Court Opinion

ID: 9651150
Source: CourtListenerOpinion
Date Created: 2023-08-23 16:09:00.587921+00
Date Added: 2024-06-11T18:12:30.641140
License: Public Domain

On Petition for Rehearing.
M. C. Garber, appellant in Number 2873, has filed a petition for rehearing in which he contends that we misinterpreted 12 U.S.C.A. § 21 et seq., as it affects the liability of one who transfers stock in a banking institution. It is contended that we established the date on which it was determined that the bank was insolvent in the sense that its liabilities exceeded its assets rather than the date on which the bank failed to meet its obligations when they matured as the date which determines the liability of one transferring stock. With this we cannot agree. We agree that it is the date on which a bank fails to meet its obligations that determines the liability of one transferring his stock. It is true that the word “insolvency” is not used in the applicable statute. The opinion could well have omitted the use of the word “insolvency.” However, there can be no question as to the sense in which we used the term. We defined insolvency for the purpose of determining the liability of one transferring stock as being the failure of a bank to meet its obligations when they mature. We said: “A national bank is insolvent within the meaning of the National Bank Act, 12 U.S.C.A. § 21 et seq., when it is unable to meet its obligations when they mature.” Inability to meet its obligations is the test which establishes the liability of one transferring stock. We do not understand the law to require that a claim be actually presented for payment and that payment be refused before liability attaches. We know of no case holding to that effect. Certainly the case of Brown v. Rosenbaum, 287 N.Y. 510, 41 N.E.2d 77, 141 A.L.R. 1345, upon which appellant relies, does not so hold. It holds that where a bank is closed and a conservator is appointed, the day on which the bank was closed may determine both the date on which the rights of creditors and the liabilities of stockholders attach. In People v. Merchants’ Trust Co., 187 N.Y. 293, 79 N.E. 1004, it was held that the appointment of a temporary receiver and the taking of assets by him operated to prevent the defendant from paying the claims of creditors and therefore obviated the necessity of a formal demand for payment. In Broderick v. Aaron, 268 N.Y. 260, 197 N.E. 274, 276, 103 A.L.R. 684, the superintendent of banks took possession of a bank on December 11, 1930. It did not appear that on that date the bank was actually insolvent. The court held that “none the less the closing of the bank occasioned an automatic default in the payment of its debts and liabilities.”
Garber sold his stock November 14, 1929. The bank disposed of its business and closed its doors November 25, 1929, and did not function as a banking institution thereafter. It went into voluntary liquidation and appointed a liquidating agent December 20, 1929. The directors distributed the $240,000 received from the First National Bank of Enid some time in December, 1929, to the stockholders of record as of November 25. Thereafter the bank had not a single dollar with which to meet any claim. Its doors were closed and it had ceased to function as a banking institution. The presentation of a claim for payment after that would have been a mere formality. By this course of conduct the bank automatically disqualified itself from meeting any of its obligations. To hold that it was still necessary that a claim be presented and dishonored before a stockholder’s liability attached would be adopting a strained construction, entirely out of line with the purpose sought to be accomplished by the statute.
The petition for rehearing is denied.