In re Worcester Cnty. Nat. Bank of Worcester

• Decision Date: 30 May 1928
• Citation: 162 N.E. 217,263 Mass. 444
• Parties: Petition of WORCESTER COUNTY NAT. BANK OF WORCESTER. In re LEGNARD'S ESTATE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

263 Mass. 444

162 N.E. 217

Petition of WORCESTER COUNTY NAT. BANK OF WORCESTER. In re LEGNARD'S ESTATE.

Supreme Judicial Court of Massachusetts, Worcester.

May 30, 1928.

Case Reserved and Report from Probate Court, Worcester County; Frederick H. Chamberlain, Judge.

Petition by the Worcester County National Bank of Worcester for leave to render account as executor of the estate of Julia A. Legnard. On reservation and report from the probate court. Question reported answered.William T. Forbes, of Worcester, for petitioner.

RUGG, C. J.

This case is reported on a finding of material facts for determination whether the petitioner is entitled to render the account. The pertinent facts are that the Fitchburg Bank & Trust Company, a corporation organized under the laws of this commonwealth, was appointed on April 21, 1926, by the appropriate court of probate executor of the will of Julia A. Legnard and qualified by giving bond. No change in the administration of this estate appears on the court records. The said Fitchburg Bank & Trust Company, located within our county of Worcester, consolidated with the Merchants' National Bank of Worcester, a national banking association organized under the laws of the United States and also located within our county of Worcester, under the corporate title, Worcester County National Bank of Worcester, pursuant to the provisions of the Act of Congress approved on February 25, 1927, c. 191, § 1, 44 U. S. Stat. at Large, part 2, pp. 1224, 1225 (12 USCA § 34a), amending an Act approved November 7, 1918, c. 209, 40 U. S. Stat. at Large, 1044, by adding at the end of said chapter 209 a new section, being section 3 thereof. For convenience this will be referred to hereafter in this opinion as said section 3. See Act of Congress of May 1, 1886, c. 73, § 2 (24 U. S. Stat. at Large, 18 [12 USCA § 30]). The certificate approving the consolidation is dated June 27, 1927. It is assumed that the consolidation took effect on that date.

The first statute purporting to authorize a trust company organized under the laws of a state to consolidate directly with a national banking association was said section 3. Its provisions, so far as material to the grounds of this decision, are that any bank, defined to include a trust company, incorporated under the laws of any state, ‘may be consolidated with a national banking association located in the same county * * * under the charter of such national banking association on such terms and conditions as may be lawfully agreed upon’ in the manner specified; ‘and all the rights, franchises, and interests of such state * * * bank so consolidated with a national banking association in and to every species of property, real, personal, and mixed, and choses in action thereto belonging, shall be deemed to be transferred to and vested in such national banking association into which it is consolidated without any deed or other transfer, and the said consolidated national banking association shall hold and enjoy the same and all rights of property, franchises, and interests including the right of succession as trustee, executor, or in any other fiduciary capacity in the same manner and to the same extent as was held and enjoyed by such state * * * bank so consolidated with such national banking association. * * * No such consolidation shall be in contravention of the law of the state under which such bank is incorporated.’

[1] First. The first question to be decided is whether consolidation of a Massachusetts trust company with a national banking association is permissible and valid, as provided for in said section 3. On this aspect of the case we shall deal only with consolidation in its general features and leave for later consideration the meaning and effect, as declared in said section 3 of such consolidation on the Massachusetts corporation and its fiduciary appointment by the court of probate, and whether these provisions are in contravention of the law of this commonwealth.

There is no statute of this commonwealth prohibiting in terms the consolidation of a trust company organized under the authority of Massachusetts laws with a national bank. We are of opinion that there is no policy of the commonwealth declared in any statutes on the subject of such consolidation. It is provided by G. L. c. 172, § 44, as amended by St. 1922, c. 292, that ‘no trust company shall be merged in or consolidated with another trust company except’ upon the terms and in the manner there specified. These statutory words in their context and by the express terms of G. L. c. 172, § 1, refer exclusively to trust companies organized under the laws of this commonwealth. These statutory words, although they do not authorize, do not prohibit a consolidation of a Massachusetts trust company with a national bank. Further provisions of said section 44 as amended touching ‘the sale or exchange of all the property and assets, including the good will and corporate franchise, of a trust company’ have no relevancy to the facts disclosed on this record because a consolidation such as here is in issue is not ‘a sale or exchange’ of the property and assets of the trust company. The final sentence of said section 44 as amended is this:

‘The charter of a trust company the business of which shall, on or after Junly first, nineteen hundred and twenty-two, be consolidated or merged with, or absorbed by, another bank or trust company, shall be void except for the purpose of discharging existing obligations and liabilities.’

