Case ID: ad_164/html/0867-01.html
Source: Caselaw Access Project
Author: {"author": "Per Curiam: Putnam, J. (dissenting):", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the Application of Eagle Savings and Loan Company for an Order Reducing Its Liability to Its Members.
    Second Department,
    December 11, 1914.
    Banking—savings and loan association—application under section 404 of the Banking Law for an order reducing liability of association to its members.
    Application to the Appellate Division by a savings and loan association, under section 404 of the Banking Law, approved by the Superintendent of Banks, for an order reducing the liability of said association to its members, so as to distribute the loss equitably among them, granted, without prejudice to any present right of action which any member has against the officers or directors of the association for misfeasance or malfeasance in office.
    Putnam, J., dissented, with opinion.
    Application for relief made directly to the Appellate Division.
    
      Almet Reed Latson, for the petitioner.
   Per Curiam:

Upon the petition of this association, approved by the Superintendent of Banks and pursuant to the provisions of section 404 of the Banking Law, we have ordered a reduction of the liability of the said association to its members so as to distribute the loss equitably among them. While it is not entirely clear that this statute properly devolves such power upon the court, we feel that we should not pass upon that question upon an ex parte application. Not only has the Superintendent of Banks formally approved of this petition, as required by the statute, but in attendance upon us he states that it is his best judgment that this is a wise measure, because the alternative is immediate winding up of the association by the Department of Banks, which would entail great loss to those interested in the association.

The order is experimental. If it is ultra judicial, no rights of any of the members are affected. In any event, it is made without prejudice to any present right of action which any member has against the officers or directors of the association for misfeasance or malfeasance in office. The Superintendent of Banks has given to the court his assurance that he will subject the association to frequent visits, which will involve almost constant scrutiny into the future conduct of the association.

Jenks, P. J., Burr, Thomas and Bich, JJ., concurred; Putnam, J., read for denial of motion.

Putnam, J. (dissenting):

By section 278 of the former Banking Law (Laws of 1882, chap. 409), relating to savings banks, in certain cases of misconduct or impairment of assets, the Attorney-General could institute judicial proceedings in which the court, having become regularly possessed of the cause, could look into and pass upon a measure scaling down depositors’ claims. (People v. Ulster County Savings Inst., 64 Hun, 434.) The court could then act judicially, and its orders were effective as against the depositors. But the present amended Banking Law (Consol. Laws, chap. 2; Laws of 1914, chap. 369) simply' provides (by § 404) for an order made ex parte on the directors’ petition, approved by the Superintendent of Banks, which on its face cuts down a deposit without a hearing, and thus affects rights which the court has no means adequately to look into. An order so made, which indorses and confirms the vote of the directors, can only be administrative, even if bearing the signature of a judge. Hence, I dissent on the ground that this amendment which calls for a court order but without court proceedings attempts to put on the court non-judicial functions, and is, therefore, unconstitutional.

Motion granted. 
      
       See Consol. Laws, chap. 2 (Laws of 1914, chap. 369), § 404.—[Rep.