Parkinson v. State Bank of Millard County

• Decision Date: 03 August 1934
• Docket Number: 5481
• Citation: 84 Utah 278,35 P.2d 814
• Court: Utah Supreme Court
• Parties: PARKINSON v. STATE BANK OF MILLARD COUNTY ET AL

35 P.2d 814

84 Utah 278

PARKINSON v. STATE BANK OF MILLARD COUNTY ET AL

No. 5481

Supreme Court of Utah

August 3, 1934

Original proceeding by Nellie Parkinson for a writ of prohibition, restraining John A. Malia, State Bank Commissioner, from paying and the district court in and for Millard county from ordering payment of, unsecured claims of common creditors of the State Bank of Millard County, or making settlement with depositors thereof, until plaintiff's claim was paid in full.

ALTERNATIVE WRIT MADE PERMANENT.

J. A Melville and A. C. Melville, both of Salt Lake City, for plaintiff.

Cline Wilson & Cline, of Milford, for defendants.

STRAUP, Chief Justice. ELIAS HANSEN, FOLLAND, and EPHRAIM HANSON, JJ., concur. MOFFAT, Justice, concurring in the result.

OPINION

STRAUP, Chief Justice.

The State Bank of Millard County, a commercial banking corporation organized under the laws of Utah, for more than twenty-five years at Fillmore, Millard county, was engaged in and doing a general banking business. Its shares of stock consisted of 600 shares at a par value of $ 100 each, all fully paid and contributed to the corporation. The bank on February 1, 1932, becoming insolvent, all of its business, assets, and affairs were taken over for liquidation by Hadlock, the then state bank commissioner who later was succeeded in the office by Malia.

Nellie Parkinson, the plaintiff, by her petition filed in this court alleging that she had a preferred claim against the bank and the commissioner and in virtue of Rev. St. Utah 1933, § 7-3-35, in force when she had dealings with the bank had a lien on the capital of the bank as security for the payment of her claim and that, without paying it, the bank commissioner out of capital and assets of the bank was paying unsecured and unpreferred claims of common creditors and making settlements with some of the depositors by assigning and transferring to them a part of the capital and assets of the bank in satisfaction of their claims, an alternative writ of prohibition was granted restraining the bank commissioner from paying and the district court from ordering payment of such clams or making such settlements, until the claim of the plaintiff was first paid in full.

By the petition it, among other things, is alleged that for a period of more than three years prior to February 1, 1932, when the bank commissioner took over the affairs of the bank, the bank had a paid-up "capital and surplus of more than $ 100,000," and that a permit, as provided by Rev. St. Utah 1933, § 7-3-34, had been issued to it by the commissioner to act as executor and administrator and to exercise other trust powers pursuant to the provisions of the sections of the statute referred to; that Ann Crane Paxton, a resident of Millard county, died testate August 21, 1930, and by her will nominated the bank executor of her estate. August 28, 1930, the bank presented the will for probate, and on its application, and in pursuance of the sections of the statute referred to, was by the district court of Millard county appointed such executor without bond and qualified to act as such. In the course of its administration of the estate the bank collected and there came into its hands something over $ 12,740, moneys and property of the estate which was kept on deposit by it in its bank. May 14, 1931, the bank as executor made and filed a report and final account and settlement and prayed a distribution of the property of the estate consisting of moneys amounting to $ 12,740, after payment of all expenses and disbursements of administration. On June 19, 1931, the account as presented was approved and settled by the district court and the moneys on hand ordered distributed and paid to the various legatees of the will, among whom was the plaintiff, Nellie Parkinson, residing in Melbourne, Victoria, Australia, who under the will was entitled to $ 6,360 which amount was ordered distributed and paid to her by the executor. Thereafter and some time prior to December, 1931, the bank paid her $ 570.40, and in December, 1931, it (as represented and stated by the parties in oral argument of the cause) mailed to her in Australia a check payable to her and signed by an officer of the trust department of the bank and drawn on the bank itself for the balance of $ 5,789.60, which check was indorsed by her and returned to the bank for payment, but before it was received by the bank and presented for payment, the business and affairs of the bank on the ground of insolvency had been taken over by the bank commissioner for liquidation. Whether the bank when the check was drawn had sufficient funds in its trust department to meet the payment of the check or what amount of moneys the bank had on hand when it was taken over by the commissioner is not made to appear. A demand on behalf of the plaintiff was made on the bank and on the bank commissioner for payment of the balance due and unpaid amounting to $ 5,789,60, but to pay the same or any part thereof the bank failed and the bank commissioner declined and refused to do. It further is alleged in the petition that such sum of $ 5,789.60 at no time became assets of the bank-- that such money was the property of the plaintiff--and was no part of the assets of the bank for liquidation, and wrongfully was withheld by the commissioner from the plaintiff. That allegation is denied by the commissioner.

