Rumble v. Tyus
| Decision Date | 15 June 1905 |
| Parties | RUMBLE et al. v. TYUS et al. |
| Court | Georgia Supreme Court |
Banks—Insolvency—Reorganization—Subsequent Failure—Rights of Creditors. A bank was placed in the hands of a receiver. Pending the receivership proceeding the bank filed a motion alleging that it was solvent and able to pay all of its creditors, set forth a scheme under which it claimed that it could be reorganized to the advantage of its creditors, and prayed that its assets be surrendered to it for this purpose. Certain of its creditors and depositors agreed in writing to the alleged reorganization scheme, and pledged themselves to aid in securing a dismissal of the receivership proceeding. The motion was granted, and the assets of the bank turned over to it, upon which it proceeded to do business under a different name, but under the old charter. The scheme failed, and the bank again made an assignment. Upon the petition of some of its creditors it was again placed in the hands of a receiver. Its assets are not sufficient to pay all of its creditors. Held, that under the facts appearing in the record in the distribution of such assets depositors who were not parties to the agreement and the application for a surrender of the assets under the first receivership are entitled to priority over those who were.
(Syllabus by the Court.)
Error from Superior Court Pike County; R. B. Russell, Judge.
In the matter of the insolvency of the People's Bank of Barnesville W. G. Tyus and W. M. Rice & Sons intervened. P. Rumble and others, receivers of the bank, demurred to the intervention, and from orders overruling the demurrer and requiring them to pay the claims of the interveners the receivers bring error. Affirmed.
The Barnesville Savings Bank, upon the petition of Rogers and others, as creditors, was placed in the hands of a receiver. While this case was pending the savings bank filed an application in the superior court in which the following allegations were, in substance, made: Since the bank was placed in the hands of a receiver, the bank has become solvent, and able to pay its debts. The bank has perfected plans for a reorganization, and its capital stock has been subscribed for anew by solvent persons, and the bank will be reorganized under its present charter as soon as the receiver is discharged. A list of subscribers and the amounts of their subscriptions were set forth. As soon as the bank is reorganized, debts due it, amounting to $69,000, will be paid to it. The depositors in the bank have agreed to take $20,000 of the preferred stock of the Barnesville Alanufacturing Company, a corporation which was a debtor of the bank in a large amount, as a credit on their respective deposits. Unless the bank is reorganized, the debts due it above referred to will be lost. All of the depositors in the bank, except a few, whose deposits amount to about $6,000, have signed an agreement by which they agree to accept preferred stock as above indicated as a credit on their deposits, and then to take 10 per cent. of their deposits in cash and the remainder in two equal payments. The bank tenders a bond in the sum of $50,000, conditioned to pay the depositors the amount of their deposits in accordance with such agreement. The bank has arranged to discharge all other debts due other persons. It is tothe best interests of all parties concerned that the receiver be discharged by the court, and the bank turned over to its stockholders, so that it can be reorganized; for in this way the debts due the bank will be paid, a new capital stock will be paid in, and a bond in the sum of $50,000 given for the protection of the depositors who are parties to the agreement; whereas, if the reorganization is not allowed to take place, the creditors of the bank will probably not receive more than 20 cents on the dollar. The prayer was that the receiver be discharged, and ordered to turn over to the bank and its stockholders all its assets and effects in his hands. The agreement referred to in the application was exhibited to the court. In it certain depositors, through their representatives, agreed to the reorganization scheme set forth in the application of the bank, and pledged their efforts to secure a dismissal of receivership proceedings, as well as a similar proceeding against the Barnesville Manufacturing Company in the federal court, upon condition that the bank would give bond as set forth in the application. Upon consideration of the application and agreement, the court passed an order reciting that: "After hearing evidence and argument upon the foregoing motion, and considering the agreement of the depositors and creditors of said bank, " it is ordered, "upon consent of all parties, that the motion be sustained, the receiver discharged, the case dismissed, and the assets and effects of the bank surrendered to it." Thereafter the bank received its assets and effects, undertook to put into operation the scheme set forth in its motion, and proceeded to do business under the name of the People's Bank of Barnesville, the charter having been amended as to the corporate name. The charter was subsequently amended so as to change the liability of the stockholders. The scheme failed, the bank made an assignment, and a second application for receiver was made by certain of the creditors of the bank. In this proceeding W. G. Tyus and W. M. Rice & Sons intervened, and asked to be made parties. They alleged that they were depositors of the Barnesville Savings Bank, set forth the facts in reference to the management of the bank's affairs and the receivership above set forth, averred that they were not parties to the application for a surrender of the assets of the bank under the original receivership, that they were not among the creditors of the bank who consented to that scheme, that the receivers had in their possession sufficient assets of the bank to pay the interveners' demands in full, and prayed that in the distribution of those assets they be allowed priority over those creditors who consented to the alleged scheme of reorganization. The receivers demurred to and answered the intervention. The court overruled the demurrer,...
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