Court Opinion

ID: 9763164
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:37:52.219291+00
Date Added: 2024-06-11T12:55:37.936500
License: Public Domain

*850HECHT, Justice,
dissenting.
I agree with the rule the Court announces for appealing orders in receiver-ships. I do not agree, however, either as a rule or in this case, that the creditors of a failed bank should be denied interest on their claims prior to a distribution of any surplus to the bank’s stockholders. Accordingly, I dissent.
The Court gives two reasons for concluding that the FDIC is not entitled to interest on its claims against the Bank of Woodson prior to payment of stockholder claims. The first is that article 342-804a, Texas Revised Civil Statutes Annotated (Vernon Supp.1990),1 which establishes payment priorities for claims against a state bank in liquidation, is silent as to payment of interest on creditors’ claims. Although the statute does not prohibit payment of interest on priority claims, a “strict interpretation” of its silence on the matter, says the Court, “would compel the conclusion that no interest should be paid on creditor’s claims.” Supra at 849. Strictly speaking, however, legislative silence does not, by itself, compel or even imply any conclusion one way or the other. No matter how strictly article 342-804a is interpreted, it does not disallow the payment of interest in these circumstances. This Court has previously awarded interest without statutory authorization. Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549 (Tex.1985). The mere absence of statutory authorization for allowing interest in the present circumstances cannot be the end of our analysis.
Like the Texas statute, federal statutes are silent concerning payment of interest on the claims of creditors of a national bank in liquidation. Creditors of a national bank, however, are quite clearly entitled to interest on their claims before the distribution of any surplus to the bank’s stockholders. See Stein v. Delano, 121 F.2d 975 (5th Cir.1941). This rule is firmly grounded on sound policy: courts have long and consistently favored creditors, including depositors, over shareholders.
The general rule is that where the assets of an insolvent bank in receivership are more than sufficient to pay all debts, then the creditors are allowed dividends to pay the interest due from the debtor bank, but where the assets are not sufficient to pay the principal of all debts, interest on the general claims will not be computed for the period after the receiver took control.
Jamison v. Federal Deposit Ins. Corp., 149 F.2d 199, 200 (5th Cir.1945), citing Ticonic Nat’l Bank v. Armstrong, 303 U.S. 406, 58 S.Ct. 612, 82 L.Ed. 926 (1938). In Ticonic National Bank, the Supreme Court observed:
The bank’s obligation to pay interest as damages for the detention of the debt is not cut off by suspension of its business and receivership. The principle has been established, and claimants held entitled to such interest, in cases where the principal amount of each of the claims was paid in full from the assets of the bank (National Bank v. Mechanics’ National Bank, 94 U.S. 437 [24 L.Ed. 176 (1876)]), including if necessary the double liability of the shareholders (Richmond v. Irons, *851121 U.S. 27, 64 [7 S.Ct. 788, 805-06, 30 L.Ed. 864 (1887)]).
303 U.S. at 410, 58 S.Ct. at 614.2 In National Bank v. Mechanics’ National Bank, the Court specifically noted that the federal statute was silent as to interest upon the claims before or after proof of judgment. 94 U.S. 437, 439, 24 L.Ed. 176 (1876). But the Court concluded: “Where the right to recover exists in this class of cases, it included interest as well as principal, unless there is something which would render the payment of the former inequitable.” Id., 94 U.S. at 440.
