Richter v. Laredo Nat. Bank

• Decision Date: 13 December 1932
• Docket Number: No. 6712.,6712.
• Citation: 62 F.2d 289
• Parties: RICHTER et al. v. LAREDO NAT. BANK et al.
• Court: U.S. Court of Appeals — Fifth Circuit

62 F.2d 289 (1932)

RICHTER et al. v. LAREDO NAT. BANK et al.

No. 6712.

Circuit Court of Appeals, Fifth Circuit.

December 13, 1932.

M. J. Raymond and G. C. Mann, both of Laredo, Tex., for appellants.

S. J. Brooks, W. L. Matthews, and Howard Templeton, all of San Antonio, Tex., and Gordon Gibson and W. R. Blackshear, both of Laredo, Tex., for appellees.

Before BRYAN, SIBLEY, and HUTCHESON, Circuit Judges.

HUTCHESON, Circuit Judge.

On December 31, 1929, Richter, a stockholder in the First National Bank of Laredo, brought this suit on behalf of that bank against the Laredo National Bank, and later by amendment, against that bank, the First Bank, its directors as trustees, and Collier, who had been appointed its receiver. He alleged the failure of the officers and directors of the First to bring it, and their consent that the stockholders might do so. The petition in substance alleged the making, on October 3d, of a contract between the two banks by which the First's assets were taken over, its liabilities assumed by, and an indebtedness of $160,000 set up in favor of, the Laredo Bank. It alleged his ownership of fifty-eight shares of stock; that his statutory liability would be $5,800 if the indebtedness was not canceled. It further alleged that the purpose and intent of the contract was to indemnify the Laredo Bank against loss in the liquidation of the First, and that the assets exceeded by several hundred thousand dollars the debts assumed. It prayed cancellation of the claimed indebtedness, and an injunction against its enforcement.

The Laredo Bank's answer pleaded the contract, and the full performance of its terms by it, and by cross-action sought a judgment for $160,000 against the First. The First, by its answer aligned itself with Richter; Collier, its receiver, aligned himself with the Laredo Bank. He affirmed the validity of the indebtedness, and pleaded that but for the suit he would have approved it for payment.

The District Judge found that the contract had been fairly made; that it was for the direct benefit of the depositors and creditors of the First National Bank; and that in providing for an orderly, immediate, and full payment and discharge of all of its obligations it inured to the benefit of the bank and its stockholders. He found that the agreement truly recited that the liability of the bank exceeded its assets by $160,000. He found that the Laredo Bank having fully and in exact accordance with the terms of the contract carried out its agreement, the First Bank should perform its part. He entered a decree adjudicating the contract valid and condemning the bank to pay $160,000 as it had agreed to do under the contract.

We think the record fully supports the findings and the decree. We will briefly summarize it.

In September 1929, the First National Bank of Laredo had become crippled and embarrassed by a slow run which it had been for sometime undergoing. The directors finding themselves faced with the necessity, unless they could secure assistance, of closing the bank's doors, sought urgently for aid. Efforts to prevent this disaster, with its inevitably consequent shocks and losses to, and the disruption if not destruction of the business of, the depositors and customers of the bank, failing in the quarter where they had hoped to obtain aid, the directors turned to the Laredo National Bank. That bank agreed in consideration of the transfer to it of all of the First's assets, and the setting up on the ledgers of an indebtedness to it of $160,000, the agreed excess of liabilities over assets, to assume and take over, and in the regular course of business meet and discharge, all of the obligations of the First Bank. This agreement, made in co-operation and after consultation with representatives of the Comptroller, represented an arrangement which all those concerned in the negotiations believed the emergency urgently required. It was not made at the solicitation, or upon the urgency, of the Laredo Bank. On the contrary, that bank went into it unwillingly, and reluctantly, and only after it had, in addition to making it clear in the agreement that it was looking for payment of the indebtedness to the statutory liability of the shareholders,¹ further emphasized that reliance by conditioning its entry into the agreement upon the deposit in escrow of $74,000, nearly one-half of the amount of the acknowledged indebtedness. This sum, representing the full amount of their statutory liability, was deposited by some of the largest shareholders of the First Bank.

The agreement, plain and clear on its face, was entered into in good faith...