Court Opinion

ID: 6873813
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:04:51.895279+00
Date Added: 2024-06-11T16:05:27.373691
License: Public Domain

STONE, Circuit Judge
(dissenting).
These were Missouri corporations. What they did was within Missouri -and governed by'the state law. There is some difference between the parties as to whether the organization of appellant and the-transfers to it were under section 5379, Mo. St.Ann. § 5379, p. 7595, or under article 4, section 5470 et seq., Mo.St.Ann. § 5470 et seq., p. 7666 et seq. (containing section 5488, Mo.St.Ann. § 5488, p. 7674) of chapter 34 of the Revised Statutes of Missouri' 1929. Article 4 is not involved because the-method pursued here was entirely different from and failed to follow essential provisions of that chapter.1 Section 5379 of article 2 of the same chapter seems to be the only other statutory basis for what, these companies did. It seems to fit what, they did.2
*663There is much argument here as to whether these transactions were sales, a merger or a consolidation. I am unable to see what difference that makes upon the liability oí appellant for these taxes. Section 5379 expressly covers all three: Sales (of all or a part) of the business of a bank, a merger, or a consolidation. The power to do any one of these three things is conditioned “that such sale, merger, or consolidation shall in nowise impair, defeat or defraud any creditor of said bank or trust company or either of them.”
It seems to me that this was a sale in form but a merger or a consolidation in effect — however, it makes no difference if it was just a sale. But it clearly was not a sale in which the appellant, as an independent entity, purchased the business and/ or assets of the old companies and paid to each of them the fair value of what it got. Had that been the situation, all creditors of the old companies would have had to look to the purchase price paid the respective company for satisfaction of their debts.
What took place here and the effect thereof upon this tax debt of the Home were as follows: Creation of appellant sprang solely from the distressed situation of the four old companies and was for the purpose of meeting and salvaging that situation. The relationship between appellant and each of such companies was based upon a statement of liabilities and assets of each old company as of February 25, 1933. Of these liabilities, appellant was to assume payment of deposits, outstanding cashier’s and certified checks and certificates of deposit, compensation of officers and employees from February 1, 1933, and ordinary current bills incurred since February 1, 1933. The liabilities so assumed were to be regarded as a debt of the respective old company to appellant. Such liabilities of each old company were to be independent and separate from any responsibility by any other such company and the assets coming from each were to be devoted exclusively to satisfying its liabilities assumed by appellant. Appellant bought all cash, indebtedness of other banks to any old company, all furniture, records, etc., “and all other property used in the business of any Old Bank,” and the capital stock and rental contracts of any safe deposit company of such old company. The aggregate amount of such money, etc., so acquired from each company was to be credited on the above assumed indebtedness of the respective company. There was a specific agreed valuation of the “banking premises” and equipment of the Home, because appellant planned to occupy such premises as its place of business. The difference between the above assumed indebtedness of each old company and the above assets taken over was “deemed the balance then owing on the debts of each Old Bank, shall .be secured by all the remaining assets and property of each Old Bank of *664every kind and character whatsoever, real, personal and mixed, including all assets and property heretofore charged off and not theretofore finally liquidated.” ■ Such property of each old company was conveyed “by way of security for the amount of the debt of the respective” old company and such company was obligated, “when requested so to do” by appellant, to convey and deliver to it all or any o.f such property, to be applied upon the above balance of indebtedness of the respective company to appellant. As to any property theretofore pledged by any old company the equity therein was (with one exception) placed within the above provisions as to property conveyed as security to appellant. Appellant was to liquidate the properties conveyed to it (at the expense of the particular old company) and, when the credits from such property equalled the above balance of indebtedness of any old company, all remaining property coming from it to appellant was to be reconveyed by appellant. If such credits shall not equal such balance by February 25, 1938, then any remaining assets from the old company shall be sold at public sale and the proceeds applied thereto. “Each of the Old Banks agrees that it will cause such action to be taken as will result in its affairs being placed in voluntary liquidation if so requested by the New Bank, with all dispatch and as soon as may be legally done after receipt of such request.” The legal expenses of organizing appellant and carrying out the contracts between it and the old companies were to be paid by appellant and allocated and charged to the. old companies on the “proportion which their resources bear to the total resources of said four [old] banks.”
The above is intended only as a bare outline of this arrangement.3 The gist of the arrangement is that appellant was or*665ganized to take over and did take over all of the property of each of the four banks under an assumption of certain liabilities o ! each. Such liabilities were confined to de*666posits, special obligations (cashier’s checks, certified checks and certificates of deposit), and current pay rolls and expenses from February 1, 1933, to February 25, 1933. *667Obviously, the old companies continued only as shells stripped of all property and with no shadow of expectation of ever again functioning as business concerns. *668That there were other liabilities (including’ the taxes here involved) of the Home which were left with no chance of payment is clear.