Like the federal courts, every state court which has ever considered whether interest should be paid on the claims of creditors of a bank in liquidation has held interest allowable. See Green v. Stone, 205 Ala. 381, 87 So. 862 (1920); FDIC v. Leggett, 204 Ark. 780, 164 S.W.2d 882 (1942); Greva v. Rainey, 2 Cal.2d 338, 41 P.2d 328 (1935); Wells, Fargo & Co. v. Enright, 127 Cal. 669, 60 P. 439 (1900); Lamar v. Taylor, 141 Ga. 227, 80 S.E. 1085 (1914); People v. Farmers State Bank, 371 Ill. 222, 20 N.E.2d 502 (1938); Bates v. Farmers Sav. Bank, 231 Iowa 1151, 3 N.W.2d 517 (1942); Flynn v. American Banking & Trust Co., 104 Me. 141, 69 A. 771 (1908); Reichert v. Metropolitan Trust, 293 Mich. 76, 291 N.W. 228 (1940); Equitable Holding Co. v. Equitable Bldg. & Loan Ass’n, 202 Minn. 529, 279 N.W. 736 (1938); FDIC v. Farmers Bank, 238 Mo.App. 350, 180 S.W.2d 532 (1944); Department of Banking v. Elm Creek State Bank, 205 Neb. 323, 287 N.W.2d 440 (1980); People v. Merchants’ Trust Co., 187 N.Y. 293, 79 N.E. 1004 (1907); Hackney v. Hood, 203 N.C. 486, 166 S.E. 323 (1932); Sebring v. FDIC, 401 P.2d 479 (Okla.1963); Jones v. Skinner, 159 Or. 325, 80 P.2d 60 (1938); Hays v. City Bank, 48 S.E. 736 (S.C.1904); In re Liquidation of Badger State Bank, 70 S.D. 120, 15 N.W.2d 744 (1944); State v. Park Bank & Trust Co., 151 Tenn. 195, 268 S.W. 638 (1925); Hoffman v. Unger, 125 W.Va. 501, 24 S.E.2d 911 (1943); In re Oconto County State Bank, 245 Wis. 245, 14 N.W.2d 3 (Wis.1944). See also 10 AM.JuR.2d Banks § 777 (1963); 9 C.J.S. Banks and Banking § 527 (1938, Supp.1990); Annot., 39 A.L.R. 457 (1925); Annot., 44 A.L.R. 1170 (1926); Hanson, Effect of Insolvency Proceedings on Creditor’s Right to Interest, 32 Mich.L.Rev. 1069 (1934); Note, Banks and Banking — Stockholders Superadded Liability — Liability for Interest and Cost of Receivership, 39 Colum.L.Rev. 1414 (1939). Although this Court has sometimes taken a position on an issue contrary to every other jurisdiction in the country, see, e.g., Dow Chem. Co. v. Alfaro, 786 S.W.2d 674 (Tex.1990), it usually offers some justification for doing so. Today it neither admits that its holding in this case is unique nor explains why.
It is certainly not obvious why a failed bank’s depositors and creditors, who are indisputably entitled to be paid before its stockholders, should not also be made whole before any surplus remaining of the bank’s assets is distributed to its shareholders. Indeed, the general rule in this state is that creditors of any corporation in receivership are entitled to interest on their claims if there is any surplus. In First Nat’l Bank v. Campbell, 52 Tex.Civ.App. 445, 114 S.W. 887 (1908), rev’d and remanded on other grounds, 104 Tex. 457, 140 S.W. 430, op. on reh’g, 104 Tex. 576, 141 S.W. 515 (1911), the court stated:
No interest, however, should be paid out of the general fund after the date of the appointment of the receiver, unless there should be, after all the debts are paid, a surplus to be returned to the stockholders of the respective corporations, in which case interest should be paid in full to date of payment out of such surplus, if not fully satisfied out of the proceeds of the securities. The rule, where applicable, that interest ceases to run when the court takes charge of the property by a receiver, applies in so far as a distribu*852tion of the assets in his hands among the creditors is concerned, and cannot be used to protect the corporation from full liability, if it proves to be in fact not insolvent.
One would be hard pressed to explain why a different rule should apply to bank liquidations than applies to receiverships generally. The Court attempts no such explanation. The Court has recognized that a claimant is not made whole unless he is awarded interest from the time his claim is incurred until it is finally paid, and has even gone so far as to characterize not paying interest as inequitable. Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549 (Tex.1985). Although Cavnar involved personal injury plaintiffs and this case involves the FDIC, there does not appear to be any other reason to treat them differently.
In sum, in holding that Texas law does not allow payment of interest on the claims of depositors and creditors of a failed bank before any payment is made to the bank’s shareholders, the Court ignores every other state authority and conflicts with its own precedent. I would hold to the contrary, for the same good reasons that have persuaded other courts and legislatures.
