Court Opinion

ID: 3625413
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:06:08.257119+00
Date Added: 2024-06-11T13:15:00.063698
License: Public Domain

I concur in the conclusion reached by my brother HOGAN. The lien of a judgment perforce of section 1251 of the Code of Civil Procedure takes effect only on the actual interest of the judgment debtor in the land and is, of course, subject to prior equities. (Towsley v. McDonald, 32 Barb. 604; Moyer v.Hinman, 13 N.Y. 180; Trenton Banking Co. v. Duncan, 86 N.Y. 221;Brown v. Pierce, 7 Wall. 205.) The statute contemplates that upon taking possession of a delinquent or insolvent bank, the superintendent "shall proceed to liquidate" its affairs unless either the bank, with the consent of the superintendent, is permitted to resume, or the Supreme Court enjoins further proceedings and directs the superintendent to surrender its business and property to it on its application made within ten days after such taking possession. The agreed fact in this case is that on November 30th, 1908, the superintendent took possession, and has since continued in possession, for the purpose of liquidating the affairs of the plaintiff. Judge WERNER, speaking for a majority of the *Page 289 
court in Matter of Union Bank of Brooklyn, (204 N.Y. 313, at page 317), said: "The plain theory of the statute is that the superintendent shall not take possession of a bank for purposes of liquidation until after he has made an examination from which it appears that the conditions warrant the exercise of the power." So the case is that the possession of the superintendent from the start was for the purpose of liquidation and was not intended to be temporary merely. The question is whether under such circumstances any equities arise superior to the lien of a judgment subsequently docketed.
The statute makes no provision for enjoining creditors from the commencement or prosecution of actions, but does expressly provide that rejected claims, and claims to which objections are sustained, must be established by a judgment. If, after the superintendent has determined to liquidate, creditors may gain a preference by obtaining judgments, the scheme and purpose of the statute will be frustrated. They may have their claims established by judgment, but whether they will thus gain any priority over other creditors is, as was said in Pringle v.Woolworth (90 N.Y. 502), "another and quite independent question."
It is true the statute does not expressly provide for a ratable distribution of assets among creditors, but such a distribution being essential to the scheme is necessarily implied. The statute is far from being a model, and it is not our province to make a new statute, still I think its provisions are workable, if effect be given to what is necessarily implied as well as to what is written.
Whilst the corporation continues to exist, the ordinary functions of its managers are suspended and the superintendent, as a liquidator, acts in its name and stead. It may still sue and be sued and it retains the legal title to its property; but by necessary implication, after a liquidation has been determined upon, it holds the legal title *Page 290 
in trust for the beneficiaries of such liquidation. Its property becomes a trust fund to be distributed among all its creditors, whose equities are to be determined as of the date of the commencement of the liquidation.
I assume that the determination to liquidate must be evidenced by acts indicating that to be the purpose of the superintendent in taking or continuing possession. The express provision authorizing the superintendent to sell upon the order of the Supreme Court all the real and personal property of the corporation necessarily implies, to my mind, a sale free from the lien of judgments obtained subsequent to the actual commencement of liquidation. What would happen in the unusual case of a suspension of the liquidation and a resumption of business by the corporation is not now before us. It would not seem to be difficult in such case to impress a lien in favor of judgment creditors on the proceeds of sales of real property by the liquidator. Such a difficulty is theoretical, not real. A resumption of business by a bank having unpaid judgments against it is hardly to be expected.
A construction of the statute under which, after the actual commencement of liquidation, the bank is to retain the legal title to its property, but in trust only, and, therefore, not subject to the lien of judgments subsequently docketed, is necessary to give effect to the manifest intention of the legislature, and to make the statute workable. Under that construction no one will be harmed. If it turn out that the assets are more than sufficient to pay the debts all creditors will be paid in full. If it happen that there is a deficiency all will be treated alike, their equities will be determined as of the commencement of the liquidation, and no one will gain an unfair advantage by subsequently obtaining a judgment which the statute makes necessary to establish a claim if disputed.
The judgment should be affirmed. *Page 291