*669The arrangement represented by these transactions presents a laudable attempt to meet a critical situation and, as such, is open to no condemnation. However, ap*670pellees are here demanding their rights and I cannot escape the conclusion that this arrangement does “-impair, defeat or [in a legal sense] defraud” appellees as crédi*671tors of the Home and, therefore, is unavailing, under section 5379, to avoid liability for this tax. I think the judgment should be affirmed.

 Section 5379 is as follows:
“Bank may sell its "business, or any of its departments — proeedure. Any bank may sell the whole of its business, or-the whole of the business of any of its-departments, to any other bank or trust company, state or national, or may for-the purpose of consolidating or merging with another bank or trust company,, state .or national, transfer its affairs, as*663sets and liabilities to the bank or trust company with which it intends to consolidate or merge: Provided, that such sale, merger, or consolidation shall in nowise impair, defeat or defraud any creditor of said bank or trust company or either of them. No state bank shall enter into such sale, purchase, merger, or consolidation as seller, except after obtaining the consent of the stockholders of record holding at least two-thirds of the outstanding capital stock, except where such sale, merger or consolidation shall, in the opinion of the commissioner of finance be deemed a public necessity or advantage. Such consent may be expressed either in writing, executed and acknowledged by said stockholders or by a vote at a stockholders’ meeting called for that purpose, notice of which shall be given by mailing notice thereof to each stockholder of record at his last known address as shown by the records of said hank, at least twenty days prior to said meeting. Such notice shall state the time and place of holding of such meeting and a brief and concise statement of the objects and purposes thereof. No guch sale, purchase, merger or consolidation shall be made without the consent of the commissioner of finance. The commissioner of finance may before granting his consent thereto canse an examination to be made of each of the banks or trust companies involved, the expense of which shall be paid by said banks or trust companies and shall not exceed fifteen dollars per day for each examiner and the actual expense incurred while making the examination. The commissioner of finance shall, before granting his consent, require each of the hanks or trust companies to file certified copies of all proceedings of their directors’ and stockholders’ meetings relating to thq transaction, showing a full compliance with the requirements of this section, and also copies of any agreement or agreements which may have been entered Into between said banks or trust companies.” Laws 1927, p. 216, S 11-

 The complete contract is here set out in full except signatures.
Contract.
“This agreement made and entered into this 25th day of February, 1933, by and between Sidney C. Walker, Nathan Rieger and Samuel Woodson, as Trustees for the New Bank hereinafter described, first parties, Home Trust Company, of Kansas City, Missouri, hereinafter designated as ‘Home’, second party, Mercantile Trust Company, of Kansas City, Missouri, hereinafter designated as ‘Mercantile’, third party, Sterling Bank, of Kansas City, Missouri, hereinafter designated as ‘Sterling’, fourth party, and Main Street Bank, of Kansas City, Missouri, hereinafter designated as ‘Main Street’, fifth party, witnesseth:
“Whereas, the Commissioner of Finance of the State of Missouri, from an examination of the second, third, fourth and fifth parties, has concluded that the capital of each of said parties, has been impaired or entirely destroyed, and that, with respect to each, a public necessity exists, and is of the opinion that it would be to the advantage of the stockholders and creditors of each of said parties that the assets of each be sold for the protection of the creditors and assets of each; and
• “Whereas, the board of directors of each of said parties, at meetings duly called, held and convened in accordance with their respective by-laws, because of the unprecedented withdrawal of deposits in each of said parties and because of the impairment of assets of each, have agreed with the Commissioner of Finance of the existence of the public necessity and of an emergency in the affairs of each of said parties, as well as the advantage to each which would result from the sale of the assets of each to the New Bank; and execution and consummation of this contract the rights of the stockholders of each of the parties will be more advantageously liquidated and protected.
“Now therefore, in consideration of the premises and of the mutual obligations hereinafter referred to, and for other good and valuable consideration hereunto moving them, it is agreed by and between the parties hereto as follows:
“1. The first parties agree to cause a new trust company (to be known as Mercantile Horae Bank & Trust Co., or by some other appropriate name) to be organized under the laws of the State of Missouri, with its principal place of business in Kansas City, Missouri, having a cash capital of $200,000.00 and paid in surplus and undivided profits of Two Hundred Thousand Dollars ($200,000.-00), which shall be represented by capital stock divided into Two Thousand (2000) shares of the par value of One Hundred Dollars ($100.00) each. All of the capital stock, surplus and undivided profits of the New Bank will be paid in cash. The New Bank will be organized and a charter procured ready to do business on February 27, 1933. The board of directors of the New Bank shall consist of fifteen shareholders. The original officers of the New Bank shall include the following who shall receive such compensation as shall be designated *665by the board of directors of the New Bank:
“0. A. Brockhouse, Secretary.
