Upham v. Bramwell

• Decision Date: 29 July 1922
• Citation: 105 Or. 597,209 P. 100
• Parties: UPHAM v. BRAMWELL, SUPERINTENDENT OF BANKS. STEELHAMMER v. BRAMWELL, SUPERINTENDENT OF BANKS. DOXSIE v. BRAMWELL, SUPERINTENDENT OF BANKS.
• Court: Oregon Supreme Court

209 P. 100

105 Or. 597

UPHAM v. BRAMWELL, SUPERINTENDENT OF BANKS. STEELHAMMER v. BRAMWELL, SUPERINTENDENT OF BANKS. DOXSIE v. BRAMWELL, SUPERINTENDENT OF BANKS. ^[*]

Supreme Court of Oregon

July 29, 1922

In Banc.

Appeals from Circuit Court, Multnomah County; Robert Tucker, Judge.

Action by C. R. Upham against Frank C. Bramwell, as Superintendent of Banks. From a judgment for defendant, plaintiff appeals. Action by Mary Steelhammer against Frank C. Bramwell, as Superintendent of Banks. From a judgment for plaintiff defendant appeals, and plaintiff cross-appeals. Action by Grace A. Doxsie against Frank C. Bramwell, as Superintendent of Banks. From a judgment for defendant, plaintiff appeals. Appeals heard together. Affirmed.

John W. Kaste, of Portland, for plaintiffs.

John P Kavanaugh, of Portland (Bowerman & Kavanaugh, of Portland, on the brief), for defendant.

McCOURT J.

On February 16, 1922, the State Bank of Portland, Or., a state bank, was insolvent and upon that date was by its officers and directors placed in the possession of the defendant as superintendent of banks, to administer its affairs and liquidate its assets in conformity with the statutes governing the liquidation of insolvent state banks. Prior to its insolvency the bank conducted a commercial banking business, and also maintained a savings department established in the manner prescribed by statute.

Defendant has converted a part of the assets of the insolvent bank into cash; about one half of the sum in the hands of defendant was realized from the assets of the savings department and the remaining half from other assets of the bank. Defendant was about to declare, distribute, and pay a dividend to each of the depositors of the bank whose claim had been proved and allowed, when these suits were brought by creditors each having deposits in the bank, two of them in the savings department, for the purpose of securing from the circuit court directions to defendant in the distribution of the assets of the bank. Each suit was instituted in behalf of the respective plaintiff named therein and all other depositors of the bank similarly situated.

In liquidating the affairs of the bank and distributing its assets, the defendant proposed to allow depositors who were also indebted to the bank each to offset his deposit against his debt due to the bank, and defendant, in declaring, distributing, and paying dividends, proposed to pay to the savings depositors of the bank ratably only such moneys as had been realized from the liquidation of the assets of the savings department of the bank, and to pay to the commercial depositors of the bank ratably all moneys realized from the liquidation of all other assets and resources of the bank.

In the suit of C. R. Upham v. Frank C. Bramwell, the plaintiff is a depositor, but it does not appear whether in the commercial or savings department of the bank. Plaintiff seeks to enjoin the defendant from allowing offsets of any kind to depositors who are debtors of the insolvent bank, and to require the defendant to collect the full amount of all debts due the bank from depositors, and then permit such debtor depositors to file their claims for the full amount of their deposits. The defendant interposed a demurrer to the complaint, which was sustained. Plaintiff refused to plead further, and a decree was entered dismissing the suit. Plaintiff appeals.

In the case of Grace Doxsie v. Frank C. Bramwell, plaintiff is a depositor in the savings department; plaintiff claims that the savings depositors of the insolvent bank have a first lien on all of the assets of the bank for the satisfaction of their claims, and that such savings depositors are entitled to be paid in full out of the proceeds realized from the liquidation of said assets before any other creditors of the bank, including commercial depositors, shall receive any dividend upon their claims. The circuit court sustained a demurrer to the complaint in this suit, and upon refusal of the plaintiff to plead further entered a decree dismissing the suit. Plaintiff appeals.

