Parke, J.,
delivered the opinion of the Court.
The original party complainant on the record at bar was Ethel E. Nagel, who began her suit against the bank commissioner of Maryland and the Union Trust Company of
M aryland, a banking institution incorporated under the laws of the State of Maryland, on behalf of herself and any other depositor of the trust company, who might join in the proceedings. Two other depositors united with the plaintiff, by the permission of the court, and the bill of complaint • was subsequently amended. The bank commissioner demurred to this amended bill and the trust company answered, and the plaintiffs demurred to the answer of the trust company. Upon hearing on the demurrers the chancellor sustained the demurrer of the bank commissioner to the amended bill of complaint, as far as it raised the question of the constitutionally of section 71-1 of chapter 46 of the Acts of the General Assembly of Maryland of 1933, and overruled the demurrer of the bank commissioner, as far as it questioned the propriety of making the bank commissioner a party defendant, with leave to answer in fifteen days; and the bill of complaint, as far as it sought to- enjoin the defendants, or either of them, from doing the acts or seeking the relief prayed in the bill of complaint, other than ascertaining the value of the several complainants’ interests in the trust company, was dismissed.
The allegations of the amended bill of complaint are that the three plaintiffs were severally depositors of the Union Trust Company of Maryland, upon the agreement that they could withdraw the amount of money so deposited on demand, but that they have been unable to withdraw the deposits since February 24, 1933, because on that day a bank holiday was proclaimed by the State of Maryland, and was thence continued and prolonged to March 4th, 1933, when, without any intermission, the custody, control and management of the trust company was, on March 5th, 1933, assumed by the bank commissioner of Maryland under the authority and pursuant to the provisions of chapter 46 of the Acts of 1933 of the General Assembly of Maryland. The bill further charges that on February 24th, and at all subsequent times, the assets of the trust company have not been sufficient to pay in full the depositors and other creditors of said trust company.
■The-further averments .of the-bill are that.the trust company on May 2'9tb,--1933y-formulated, a plan of reorganization of the trust--company that purported to-be under the terms and-provisions of the said'chapter 46-, and -particularly section 71T, and that had the approval-of the bank commissioner of Maryland.- On the date of the adoption, of the plan, the trust eompany sent to the plaintiffs and -to- the other credifcors,; depositors and stockholders-a letter, and -a-circular entitled “Plan of Reorganization of Union- Trust Company,” with á form of assent thereto. The circular contained a condensed-summary-of the plan of reorganization, .and .was intended to be- a compliance with the provisions of section 7 IT of chaptor'46 of the-Acts-O-f 1933. The plaintiffs thereupon demanded- of the trust- company and the bank commissioner certain- detailed information which was alleged to' he- necessary' for the plaintiffs intelligently to decide whether to assent or disagree tó the proposed plan. - The respondents- refused to'furnish the information, and thereupon the depositors dissented' from the proposed plan, and evidenced that dissent by filing the'present hill 'of complaint. •
The plaintiffs not only dissented from the proposed plan of reorganization,, but also asserted that chapter 46, and especially'section 71-I-of thfe act, under which the reorganization is to be made, -are-unconstitutional and void, and that, neither at the time of the enactment of - the statute nor since, has there-existed any emergency with respect to the hanks and banking institutions of the state,- and -that, therefore, the- proposed reorganization is. invalid-and void'.' The relief sought by this Till of complaint is-either: (l)-Au injunction to- restrain the defendants from‘carrying out-the proposed plan, of reorganization;' (2) that• chapter 46’ of the Acts of 1933 be de-clared unconstitutional and void; (3.) that.,-the-proposed plan of reorganization be declared'illegal and void. ■ Or-(a) that the respondents-'m'ay' make- discovery óf the- information which the respondents-refused-to give on-demand'of the plaintiffs-;(b)' that the-fair-liquidating value of the claims • of- the plaintiffs-against’the> trust company be ascertained, -and the- trust
company be required to pay- the amounts thereof to tho plaintiffs in money;, and (c) that general relief be accorded the plaintiffs. - .