“LoGlair Lambert, Vice-President.
“Alexander Rieger, Chairman of the Board of Directors.
“Nathan Rieger, Vice-President.
“John Siemens, Vice-President.
“John W. Wagner, Chairman of the Executive Committee.
“Sidney C. Walker, Vice-President.
“Samuel M. Woodson, President.
“The by-laws of the New Bank shall provide for a Chairman of the Board of Directors and an Executive Committee consisting of five directors and the President. The following directors and President shall constitute the original Executive Committee:
“Jacob Barzen.
“LeOlair Lambert.
“L. J. Navran.
“Nathan Rieger.
“Sidney C. Walker.
“John W. Wagner, Chairman.
“The stock of the New Bank shall be subscribed and paid for in cash at Two Hundred Dollars ($200.00) per share in the following manner:
“Nathan Rieger, 875 shares
“Samuel Woodson, 450 shares
“Mercantile Trust Company, 300 shares.
“Sidney C. Walker, on behalf of Main Street State Bank, 375 shares.
“The obligations hereunder of Messrs. Walker, Rieger and Woodson shall not be joint, but several.
“The first parties agree that the capital stock of the New Bank subscribed by Nathan Rieger and Samuel Woodson will be deposited with Nathan Rieger, Samuel Woodson and - as Voting Trustees under a Voting Trust Agreement having a duration of five (5) years. The Voting Trust Agreement shall provide that all of the rights of stockholders and title to the stock shall be absolutely vested in the Trustees. Included in said Voting Trust Agreement shall be a provision that ihe Voting Trustees may increase the capital of the New Bank and sell the additional shares of the capital stock of the New Bank for such consideration as they may deem advisable, (but not less than par) and to such persons as they may select, it being the intention hereof that stockholders shall waive their preemptive rights to subscribe to any additional stock of the New Bank that may from time to time be authorized and/or issued. Certificate holders for Rieger stock shall select the successor of Nathan Rieger as Voting Trustee. Certificate holders for Woodson stock shall select the successor of Samuel Woodson as Voting Trustee. The above Voting Trustees or successors shall select the successor third Voting Trustee in the event of a vacancy in that respect.
“In the event the third Voting Trustee as herein provided for is not named in this contract, then the two Voting Trustees as herein provided for shall select the third, but in the event they are unable to agree upon the selection of a third Voting Trustee ton (10) days before the next meeting of the stockholders of the New Bank, then the Executive Committee of the New Bank shall select such third Voting Trustee. The decision of the majority of the Voting Trustees shall be binding on all three Voting Trustees.
“2. The second, third, fourth and fifth parties each agrees to furnish to the first parties or the New Bank a duplicate statement of the true and correct condition of the respective party furnishing such statement, duly verified by the President of the party making such statement, showing the true and correct condition of such party as of the close of business on the 25th day of February, 1933. The statement shall show in detail the amounts of the resources and the exact liabilities of each party, in the same form substantially that reports are made by banks or trust companies in Missouri to the State Finance Commissioner, which statement shall become a part of this contract as if originally incorporated herein. There shall also bo furnished a statement by each of the parties to the first parties, or the New Bank, of all of the assets and property .of the party furnishing such statement which have heretofore been charged off the books of such parly, and which is now in its possession or under its control, showing in detail the amount and character of such assets, which statement shall also become a part of this contract as if originally incorporated herein. The aforesaid statement of each bank shall constitute its covenant, warranty and representation with respect to its financial condition.
“3. The first parties agree to cause the New Bank to take over and to assume the payment of the following liabilities of the second, third, fourth and fifth parties, in the amounts respectively shown by the statements of each of said parties referred to in the preceding paragraph hereof, and as ihe same appear on the books of each of said par*666ties at the close of business on the 25th day of February, 1933, to-wit:
“(a) The amounts of all demand, time, savings and other deposits, with interest, if any, then accrued;
“(b) The amounts of all outstanding cashier’s checks, certified checks and certificates of deposit, together with interest, if any, then accrued;
“(c) Such amounts as may at the close of business on said date be owing for services rendered by the active regular officers and employes of each of the last four named parties to this contract from not earlier that February 1, 1933, to the close of business on said date on the basis of the regular compensation which they had been receiving during the preceding calendar month as shown by the books of the last named four parties to this contract;
“(d) Ordinary current bills of each of said last named four parties incurred by each of them between February 1, 1933, and the close of business on said date.
