Houghton v. Enslen

• Decision Date: 10 November 1919
• Docket Number: 3339.
• Citation: 261 F. 113
• Parties: HOUGHTON et al. v. ENSLEN et al.
• Court: U.S. Court of Appeals — Fifth Circuit

261 F. 113

HOUGHTON et al. v. ENSLEN et al.

No. 3339.

United States Court of Appeals, Fifth Circuit.

November 10, 1919

Robert N. Bell and James A. Mitchell, both of Birmingham, Ala. for appellants.

Forney Johnston and W. R. C. Cocke, both of Birmingham, Ala., for appellees.

Before WALKER, Circuit Judge, and FOSTER and EVANS, District Judges.

WALKER Circuit Judge.

This was a stockholders' bill filed by the appellants, three stockholders of the Jefferson County Savings Bank, an Alabama corporation (which will be referred to as the bank), against that bank and the directors thereof. The bill sought a decree charging the directors individually with liability for alleged losses sustained by the bank in consequence of alleged wrongful conduct of the directors in making, for and in the name of the bank, sundry loans of the bank's funds to insolvent borrowers without security, or on grossly inadequate security, and in investing other funds of the bank in property worth greatly less than the aggregate of the amount of incumbrances thereon and the amounts of the bank's funds invested therein. Among the matters set up in the answer to the bill as defenses thereto were the following:

(1) That the causes of action sued on were barred by the Alabama statute of limitations of one year; (2) that the claims sued on were assigned to the Jefferson County Bank, another corporation, by the Alabama superintendent of banks pursuant to a decree of the chancery court of Jefferson county, Ala., rendered in a cause to which the superintendent of banks and the Jefferson County Savings Bank were parties, which decree was rendered after the making of such assignment had been agreed to by the stockholders of the bank, as evidenced by a resolution adopted at a meeting of such stockholders, a copy of which was exhibited to the court ordering the sale.

The court ordered that the above-mentioned two matters set up in defense to the bill be separately heard and disposed of before the trial of the case as a whole. The result of that hearing was a decree dismissing the bill. The appeal is from that decree.

The decree under review is not subject to be reversed if either of the above-mentioned matters constituted a defense to the bill.

The superintendent of banks is a state officer provided for by an act of the Legislature of Alabama entitled:

'An act to create a banking department of the state of Alabama and through this department to regulate, examine and supervise banks and banking, and to punish certain prohibited acts relating thereto. ' General Acts Alabama 1911, p. 50.

That act provides that, on the happening of specified delinquencies or on a finding, after examination, that a corporation or individual banker is in an unsound or unsafe condition to transact the business for which it was organized, or that it is unsafe for it to continue in business, the superintendent of banks may take possession of the property and business of such corporation or individual banker, and retain such possession until such corporation or individual banker shall resume business or its affairs be finally liquidated as provided in the act. While so in possession the superintendent is authorized to collect all debts due and claims belonging to the bank. Provision is made by the act for the superintendent completing the liquidation of the affairs of a bank, and for his selling, pursuant to an order of court, and on such terms as the order prescribes all real or personal property of the bank, the property and business of which has been taken possession of.

The provision for the authorization of a sale by the superintendent of banks of 'all real and personal property' of a bank is to be interpreted in the light of the fact that the making of such...