The answer of the trust, company admits, the preliminary and formal 'allegations of the- bill of complaint; denies the contention that chapter 4(5 of the Acts of 1933, or its section 71-1,'is unconstitutional and void; asserts that -the refusal of the -demand of the plaintiffs, for specified details of the affairs'of the trust-company is not-material; 'but admits that the pla intiffs arer entitled to receive the fair liquidation value of their claims as provided iir section 71-1 of-the act because of their dissent/and that the defendant corporation is willing to pay to said plaintiffs said fair liquidating value of their claims upon tho proper and'-legal ascertainment‘of such fair value. - • • " - ■ • • ’
Thb argument'of-plaintiffs, is addressed to section-71-1 of chapter 4’6 of the Acts of 1933, in'support Of the theory that this section of the act (Emergency'Bank Act)'is unconstitutional, on two grounds. Thei first, in the words of their brief, is that the section deprives depositors' of existing legal remedies against banking'institutions to enforce payment of deposits-,■ without affording- an alternative remedy substantially equivalent'in' coercive force to that provided by-law'when'the obligation was contracted. Tho second, similarly quoted, is that tho section provides iro standards for -a, 'reorganization plan to be proposed by-the directors,-andmo' standards-for the approval of any plan, by the bank commissioner.
The section assailed is in these words:
“71-1."The Board of .Directors of any banking institution whose aggregate property shall not'be sufficient in’'amount to pay its debts or'which may'be unable to pay'its debts in the ordinary cotirsd‘of business as'they mature or which may be in the custody of the Banking Commissioner under this Act, may formulate and'propose a"plan of ^organisation. -Such reorganization may provide- for a continuance of such existing institution' or -the íor'mátián of-One- -or 'more new banking institution^''Stat'e 'ornational; 'Or other-corporations and for
the transfer of all or part of the assets to such new institutions or corporations or to trustees for such consideration in money, securities or evidences of debt or interest of any kind approved by such Board.
“Such plan of reorganization shall be filed with the Bank Commissioner. He shall make such study and investigation of said plan as he may deem necessary and no hearing before him shall be required. If the Commissioner approves the plan he .shall give notice thereof by publication once a week for at least two successive weeks in one or more newspapers having a general circulation in every county in which the institution, party to said reorganization, maintains an office or principal place of business. The word ‘County’ for this purpose includes the City of Baltimore.
“The banking institution so- filing said plan shall within five days after such approval by the Bank Commissioner, cause notice to be mailed or sent to all stockholders, depositors and other creditors at their respective addresses shown on the books, of the corporation notifying them that said plan has been filed and is open to- inspection at the office of the Bank Commissioner, with a condensed summary of the important provisions of the plan. Any failure to' notify any particular stockholder, depositor or other party in interest shall not affect the reorganization. A certificate of the President of other proper officer of such banking institution filing said plan to the effect that such notice has been given shall be
prima, fade
proof that thisi provision has been complied with.
“Any depositor, creditor, stockholder or other person in interest who shall not have approved the plan may within thirty days from the first publication of the notice apply to the Circuit Court of the county in which the principal office of the institution is situated or to one of the Circuit Courts of Baltimore City if the principal office or place of business be located in Baltimore City and apply for the ascertainment of the fair liquidating value of his claim, stock or other interest, which liquidating value shall be made or paid either in money or in kind. Such Court shall upon such
application determine the present cash value o>f such objecting parties’ interest on the basis of a .judicial liquidation of said institution.
“The Court may in lieu of fixing the cash value of said objecting parties’ interest apportion to said objecting parties t-heir distributive share in the assets of the corporation. Assets divisible in kind shall in this event, be so apportioned. With respect to assets indivisible in kind between all the assenting and non-assenting parties the Court may apportion such assets by allotting to the objecting parties shares of stock, securities or certificates of interest issued by a corporation or Trustee reasonably fairly representing such non-assenting parties’ interest in such indivisible assets. The entire amount alloted to such non-assenting parties, however, shall be delivered and paid to the Bank Commissioner as ^Receiver for liquidation for the benefit of the non-assenting parties.