“The aforesaid liabilities and obligations shall constitute the sole and only obligations of the last named four parties to this contract which the New Bank shall assume hereunder or in any manner become liable for. Each of said four banks will on February 25, 1933, be also indebted to the Reconstruction Finance Corporation, banks, bankers or trust companies for borrowed money together with accrued interest thereon as shown in the respective statements hereinbefore referred to. All of said indebtedness is secured, but is not to be assumed by the New Bank. The New Bank is hereby authorized in its discretion to pay all or any part of said obligations of said four parties to this contract and charge the amounts so paid to the account of the party which is now indebted therefor.
“4. The total amount of said obligations and liabilities so to be assumed by, the New Bank on behalf of each of the four banks or trust companies who are parties to this contract, shall, on and after the close of business on the 25th day of February, 1933, represent a debt and obligation of each of the said banks to the New Bank, which said debt each bank, on behalf of itself and to the extent only of its debt, agrees to pay to the New Bank, together with the amount of any debt of any such bank owing to any bank, banker, trust company, or the Reconstruction Finance Corporation, which the New Bank may hereafter pay. Each of the four banks agrees to repay its respective obligation or obligations to the New Bank on the 25th day of February, 1938, unless sooner paid as herein provided, with interest thereon until paid and on any balance remaining unpaid thereon from time to time at the rate of five per cent per annum. Said interest shall be computed on daily balances and charged to said account at intervals of ninety days.
“5. As of the close of business on the 25th day of February, 1933, an account shall be opened on the books of the New Bank for each of said four banks and in their respective names. On one side of each of said accounts there shall be entered as a charge against each of said banks all of the liabilities then' assumed by the New Bank for such banks which are mentioned in paragraph 3 hereof; and as and when paid by the New Bank there shall also be entered in said account, as a charge against such bank for which the same may be made, all other liabilities to be assumed by the New Bank hereunder, or which may from time to time be paid by the New Bank on behalf of any such bank. From time to time there shall be added to said accounts as charges against any such Bank such amounts, if any, as shall be paid or advanced by the New Bank pursuant to the terms hereof. All such payments or advances shall be repaid to the New Bank at the same time and in the same manner as the other charges herein authorized to be made to the account of the respective banks. Interest on all such accounts shall accrue at the aforesaid rate from the date such charges are made so that the whole balance at any time owing on the accounts of any such bank shall bear interest at the said rate. No one of the presently existing banks shall be liable for any of the liabilities or obligations of any other such bank which may be a party to this contract, but the liabilities of each shall be treated independently and separately from the others.
“Second party has now and will concurrently herewith issue and have outstanding obligations or certificates of indebtedness issued pursuant to Section 5312 and following of the laws of the State of Missouri, 1929, to-wit:
Alexander Rieger $174,000.00
Alexander Rieger 26,000.00
A. G. Biggerstaff, Trustee 139,000.00
“The New Bank shall, under no circumstances, and in no event, be deemed to have assumed any of the obligations of *667any of the presently existing banks which are parties to this contract represented by certificates of indebtedness, nor shall the New Bank be deemed to have assumed any other obligations which are not specifically assumed by the New Bank under the terms of this contract.
“6. At the close of business on said 25th day of February, 3933, each of the Old Banks agrees to and does sell, transfer, convey, set over and deliver to the New Bank the following assets and properly which shall thereupon become the solo and absolute property of the New Bank, to-wit:
“(a) All cash which any Old Bank then has on hand;
“(b) All amounts due to any Old Bank from any bank, banker or trust company, with interest payable therein, if any;
“(c) All furniture, fixtures, vaults, safe deposit boxes, machines, equipment, supplies, books, records and aE other property used in the business of any Old Bank;
“(d) The capital stock of the safe deposit company, if any, of each of the Old Banks; and all outstanding rental contracts for safe deposit boxes, either with the safe deposit company of such Old Banks or with the Old Banks direct.
“The aggregate amount of the aforesaid cash and the amounts due and owing by banks, bankers and trust companies shall be credited to the respective accounts of the Old Banks and bo applied as of the close of business on the 25th day of February, 1933, upon the aforesaid respective indebtedness of each Old Bank to the New Bank and to the extent thereof the indebtedness of each Old Bank shall bo respectively reduced.
“The second party shall also be entitled t.o have its indebtedness to the New Bank as shown on the books of the New Bank as of the close of business on the 25th day of February, 1933, credited with the sum of Two Hundred Thirty-five Thousand . (§235,000.00) Dollars, representing the agreed value of the banking promises, fixtures, equipment of the second party and the capital stock of the Home Safe Deposit Company. Each of the Old Banks shall also be entitled to credit for the amount of returned insurance premiums on policies of insurance of the various classes carried by each of the Old Banks and which shall be cancelled by the New Bank. Any snch insurance which shall not be cancelled by the New Bank, but shall be retained by it, shall create a further credit for the Old Bank which originally paid for said policies to the extent of the unearned premiums thereon.
