Court Opinion

ID: 5256034
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:28:11.291767+00
Date Added: 2024-06-11T08:28:00.752839
License: Public Domain

Putnam, J. (dissenting):
On January 30, 1908, the Mechanics and Traders’ Bank closed, and went into the hands of a receiver. The circular of June 16, 1908, to stockholders, declared that as a condition of reopening, the Superintendent of Banks required that the stock be put in a voting trust, so that for five years “ the affairs of the Bank may be managed by voting trustees, whose *201appointment is subject to the approval of the Banking Department.” It announced the preparation of an agreement for this purpose, which had been signed by some of the stockholders. The old stock was to be surrendered, which capital reduced to $1,000,000 should be stock in the new name of the Union Bank, to be reissued to the voting trustees, whose control should continue till June 1, 1913.
Though the Home Bank did not sign this voting trust agreement, it acted under it, by depositing all its holdings of the Mechanics and Traders’ Bank stock which as reduced through the reorganization were 551 shares. It received from the voting trustees certificates in the following form:
“ No. 100 Shares.
“ Union Bank of Brooklyn
“ Stock Trust Certificate
“ This is to Certify that as hereinafter provided Home Bank of Brooklyn (hereinafter called the stockholder) will be entitled to receive on the first day of July, 1913, or sooner at the option of the undersigned voting trustees, a certificate or certificates for ........ shares of the new issue of stock of the Union Bank of Brooklyn (formerly the Mechanics and Traders’ Bank) of the par value of One Hundred Dollars.”
The certificate gave the holder a right to payments equal to dividends, if any, when collected by the trustees. It expressly reserved all voting rights to the trustees. A concluding clause was that “ on surrender hereof or cancellation or transfer the undersigned voting trustees may treat the registered holder as owner hereof for all purposes whatsoever, to accept delivery of stock certificates hereunder which shall not be made without a surrender hereof.”
Permanent certificates in like form were issued by the voting trustees in the name of the appellant Main for 125 shares, which he still holds.
If, as stated in the reorganization circular already quoted, the Superintendent required this voting trust (probably to restore confidence through the three persons thus placed in control), such corporation methods were only constitutional, if they preserved to creditors and maintained in force as against the complying stockholder the burdens and penalties *202of bank stock ownership. Like certificate holders under a five-year voting trust issued to four corporations entitling them to stock in the new organization, were held taxable as future transfers of stock, -under section 270 of the Tax Law (as added by Laws of 1910, chap. 38).* (United States Radiator Corp. v. State of New York, 151 App. Div. 367; affd., 208 N. Y. 144.) Collin, J., there said of such voting trust: “ The four corporations did not transfer the shares owned by them to the trust company. They caused the record title to them to be placed in the trust company temporarily and for an expressed and limited purpose. They remained the owners of the stock. Their ownership was subject to the right of the trust company to vote the shares at corporate elections, but the power to transfer the shares, subject to the right of the trust company to vote them, remained in the corporations.”
I cannot accept the view that despite the terms of the Constitution, article 8, section 7, declaring the liability of bank stockholders, this voting trust could be made a defensive screen behind which the stockholder was immune from liability, because his stock was evidenced by voting trust certificates, especially where tiie certificate holder appeared as owner, and not as a lender on collateral.
I am, however, of opinion that under the law as it stood September 1, 1911, the date of the call on defendants for payment, the declaration of the Superintendent of Banks had not the force and effect of a like determination of the Federal Comptroller of the Currency. Therefore, under Burr v. Wilcox (22 N. Y. 551); Handy v. Draper (89 id. 334), and Tuzzeo v. American Bonding Co. (226 id. 171), interest should be computed from the date the suit was begun. So I would modify the judgment by excluding interest prior to April 4, 1912, but vote otherwise that it be affirmed.
Judgment reversed on reargument, with costs, as to the defendants, appellants, Main and the Home Bank of Brooklyn, and complaint dismissed upon the merits, with costs, as against said defendants, in accordance with opinion by Kelly, J. Settle order on notice.

 Since amd. by Laws of 1911, chap. 352; Laws of 1912, chap. 292, and Laws of 1913, chap. 779.— [Rep.