Gormley v. Eison

• Decision Date: 13 October 1939
• Docket Number: 13066.
• Citation: 5 S.E.2d 643,189 Ga. 259
• Parties: GORMLEY, Superintendent of Banks v. EISON et al.
• Court: Georgia Supreme Court

5 S.E.2d 643

189 Ga. 259

GORMLEY, Superintendent of Banks v. EISON et al.

No. 13066.

Supreme Court of Georgia

October 13, 1939

Rehearing Denied Nov. 17, 1939.

Syllabus by the Court.

It was error to overrule a demurrer to the petition of certain depositors of an insolvent bank in the hands of the superintendent of banks for the purpose of liquidation seeking to compel that officer to pay them interest on the amount of their deposits, it not appearing that there was a contract to pay interest, or that there were in his hands sufficient to meet all demands and leave a surplus.

On July 9, 1939, Sarah E. Eison and twenty-five other depositors of the insolvent Milton County Bank of Alpharetta filed their petition for mandamus to compel R. E. Gormley, as superintendent of banks of the State of Georgia, to pay them interest in their general demand deposits from the time said bank suspended business and was placed in the hands of the superintendent on December 12, 1932. Petitioners set forth the respective amounts of their demand deposits at the time the bank suspended; and alleged that all costs and expenses connected with the liquidation of the bank, together with 100 per cent. of the principal amounts of their claims, without interest, had been paid; that there were in the hands of the defendant cash and other assets totaling the appraised value of $8,000; and that they and others similarly situated were entitled to interest on their deposits from the date of the suspension of the bank, as represented by their claims duly allowed; and that the defendant had refused payment of interest after demand.

The defendant demurred on the grounds, among others, that the superintendent of banks was not a proper party defendant, but the action, if maintainable, must be brought against Milton County Bank, and not against the superintendent of banks that the petition failed to show that petitioners' claims for interest were filed within twelve months after the expiration of the time fixed in the notice to creditors for the presentation of claims, as required by the Code, §§ 13-820, 13-826; that the petition failed to show on what date the superintendent rejected any of the claims, or that this suit was filed within ninety days after notice to any of the petitioners of the rejection of their claims by the defendant, as required by the Code, § 13-817. The defendant also filed pleas in bar and of accord and satisfaction. He contended that the action was barred by the Code, §§ 13-820, 13-826; for that, in compliance with the sections 13 and 14 of article 7 of the banking act of August 16, 1919, (Laws 1919, p. 158), notice to all depositors and creditors was published, beginning on December 30, 1932, calling on them to present their claims properly attested; that no claim for interest was ever filed with the defendant by or on behalf of any of the petitioners; that more than twelve months had expired between the time fixed for presentation of claims and the date of the filing of the suit; that dividends aggregating 100 per cent. of the principal of deposits of the petitioners had been paid between April 15, 1933, and February 27, 1936; and that interest on any dividend declared and paid more than four years before the time of filing this suit was barred by the Code,§§ 3-706, 3-711, 3-1003. The plea of accord and satisfaction was based on the alleged fact that the petitioners had been paid in full the principal amounts of their respective claims for demand deposits.

In his answer the defendant admitted the payment in full of the principal of the demand deposits of the petitioners, and that he had in his possession cash, notes, and real estate of the appraised value of $10,119.37; but he stated that he had realized $10,902.62 from assessments levied against stockholders, and averred that the stockholders had not been reimbursed to any extent on account of these assessments. On the hearing counsel for the plaintiffs admitted the facts as set up in the defendant's pleas in bar and of accord and satisfaction and in his answer. The court overruled the demurrer, and issued a mandamus absolute. The defendant excepted.

Ellis G. Arnall, Atty. Gan., and Herschel E. Smith, Asst. Atty. Gen., for plaintiff in error.

C. N. Davie and Alex McLennan, both of Atlanta, for defendants in error.

GRICE Justice.

1. petitioners base their right to prevail on the contention that the superintendent of banks, after having paid them the full amounts of their principal, is in duty dound to pay them interest on their general demand deposits. It was not alleged that the bank contracted to pay them interest, or that the fund in the hands of the superintendent of banks had produced interest. The bank in process of liquidation having paid all costs and expenses of liquidation, and having paid the principal amount of all claims of depositors and other creditors, and the superintendent of banks having in his possession cash and other assets of an appraised value of more than $8,000, the petitioners assert that they and all others similarly situated are entitled to interest on their deposit from the date of the suspension of the bank. 'The law allows interest only because of a contract, express or implied, for its payment, or as damages for the detention of money, or for breach of some contract, or the violation of some duty. It is very generally stated that interest, being of purely statutory origin and not the creature of the common law, should not be awarded except in such cases as fall within the terms of the statute, unless it has been contracted for either expressly or impliedly. In other words, there is no absolute right, independent of contract, express or implied, or of statute, to interest.' Best v. Maddox, 185 Ga. 78, 82, 83, 194 S.E. 578, 581. There is in our rather comprehensive banking law of 1919 (Ga.L.1919, p. 135 et seq.), and the act amendatory thereof (Ga.L.1925, p. 119 et seq.), codified as title 13 of our Code of 1933, § 13-101 et seq.), no provision in the liquidation of insolvent banks for the payment of interest. Section 24 of article 7 of the original act contains the sole reference to interest on deposits of an insolvent bank. It requires the superintendent of banks to deposit in a bank dividends and unclaimed deposits remaining in his hands unpaid for six months after the order for final distribution, the same to be in trust for the several depositors in, and creditors of, the liquidated bank; 'and the Superintendent may pay over the money so held by him to the persons, respectively, entitled thereto, as and when satisfactory evidence of their right to the same is furnished.' The section concludes with the following statement: 'The interest earned on the moneys so held by him shall be applied toward defraying the expenses incurred in the payment and distribution of such unclaimed deposits or dividends to the depositors and creditors entitled to receive the same. The balance of interest, if any, shall be deposited and held as other funds to the credit of the Department of Banking.'

The language in the first part of the section, with reference to being held in trust for the several depositors in, and creditors of, the liquidated bank, does not refer to interest. It is the latter part of the section, quoted above that deals with interest, and specific provision is there made for the application of interest so earned. There is no allegation in the petition as to where the sum of $8,000, alleged now to be in the hands of the defendant, was derived from. If it was interest earned by the superintendent of banks, since the failure of the bank, on the dividends and unclaimed deposits remaining in his hands for six months after the final order of distribution, then by virtue of the very terms of the Code section the sum is not available for the payment of plaintiffs' claim, because the law applies it otherwise. By its terms, the act approved March 15, 1935, striking section 13-822 of the Code of 1933 (Ga.L.1935, pp. 103-105), does not affect a bank which, as in this case, was taken over by the superintendent for liquidation pursuant to title 13 of the Code. If the $8,000 represents money paid by the stockholders as assessments imposed upon them by the law in force at the time (Code, § 13-822), the plaintiffs are in no better position, because our banking law applicable to this case provides: 'After all the indebtedness of such bank is paid in full, the remaining assets of such bank shall be applied first to reimbursing the stockholders who have paid such assessment or assessments, and thereafter pro rata to all the stockholders.' We think the context shows that the word 'indebtedness' as there used can not refer to interest, but only to the principal amounts of indebtedness. We are supported in this construction by the very wording of the first part of the section from which the language last quoted was taken (Code, § 13-822): 'Within 90 days after the Superintendent of Banks has taken possession of the assets and business of any bank, as in this Title authorized, he shall make a careful estimate of the value of the cash assets...