In Re LaFayette Bank & Trust Co.

153 S.E. 452, 198 N.C. 783, 1930 N.C. LEXIS 487

• Court: Supreme Court of North Carolina
• Decided: June 6, 1930
• Status: Published

Opinion

CoNNOR, J.

Chapter 113, Public Laws of North Carolina, session 1927, now C. S., 218(c), is entitled “An act to amend section 218(c) of Yolume 3 of the Consolidated Statutes, relating to the method of liquidating banks.” It is provided by subsection 22 of said act that “no bank created under the Banking Act, or the Industrial Banking Act, and under the supervision of the Corporation Commission, shall be liquidated in any other way or manner than that provided herein.” All banks, doing business under the laws of this State, whether public or private, are by statute under the supervision and general control of the Corporation Commission, C. S., 1035, subsection'7. Therefore, no State bank can be liquidated, voluntarily or involuntarily, otherwise than as provided by this statute. O. S., 218(a), providing for the voluntary liquidation of a bank, insofar as it is in conflict with the statute is superseded by its provisions.

For the purpose of liquidation, either voluntary or involuntary, the Corporation Commission is authorized and empowered by the statute, either upon its own initiative, in certain cases (subsection 1), or pursuant to resolution of a majority of the board of directors of the bank (subsection 2), to take possession of the assets and business of any bank doing business in this State, and subject to its supervision and general control. In either case the Corporation Commission, upon taking possession of the assets and business of any bank, is authorized, through the Chief State Bank Examiner, or through its duly appointed agent, to convert its assets, real and personal, into money, by the collection of all debts due the hank, or with the approval of the judge of the Superior Court for the district in which the bank has its principal place of business, by the sale of its property, real or personal, subsection 7. All funds belonging to the estate of the bank, and collected by the Commission shall be deposited from time to time in such bank or banks as the Commission shall select, and shall be subject to the check of the Chief State Bank Examiner, in the name of the Corporation Commission, subsection 15. Claims of depositors or other creditors of the bank must be filed with the Corporation Commission within the time specified by the Commission, which shall be not less than ninety days from the date of notice given by publication in a newspaper pub lished in the county in which the hank was doing business at the time the Commission took possession o£ its assets and business, subsection 10. At any time after the expiration of the date fixed by the Chief State Bank Examiner, or by the duly appointed agent of the Commission, for the presentation of claims against the bank, the Commission may declare, and out of the funds on hand, after paying expenses and debts which have priority, shall pay dividends to the depositors and other creditors of the bank whose claims have been allowed by the Commission. Dividends shall be declared and paid when and as often as the funds on hand, subject to the payment of dividends, are sufficient to pay ten per cent on all claims entitled to share in such dividends, subsection 14. When the assets of the bank have been fully administered, the Corporation Commission is required by the statute to file in the office of the clerk of the Superior Court of the county in which the proceeding for the liquidation of the bank is pending, a full and complete report of all its transactions in said proceeding. Upon the filing of this report, the Corporation Commission shall be discharged from all further liabilities by reason of the liquidation of the bank, subsection 18. In the event any funds or assets belonging to the bank remain in its hands, after the payment of all expenses and all claims against the bank, provision is made in the statute for the payment of said funds or the delivery of said assets to an agent or agents of the stockholders to be distributed among them, according to their respective interests, subsection 19. The statute provides in detail for a full and complete liquidation of the assets of a hank which have been taken over by the Corporation Commission, pursuant to its provisions; to the end that the rights of depositors and other creditors, and of stockholders may be fully protected. Under the provisions of the statute, the Corporation Commission is a statutory receiver, with full authority to liquidate State banks, whose assets and business have been taken into its possession for that purpose. When the Corporation Commission has taken possession of the property, real or personal, of a State bank, the statute contemplates that it shall retain possession of said property, until the Commission has fully administered the same, in accordance with its provisions, and in order to accomplish its purposes.

With respect to the sale of the property of the bank, real and personal, which has come into the possession of the Corporation Commission by virtue of the statute, it is provided in subsection 7 that the Chief State Bank Examiner, or the duly appointed agent of the Commission “by motion in the pending action (see subsection 3) and upon authority of an order of the presiding or resident judge of the district, may sell, compromise, or compound any bad or doubtful debt or claim, and may upon such order, sell the real and personal property of such bank on such terms as the order may provide or direct, except that, where the sale is made under power contained in any mortgage or lien bond, or other paper wherein the title is retained for sale and the terms of sale set out, sale may be made under said authority. Upon the motion made, the bank or any person interested, may be heard, but the judge hearing the motion, shall enter his order as in his discretion will best serve the parties interested.”

When a sale of property, real or personal, belonging to the estate of the bank, and in the possession of the Corporation Commission, has been made, under an order of the judge of the Superior Court, having jurisdiction, the purchase money must be paid to and collected by the Corporation Commission or by the Chief State Bank Examiner, or by the duly appointed agent of the Commission. When thus collected, the money paid for the property sold becomes a part of the fund in the hands of the Commission, available for the payment of its expenses, incurred in the proceeding, and of dividends to depositors and other creditors. The judge is without power under the statute to authorize the Corporation Commission to surrender possession of or to transfer said property to a third party, without a provision in his order that the purchase money for the property shall be paid to and collected by the Corporation Commission, or by the Chief State Bank Examiner, or by the duly appointed agent of the Commission.

In the instant case, there is a proposal by interested parties in the city of Fayetteville that they will purchase the assets of the LaEayette Bank and Trust Company, now in the possession of the Corporation Commission for purposes of liquidation, under the statute, transfer same to a bank to be organized by them, and pay to each depositor or other creditor of the LaEayette Bank and Trust Company a certain percentage of his claim. There is no error in the order of Judge Sinclair denying the petition of the Corporation Commission for an order 'authorizing the Commission to accept this proposal. By its terms, the Corporation Commission would be relieved of any further duty to the depositors, creditors, or stockholders of the LaEayette Bank and Trust Company, and would be deprived of any power to protect their interests in the property which it had taken into his possession under the provisions of the statute.

We do not discuss or decide the question presented on this appeal as to whether under the provisions of subsection 7, C. S., 218(c), the judge has the power to authorize a sale of the assets of a bank, in the possession of the Corporation Commission for purposes of liquidation, in bulk. It would seem, however, that as the statute provides that the judge shall make such order as in his discretion will best serve the parties interested, he has the power to authorize such sale. When an order bas been made by the judge in tbe exercise of the discretion vested in him by the statute, his order is not reviewable by this Court, on appeal, except upon the ground that there has been an abuse of such discretion.

As we find no error in the order of Judge Sinclair, the same is

Affirmed.