“7. The amount of the difference between the obligations and liabilities of each Old Bank so to be assumed, or which may be paid as aforesaid by the New Bank, and the aggregate amount of the property and assets so sold, transferred, conveyed and delivered to the New Bank as its sole and absolute property, deemed the balance ihen owing on the debts of each Old Bank, shall be secured by all the remaining assets and property of each Old Bank of every kind and character whatsoever, real, personal and mixed, including all assets and property heretofore charged off; and not theretofore finally liquidated.
“For the purpose of so securing the debts and obligations of each Old Bank to the New Bank, each .Old Bank agrees to sell, assign, transfer, convey, set over and deliver unto the New Bank, its successors and assigns, all of its assets and property of every kind and character and wheresoever situated including that heretofore charged off and not finally liquidated, excepting only the aforesaid assets and property so to be conveyed to the New Bank as its absolute property as aforesaid, and each Old Bank does hereby promise and agree that it will, when requested so to do from time to time, make, execute, and deliver to the New Bank such instruments of assignment, transfer, conveyance and endorsement as shall be legally sufficient and requisite to vest in the New Bank, its successors and assigns, the full and complete title in and to> all said assets' and property for the purposes of this agreement.
“It is the intent and purpose of this contract, anything herein contained to the contrary, notwithstanding, that the Now Bank shall be entitled to receive all of the assets of each Old Bank hereby conveyed by way of security for the amoxmt of the debt of the respective Old Banks hereby created, and such further advances as may be made hereunder for sxieh Old Bank, with interest as herein provided, and that all proceeds received by the New Bank from the collection of such assets so pledged (both principal and interest) shall be credited to the respective Old Banks and applied by the New Bank to the reduction of the debt and interest owing by sxxch respective Old Banks to the New Bank, applying the same, at the option of the New *668Bank, to the reduction of either principal or interest.
“8. Each of the Old Banks, on behalf of itself, shall designate one of its officers or directors as its representative and agent to act for and on behalf of the Old Bank appointing him in all matters which may require action by such Old Bank on its behalf or on behalf of its shareholders. Such agent shall have full power, right and authority to make and enter into any agreement with the New Bank which may become necessary or may be reasonably requested by the New Bank in order that such Old Bank may more effectually consummate and carry out the obligations of such Old Bank contained in this contract.
“9. Each Old Bank which is a depositary of any public funds agrees that such action will be taken upon its part as may be requested by the New Bank to secure the designation of the New Bank as the depositary of any public funds now held by such Old Bank, or of other funds, the deposit of which is secured in any manner, but nothing in this agreement shall entail upon the New Bank any liability under any agreement or contract between any Old Bank and depositors of funds as aforesaid, except to the extent of paying the amount of interest remaining unpaid thereon as of the close of business on the aforesaid date and to thereafter pay during the life of this agreement interest on said deposits at the rate named therein.
“10. The New Bank at all times, until it has been repaid the full amount of the indebtedness of each Old Bank with interest on such indebtedness as herein stated, shall have the right to become the sole and absolute owner of any of the property and assets of any Old Bank to be transferred and conveyed as security hereunder, or of any part of such asset or property by applying as a credit upon said indebtedness an amount representing the value or worth of such asset or property as hereinafter set forth, or the amount of the value or worth of the part of the same which is so purchased and acquired. No such purchase, however, shall have been deemed to have been made unless a record thereof appears in the minutes of the Board of Directors of’ the New Bank, or unless acquired under paragraph 6 hereunder.
No asset of any one Old Bank may be used in satisfying the liabilities or indebtedness of any other Old Bank to the New Bank hereunder, but it is intended that the debt of the Old Banks shall be treated separately; that neither shall be liable for the obligations of the other.
“The term ‘value’ or ‘worth’ as used herein as to notes and interest bearing obligations which are now being carried on the books of any Old Bank at other than a nominal value of $1, shall mean the amount of principal and interest owing on any such note or interest bearing obligation according to the terms thereof. As to all other assets and property, other than those carried at a nominal value of $1, the value of worth thereof shall be the amount at which such asset or property was carried on the books of the respective Old Banks on the 25th day of February, 1933. As to all assets carried at a nominal value of $1, or as a part of assets carried at such nominal values, the value or worth thereof shall be such amount as the Executive Committee of the New Bank shall fix and determine. Notwithstanding the aforesaid provisions with reference to the value or worth of assets carried on the books of the respective Old Banks at a value other than a nom-, inal value, if the Executive Committee of the New Bank determines that the value of such assets is less than the amount at which the same appears on the books of the respective Old Banks, any amount so fixed by the Executive Committee shall be deemed and considered for the purposes hereof as the value or worth of the same. If a part only of any asset is purchased hereunder, the New Bank shall be entitled to receive payment of the part so purchased before payment is made on the remainder of such asset, and any and all security for such asset shall be deemed to secure the part thereof so purchased prior to securing the remainder of such asset.
