Green v. City of Homewood

• Decision Date: 15 January 1931
• Docket Number: 6 Div. 699.
• Citation: 131 So. 897,222 Ala. 225
• Parties: GREEN, SUPERINTENDENT OF BANKS, v. CITY OF HOMEWOOD.
• Court: Alabama Supreme Court

131 So. 897

222 Ala. 225

GREEN, SUPERINTENDENT OF BANKS, v. CITY OF HOMEWOOD.

6 Div. 699.

Supreme Court of Alabama

January 15, 1931

Appeal from Circuit Court, Jefferson County; C. B. Smith, Judge.

Petition to the circuit court, by D. F. Green, as Superintendant of Banks, liquidating the Banks of Ensley, for a judgment upon the ruling of petitioner approving, as a preferred claim, the claim of the State of Alabama against the Bank of Ensley with an objection by the City of Homewood. From a judgment sustaining the objection of the City of Homewood and disallowing the claim of the State as a preferred claim petitioner appeals.

Reversed and remanded.

H. L Anderton, of Birmingham, for appellant.

Chas. E. Rice and Peyton D. Bibb, both of Birmingham, for appellee.

SAYRE J.

The Bank of Ensley, proceeding according to the provisions of chapter 25, article 8, §§ 891-905, of the Code, deposited with the state treasurer state bonds to the amount of $10,000 as security for the faithful performance of its duties as a state depositary. As such depositary the bank was authorized to receive state funds in an amount equal to the par value of the bonds so deposited, in no case to exceed its paid-in capital stock, surplus, and undivided profits. Section 893. But "no state depositary shall receive or have at any time an amount of said money or funds in excess of the face value of said bonds actually deposited by it with the State Treasurer," nor in excess of its capital stock, etc. Section 894.

Section 895: "If any bank or trust company designated as a state depositary shall receive, or have on hand at the close of any day's business, state funds or moneys in excess of the amount it is herein authorized to receive, or have at any time, such depositary shall at once remit such surplus direct to the state treasurer, and on failing to do so, the governor, upon the fact being certified to him by the state treasurer, or otherwise coming to his knowledge, shall forthwith direct the withdrawal by the state treasurer from such bank or trust company of said funds or moneys, and the same being withdrawn, he shall forthwith revoke the authority of such bank or trust company to be or continue a state depositary." On January 4, 1930, the balance to the credit of the state with the bank was $4,483.06. On that date the tax collector of Jefferson county deposited on behalf of the state to the account of the state treasurer with said bank the sum of $10,000. The bank accepted the deposit, $4,483.06 in excess of the amount it was authorized to receive, but failed to forward the said excess to the state treasurer, as required by section 895. "Said bank went into the hands of the Superintendent of Banks for liquidation on or about January 10, 1930, and the excess referred to above has never been paid to the State of Alabama." Treasurer's affidavit, April 7, 1930.

The question presented for decision is whether the state is entitled to receive out of the assets of the bank in liquidation the full sum of $4,483.06, or whether, on the other hand, it must accept payment from the funds of the bank in the hands of the superintendent pari passu with its unsecured creditors.

The opinion here is that the state is due to be preferred out of the funds of the bank in the keeping of the superintendent of banks to the extent of $4,483.06, or so much thereof as will make the state whole.

Section 894 of the Code, as our quotation therefrom has shown, made it unlawful for the bank to have or receive an amount of money in excess of the face value of the bonds deposited by it with the state treasurer, and section 895, to repeat, requires that the depositary shall at the close of each day's business remit any surplus to the state treasurer, or, failing therein, forfeit its rights and privileges as a depositary.

There is no need for prolonged discussion. We refer to the case of Maryland Casualty Co. v. Rainwater, 173 Ark. 103 291 S.W. 1003, 51 A. L. R. 1332, and the annotation thereunder, where it appears that the majority view of the American courts is that the state enjoys a prerogative right of preference in the assets of an insolvent bank...