The second reason the Court gives for denying the FDIC interest in this case is that the FDIC mishandled the bond claim which produced the surplus being argued over, and on “equitable principles” is not entitled to interest. The Court cites as its only authority for looking to equitable considerations in this case section 64.004 of the Texas Civil Practice and Remedies Code. The Court fails to note that this statute does not govern this case because the bank receiver here is appointed not by the court but by the Commissioner of Banking as authorized by article 342-803 and article 4896, § 3, Texas Revised Civil Statutes Annotated (Vernon Supp.1990).
However, the Court errs in considering any equities in this case for even more important reasons. For one thing, the trial court did not deny the FDIC interest because of any inequitable activity. Rather, the trial court held that “the law does not permit the payment of interest to creditors of the Receivership.” (Emphasis added.) The trial court implicitly approved the FDIC’s overall handling of the liquidation, allowing most of its expenses.
In addition, there is absolutely no evidence in the record before us of any inequitable conduct by the FDIC. The Court appears to summarize the evidence it finds persuasive as follows:
F.D.I.C. attempted to settle the claim for a fraction of what was ultimately recovered. The surplus in this case is due to the proposed settlement that required the trial court to appoint a special prosecutor.
Supra at 849. The Court has been through the record in this case very carefully, line by line, and there is not so much as a word of evidence to support these assertions. If there were, the Court would certainly cite it. Yet, the Court does not. It does not because it cannot. The Court’s conclusion that “the facts of this case support the trial court’s denial of interest on the F.D.I.C.’s claims based on equitable principles”, supra at 849, is not merely a difference of opinion with the dissent. Nor is it simply a different interpretation of the evidence. There is, of course, room for honest disagreement when evidence is confused or conflicting. That is not this case. The Court’s assertion that there is evidence in this record of inequitable conduct by the FDIC is a complete fabrication. The Court makes no attempt to meet this charge.
The only other authority referred to by the Court is the court of appeals’ statement: “There is evidence to support the trial court’s judgment that some of the fees and expenses were due to the receiver’s mishandling of the claim on the bond.” 757 S.W.2d at 915 (emphasis added). This statement does not support the Court’s theory. The court of appeals did not state that there was evidence to support a denial of interest; to the contrary, the court of appeals awarded interest to the FDIC!
The records of cases in this Court are not readily available to all who will read its opinions. Faithfulness to the record is therefore fundamental to the integrity of *853the Court’s decisions. The Court today has violated this principle.
I would hold that the FDIC is entitled to interest on its claim in this case. Thus, while I agree with the Court regarding the rule it fashions for appealing orders in receiverships and therefore disagree with that portion of the court of appeals’ opinion, I would affirm the judgment of the court of appeals reversing the judgment of the trial court and remanding this case for further proceedings.
PHILLIPS, C.J., and GONZALEZ and COOK, JJ., join in this dissenting opinion.

. "Article 342-804a. Priority of Claims — Payment
"On liquidation of a state or private bank or on execution of a purchase of certain assets and assumption of certain liabilities of a state bank under Article 3a of this chapter, [Article 342-803a] claims for payment against that state bank have the following priority:
"(1) obligations incurred by the Banking Commissioner, fees and assessments due to the Banking Department, and expenses of liquidation, including any taxes due, all of which may be covered by a proper reserve of funds;
"(2) claims of depositors having an approved claim against the general liquidating account of the bank;
"(3) claims of salaried employees of the bank for salaries that are earned but unpaid at the time the bank is closed or purchased under Article 3a of this chapter;
"(4) claims of general creditors having an approved claim against the general liquidating account of the bank;
"(5) claims otherwise proper that were not filed within the time prescribed by this Code;
"(6) approved claims of subordinated creditors; and
"(7) claims of stockholders of the bank."

. At that time, bank shareholders were typically liable by statute or by state constitution beyond the actual amount of their investment, in a specified amount. Early cases often involved claims to collect this “superadded liability” for the benefit of creditors. See Note, Banks and Banking — Stockholders Superadded Liability— Liability for Interest and Cost of Receivership, 39 Colum.L.Rev. 1414 (1939). See also Stein v. Delano, 121 F.2d at 978.