In the suit of Mary Steelhammer v. Frank C. Bramwell, the plaintiff presented the contention that all the savings depositors of the bank are entitled to have all of the assets of the savings department when liquidated, less the cost of such liquidation, applied exclusively upon and in payment of their respective claims, and are also further entitled from time to time, as dividends are declared, to share pro rata with the other depositors of the bank in the funds realized from the liquidation of the other assets and resources of the bank, until their respective claims, as such depositors, have been fully paid, or the assets exhausted. Defendant demurred to the complaint in this suit. The demurrer was overruled, and a decree entered in accordance with the prayer of plaintiff's complaint. Defendant has appealed from that decree.

These appeals for convenience were heard together, and for like reasons will be disposed of in one opinion.

The questions presented are affected by section 6220, Or. L., as amended by chapter 317, Laws of 1921. That section contains eight subdivisions, (a) to (h), inclusive. At the head of each subsection is a title, placed there by the compilers of the 1920 Codes, and not found in the section as enacted by the Legislature, chapter 171, Laws of 1911; chapter 285, Laws of 1915, § 11. Subd. (a) sets forth the procedure to be pursued by a state bank for establishing a savings department. Subdivision (b) requires the issuance to savings depositors of passbooks containing the rules and regulations governing such deposits. Subdivision (c) is as follows:

"(c) Books and Accounts to be Kept Separate; Securities. --Any bank combining any of the business of a commercial bank, trust company and savings bank shall keep separate books or accounts for each department, and shall keep all moneys received as such savings deposits, and the funds and securities in which the same are invested, at all times segregated from and unmingled with the other moneys and funds of the bank, and all bonds, warrants, notes, mortgages, deeds and other securities of every nature of such savings department shall be marked, stamped or labeled 'savings department' or some similar words. All funds, investments and other assets of the savings department shall be held solely for the repayment of the depositors in said department and shall not be liable for, pledged as sccurity for, or used to pay any other obligation or liability of the bank until after the payment in full of all depositors of said savings department."

Subdivision (d) describes the securities in which savings deposits may be invested, provided the reserve required by section 6209, Or. L., shall be maintained. Subdivision (e) permits the requirement that depositors before withdrawing savings deposits shall give notice of from 30 days to 6 months, depending upon the amount to be withdrawn, and further provides:

"In case of the insolvency or liquidation of any bank which shall establish or maintain a savings department, under the terms of this section, savings depositors shall have an exclusive prior lien upon all the assets, including cash of such savings department [and lien upon all the assets, including cash, of such savings department], and which shall first be paid, and the remainder, after they have been paid in full, shall be applied to the payment of the claims of the other creditors of said bank." Note.--The matter in brackets is repetition.

Subdivision (f) authorizes the payment of interest on savings deposits, and directs that such interest be paid out of the commercial department, if the earnings on savings deposits are insufficient to pay the same; also authorizes at any dividend period the transfer of the net accumulated and collected earnings of the savings department to the profits account of the bank. Subdivision (g) prescribes a penalty for each failure to observe the requirement of the statute that the accounts and funds of the savings department shall be kept separate and identified. Subdivision (h) reads:

"(h) Savings Deposits have First Lien on Assets. --In the event of the insolvency or bankruptcy of any state bank doing business within the meaning of this act, depositors of such bank shall have a first and prior lien on all the assets of such bank; and in the distribution of such assets or the proceeds thereof, the same shall be first applied to satisfy the amount due such depositors after the payment of expenses of liquidation of any such bank; provided however, that this section shall not apply to assets pledged as collateral security for money borrowed."

The parties are agreed that the statute requires that the assets of the savings department shall be applied exclusively to the payment of the claims of the savings depositors, until such claims are paid in full, or such assets are exhausted, but they differ as to the construction of subdivision (h) of the section.

Plaintiff Doxsie contends that the provisions of section 6220, Or. L as amended by chapter 317, Laws of 1921, including subdivision (h), relate exclusively to savings banks and savings departments of state banks and the depositors therein; that such is the purport of the statute, it is said, is clearly shown by the subject-matter of the section, together with the title placed upon subdivision (h) by the compilers of the Codes (Olson, 1920). Plaintiff Steelhammer contends that the subdivision embraces all depositors of state banks, and entitles savings depositors, after the savings assets are exhausted, to share ratably with other depositors in the distribution of all other assets and resources of the bank. Defendant insists that subdivision (h),...