So on September 30, 1932, the plaintiff brought an action in the district court in and for Millard county against the bank and the commissioner wherein the matters and things hereinbefore recited were alleged, in which action the bank defaulted but in which the commissioner answered. Upon proceedings had in such cause, findings, conclusions, and decree were made and rendered December, 1932, whereby it was adjudged and decreed that there was due and owing the plaintiff and unpaid the sum of $ 5,789.60 with interest and that she have and recover such sum from the bank and from the commissioner in charge of the liquidation of the bank and that he pay the same to her out of "the capital of the bank," and that the capital and assets of the bank, in virtue of the sections of the statute referred to, be held as security for the payment of such sum and a first and prior lien was impressed on "the capital of the bank" for the payment of the same. In that action it also was found and adjudged, and it so is alleged in the petition for the writ, that the bank at no time was released or discharged as executor of the estate. A motion for a new trial in such action was made by the commissioner, which on May 8, 1933, was overruled. From the decree and judgment rendered in such action the commissioner on November 2, 1933, prosecuted an appeal to this court and caused the transcript of the record to be transmitted to this court on November 23, 1933, which appeal is now pending, unpresented, and undetermined awaiting the determination of the matter presented by the petition in this cause for a permanent writ of prohibition. However, about all of the material facts presented in the action referred to are alleged and presented by the petition in application for the writ and admitted by the demurrer and answer of the bank and of the commissioner, except as herein otherwise stated.

It further is alleged in the petition that the capital stock of the bank at the time its doors were closed and the affairs of the bank taken over by the commissioner and for a long time prior thereto consisted of 600 shares of stock of the par value of $ 100, and a surplus as shown by the books of the bank in excess of $ 40,000; that its assets were in excess of $ 300,000 and its liabilities, including deposits, were more than $ 50,000 in excess of its assets, and that more than the sum of $ 5,789.60 was collected by the commissioner from stockholders of record of the bank upon their statutory stockholders' liability.

It also is alleged by the petition that the commissioner refused to recognize the claim of the plaintiff as a preferred claim or as a lien on any property or assets of the bank taken over by him or coming into his hands, that he asserted her claim to be merely an unsecured claim of a common creditor and as such to share ratably with claims of depositors and other unsecured claims against the bank, and that he, unless restrained, would so dispose of the proceeds of the assets of the bank; and that in addition thereto, the commissioner had and, unless restrained, would continue, in some instances, to assign and transfer particular assets of the bank in settlement and in satisfaction of claims of depositors, to the prejudice of other claimants, especially the plaintiff who asserted a preferred claim and a lien on the "capital of the bank" secured to her in virtue of the sections of the statute referred to.

The bank and the commissioner by their demurrer and answer admitted substantially all of the material allegations of the petition, admitted the amount claimed by plaintiff was past due and unpaid, that the claim arose in manner as alleged in the petition while the bank was acting as executor of the estate, that in virtue of the sections of the statute referred to the plaintiff had a lien on "the capital of the bank" to secure the payment of the claim, that assets of the bank in excess of $ 300,000 were received by the commissioner, and that the liabilities were more than $ 50,000 in excess of assets, but denied that when the affairs of the bank were taken over by the commissioner there was "any capital" or surplus of the bank in existence or that any came into the hands of the commissioner or that there was any capital to satisfy the claim of plaintiff, and averred that the "capital" originally possessed by the bank including its...