Reichert v. People's State Trust & Sav. Bank (In re Reiher)

• Decision Date: 04 June 1934
• Docket Number: No. 84.,84.
• Citation: 267 Mich. 543,255 N.W. 301
• Court: Michigan Supreme Court
• Parties: REICHERT, Banking Com'r, v. PEOPLE'S STATE TRUST & SAVINGS BANK. In re REIHER et al.

267 Mich. 543

255 N.W. 301

REICHERT, Banking Com'r,

v.PEOPLE'S STATE TRUST & SAVINGS BANK.

In re REIHER et al.

No. 84.

Supreme Court of Michigan.

June 4, 1934.

Appeal from Circuit Court, Oakland County, in Chancery; Frank L. Doty, Judge.

Suit by Rudolph E. Reichert, State Banking Commissioner, against the People's State Trust & Savings Bank, for which a receiver was appointed. From an order denying the petition of Caroline Reiher and others to credit sums paid by them under stock assessments levied by the bank's directors on assessments levied by the receiver, petitioners appeal.

Affirmed.

Argued before the Entire Bench.

A. L. Moore, of Pontiac, for appellants.

Harold E. Howlett, of Pontiac, for Murray M. Ashbaugh, receiver of the First Nat. Bank at Pontiac.

Patterson & Patterson and C. D. Underwood, all of Pontiac, for Hugh A. McPherson, receiver of Pontiac Commercial & Savings Bank.

Ralph T. Keeling and Carl H. Pelton, both of Pontiac, for receiver and appellee.

Patrick H. O'Brien, Atty. Gen., and Charles Fitch Cummins, Asst. Atty. Gen., for the Attorney General, intervener.

BUTZEL, Justice.

Caroline Reiher, and 72 other petitioners, were stockholders of the People's State Trust & Savings Bank, a Michigan corporation, of Pontiac, Mich. Owing to a shrinkage in value of the bank's assets and the consequent impairment of its capital, the directors of the bank, on March 10, 1930, upon the order of the State Banking Commissioner, levied a 50 per cent. assessment on its stock. The proceedings were in accordance with section 11941, C. L. 1929. Petitioners paid the assessment, in the belief that the bank would thereby be enabled to continue. The bank, with its capital, thus partially renewed, did continue in business for approximately one year. However, on March 17, 1931, immediately following a large bank failure in the city of Detroit, it was forced to suspend, and in a suit brought by the Banking Commissioner, a receiver was appointed. On September 16, 1932, in accordance with the petition theretofore filed, the receiver was authorized and directed to levy an assessment against each stockholder of 100 per cent. of the par value of the stock held by each.

Plaintiffs have filed a petition asking that they be credited with the 50 per cent. paid by them under the assessment levied by the board of directors in March, 1930, so that their stockholders' liability may be reduced 50 per cent. They claim that they were misled into paying the first assessment under the mistaken belief that it would produce a solvent bank; that actually the bank was in such dire distress at that time that the payment thus exacted could not have saved it from failure; that after payment of this assessment, a very large amount of the assets of the bank had to be written off at the demand of the Banking Commissioner; and that under all these circumstances, equity and good conscience should prompt the court to come to their rescue.

We need not recite...