White v. Federal Deposit Ins. Corporation

• Decision Date: 10 September 1941
• Docket Number: No. 4802.,4802.
• Citation: 122 F.2d 770
• Parties: WHITE et al. v. FEDERAL DEPOSIT INS. CORPORATION.
• Court: U.S. Court of Appeals — Fourth Circuit

122 F.2d 770 (1941)

WHITE et al. v. FEDERAL DEPOSIT INS. CORPORATION.

No. 4802.

United States Circuit Court of Appeals, Fourth Circuit.

September 10, 1941.

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J. Brooks Mapp, of Keller, Va., and Benjamin T. Gunter, Jr., of Accomac, Va. (H. Ames Drummond and George Walter Mapp, Jr., both of Accomac, Va., on the brief), for appellants.

Tazewell Taylor, of Norfolk, Va. (Jeff F. Walter, of Onley, Va., on the brief), for appellee.

Before PARKER and DOBIE, Circuit Judges, and H. H. WATKINS, District Judge.

PARKER, Circuit Judge.

This is an appeal in an action by the Federal Deposit Insurance Corporation, Receiver of the Parksley National Bank, of Parksley, Virginia, against certain of the directors of that bank, to recover assets of the bank transferred to them and to recover a money judgment for moneys of the bank alleged to have been received by them, in large part as collections made on these assets. A jury trial was had in the course of which the trial judge excluded parol evidence of an agreement between the defendants and certain officers of the Federal Reserve Bank of Richmond to the effect that the assets in question were to be transferred to defendants in consideration of a contribution of $50,000 made by them to the bank's assets. Verdict in favor of the plaintiff was directed by the judge, who retained for further consideration the questions raised by pleas of laches and the statutes of limitations. Upon decision of these questions in favor of the plaintiff, judgment was entered in its favor for the recovery of the assets and for the full amount of the collections thereon made by the defendants plus the sum of $1,009.33 realized from a sale of securities belonging to the bank. From this judgment the directors have appealed. Three questions are raised by the appeal: (1) Whether there was error in excluding the parol evidence of the agreement that the assets in question were to be transferred to defendants; (2) whether there was error in denying to defendants the benefit of the statute of limitations with respect to the assets transferred to them and the collections made thereon; and (3) whether the statute of limitations applies to the $1,009.33 item realized from the sale of bonds belonging to the bank.

The facts are that the bank was placed in the hands of a conservator following the bank holiday of 1933. On May 27, 1933, a plan for reopening it was devised and was communicated to the Comptroller of the Currency. This plan proposed that there should be $50,000 "unconditional voluntary cash contribution by shareholders to surplus fund" and that items aggregating $108,945 should be eliminated from the balance sheet. This plan was approved on June 2nd by the Deputy Comptroller, with two minor modifications suggested by the Federal Reserve Bank of Richmond which are not here material. On July 15th, the conservator of the bank, who was also its cashier and one of its directors, filed a statement with the Comptroller setting forth that the plan had been complied with, and specifically that the sum of $50,000 had been "voluntarily contributed by the shareholders of the bank for the rehabilitation of the capital structure" and that the eliminations required would be made upon the return of the bank to its officers and directors. Thereupon the Comptroller, on July 17th, entered an order terminating the conservatorship and authorizing that the control of the bank be returned to its directors on the morning of July 19th. On the last named date, the directors adopted a resolution reciting the entry of the order by the Comptroller and acknowledging the receipt of all of the assets of the bank from the conservator. Subsequently, in reports made to the Comptroller of the Currency. the $50,000 addition to capital was consistently referred to as a voluntary contribution.

Evidence was offered, but excluded, that there was an arrangement between the directors of the bank and certain officers of the Federal Reserve Bank of Richmond to the effect that the items charged off and eliminated from the balance sheet should be transferred to the directors who made the cash contribution of $50,000. There was evidence also that all of the stockholders of the bank, as well as all of its directors, knew of this arrangement and approved it. There is nothing in the plan approved by the Comptroller, however, which refers directly or indirectly to any such arrangement; and there is nothing in the records of the bank made at the time to show its existence. In November 1934 an entry was made in the minutes of a meeting of the directors showing the purchase by them of the charged off assets.

