Granader v. Public Bank, 18877.
Decision Date | 15 October 1969 |
Docket Number | No. 18877.,18877. |
Citation | 417 F.2d 75 |
Parties | Harry GRANADER in his individual capacities of his separate businesses and as a stockholder and director of Public Bank, and as a member of the following classes; the classes being the stockholders of Public Bank, a Michigan banking corporation, and the Directors of the Public Bank, a Michigan banking corporation, Plaintiff-Appellant, v. PUBLIC BANK, a Michigan banking corporation et al., Defendants-Appellees. |
Court | U.S. Court of Appeals — Sixth Circuit |
William I. Liberson, Detroit, Mich., for plaintiff-appellant; Cyril Abramson, (of counsel) Detroit, Mich., on brief.
George E. Parker, III, Detroit, Mich., for Federal Deposit Ins. Co.; Miller, Canfield, Paddock & Stone, Peter P. Thurber, Detroit, Mich., S. Rex, Lewis, Gen. Counsel, J. Lovering Trucott, Asst. Gen. Counsel, Washington, D. C., on brief.
John A. Ziegler, Jr., Detroit, Mich., for Bank of the Commonwealth, and others; Parsons, Tennent, Hammond, Hardig & Ziegelman, William H. Merrill, Detroit, Mich., on brief.
James J. Wood, Asst. Atty. Gen., Lansing, Mich., for State of Mich. and others; Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Maurice M. Moule, Asst. Atty. Gen., Lansing, Mich., on brief.
Before WEICK, Chief Judge, and EDWARDS and PECK, Circuit Judges.
This is an appeal from a summary judgment entered by a District Judge in the United States District Court for the Eastern District of Michigan, Southern Division, in favor of defendants-appellees named above.
In its form this action is a civil suit for treble damages, alleging injury to plaintiff resulting from a conspiracy on the part of defendants to have defendant Bank of the Commonwealth (Commonwealth) acquire all of the assets of defendant Public Bank (Public) in violation of federal law. The provisions involved are the antimonopoly sections of the Sherman Act, §§ 1 and 2 (15 U.S.C. §§ 1 & 2 (1964)), the prohibitions against restraint of trade and competition of the Clayton Act, § 7 (15 U.S.C. § 18 (1964)), and the due process provision of the Fourteenth Amendment.
This is no ordinary antitrust case. Plaintiff was a stockholder and a Director of the Public Bank, a state bank located in Detroit, Michigan. Public Bank has now been placed in receivership and substantially all of its assets have been sold to defendant, Bank of the Commonwealth — an existing Detroit bank which appellant alleges had 6.1% of the banking business (as measured by assets) in the Detroit area prior to this acquisition and 7½% after. The petitions for receivership and for approval of sale of assets were filed by defendant, Charles D. Slay, Commissioner of Banking for the State of Michigan, and by defendant, Federal Deposit Insurance Corporation, which had insured Public Bank's deposits. The FDIC was appointed receiver of Public Bank and immediately concluded a previously negotiated sale of assets to Commonwealth, extending to Commonwealth, in order to induce the purchase, a $10,000,000 FDIC guarantee against losses. Commonwealth in turn assumed all of Public's liabilities and took over and opened its offices the morning after the receivership and sale were concluded, without interruption of Public's business. Other defendants are individual officers of Commonwealth and accountants, all of whom played various roles in the receivership and sale of assets.
Plaintiff Granader was present when the sale of assets of Public to Commonwealth was approved by the Board of Directors of Public (on terms somewhat less favorable to Public than those negotiated by FDIC). He signed the tentative agreement. Granader was also a party to the contested state receivership proceedings and participated in the 42 days of trial.
There were also some cloak and dagger aspects to the receivership proceedings which flavor this record. The precarious state of Public Bank became known to both the Banking Commissioner of Michigan and the FDIC at least by the end of 1965. Various methods of strengthening it were attempted. These efforts failed. So did efforts of Public Bank Directors and subsequently the FDIC to sell the bank or its assets. By September 23, 1966, the impending insolvency of Public was known but was carefully kept from public gaze by the two regulatory agencies for fear of a run on the bank's assets. Both agencies participated in an approach to the Wayne County Circuit Court, asking for a hearing after court hours on an important item of litigation, and by blind draw the responsibility for conducting such a hearing was assigned to Judge Benjamin Burdick. In an extraordinary past midnight court session Judge Burdick heard the testimony offered by the FDIC and the Banking Commissioner on the Banking Commissioner's petition for receivership of Public Bank, made a tentative finding of insolvency, and appointed FDIC as the receiver. FDIC then negotiated a sale of the assets of Public Bank to the Bank of the Commonwealth. A similar sale had previously been approved by the Federal Reserve Board on September 23, 1966, as a result of an agreement on approximately the same terms negotiated between the Directors of Public Bank and the Bank of the Commonwealth.
Subsequent to these proceedings, Judge Burdick disqualified himself and the receivership case was assigned for full hearing to Circuit Judge Blair Moody, Jr. He conducted a hearing which took testimony for 42 days and then entered findings, the relevant ones being that as of October 12, 1966, Public Bank was insolvent and that the sale of Public Bank to the Bank of the Commonwealth was "the best possible and obtainable offer." On the state law issues involved in the receivership proceeding, Judge Moody summarized his findings as follows:
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