“In ease within said period of thirty days less than 33-J% in interest of the depositors and other unsecured creditors shall file such application in said Courts, the plan shall b© binding upon all such depositors and other unsecured creditors, as fully as if they had assented to said plan. If within thirty days less than
33\°/a
of the stockholders of such institutions shall have made application to said. Court as. above provided, said plan shall he binding upon all stockholders as fully as if they had assented; subject, however, as to said depositors, other creditors and stockholders to the right to the valuation of their interest as above provided for. No party to said reorganization, however, shall he subjected by any such plan to any personal liability without his express consent. Said proceeding shall not, however, save at the option of the Board of Directors of said institution, postpone or delay consummation of such reorganization plan. If consummated prior to the conclusion of said proceeding, the reorganized or new eotaipany shall he liable and responsible for tbe performance of the decree in said proceedings. Such reorganized or new company may, however, at any time within ten days after the final decision in such proceeding
abandon said plan for- reorganization- and restore said property to- said--constituent institutions.”
1. The bill of complaint alleges that on February 24th, 1933, and- at all times- since that date, the, assets of the trust company were' insufficient to- pay its depositors and other creditors in full, and' that the -trust company was in the custody of the bank commissioner, so there can be no question -that the formulation and proposal of a plan of reorganization that- provided for the continuance of the hanking business'of-the trust-company was--within -the express authorization-of-the statute.- All-the requirements of the -section with reference "to--the plan of reorganization- are shown to have been fulfilled,- and, therefore, there is nothing to prevent the plan becoming effective if the section and the plan adopted are constitutional.
As was stated
in Ghingher v. Pearson, 165
Md. 273, 168 A. 105, the Emergency Banking Law, or chapter 46 of the Acts of 1933, -is -of universal application, to- alb banking institutions-a-nd credit unions-accepting .deposits-and-doing business on -March-4th,-1933, when; the: statute became-effective as emergency legislation. During the -complete:- possession, control, and management transferred- ■ by the: act and-conferred upon the bank commissioner, any banking-institution whose aggregate property; should not -bo sufficient in amount to- pay its debts',-Or which might be-un-able-"tt> pay its debts in the ordinary course-of business as-they mature:; ■ or merely because ;it might befití the custody of-the-bank-Commissioner, Could, with-the'conse-nt-of the commissioner, resume-business under -a-plan-of reorganization!,, which; whether.-a solvent or ■insolvent'institution, afforded-to- alLthe parties in- interest a new-and--statutory'remedy under a,'comprehensive act which tícftifemplat'ed -the -alternatives of-a contimtance, a reorganization, or a‘liquidation of'the finaneiab-iust-itvition-.<: The-act interposed'its^omergency provi&i-o-n-s-, aiid created .a status for thé' 'specified 'p&riócV-during! -which, -the contractual -rights, and lia-Mli ties'
"-él
the-parties were suspended, and. methods- whereby ’tbese-'r’i-ghts'JFaiid-'li'abilitáes would-be .-resolved-and- deteriniiiodr''-If ‘¿"ffinanciab-institution yere released, under-the
act, from flic custody, control, and management of the hank commissioner and resumed its normal financial operation, there would merely result á restoration of the rights and liabilities of all those in title and interest. A reorganization, on tlie oilier hand, might adversely affect one or all the difieren!, categories of-rights, liabilities,, and interests. The alternative of a reorganization on the plan adopted is liquidation; anti, therefore,, the parties in interest must severally make an election between the plan proposed, for reorganization and a liquidation. The section provides the method of notice- to ail stockholders, depositors and other creditors, and makes the effectiveness of the plan depend upon the dissent, within thirty days, of more than one-third in interest of cither (1) the depositors and other unsecured creditors, or (2) the stockholders. Should the dissent of these two classes bo not, numerous enough to prevent, the, adoption of the plan, the section does not exclude the dissenters from participation in the adopted plan, but puts every one of them to, an election of whether lie shall accept the adopted plan or receive the fair liquidating value of his claim, stock, or other interest. If the party elects to take the fair liquidating value, the section provides that this present cash value is to be ascertained by a court, upon the basis of a judicial liquidation of the banking