' “11. As long as any amount remains owing by any Old Bank to the New Bank, the New Bank shall have the right to provisionally carry in its loans and discounts, or otherwise on its books, assets or property so to be conveyed by way' of security as aforesaid and any part or parts of any of the same in an aggregate amount equal to the balance at any time owing by any Old Bank to the New Bank hereunder, and the New Bank shall have the right from time to time to make substitutions between assets and property so carried and the remaining assets and property. The act; of the New Bank in so carrying assets and property and making substitutions therefor, shall in no manner affect the character thereof as security, or in any wise *669affect the right of the New Bank therein or create the New Bank as the owner thereof.
“12. The New Bank shall have full power, right and authority to renew or extend the time of payment and successively renew or extend, in whole or in part, any note or other asset to be transferred hereunder, and any and all such extensions and renewals may be evidenced by one or more notes or other evidence of the indebtedness involved. In renewing or extending the time of payment of any asset the New Bank may cause the same to bo divided into such part or parts and ,in such manner as it may determine and may in its discretion rearrange any security for any asset or obtain additional security for the same in such manner that a part or parts of said asset will be secured by a jjrior and superior lien or liens to the lien or liens securing the remainder of such asset. It may further make substitution of security for any such asset or part thereof, change the rate of interest thereon or make such other changes in its terms as in its opinion is to the best interest of the parlies thereto. The New Bank may release any endorser or guarantor of any obligation and accept other guarantors or securities therefor.
“Some of the assets of each Old Bank as of February 27, 1933, will he pledged to banks, bankers, trust companies, or the Reconstruction Finance Corporation, The New Bank may exercise all the rights, powers, privileges and immunities heroin conferred upon it with respect to all such pledged assets of each Old Bank as it has with respect to unpledged assets under the terms of this contract, and no action taken with respect to such pledged assets shall be deemed either an assumption of the debt of any Old Bank, for which said assets are pledged, or as a purchase by the New Bank of such asset from the Old Bank.
“It is understood that the rights in this paragraph conferred on the Now Bank are with the view of the New Bank becoming the purchaser of certain of the assets or parts thereof, which it may so renew or extend and its act in renewing or extending the, time of payment of such assets or parts thereof, and obtaining additional security, or re-arranging the security therefor, or in doing any other act herein authorized, shall in no manner affect or prejudice its right to ultimately become the purchaser of such assets or any part thereof. Any and all renewals or extensions may ho made either in the name of the Old Bank now holding the assets so extended or renewed or in the name of the New Bank, all at the option of the Now Bank, but irrespective of the name in which the same or any part thereof may be so renewed or extended, the title of the New Bank shall in no manner be changed or affected thereby.
“With the consent of a majority of the members of the Executive Committee of the New Bank, the New Bank may compromise or settle any assets to be transferred hereunder, or discharge any party therefrom, or release any security therefor; any such consent of a majority of the Executive Committee may be obtained at a formal meeting of the Executive Committee or otherwise by written approval of a majority of the members of such Committee.
“13. The real estate of each of the Old Banks shall be transferred by each of such Old Banks to the New Bank, or to such person as may be designated by the New Bank, by general warranty deed, without reference therein to this agreement, or that any part of the same is to be held as security hereunder.
“All or any part of such real estate may bo sold and conveyed by the New Bank for such consideration, upon such terms and to such person or persons as the Executive Committee of the New Bank may determine. Any conveyance of any of such real estate by the New Bank, pursuant to the terms hereof, or by its nominee, shall vest the full and absolute title thereto in the grantee or grantees thereof. The New Bank shall in no event be required to make any conveyance of any of said real estate with any warranties whatsoever, but shall make such conveyances only as will vest the title to the premises conveyed in the grantee or grantees thereof.
“The New Bank may make advances for the preservation or protection of any of the assets or property to he held as security hereunder, but shall not be required to do so. Any and all advances made by the New Bank for the preservation or protection of any asset of any Old Bank transferred hereunder shall be added to the debts of the Old Bank which now owns said asset and shall be secured and repaid with interest at the same rate and in a like manner as the remainder of the debts of said bank created hereunder.
