In re Hanover Trust Co.

• Decision Date: 22 May 1925
• Citation: 148 N.E. 130,252 Mass. 348
• Parties: In re HANOVER TRUST CO. In re COSMOPOLITAN TRUST CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

252 Mass. 348

148 N.E. 130

In re HANOVER TRUST CO. In re COSMOPOLITAN TRUST CO.

Supreme Judicial Court of Massachusetts, Suffolk.

May 22, 1925.

Case Reserved from Supreme Judicial Court, Suffolk County; J. C. Crosby, Judge.

Separate petitions by Joseph C. Allen, Commissioner of Banks and Banking, in possession of the property and business of the Hanover Trust Company and of the Cosmopolitan Trust Company, for instructions as to payment of final dividends from assets of respective companies. Case reserved for consideration of full court on report of a single justice. Decree entered to conform to opinion.

1. Banks and banking k80(2)-Court may establish time for proof of claims against banks in possession of commissioner.

In view of G. L. c. 167, ss 28, 29, 31, relating to proof of claims against banks in possession of banking commissioner, general equity powers conferred by section 36 authorize decree establishing time after which there can be no further proofs of claims by creditors.

2. Banks and banking k80(9)-Banking Act, as to distribution of assets of banks to creditors proving claims, construed in light of construction of federal National Bank Act.

As G. L. c. 167, as to liquidating banks, is modeled on the federal National Bank Act, which makes no provision for reservation for those who do not prove their claims, and as assets of defunct national banks, in view of Rev. St. U. S. s 5236 (U. S. Comp. St. s 9823), are distributed among those whose claims have been proved to satisfaction of comptroller or adjudicated in competent court, chapter 167 is construed in light of such general considerations.

3. Banks and banking k80(9), 317-Reservation of funds in decree for final dividend not required on account of deposits or claims not proved within time limited by decree.

In liquidation of bank or trust company by commissioner of banks, G. L. c. 167, ss 28, 29, 31, and 35 as amended by St. 1925, c. 240, do not require in decree for final dividend, reservation of funds on account of deposits or other claims which have been unproved within time limited by court's decree.

F. H. Smith, Jr., of Boston, for petitioner Hanover Trust Co.G. L. Vaughan, of Melrose, for petitioner Cosmopolitan Trust Co.

RUGG, C. J.

These are petitions for instructions by the commissioner of banks in possession of the property and business of two trust companies and liquidating their affairs in accordance with the statutes. It is apparent from the records, as well as from the lapse of time since possession was taken, that the liquidation is nearing an end. The present petitions are brought with a view to arranging for the payment of a final dividend and closing the liquidation proceedings. The cases must be considered on that footing. The salient facts set forth in each petition in substance and effect are that in each case the commissioner by publications and mailing of notices, as required by G. L. c. 167, § 28, called upon all persons having claims against the trust company to make legal proof of their claims on or before a specified date. Subsequently, upon an appropriate petition by the commissioner, a decree of court was entered pursuant to G. L. c. 167, § 36, fixing a specified date on or before which all persons having claims against the trust company must present and make legal proof thereof or be forever barred from sharing in the distribution of its assets. That time limit has now long since expired. From statements made in argument at the bar, it seems that, in addition to the publications and mailed notices, all reasonable effort was made in behalf of the petitioner to get every person supposed to be a creditor to make proof of his claim within the time specified. There appear to be upon the books of each trust company unclaimed deposits, both in the commercial and in the savings departments, aggregating considerable sums, outside those as to which claims have been presented and proved and those as to which litigation is pending. That is to say, the books of each trust company show certain deposits or obligations to creditors who have never made any effort to present or prove their claims or to assert their rights against the assets of the trust companies. The assets of each trust company are insufficient to pay in full the claims proved and allowed against it.

[1] The provisions of G. L. c. 167, §§ 28, 29, and 31, relate to the proof of claims. The first named section requires the fixing of a time for the proof of claims. The plain implicationof this section is that some time may be fixed after which there can be no further proofs. The general equity powers conferred by section 36 authorize the court by decree to establish such a time which shall be binding upon all persons. It is only in this way that the liquidation can be brought to an end.

The main question is whether the petitioner must reserve funds to pay the proper percentage on these unclaimed deposits, or whether distribution of all the assets is to be made in proper proportion among those alone who have presented and proved their claims, without further regard to deposits or claims which have...