State ex rel. Meyer-Kiser Bank v. Superior Court of Marion Cnty.

• Decision Date: 24 July 1931
• Docket Number: No. 26055.,26055.
• Citation: 202 Ind. 589,177 N.E. 322
• Parties: STATE ex rel. MEYER-KISER BANK v. SUPERIOR COURT OF MARION COUNTY et al.
• Court: Indiana Supreme Court

202 Ind. 589

177 N.E. 322

STATE ex rel. MEYER-KISER BANK

v.SUPERIOR COURT OF MARION COUNTY et al.

No. 26055.

Supreme Court of Indiana.

July 24, 1931.

Original prohibition proceeding by the State, on the relation of the Meyer-Kiser Bank, against the Superior Court of Marion County, Thomas D. McGee, Special Judge thereof, and others, to prohibit respondents from further acting in a case wherein Leland Thorne and others were asking judgment against the relator and for appointment of a receiver. In the proceedings Luther F. Symmons, as Bank Commissioner of Indiana, by permission of court, filed cross-petition as relator.

Temporary writ of prohibition made permanent.

Smith, Remster, Hornbrook & Smith and Noel, Hickam, Boyd & Armstrong, all of Indianapolis, for relator.

James M. Ogden, Atty. Gen., and E. Burke Walker, Deputy Atty. Gen., for Bank Commissioner of Indiana.

L. Russell Newgent, Fred E. Barrett, and Wm. B. Miller, all of Indianapolis, for respondents.

MYERS, J.

This is an original action brought by the relator, Meyer-Kiser Bank, filed June 12, 1931, against the superior court of Marion county, Thomas D. McGee, special judge, and seven other persons named, for a writ of prohibition prohibiting the Marion superior court and Thomas D. McGee as special judge from further acting in cause No. A 61387, wherein the seven persons are asking judgment in the aggregate of $5,560 against the Meyer-Kiser Bank and for the appointment of a receiver. A temporary writ was issued on June 17, 1931. Luther F. Symmons as bank commissioner of Indiana, by permission of the court, became a party to this action, and as relator, filed his cross-complaint showing, among other things, in keeping with the showing made by the relator Meyer-Kiser Bank, that this bank was incorporated under the provisions of the general banking act approved February 7, 1873, and acts amendatory thereof and supplemental thereto; that it continued in business until May 12, 1931, when, by resolution of its board of directors passed the previous day, the bank was closed “with a view to voluntary liquidation” and the banking commissioner notified of the action so taken by the bank's officials; that since the bank was closed the commissioner caused an examination of the bank to be made and upon a careful check and audit he found the total assets, as per the books of the institution, to be $3,004,033.83; total liabilities, $2,282,640.07; apparent excess of assets available to meet losses, $721,393.76; that a conservative value of the assets on liquidation is $2,382,771.97, and with prudent management the assets should exceed the liabilities by $100,000.

On May 23, 1931, after notice to the stockholders had been given, shareholders in person, representing 13,537 shares, and by proxy, 25 shares, out of a total of 15,000 shares, the entire capital stock of the bank, met and by unanimous vote ratified and confirmed the action theretofore taken by the board of directors, and by additional resolutions, in substance, directed that the board of directors proceed to the liquidation of the bank through the medium of liquidating agents to be appointed by the board subject always to the further supervision, direction, and control of the department of banking of the state of Indiana; that the assets of the bank be converted into cash and, after paying expenses incident thereto, they be applied, first to the payment in full of claims of depositors and creditors of the bank in accordance with their respective equities as established by law, and, second, the residue to be paid to the stockholders in proportion to the shares of capital stock owned by them; that no dividends or profits shall be paid to the stockholders, nor shall any part of the capital stock be withdrawn by nor paid to the stockholders in any manner whatever until the debts and liabilities of the bank of every kind are fully paid. Notice of these resolutions was given by publication. Immediately following the stockholders meeting, the banking department of Indiana approved the proposed liquidation of the bank and ordered that its business be restored to the custody of the liquidating agents, subject always to the supervision, direction, and control of the department of banking of the state of Indiana.

On the same date, May 23d, the board of directors, at a special meeting, convened and by resolution appointed three persons as liquidating agents, and in other respects the resolutions were practically the same as those adopted by the stockholders. The liquidating agents, after their appointment had been approved by the commissioner of banking, entered upon the discharge of their duties under the supervision and control of the commissioner of banking, and were so acting on June 4, 1931, when Leland Thorne and six others commenced Cause No. A61387 in the Marion superior court.