“14. Until each Old Bank shall have repaid the New Bank the amount which may at any time be due and owing to the New Bank hereunder from such Old Bank, the New Bank shall have the right *670to pledge and hypothecate for its own loans any of the assets of such Old Bank to be transferred hereunder to the New Bank, and the New Bank may also discount or re-discount any of the same, and no such act. on the part of the New Bank shall be construed as a purchase by it of any such asset, but on the contrary, its title thereto shall in no way be affected thereby.
“15. Each Old Bank does hereby transfer, sell, assign, set over and deliver to the New Bank all pledges, guaranties, hypothecations and securities held by such Old Bank for the security of any asset or property hereby agreed to be conveyed, and each Old Bank does hereby agree that it will, from time to time, on request of the New Bank make such further and additional assignments, transfers and conveyances thereof as shall be sufficient and requisite to make all of the same as fully available to the New Bank as the same are now held by such Old Bank.
“16. The New' Bank shall have the right to collect and enforce all assets in its own name and to exercise with reference thereto full rights of ownership in any suit or proceedings which it may be necessary to institute or become a party to for the collection thereof, or for the enforcement of any security pertaining thereto, but it may, if for any reason it so desires, conduct and carry on in the name of the Old Bank now owning such assets any suit or action on any of said assets for the enforcement thereof or of the security therefor. In addition, each Old Bank agrees that its agent appointed as aforesaid, will, on the request of the New Bank, take over and enforce any asset which the New Bank may determine should be so handled.
“17. The New Bank shall endeavor in good faith to collect and liquidate all of the assets and properties to be assigned, transferred and conveyed to it hereunder, without charge or expense, to any Old Bank, except expenses incurred by it other than in the usual and routine operation of its business, such -as traveling expenses, attorneys’ foes, court costs, and other actual and reasonable expenses of similar character, until the debt due and owing to it from each respective Old Bank, as created hereunder, shall have been fully paid. All amounts so expended by the Now Bank in liquidation shall become a' part of the debt of each Old Bank for whose asset such amount shall have been paid, and the same shall be secured and repaid, with interest at the same rate and in like manner as the remainder of said debt of such Old Bank.
“18. It is expressly understood and agreed that the New Bank shall in no manner become liable for the obligations or liabilities of any Old Bank to its stockholders, as such.
“Each Old Bank, on behalf of itself, and not the other, represents and warrants that it has good title to the assets and property hereby' agreed to be sold, transferred and conveyed, and that there are no outstanding claims or liens against any of the same, except taxes on real estate, mortgage liens on its real estate as shown by its books, and obligations to banks, bankers, trust companies, the Reconstruction Finance Corporation and/or the obligations and Certificates of indebtedness mentioned in Paragraph 5, as shown on its books. Each Old Bank for itself hereby agrees to save the New Bank free and harmless from any liability or damage arising out of the assertion or establishment of any other lien or claim against its assets, that is, of such Old Bank.
“19. Each Old Bank represents that its books are correct in the details of its assets and liabilities. In the event any liability exists which does not appear on said books and the New Bank shall assume or pay the same, the amount of such liability shall thereupon become a part of the debt of the Old Bank for whom the same has been assumed or paid by the New Bank, and such Old Bank shall thereupon become further indebted to the New Bank, and such Old Bank agrees to repay said amount to the. New Bank, with interest thereon, at the rate hereinbefore provided, and such additional debt shall be secured in like manner as is the other indebtedness of such Old Bank to the New Bank as heroin provided. If any difference shall appear which shall decrease the amount of the assets to be transferred and conveyed hereunder by any Old Bank, and the Now Bank shall suffer any loss on account thereof, then such Old Bank agrees to repay the amount of the same to the New Bank at the time herein named for the payment of its aforesaid debt, with interest thereon at the rate herein provided. Each Old Bank, for itself and not the other, represents that its assets are valid and genuine in all respects and it agrees to save the New Bank free and harmless from any loss or damage growing out of the invalidity or partial invalidity of or lack - of genuineness of any such assets or the in*671accuracy of the hooks of such Old Bank with respect to such assets or with respect to any liability. Anything herein, to the contrary notwithstanding, it is understood that the statements of the third and fifth parties as of the close of business on February 25, 1933 may not reflect obligations to the Reconstruction Finance Corporation, respectively in the sum of $60,000.00 and $100,000.-00, which will be consummated February 27, 1933. The New Bank does not assume these obligations, but its rights and powers with respect to the securities pledged therefor by said second and fifth parties shall be subject to the rights of the Reconstruction Finance Corporation.
