and the First National Bank assumed all the liabilities of the American National Bank existing on June 20, 1933, with the exception of that which might arise by virtue of the lease.

The lease mentioned was entered into on March 17, 1923, by and between Andrew J. Giesy and Ida H. Giesy, his wife, as lessors, and the Broadway Bank, a corporation existing under the laws of the state of Oregon, as lessee, for certain property situated in the city of Portland, Ore., for a term of 30 years, with a rental reserved of $450 a month for the first five years, thereafter to be periodically increased. In addition to the payment of rentals reserved, the lessee agreed to pay all taxes and assessments against said real property during the term of the lease, and also to erect on the real property a building costing not less than $30,000 and at least 2 stories in height.

The lessee entered into possession of the property, erected its building, and thereafter, in February, 1929, when the lessee in the meantime had become a national institution known as Portland National Bank, it consolidated with another national bank which later became the American National Bank. In that consolidation, it transferred all its rights in and to the lease to the American National Bank. Under date of March 29, 1932, the American National Bank transferred and assigned the lease to the Pacific Bancorporation, which latter concern on the following day transferred and assigned the same to the Capital Underwriters Corporation. About this same time the lessors, in consideration of the American National Bank's guaranteeing the payment of the rents reserved in the lease and the fulfilment of all and each of the terms and conditions therein set forth, ratified and confirmed the various assignments hereinbefore mentioned.

At the time when the agreement between the American National Bank and the First National Bank was signed, to wit, June 20, 1933, the monthly rental for June had been paid, and for three months thereafter such rent was paid by the Capital Underwriters Corporation, which during such time was, and still is, in possession of the premises. There was, however, on June 20, 1933, remaining unpaid under the terms of the lease, the sum of $8,043.38, which represented unpaid taxes and street assessments against the property, with interest on the same.

In November, 1933, the plaintiffs instituted an action in the circuit court for Multnomah county, against the American National Bank, Pacific Bancorporation, Capital Underwriters Corporation and Union States Building Corporation, to collect the unpaid taxes and city liens here inbefore mentioned and rent for the months of October and November, 1933. On December 13 of that year, a judgment was entered in that court in favor of the plaintiffs for the sum of $10,163.54, which included rental for the months of October and November. Execution was thereafter issued on the judgment and returned by the sheriff nulla bona.

On February 14, 1934, this proceeding was instituted in the nature of a creditors' suit against the American National Bank and the First National Bank, both of Portland, Ore., to recover the amount of the judgment rendered in the former action, with interest thereon, for $1,000 as rental for the months of December, 1933, and January, 1934, and for reasonable attorneys' fees as provided in the contract of leasing. The trial resulted in entry of judgment in favor of plaintiffs and against the American National Bank for the sum of $1,000 as rent for December, 1933, and January, 1934, with interest thereon, and attorneys' fees. The judgment referred to that of $10,163.54 rendered against said bank and others in December, 1933, and decreed that the plaintiffs recover from the First National Bank the amount of the previous judgment, with interest, and the amount of the judgment herein entered against the American National Bank, on the ground that the First National Bank had "commingled with its own assets all the assets of the defendant, American National Bank." From the judgment and decree so entered, both defendants have appealed.

It is the plaintiff's contention that since the American National Bank was insolvent on June 20, 1933, when it conveyed its assets to the First National Bank, such transfer was null and void; that the plaintiffs had a right to follow such assets, if the same could be ascertained, and impress upon them a lien for the entire amount which the American National Bank had obligated itself to pay under the lease hereinbefore described; and that if such assets, after passing into the hands of the First National Bank, had been merged with and become a part of the general assets of the latter bank so that they could not be segregated therefrom, plaintiffs would be entitled to judgment against the First National Bank for the amounts found due them under the lease, not exceeding, however, the value of the assets transferred to that bank by the American National Bank. In support of this argument the plaintiffs rely upon sections 5242 and 5236, R.S. (U.S.C.A., tit. 12, §§ 91 and 194), which statutes respectively read as follows:

"All transfers of the notes, bonds, bills of exchange, or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money bullion, or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void; and no attachment, injunction or...