Hightower v. American Nat. Bank of Macon

• Decision Date: 05 November 1921
• Docket Number: 3722.
• Parties: HIGHTOWER et al. v. AMERICAN NAT. BANK OF MACON.
• Court: U.S. Court of Appeals — Fifth Circuit

276 F. 371

HIGHTOWER et al. v. AMERICAN NAT. BANK OF MACON.

No. 3722.

United States Court of Appeals, Fifth Circuit.

November 5, 1921

Charles L. Bartlett, Robert L. Berner, Charles Akerman, Robert L Anderson, John E. Hall, and Warren Grice, all of Macon, Ga (Richard D. Feagin, Thomas E. Ryals, and Augustus O. B Sparks, all of Macon, Ga., on the brief), for appellants.

Orville A. Park and George S. Jones, both of Macon, Ga. (Jones, Park & Johnston, of Macon, Ga., on the brief), for appellee.

Before WALKER and BRYAN, Circuit Judges, and SIBLEY, District Judge.

BRYAN Circuit Judge.

This is an appeal from a final decree establishing in favor of the American Bank of Macon, Ga., the statutory liability of appellants as shareholders of the Commercial National Bank of Macon, Ga.

Reference is made to the opinion of this court on a former appeal reported in 254 F. 249, 165 C.C.A. 537, in which a decree of the District Court dismissing the bill was reversed, for a statement of the averments of the bill filed by appellee, and for the full text of the contract and resolutions pleaded and attached as exhibits.

It was decided on the former appeal that the bill states a case. Whether the evidence supports the averments of the bill, as it is held to do by the decree now appealed from, is the only question presented by this appeal. If the evidence shows that the American Bank was a creditor of the Commercial Bank, it is admitted by appellants that the decree of the District Court is correct and should be affirmed. On the other hand, if the evidence shows that the American Bank was a purchaser of the assets of the Commercial Bank, it is admitted by appellee that the decree is erroneous and should be reversed.

In June, 1914, the Comptroller of the Currency complained of the condition of the Commercial Bank as disclosed by the report of a national bank examiner, and required the material reduction of large lines of credit extended to certain customers, and particularly to directors and corporations in which directors were interested. In July it was stated in a report by its finance committee that the bank was in need of $100,000 to make it above criticism; that money borrowed in excess of the amount permitted by law was about $60,000; and that its cash on hand was too low to be allowed to stand. Rumors as to the solvency of the bank became current, exchanges were held up, and remittances were not promptly made. Finally, on July 31, 1914, an appeal was made to the president of the American Bank for assistance. The officers of the two banks met, and after an all night session spent in considering the condition of the Commercial Bank, the two resolutions of August 1, 1914, were adopted. Thereafter, in pursuance of these resolutions, the contract of August 11, 1914, was entered into by authority of the boards of directors of the two banks, and the resolutions of August 12, 1914, and September 30, 1914, were adopted by the shareholders of the Commercial Bank. After August 1, 1914, the Commercial Bank transacted whatever business it did in the banking offices of the American Bank, but by its own officers, for more than two weeks at least, during which time the Commercial Bank paid its depositors largely with money furnished by the American Bank, but maintained and kept separate books and accounts. When it was necessary to secure funds from the American Bank, appropriate entries of debit and credit were made by the bookkeepers of the two banks.

Immediately after the adoption of the resolutions of August 1, 1914, the directors of the two banks caused advertisements to be inserted in the daily papers. That of the American Bank announced that a consolidation of the business of the two banks had been effected, that the assets of the Commercial Bank had been taken over by the American Bank, and that the latter would take care of all the business theretofore handled by the former; that the money on deposit with the Commercial Bank had been transferred to the American Bank, and that the latter would pay checks against the former; and that checks should be written on the blanks of the Commercial Bank until the depositors made other arrangements. The advertisement of the Commercial Bank announced that a merger of the two banks had been perfected; that all the assets of the Commercial Bank had been transferred to the American bank; that checks of customers upon the Commercial Bank would be honored by the American Bank; that depositors of the Commercial Bank should use the blank checks of that bank until they transferred their accounts to the American Bank, or made other arrangements; and that arrangements had been made to protect the interests of the stockholders of the Commercial Bank.

At the shareholders' meeting held August 12, 1914, objection was made to that provision in the contract executed the day before by the directors to the effect that shareholders of the Commercial Bank should not be relieved of their liability as such, for any deficit that might remain after exhausting the other assets of the bank; but upon the statement being made that the American Bank insisted upon the provision remaining in the contract, the resolution containing it was unanimously adopted. According to the minutes of that meeting, one of the directors stated that the American Bank relied upon the statutory liability of the shareholders. The director shown by the minutes to have made this statement testified that he did not do so. The shareholders also appointed a committee to represent them in liquidating the assets of the Commercial Bank. At the meeting of the shareholders on September 30, 1914, a...