“20. Whenever any Old Bank shall' have received or shall be entitled to receive credit on its account equal to the indebtedness of such Old Banks to the New Bank, plus interest thereon, then the New Bank shall, subject to the provisions contained in Paragraph 21 hereof, transfer, assign, convey and deliver to the aforesaid agent of such Old Bank, without recourse or warranty of any kind or character, all assets then remaining in its possession as security, and the obligation of the New Bank and such Old Bank under this contract shall thereupon be at an end.
“21. The certificates of indebtedness of second party mentioned in paragraph 6 hereof in the sum of $139,000.00 have been secured by certain specific assets of the second party. If and when said certificates of indebtedness have been liquidated out of the proceeds from said assets, all remaining assets so pledged to secure said $139,000.00 shall be held by the New Bank as security for the indebtedness from time to time due and owing to the New Bank under this contract from the second party, which assets and the proceeds thereof shall be held, used and applied in the manner provided for the other assets of the second party. After the satisfaction of the indebtedness • of the second party to the New Bank hereunder, then any such remaining assets of the second party held by the New Bank shall be delivered to the second party for the benefit of the holders of said other certificates of indebtedness or obligations of the second party, without any liability on the part of the New Bank to see to the application or distribution of the assets or the proceeds thereof.
“22. If, on or before the 25th day of February, 1938, after making all credits in the aforesaid account to which each Old Bank shall be entitled, the New Bank shall not have been fully paid the aforesaid debts of such Old Banks with interest as herein provided, then all assets of the Old Banks whose debt has not been paid as aforesaid; remaining as security for the payment of said debt, shall be sold by the New Bank at public vendue to the highest bidder at the South front door of the then Jackson County, Missouri, Court House at Kansas City, Missouri, for cash, first giving thirty days' notice of the time, terms and place of sale, with a brief general description only of the property to be sold. At such sale the New Bank may become the purchaser of all or any part of the assets so offered for sale. The proceeds derived from any such sale shall be applied upon the aforesaid debt and if there be any residue the same shall be paid to the then agent of the Old Bank for the satisfaction of whose debt to the New Bank such sale was hold, subject, however, to the provisions with respect to the obligations of the second party contained in the preceding paragraph hereof.
“23. Each of the Old Banks agrees that it will cause such action to be taken as will result in its affairs being placed in voluntary liquidation if so requested by the New Bank, with all dispatch and as soon as may be legally done after receipt of such request. All such requests shall be made to the respective agents of such Old Banks. Each of the Old Banks agree that so far as legally possible, each will, upon the request of the New Bank, cause the New Bank to be substituted as a fiduciary in the place of such Old Bank, provided, however, the New Bank shall not, under any circumstances, assume any liability of any Old Bank incurred as such fiduciary prior to the substitution of the New Bank for such Old Bank. Each Old Bank also transfers, assigns, conveys and delivers to the Now Bank any and all rights, titles and causes of action which it may now have against any person, firm or corporation, including any fees or compensation to which it may be entitled as any fiduciary, to be held by the New Bank in the same manner as the other assets of the Old Bank are to be held under the terms of this contract.
“24. Neither the Kansas City Clearing House Association nor any of its members or associate members, nor any of the members of various committees of said Association, nor any of its officers, are parties to this contract, nor did they have any participation in the nego*672tiations with, respect thereto. Furthermore, no representations or agreements with respect to the New Bank or any Old Bank were made by any of the aforesaid parties. Such financial assistance, if any,' as may have been given, to any party to this contract was purely in the form of a loan without any conditions attached thereto and without any personal interest therein or .in the consummation of this contract. Each of the parties hereto, including its directors as well as the directors of the New Bank have entered into this agreement of their own accord, voluntarily and without any counsel with respect thereto from said Clearing House Association, its members or any of the officers or employees thereof.
• “25. The fourth party does hereby further covenant and agree with the New Bank that any and all rights and claims which it may now or hereafter have against the predecessor of the fourth party are hereby transferred, conveyed and delivered to tbe New Bank in tbe same manner and for tbe same purposes as tbe other assets of tbe fourth party are transferred, conveyed and delivered hereunder.
“26. Tbe New Bank shall pay Messrs. Ryland, Stinson, Mag & Thomson for their legal services rendered by them in connection with the organization of the New Bank and the preparation and carrying out of this contract. The amount so paid shall be allocated between the four Old Banks and charged against them in the proportion which their resources bear to the total resources of said four banks, and shall be deemed as an additional obligation or debt of each of said four banks to tbe New Bank in the proportion hereinbefore set out.
“In witness whereof, all of the parties hereto have executed or caused to be executed, this contract by duly authorized officers, each for himself or itself, without liability for the other, this 25th day of February, 1933.’'