The title of the act under which the relator, Meyer-Kiser Bank, was incorporated reads as follows: “An Act to authorize and regulate the incorporation of Banks of Discount and Deposit in the State of Indiana.” Section 11 of that act is still in force and provides that: “Any such association may go into liquidation and be closed by the vote of its shareholders owning two-thirds of its stock. And when such vote shall be taken, it shall be recorded on the record book of the association and notice thereof given by publication for at least three successive weeks. *** And after such vote shall be taken, no dividend of profits or of the capital shall be made to the stockholders, nor any part of the capital withdrawn by, nor paid to the shareholders in any manner whatever, until all the debts and liabilities of the association of every kind are fully paid.” Acts 1873, c. 8, p. 21, section 3867, Burns' Ann. St. 1926. In connection with this section, the Legislature, in 1915 (Acts 1915, c. 127, p. 546, section 3972, Burns' Ann. St. 1926), gave the auditor of state, now bank commissioner, the right to petition for a receiver of a bank when, in his opinion, its “affairs are not being administered to the best interests of the depositors and stockholders,” although the same is in voluntary liquidation.

The vote of the shareholders was had and resolutions adopted, record made, and notice given in compliance with section 11, supra. Section 18 of the 1873 Act provided for an examination of such associations under directionof the auditor of state, but that section was amended in 1895 (Acts 1895, c. 98, p. 202) to the effect that when an examination disclosed an insolvent or failing condition of the bank, it was the duty of the examiner to notify the auditor of state, who at once was required to put some one in charge of the affairs of the bank and to immediately apply to the judge of the circuit or superior court of the county in which the bank is located for the appointment of a receiver. This same provision with reference to the duty of the auditor of state to put some one in charge and to have a receiver appointed was carried forward into the Act of 1907 (Acts 1907, c. 182, p. 300, § 2), which impliedly repealed the 1895 amendment of section 18, supra, and which provision as to placing some one in charge and the appointment of a receiver was also a part of the Act of 1911 (Acts 1911, c. 17, p. 30), which superseded the Act of 1907.

The Act of 1911 consisted of five sections. The fourth section repealed all laws in conflict therewith, and the fifth was an emergency section. The first three sections were amended in 1921 (Acts 1921, c. 263, p. 816) whereby (section 2) the bank commissioner was substituted in place of the auditor of state, in conformity with an act of the Legislature approved March 7, 1919 (Laws 1919, c. 50). This section was again amended in 1929 (Acts 1929, c. 161, p. 495, section 3965, Burns' Ann. St. Supp. 1929) in several important particulars, each of which gave the bank commissioner additional power and discretion. Owing to the length of the section amended and as amended, we deem it sufficient for this opinion to call attention to the amendments alone pertinent to this case.

Prior to the amendment of 1929, the bank commissioner, on notice by an examiner of the insolvent or failing condition of a bank, “shall thereupon direct said examiner or some other person appointed by him to at once take charge and control” of the affairs of the bank, “and said bank commissioner shall immediately thereafter make application to the judge of the circuit court or superior court of the county where such” bank is situated for the appointment of a receiver. But the section as amended permits the commissioner upon such notice by the examiner to exercise discretion, that is to say, “ if said bank commissioner shall deem it necessary and expedient [our italics] he shall thereupon direct said examiner or some other person appointed by him to at once take charge and control of said private bank ***, and said bank commissioner shall, if he finds it to be to the best interests of the depositors and creditors [our italics] of said bank, make application to the judge *** for the appointment of a receiver.” Furthermore, in place of the provision, “Banks, *** being administered by receivers and assignees shall be subject to the same examination and be required to report to the bank commissioner as is required of solvent banks *** and safe deposit companies,” it now reads, “Banks *** in voluntary liquidation shall be subject to the same examination and shall be required to report at the discretion of the bank commissioner the same as solvent banks *** and safe deposit companies.” There is also a provision, not at this time material, whereby the attorney general may be called to perform the duties of the bank commissioner.

The Legislature, in 1919, “created a department of the state government, to be known as the department of banking.” All laws relating “to the incorporation, organization, supervision, control and management of all banks of all...