It is to be observed that here for the first time occur the words ‘another bank’ coupled with the words ‘trust company.’ The use of the word ‘bank’ in this connection, in a chapter devoted solely to the subject of trust companies, bears some indication of legislative recognition of the fact that a consolidation or merger of a trust company with a ‘bank’ was contemplated. By said chapter 172 and by G. L. c. 167, a bank is a different institution from a trust company. So far as we are aware or have been able to discover, there is no statute of this commonwealth authorizing any state bank, as distinguished from a trust company, to consolidate with a trust company; and there is no statute, except said section 44 as amended, authorizing a trust company to consolidate with another institution transacting any branch of the business of banking. The use of the word ‘bank’ in the context shown in said section 44 as amended renders it impracticable to hold rightly that consolidation of a trust company with a national bank, subject to the limitation expressed in the final sentence of said section 44 as amended, is contrary to declared legislative policy even though at the time of the enactment of St. 1922, c. 292, no such direct consolidation was permissible under any act of Congress. An indirect and roundabout method of consolidation theretofore was possible by means (1) of the conversion of a trust company into a national bank under U. S. Rev. St. § 5154 (12 USCA § 35), and (2) of the consolidation of the national bank thus established with another national bank under the charter of such other national bank under Act of Congress of November 7, 1918, c. 209, 40 U. S. Stat. at Large, 1043. That method has been followed in some instances, as shown by the record in Petition of Commonwealth-Atlantic National Bank of Boston, 249 Mass. 440, 144 N. E. 443. The Legislature may have had that method of accomplishing the result in mind in phrasing the final sentence of said chapter 292. It would have been simple for the Legislature to have declared that such consolidation or merger was in contravention of the policy of the commonwealth if such had been its purpose.

There is no provision in the statutes of this commonwealth authorizing or recognizing the consolidation of a trust company or bank organized under such statutes with a national banking association. Formerly there were statutes respecting the conversion of a state bank into a national bank under Act of Congress of June 3, 1864, c. 106, § 44, 13 U. S. Stat. at Large, 112, now U. S. Rev. St. § 5154 (12 USCA § 35). See St. 1863, c. 244, St. 1864, c. 190. Of course these early statutes never were applicable to a consolidation of a state bank with a national bank, which appears first to have been authorized by said section 3 (44 U. S. Stat. at Large, part 2, pp. 1225, 1226). But those early statutes were repealed by Pub. St. c. 224. It is quite possible that that repeal came about because such statutes were thought to be unnecessary in view of the decision in Casey v. Galli, 94 U. S. 673, 24 L. Ed. 168, to the effect that no enabling state statute was required to accomplish such change and conversion.

This review of the statutes of this commonwealth shows that there has been no exercise of whatever power may reside in the state to declare a general policy against the consolidation of a state trust company with a national bank. Thereby in effect that field is left open to the exercise by Congress of whatever power it possesses over that subject. Commonwealth v. Nickerson, 236 Mass. 281, 292, 293,128 N. E. 273 (10 A. L. R. 1568). Such consolidation, however, must be subject to the limitation already quoted from the final sentence of St. 1922, c. 292, amending G. L. c. 172, § 44.

It follows that, speaking broadly, the consolidation of a Massachusetts trust company with a national banking association is not ‘in contravention of the law’ of this commonwealth, subject to the limitation in St. 1922, c. 292, amending G. L. c. 172, § 44, and to the limitations hereinafter stated.

The question was directly raised in Casey v. Galli, 94 U. S. 673, 24 L. Ed. 168, whether a state bank could change its organization into that of a national banking association without any authority given by the state law in its charter or otherwise to make the change. It was said at page 678:

‘No authority from the state was necessary to enable the bank so to...