State v. American Bank & Trust Co. of Great Falls, Mont.
| Decision Date | 15 June 1926 |
| Docket Number | 5911. |
| Citation | 247 P. 336,76 Mont. 445 |
| Parties | STATE ex rel. v. AMERICAN BANK & TRUST CO. OF GREAT FALLS, MONT. RANKIN, Atty. Gen., JENSEN v. SPRINGHORN. |
| Court | Montana Supreme Court |
Appeal from District Court, Cascade County; Stephen J. Cowley Judge.
Receivership proceeding by the State, on the relation of Wellington D Rankin, Attorney General, against the American Bank & Trust Company of Great Falls, Montana, wherein S. R. Jensen trustee, petitions for allowance of claim opposed by A. W Springhorn, receiver. From an order denying the petition, petitioner appeals. Affirmed.
A. H. Gray and Maddox & Church, all of Great Falls, for appellant.
Hurd, Rhoades, Hall & McCabe, of Great Falls, for respondent.
On May 1, 1925, the appellant, S. R. Jensen, filed his duly verified petition in the above-entitled cause for an order of the court allowing his claim as a creditor of the American Bank & Trust Company, an insolvent banking corporation, in process of liquidation through intervention of a regularly appointed and qualified receiver. After issue joined by answer, proofs were submitted to the court and the appellant's petition denied. The appeal is from the order denying his petition.
It appears that the American Bank & Trust Company of Great Falls, a Montana banking corporation, closed its doors on December 3, 1920, because of insolvency, and thereafter A. W. Springhorn was, on March 1, 1921, duly and regularly appointed and qualified as receiver of such bank, which position he has ever since held and now holds. Among other creditors, the bank was indebted to the New York Trust Company of New York City, N. Y., in the sum of $70,000 at the time it discontinued business. Such indebtedness had its inception May 22, 1920, and was evidenced by a promissory note executed by the American Bank & Trust Company, secured by a large number of miscellaneous negotiable notes receivable, owned, and held by the American Bank & Trust Company, including the notes now held by the appellant upon which his claim is based. The notes so pledged as collateral security for the payment of the indebtedness were all indorsed and delivered unconditionally by the American Bank & Trust Company before maturity. The face value of this collateral security was apparently considerably greater than the amount of the indebtedness, for the aggregate balance of the notes now held by the appellant, and which furnish the basis of his claim amounts to $137,855.62.
On February 21, 1922, the court made the following order in the receivership proceedings:
"It is ordered that all claims against the American Bank & Trust Company, asserted by creditors or claimants, must be presented to the receiver thereof on or before the 31st day of May, 1922, and that no claim presented after said date to said receiver shall be allowed by him."
This order was duly published as notice to creditors of the insolvent bank, and pursuant thereto, within the time limit so established, the New York Trust Company regularly filed its claim for the principal amount of the indebtedness due it, viz. $70,500. This was later reduced to the sum of $40,000 prior to the sale of the collateral security remaining in its possession. The New York Trust Company retained possession of all the collateral notes upon which it had not realized by collection until February 1, 1922, when it sold that which remained at public auction for $50,000 and made delivery thereof to the purchaser.
One Harry J. Harding made purchase thereof, and later, on February 17, 1922, he sold the notes to the Liberty Industrial Corporation, which, in turn, sold them, on August 18, 1923, after their maturity, to the appellant, Jensen. The amount which the New York Trust Company received upon the sale of the remaining collateral notes made by it to Harding was never applied on the principal indebtedness. The amount which the appellant paid for all these notes appears to have been about $41,000. He testified:
Before filing the petition herein the appellant had filed a claim with the receiver for allowance of like amount in February, 1925, which was by the latter rejected in March, 1925. Other claims made by creditors against the insolvent bank have been allowed by the court upon presentation thereof subsequent to the time limit fixed by the order and in the published notice to creditors. So far as the record discloses, the American Bank & Trust Company is still indebted to the New York Trust Company in the approximate sum of $40,000 on an outstanding approved claim against the receiver. The assets of the insolvent bank, after the payment of 20 per cent. in two dividends, amount to about $1,250,000. The appellant maintains right to share equally and ratably with other general creditors of the insolvent bank.
The only question involved is whether the court was in error in denying the appellant's petition. Our statutes provide:
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