The sun., 1908-03-18
COURT KNOCKS JACKSON FLAT
ORIENTAL BANK TAKEN OUT
or HIS PATERNAL GRIP.

setback yesterday in his bank receiyership
proceedings at the hands Of the Appellate
Division Of the Supreme Court, which
decided that II was perfectly proper TO
discharge the receivers whom jackson
had suddenly named for the Oriental Bank
and that IL was none Of his business how
the depositors and the stockholders had
arranged to settle their affairs,
The appellate Divisions opinion, written
by Justice Houghton' and ooncurTod in
by all the Justices, contains this paragraph
The Attorney General Is not the guardian
Of investors against their WILL Paternal gov
eminent In this State has not yet gone 10 the
extent Of regulating in what its citizens shall
invest their money. II is primarily the oredi-
tors Of an insolvent corporation with which
the state is concerned. II is hardly probable
that the assets Of the defendant, cut down
a. they have been. will further shrink sum
GENTLY to wipe out the large surplus shown
% that the creditors Of the defendant will
not obtain their money in full
The opinion states in effect that the
order Of Justice 0'Gorman vaoating the
temporary receivership was erninently
proper, but that he should not have incor-
p6rated In II an approval Of the proposed
plan by which the Metropolitan Trust
Company ia to take over all the liabilities
n the Oriental Bank and pay of the
depositors in few days, taking as security
for its action all the assets Of the bank,
AZ the Appellate Court points out:
As soon as the receivers are discharged
the management Of the affairs Of the bank
reverts to the directors, who have full
authority to enter into any lawful arrange
ment for the purpose of promptly meeting
its obligations; and therefore the order in
these regards should be modified
Justice Hought6n reviews at length the
events leading up to the sudden application
nv jackson 10 Justice Plat2ek for the
appointment Of receivers eN parte, or
without notice TO the bank, which applica-
ton Justice Platzek granted, He remarks
The Attorney-Genera should have given
the defendant notice Of his application for
the appointment OF the temporary receivers
Unless there be some emergency recurring
immediate action the Law contemplates the
giving OF notice OF an application for the ap-
pointment Of receivers. The court TO which
application may be made Is given discretion
10 dispense With notice. but that discretion
-. pf
sented to Il showing necessity for instant
action TO prevent some Impending wrong,
Conclusions are not enough; and II such
proven facts are not presented notice should
not be dispensed with hut should be required
In the present case. instead Of there being
sny proof authorizing the dispensing with
notice, the only proof before the court was
that contained in the compliant itself, which
showed that the funds OF the defendant we're
in the hands OF the Superintendent OF Banks,
the State otficial authorized BY law 10 hold
them.
The court having been led into improperly
dispensing with notice OF appointment or
the temporary receiver II was very proper
Tor the Judge who granted the original order
70 grant an order 10 show cause and thus give
the defendant an opportunityto to be heard to
set aside the order which he had imDrovidently
granted without notice The effect Of this
order TO show cause was not to review the
former order, but rather TO grant hearing
IN the proprietv OF appointing receivers at
all and to advance the hearing on tho original
order to show cause appointed for March 70
TO an earlier date.
Treating the procedure in this manner.
as IL is proper we should, it is manifest that
on the hearing the defendant was shown
10 be perfectly solvent and that receivers
ought not 10 have been appointed, and that
the order vacatng their appointment was
proper.
The report OF the bank examiners showed
a surplus over debts Of nearly million ana
quarter OF dollars, and that OF the public
accountants Of nearly million and a nail.
The liability Of the defendant TO its stock
holders on its 1850. .OOO Of capital stock is Of
no concern TO the people.
The complaint alleges that from reports
made by the Superintendent Of Banks TO
the Attorney General he believes the
defendant will be unable 10 pay It's de-
positors and other creditors. The only re-
port disclosed by the record is one which
shows the large surplus referred to. The
Attorney-General has received no report
Of the Superintendent of Banks that the
defendant is actually ihsolyent. so far as
appears, but only that It was at the time
NJ making II unsafe and inexpedient for
the defendant 10 continue business. II
the Attorney General has any report from
the Superintendent Of Banks as TO defendants
insolvency. which is quite improbable, he
should have presented II by afidavit or
alleged its substance 10 the complaint.
There is a further broad allegation In the
complaint that the defendant is insolvent
The Attorney General does not sllege thai
he himself examined as to the assets ano
liabilities Of the defendant 80 that he ac'
quired personal knowledge OF its financial
condition. The whole tenor Of his complaint
is that his conclusion, which he alleges as q
positive fact, il based on information fur
nished BY others. The complaint, therefore
standing alone. stated no facts upon which
Judgment OF insolvency could be based.
The closing Of defendants banking house
and calling upon the Superintendent OF Bank
10 take charge Of its assets may very properly
be deemed acts Of insolvency. but they are mol
conclusive acts When u was shown, as II
was, that this course was unnecessary, tha
the defendant was able to pay It's debts anC
have large surplus besides, these acts, re-
mting, as they must, from fright>or over
caution In view Of the financial situation ex
istinR or from ignorance Of the solvency nov
disclosed lose their pTobatiye force.
Nor we're such acts surrender OF defend
ants corporate franchise. surrender o
corporate franchises cannot be inferred ever
from insolvency and suspension OF business
for less period than that designated by th'
statute TO consummAte II, unless the olroum
stances are such as 70 make Il appear that tn
corporation has not power 10 continue OF re