Wille, In re
Decision Date | 12 June 1968 |
Citation | 61 Misc.2d 992,308 N.Y.S.2d 520 |
Court | New York Supreme Court |
Parties | In the Matter of the Petition of Frank WILLE, as Superintendent of Banks of the State of New York, for approval, pursuant to § 618(1) of the New York Banking Law, of the Agreement of Compromise between petitioner and the Commodity Credit Corporation, an agency and instrumentality of the United States of America. WILLE v. INTRA BANK, S.A. |
Hughes, Hubbard, Blair & Reed, New York City, for petitioner Frank Wille (Francis Reed, Powell Pierpoint, New York City, of counsel.
Robert Morgenthau, U.S. Atty., Southern Dist. of N.Y., for U.S. (Lawrence W. Schilling, New York City, of counsel).
Bigham, Englar, Jones & Houston, New York City, for Middle East Airlines (Robert B. Budelman, Jr., New York City, of counsel).
Milbank, Tweed, Hadley & McCloy, New York City, for Chase Manhattan Bank (William E. Jackson, A. Sidney Holderness, Jr., New York City, of counsel).
Bernard Bernstein, New York City, for Pehle, Reimer, Luxford & Naiden.
William Mellon Eaton, New York City, for Intra Bank, S.A. (John G. Houser, New York City, of counsel).
Lee, Mulderig & Celentano, New York City, for American Life Ins. Co., American Internatl. Underwriters Mediterranean Inc., American Internatl. Underwriters Corp., Middle East Assurance & Reassurance Co. S.A.L., Firemen's Ins. Co. of Newark, N.J. (Peter J. Malloy, Jr., New York City, of counsel).
Intra Bank, S.A. ('Intra Beirut'), a banking corporation organized under the laws of the Republic of Lebanon, was licensed to maintain a branch in New York City ('Intra NY'). On October 15, 1966, the Superintendent of Banks took possession of the business and property of Intra NY and determined to liquidate its affairs, pursuant to section 606 of the Banking Law.
The time for filing claims expired on July 20, 1967. The Superintendent allowed claims aggregating $913,656. He rejected the following claims:
The Superintendent has available quick assets of $1,532,810, which are subject to the expenses of administration. The other assets include (a) the building at 680 Fifth Avenue, presently subject to a sale on sealed bids authorized by this Court, on which the anticipated not realization is approximately $3.5 million; and (b) causes of action against various banks, as to which no estimate of anticipated realization is made.
The Superintendent has submitted for approval a proposed Agreement of Compromise with the United States, pursuant to section 618(1) of the Banking Law. This provides, in substance, that the Superintendent
(a) accepts CCC's claim as valid;
(b) will pay in full, with maximum statutory interest, all other valid claims against Intra NY (and all costs of administration and liquidation) before making payment on account of CCC's claim;
(c) will assign to the United States all his rights in the causes of action held by him.
The Superintendent has been advised and believes that, if the agreement is approved, he will be able to pay all other valid claims in full with maximum statutory interest, with a balance remaining to be paid to the United States. Moreover, the latter will assume all of the costs and other burdens of the many pending litigations. If the CCC claim be upheld as valid, and if it be found entitled to the statutory priority, there will be nothing left for payment to other creditors.
The original priority statute was enacted in March, 1797, and was subsequently known as R.S. § 3446. It is now embodied in 31 U.S.C. § 191, and applies in all cases of insolvency. So far as is material here, it provides: 'Whenever any person indebted to the United States is insolvent * * * the debts due to the United States shall be first satisfied * * *.'
(15 U.S.C. § 714b, subd. (e)).
The Superintendent recommends approval of the compromise. Notice thereof was given to all those involved in the Superintendent's pending litigations, to all persons whose claims were rejected, and to Intra Beirut. A hearing was held on March 27.
The settlement is opposed by Intra Beirut and by Chase Manhattan Bank. Both contend that CCC's claim is not valid, and that if it is invalidated, there will be a surplus after payment to New York creditors. In that event, Intra Beirut points out that its stockholders would be entitled to the surplus (Banking Law, § 606(4), subd. (b)); Chase argues (a) that the Superintendent would be precluded from pursuing his actions against it to recover funds claimed to be due to Intra NY; (b) its right to set off balances held by it in New York against debts owed to it in Beirut would be advantaged.
The duty of a court in passing upon proposed compromises in an insolvency proceeding was recently summarized by WHITE, J., in Protective Committee for Independent Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424, 88 S.Ct. 1157, 1163, 20 L.Ed.2d 1, 9--10:
In Shielcrawt v. Moffett, Sup., 59 N.Y.S.2d 619, 621 (not officially reported), BOTEIN, J. said:
'In weighing the benefits held forth by the agreement of settlement against benefits dependent on the likelihood of recovery upon the plaintiffs' cause of action, the courts cannot be expected to balance the scales with the nicety of an apothecary. The very object of a compromise
See, to the same effect, Zenn v. Anzalone, 17 Misc.2d 897, 191 N.Y.S.2d 840 (McGIVERN, J.).
The Court 'has apprised himself of all facts necessary for an intelligent and objective opinion of the probabilities of ultimate success should the claim be litigated * * * to the end that a true appraisal be made of the (CCC's) chances of success upon the issues presented, and a correlative conclusion drawn as to the fairness and reasonableness of the proposed compromise.'
CCC was created 'for the purpose of stabilizing, supporting, and protecting farm income and prices, of assisting in the maintenance of balanced and adequate supplies of agricultural commodities * * * and of facilitating the orderly distribution of agricultural commodities' (15 U.S.C. § 714). (Rainwater v. United States, 356 U.S. 590, 591--592, 78 S.Ct. 946, 948, 2 L.Ed.2d 996 (footnotes omitted)).
In the fulfillment of its purposes, CCC was authorized only (so far as is here material) to
'(a) Support the prices of agricultural commodities through loans, purchases, payments, and other operations'; * * *
'(d) Remove and dispose of or aid in the removal or disposition of surplus agricultural commodities': * * *
'(f) Export or cause to be exported, or aid in the development of foreign markets for, agricultural commodities'; * * *
'In the Corporation's purchasing and selling operations with respect to agricultural commodities * * * the Corporation shall, to the maximum extent practicable consistent with the fulfillment of the Corporation's purposes and the effective and efficient conduct of its business, utilize the usual and customary channels, facilities, and arrangements of trade and commerce' (15 U.S.C. § 714c).
In the furtherance of such purpose CCC 'may make such loans and advances of its funds as are necessary in the conduct of its business' ( § 714b, subd. (l)).
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