In re Carnegie Trust Co.
| Decision Date | 19 November 1912 |
| Citation | 206 N.Y. 390,99 N.E. 1096 |
| Parties | In re CARNEGIE TRUST CO. In re APPLICATION OF SUPERINTENDENT OF BANKS OF STATE OF NEW YORK. |
| Court | New York Court of Appeals Court of Appeals |
OPINION TEXT STARTS HERE
Appeal from Supreme Court, Appellate Division, First Department.
In the matter of the Carnegie Trust Company, in liquidation, in which the Superintendent of Banks of the State of New York applied for leave to declare and pay a supplemental first dividend to the creditors of said Carnegie Trust Company. From an order of the Appellate Division (151 App. Div. 606,136 N. Y. Supp. 466), reversing an order of the Special Term, which confirmed the report of a referee, finding that the deposit of state canal funds in the trust company did not entitle the state to a preference, George C. Van Tuyl, Jr., State Superintendent of Banks, appeals. Affirmed.Frank M. Patterson, of New York City, for appellant.
Thomas Carmody, Atty. Gen. (Henry Selden Bacon, of Albany, of counsel), for John J. Kennedy, State Treasurer.
Under the findings of the referee it appears that the Carnegie Trust Company was a corporation transacting a banking and trust business, pursuant to the Banking Law of this state, and by a resolution of the commissioners of the canal fund of the state it was designated as a depositary of such fund; that thereafter and from time to time the treasurer of the state made deposits with the trust company in different amounts, and on the 7th day of January, 1911, the trust company held on deposit the sum of $135,843.85 belonging to the state; that all of the amount of such deposit was a part of the canal fund except the sum of $3,418.93, which belonged to the general fund of the state. On the 29th day of October, 1910, at the instance of the treasurer of the state, the trust company caused to be executed and delivered to the state treasurer two bonds, conditioned that in the event of default on the part of the trust company the sureties will repay the state the percentage which the amount of the bonds bears to the total deposits. One bond was executed by the United States Fidelity & Guaranty Company of Baltimore, Md., as security, in the sum of $75,000; the other bond was executed by the AEtna Indemnity Company of Hartford, Conn., in the sum of $190,000. Thereafter and on the 7th day of January, 1911, the trust company went into liquidation and passed into the hands of the superintendent of banks of the state, pursuant to the provisions of the Banking Law, and thereupon the United States Fidelity & Guaranty Company paid to the treasurer of the state its proportional percentage of the claim, amounting to the sum of $38,471.12. This payment was applied by the treasurer in discharging the amount of the deposit belonging to the general fund, and the rest upon the amount of the canal fund held by the trust company on deposit, leaving the sum of $97,372.73 of the canal fund unpaid. It does not appear that the AEtna Indemnity Company of Hartford has paid any sum whatever on the indemnity bond executed by it to the treasurer. The referee found, as conclusions of law, that the treasurer of the state was not entitled to priority over the claims of the general creditors of the company, but that his claim should be allowed as a general claim against the company. Exceptions were taken by the state treasurer to the conclusions of law so found, and the question presented for our determination on this review is as to whether the Appellate Division properly reversed the judgment entered upon such conclusions.
[1] In the first place we are met with a preliminary objection presented by the Attorney General, in which he claims that the superintendent of banks has no power to appeal to this court, and that therefore his appeal should be dismissed. Under the Banking Law the superintendent is now authorized to take possession of insolvent banks, to collect in their assets, and to make distribution among the creditors and stockholders. He is empowered to declare one or more dividends after the expiration of time fixed by statute, 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.’ Also in case of objections made to any claim, he is required to present the same to the Supreme Court for determination; and in cases of doubt or conflicting claims, he may ask for an order of the Supreme Court disposing of such claims. In this case a claim was made on behalf of the state treasurer to have the amount of the state funds deposited with the bank preferred over the claims of ordinary depositors. The superintendent had the right, therefore, under the statute to make application to the Supreme Court to determine that question. The application having been made pursuant to a statute it became a special proceeding, and in view of the fact that the superintendent represented the creditors generally in his official capacity as well as the state and the stockholders and would be personally liable for any unauthorized distribution of the funds, we are of the opinion that he had the power to appeal from the order of the Appellate Division under the provisions of the Code empowering an appeal from a final order in special proceedings.
In considering the case upon the merits, the first question that arises is as to whether the funds of the state deposited with the trust company were preferred by any express provisions of the statute. The commissioners of the canal fund are created by the provisions of the Constitution. Article 5, § 5. Their powers and duties were originally prescribed by the Laws of 1817 (chapter 262, § 1), in which it was made the duty of the commissioners of the canal fund to receive, arrange, and manage to the best advantage all things belonging to the said fund, to borrow from time to time moneys on the credit of the people of the state, and out of such funds to make payments, etc. This provision, after passing through several revisions of the statute, has finally been incorporated in our present State Finance Law (Consol. Laws, 1909, c. 56, art. 4, §§ 60, 61, 62). The latter section authorizes the commissioners to deposit the moneys belonging to such fund or the canal debt sinking fund with any safe incorporated moneyed institution or banking association in this state and may make such contracts therewith for the interest on and the duration of such deposits as will best promote the interest of the funds. Pursuant to this provision, as we have seen, the commissioners of the canal fund designated the Carnegie Trust Company as a depositary for such funds, and thereupon the treasurer paid over to such depositary the funds which he now seeks to have preferred.
Section 189 of the Banking Law (Consol. Laws, c. 2), among other things, provides as follows: ...
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