In re Bologh

• Citation: 185 F. 825
• Parties: In re BOLOGH et al.
• Decision Date: 17 February 1911
• Court: U.S. District Court — Southern District of New York

185 F. 825

In re BOLOGH et al.

United States District Court, S.D. New York.

February 17, 1911

Myers &amp Goldsmith (E. J. Myers, of counsel), for trustee in bank ruptcy of Philip Bologh and David Samlowitz and receiver in bankruptcy of Frederick Rosenzweig.

James Schell & Elkus (Abram I. Elkus, of counsel), for receiver in bankruptcy of Simon Lindau.

White &amp Case (George B. Case and Joseph M. Hartfield, of counsel) for Superintendent of Banks of State of New York.

HOLT District Judge.

These are three similar motions, made by a receiver in bankruptcy in each of the Rosenzweig and Lindau cases, and by a trustee in bankruptcy in the Bologh case, for orders directing the superintendent of banks of the state of New York to pay to the respective petitioners certain amounts deposited by them with the Carnegie Trust Company. In 1907 this court designated the Carnegie Trust Company as a depositary for the money of bankrupt estates, pursuant to section 61 of the bankrupt act (Act July 1, 1898, c. 541, 30 Stat. 562 (U.S. Comp. St. 1901, p. 3446)). The Carnegie Trust Company, pursuant to such section, thereupon gave, as principal, with the United States Fidelity & Guaranty Company as surety, a bond to the United States, conditioned as follows:

'That if the said Carnegie Trust Company shall well and truly account for and pay over all moneys deposited with it as such depository, and shall pay out the same only as provided by the act of Congress, in such case made and provided, and the rules of court applicable thereto, and shall abide by all lawful orders and decrees of the court, in and by the premises, then this obligation to be void, otherwise to remain in full force and virtue.'

Thereafter deposits were made by the petitioners of money in their hands as receiver or trustee respectively of the estates of the above-named bankrupts. On January 7, 1911, pursuant to section 19 of the banking law of New York (Consol. Laws 1909, c. 2), the superintendent of banks took possession of the property and business of the Carnegie Trust Company, and is now proceeding with the liquidation of its affairs in accordance with said section. That section provides, among other things, as follows:

'Whenever it shall appear to the superintendent that any corporation or individual banker to which this chapter is applicable has violated its charter or any law of the state, or is conducting its business in an unsafe or unauthorized manner, * * * or if from any examination or report provided for by this chapter the superintendent shall have reason to conclude that such corporation or individual banker is in an unsound or unsafe condition to transact the business for which it is organized, or that it is unsafe or inexpedient for it to continue business, or if any such corporation or individual banker shall neglect or refuse to observe an order of the superintendent specified in section seventeen of this chapter, the superintendent may forthwith 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 herein provided.' Section 190 of the banking law further provides:

'No bond or other security, except as hereinafter provided, shall be required from any such corporation for or in respect to any trust, nor when appointed executor, administrator, guardian, trustee, receiver, committee or depositary. * * * If dissolved by the Legislature or the court, or otherwise, the debts due from the corporation as such executor, administrator, guardian, trustee, committee or depositary shall have the preference.'

The superintendent of banks, in taking charge of a banking institution, does so by virtue of his authority as such superintendent under the statute, and not as a result of any proceeding in court. His authority is somewhat analogous to that of a Receiver of a national bank appointed by the Comptroller of the Currency. Section 19 of the banking law, however, provides that his administration in certain respects shall be subject to the action of the Supreme Court of the state of New York. Thus it is provided that, upon taking possession of the business of a corporation or individual banker:

'The superintendent * * * upon the order of the Supreme Court may sell or compound all bad or doubtful debts, and on like order may sell all the real and personal property of such corporation or individual banker on such terms as the court shall direct. ' He may reject any claim field, serving notice of such rejection upon the claimant, and 'an action upon the claim so rejected must be brought within six months after such service. * * * The compensation of the special deputy superintendents, counsel and employes and assistants, and all expenses of supervision and liquidation, shall be fixed by the superintendent subject to the approval of the Supreme Court. * * * At any time after the expiration of the date fixed for the presentation of claims the superintendent may out of the funds remaining in his hands after the payment of expenses declare one or more dividends, and after the expiration of one year from the first publication of notice to creditors he may declare a final dividend, such dividends to be paid to such persons, and in such amounts, and upon such notice, as may be directed by the Supreme Court in the judicial district in which the principal office of such corporation or individual banker is located. Objections to any claim not rejected by the superintendent may be made by any party interested by filing a copy of such objections with the superintendent, who shall present the same to the Supreme Court at the time of the next application to declare a dividend. The court may make proper provision for unproved or unclaimed deposits. * * * The superintendent may pay over the moneys so held by him to the persons respectively entitled thereto upon being furnished satisfactory evidence of their right to the same. In cases

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