State v. People's Sav. Bank & Trust Co.
| Decision Date | 29 August 1917 |
| Docket Number | 2042. |
| Citation | 168 P. 526,23 N.M. 282,1917 -NMSC- 060 |
| Parties | STATE v. PEOPLE'S SAVINGS BANK & TRUST CO. RYAN v. AMERICAN SURETY CO. OF NEW YORK. |
| Court | New Mexico Supreme Court |
On Motion for Rehearing, November 1, 1917.
Syllabus by the Court.
Upon the appointment of a receiver of an insolvent banking corporation, having on deposit state funds, the state loses such priority as comes to it from the common law as a sovereign right, by reason of the divestiture of title which takes place upon the appointment of such receiver.
On Motion for Rehearing.
Syllabus by Editorial Staff.
Laws 1915, c. 67, providing for the organization of savings banks etc., and by section 85, providing that the bank examiner taking charge of any bank, shall ascertain its actual condition and make a return to the Attorney General, who, if satisfied that it cannot liquidate its indebtedness, shall institute proper proceedings to have a receiver appointed to wind up its affairs for the benefit of its depositors creditors, and stockholders, such proceedings to be governed by the provisions of the general incorporation laws for the winding up of insolvent corporations, construed with Code 1915, § 959, divesting the bank's title to its property on the appointment of a receiver, vests title in a bank receiver, vests him with the powers of a receiver enumerated by section 957; as the word "proceedings" in section 85 include all of the steps and all of the acts done by the court, and the receiver in the cause instituted by the Attorney General.
[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Proceeding.]
Appeal from District Court, Grant County; Neblett, Judge.
Proceedings by the State of New Mexico, filed by the Attorney General, to wind up the affairs of the People's Savings Bank & Trust Company, an insolvent corporation, with claim against the receiver by the American Surety Company of New York. From a judgment of the district court, dismissing exceptions of the surety company to the referee's decision and sustaining his decision, the surety company appeals. Affirmed.
Francis C. Wilson, of Santa Fé, for appellant.
Wilson & Walton and James Royall, all of Silver City, for appellees.
The People's Savings Bank & Trust Company, of Silver City, N. M., closed its doors on June 26, 1915, having on deposit $9,929.08 of state funds. The deposit was secured by a depository bond in the sum of $30,000, with the American Surety Company as surety on the bond. Upon the closing of the bank the state of New Mexico made demand on the surety company for the payment of the amount of state funds on deposit in the bank at the time when it was closed, and the company paid the amount on July 27, 1915. Upon the payment of this amount, the state treasurer, in behalf of the state, receipted and assigned its demand against the People's Savings Bank & Trust Company to the surety company. Thereafter the attorney general filed a proceeding to wind up the affairs of the bank under the provisions of section 954 et seq., Code 1915, for the winding up of insolvent corporations, and the surety company filed with the receiver proof of claim, in which it is set up that the state had a common-law priority in the assets of the bank to the full extent of its deposits, and that by virtue of its payment of the sum representing these deposits the surety company became subrogated to that priority, and therefore entitled to the payment of the claim before any other creditors whose claims were not secured by lien upon such assets. The question of priority raised by the surety company was decided adversely to the company by the referee. Upon exceptions filed by the surety company to the referee's report, the matter was brought before the district court, which overruled the exceptions and sustained the referee's decision, and thereupon this appeal was taken.
1. The case may be disposed of quite summarily upon a single point. It is conceded that if the state had priority over other creditors of the insolvent corporation, then the surety company, under the facts existing in this case, would become subrogated to the rights of the state. The question, then, which is decisive of the case is whether the state, under the circumstances existing in this case, had a priority over other creditors of the insolvent corporation. We have recently had occasion to examine this question in the case of State of New Mexico v. First State Bank of Las Cruces, 22 N.M. 661, 167 P. 3, not yet officially reported. In that case the state itself asserted the priority. After a thorough consideration of many cases the court concluded in that case that the right of priority of the state, even if it existed in this jurisdiction in all of its common-law force and effect the same as it formerly existed in the sovereign in Great Britain, was lost whenever the title to the property of an insolvent corporation was divested out of the corporation and invested in a receiver under the provisions of the statute. Counsel for appellant in this case has cited several cases not referred to in the opinion in the former case, all of which we have examined, but we find nothing in them to change our view of the question as heretofore announced. Counsel for appellant relies much upon the case of American Bonding Co. v. Reynolds (D. C.) 203 F. 356. In that case the common-law right of priority was recognized to exist in Montana as a sovereign right of the state. It is held, however, in that case that the appointment of a receiver of an insolvent banking corporation under the laws of Montana does not so divest title as to cut off the right of priority of the state. In this particular the laws of Montana differ from those of this jurisdiction. As we held in the former case and as is plainly pointed out in our statutes, the appointment of a receiver of an insolvent corporation divests the title of the corporation and vests the same in the receiver. Counsel also cites In re Carnegie Trust Co., 206 N.Y. 390, 99 N.E. 1096, 46 L. R. A. (N. S.) 260, and State v. Foster, 5 Wyo. 199, 38 P. 926, 29 L. R. A. 226, 63 Am. St. Rep. 47, where valuable notes are appended to the cases. These two cases and the notes accompanying the same present no new features which have not been considered in our former opinion.
It follows that the judgment of the court below was correct and should be affirmed; and it is so ordered.
On Motion for Rehearing.
Counsel for appellant has moved the court for rehearing upon the ground that the court has overlooked controlling principles which were called to its attention in the brief and on argument.
It is to be observed that this case differs from the case of State v. First State Bank of Las Cruces, 22 N.M 661, 167 P. 3, in that the bank, in this case, was organized under a later and different law, which will receive some further...
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