Knight, In re
| Citation | 208 N.E.2d 679,60 Ill.App.2d 457 |
| Decision Date | 22 June 1965 |
| Docket Number | Gen. No. 50182 |
| Parties | In the Matter of the Possession and Control of Joseph E. KNIGHT, Director of the Department of Financial Institutions of the State of Illinois, of the Chatham Bank of Chicago, Chicago, Illinois. FIRST FINANCE COMPANY, an Illinois corporation, Petitioner-Appellant, v. FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver of Chatham Bank of Chicago, Respondent-Appellee. |
| Court | United States Appellate Court of Illinois |
Joseph L. Baime, Chicago, for petitioner-appellant.
Chapman & Cutler, Chicago John B. Huck, John B. Kemp, Chicago, of counsel, for respondent-appellee.
A summary decree was entered in favor of the receiver and against the stockholder on the latter's petition to be allowed a set-off against an indebtedness owed by the stockholder to the insolvent bank. The stockholder appeals.
In 1962, First Finance Company made a loan to Club Lucerne, Inc., taking as collateral security 120 shares of stock of the Chatham Bank of Chicago. Club Lucerne subsequently defaulted on its note, whereupon First Finance Company perfected title in itself to the 120 shares of stock. Sale of the stock was attempted by First Finance Company, but a buyer could not be found.
In June of 1963, First Finance Company borrowed $75,000 from the Chatham Bank, executing its promissory note therefor to the Bank. A short time later the Chatham Bank became insolvent and the Federal Deposit Insurance Corporation was appointed receiver. As against the $75,000 indebtedness owing to the Chatham Bank, First Finance Company paid the receiver $38,790.65 and was also allowed a set-off of $11,250, the latter representing an amount in a deposit account with the Bank, leaving a balance of $24,959.35 owing to the Chatham Bank on the $75,000 note.
On December 30, 1963, First Finance Company filed the instant petition, wherein it claimed the right to set off the amount of $24,959.35 against the balance of the indebtedness due the Chatham Bank. The $24,959.35 figure was alleged to represent the damages suffered by First Finance Company when its 120 shares of Chatham Bank stock were rendered valueless because of the wrongful actions and mismanagement of the Chatham Bank's officers and directors. The petition alleged that the Chatham Bank was liable for these damages since it was responsible for the actions of its directors and officers.
The answer of the receiver admitted the allegations of the petition, except those relating to the financial dealings between First Finance Company and Club Lucerne and those relating to the right of set-off claimed by First Finance Company. It was specificall admitted by the receiver that the officers and directors of the Chatham Bank were guilty of the wrongdoing alleged in the petition.
The trial court took the matter on the pleadings, briefs and arguments of counsel, and on motion of the receiver entered summary judgment in its favor, and against First Finance Company on its cross-motion for a summary judgment.
First Finance Company maintains that, since the Chatham Bank is responsible for the acts of its officers and directors and since their wrongful acts injured the security of First Finance Company by impairing the value of its stock, First Finance Company has a right of action for damages against the Chatham Bank which it may use as a set-off against the balance of its indebtedness to the Bank on the $75,000 note. The receiver contends that the position taken by First Finance Company is nothing more than an attempt by a stockholder to gain a preference in the settlement of the affairs of the Chatham Bank, by means of the contention that it has a personal right of action for damages against the Bank based on the wrongful...
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