The assets charged off and eliminated from the balance sheet included notes and other securities of a face value of approximately $62,000 and an unpaid draft on another bank in the sum of $7,566.92. These were charged off at the time of the reopening of the bank on July 19th; and the papers themselves were separated from the other assets of the bank by the defendant White, who kept them in an envelope to themselves and held them under claim of right for the benefit of himself and the other directors. Collections were made on these charged off assets from time to time aggregating a little in excess of $12,000, were deposited by White in a special account which he maintained in his own name as trustee and were immediately disbursed for the individual benefit of the directors, who claimed to be the rightful owners thereof.

The evidence shows without contradiction that all of the stockholders of the bank knew from the beginning that the defendants were claiming to be the owners of these charged off assets, that there were fifteen stockholders of the bank other than the interested directors and that they owned 14 per cent of the bank's stock. There is evidence, also, that the fact that the directors were claiming these assets was well known from the beginning to the bank examiners who examined the bank for the Comptroller of the Currency and for the Federal Deposit Insurance Corporation, that a representative of the Reconstruction Finance Corporation referred to it in a letter in 1934 and that the Deputy Comptroller of the Currency referred to it in a letter in 1936. Suit was not instituted to recover the assets or to challenge the right of the defendants in same, however, until January 11, 1940.

With respect to the $1,009.33 item, this represented a sum realized over and above the secured indebtedness, from the sale of securities of the bank theretofore pledged to secure a loan, the amount of which had been reported to the Comptroller upon the reopening of the bank as sale price of the pledged securities. When the securities were sold, the amount realized in excess of the loan was credited to the special account of White along with collections upon the charged off assets. There is no evidence that the independent stockholders of the bank or the bank examiners ever discovered how this matter was handled until after the receivership of the bank in 1939.

Except in so far as the evidence of the agreement or understanding that the directors were to have the charged off assets tended to support the contention that they were holding these assets adversely to the bank and were protected by the statute of limitations, we agree that this evidence was properly excluded. For the purpose of showing that the assets passed to them upon the opening of the bank, it was clearly not competent because contradictory of the written record made at the time as to the conditions upon which the opening was authorized. The action of the Comptroller in permitting the bank to be opened was based upon 12 U.S.C.A. § 205, which provides: "If the Comptroller of the Currency becomes satisfied that it may safely be done and that it would be in the public interest, he may, in his discretion, terminate the conservatorship and permit such bank to resume the transaction of its business subject to such terms, conditions, restrictions and limitations as he may prescribe."

It would seem to be too clear for argument that where the Comptroller, acting pursuant to this statutory authority, grants a permit for the opening of a closed bank upon terms which are made of record at the time, it is not permissible to contradict such record by parol evidence of a different agreement or understanding had with the officers of another institution alleged to represent the Comptroller. No authority is cited to the contrary and we know of none. It is hardly thinkable that the records of a public officer dealing with matters of the gravest consequence should be thus subjected to contradiction by parol evidence of agreements and understandings. Merely to state the proposition is to answer it.

It is argued that the understanding or agreement with the Federal Reserve Bank was subsequent to the offering of the plan of May 27th; but it was admittedly not subsequent to the entry of the Comptroller's order, which, as stated above, was filed on July 17th. Furthermore, there is nothing to indicate that the Federal Reserve Bank had any authority to modify in any way the terms upon which the reopening was to be authorized. It is true that there is testimony that the consent of the Federal Reserve Bank was to be obtained to the terms of reopening; but this was because that bank would be required to furnish the funds which would make the reopening possible, and the testimony furnishes no evidence of authority on its part to modify the terms of the proposed plan for reopening finally approved by the Comptroller. The Comptroller, and not the Federal Reserve Bank, was authorized by Congress to grant the permit for reopening and prescribe the conditions thereof; and the Comptroller could not delegate, even to the Federal Reserve Bank, the authority thus vested in him.

It is argued, also, that there is sufficient ambiguity in the plan and order to authorize the introduction of the agreement...