institution, and, when so ascertained, shall be paid either in money or in kind. Instead of fixing such cash value, the court may apportion to the objecting parties their distributive share in the assets in kind. In the event there be assets indivisible in kind between all the assenting and non-assenting parties, an apportionment is secured by allotting to the objecting parties shares of stock, securities, or certificates of interest issued "by a corporation or trustee, reasonably fairly representing such non-assenting interest in such indivisible assets, and'the entire amount allotted to such non-assenting parties to- be delivered to the bank commissioner as receiver for liquidation for the benefit of the non-assenting'parties. In other words; the non-assenting party' has ■ assured to him an opportunity to exercise his j udgment lipón whether
the submitted plan of reorganization is more beneficial to himself than the receipt of the present cash value- of his interest. So, ultimately, the latter alternative is to deprive the party of the remedy of an administration in equity of the affairs of a banking corporation in which he, along with all others, would receive his due proportion of the assets when liquidated, and to substitute therefor the judicially determined present cash value of his interest in the same assets. In other words, what he would get in the event of a universal liquidation would be his share in the residue for distribution; and what he would obtain under the statute would be a judicial finding of what the present cash value of that share would be. The effect substantially is that the dissenting party is deprived of one remedy and given another of equal efficacy, adequacy, and benefit, because it is not to be assumed that the finding by the. court of the present cash value of what a dissenting party’s interest would be on the basis of a final liquidation of the banking institution would not be the fair and reasonable equivalent of the value of what would have been received in the event of an actual and complete judicial liquidation. The value is found in the first method by judicial conversion, and in the new method by judicial estimation. Therefore, there was no material change by the alteration of the remedy, and, consequently, the alteration does not impair the obligation of contract, even though the new remedy be less convenient or less prompt and speedy.
Cooley on Const. Lim.
(8th Ed.), pp. 586, 587, 754;
Antoni
v.
Greenhow,
107 U. S. 769, 2 S. Ct. 91, 27 L. Ed. 468;
Tennessee v. Sneed,
96 U. S. 69, 24 L. Ed. 610;
South Carolina v. Gaillard,
101 U. S. 433, 25 L. Ed. 937;
Penniman's Case,
103 U. S. 714, 26 L. Ed. 602;
Fourth Nat. Bank v. Francklyn,
120 U. S. 747, 7 S. Ct. 757, 30 L. Ed. 825;
Waggoner v. Flack,
188 U. S. 595, 23 S. Ct. 345, 47 L. Ed. 609;
Panama R. Co. v. Johnson,
264 U. S. 375, 392, 44 S. Ct. 391, 68 L. Ed. 748;
Balto. & O. R. Co. v. Maughlin,
153 Md. 367, 376-378, 138 A. 334;
Cummings v. Wildman,
116 Md. 307, 316, 317, 81 A. 610;
Pittsburg Forge Co. v.
Safe Deposit & Trust Co.,
116 Md. 697, 84 A. 335;
Bettendorf v. Field,
114 Md. 487, 489-495, 79 A. 724;
Pittsburg Steel Co. v. Balto. Equitable Co.,
113 Md. 77-80, 77 A. 255;
Miners' Bank v. Snyder,
100 Md. 57, 66, 59 A. 707;
Thistle v. Frostburg Coal Co.
10 Md. 129, 145;
Homer v. Crown Cork & Seal Co.,
155 Md. 66, 78, 85, 86, 141 A. 425. Compare Code, article 23, secs. 33-36, 43 (as amended by Acts 1927, ch. 581, sec. 43), 88, 221; article 11, secs. 54, 60.
2. The second objection urged against the constitutionality of section 71-Lis that the section provides no. standards for a reorganization plan to be proposed by the directors, and none for the approval of any plan by the bank commissioner. It would have been impracticable for the statute to have erected explicit standards to govern the board of directors in the formulation of a plan of reorganization. The financial affairs of the numerous banking institutions present independent problems with resppet to> every one, since they differ in capital, assets, and liabilities, in the scope and nature of their financial operations, in their organization, management, and field of activity. It violates, no principle of law to delegate to the governing body of a financial institution the preparation and proposal of á plan of reorganization, and then to require its presentation to the bank commissioner to study and investigate the: plan, and to make his approval necessary before the plan may be submitted to. everybody in interest for their acceptance or disapproval. The method prescribed assures that the plan will originate with the officers of the banking institution who are charged with the duty and have: been administering its affairs, .and are most familiar with its resources and its capacity to operate in the way planned; and, also; assures an official study and investigation of the plan by the bank commissioner, a state official designated to approve or disapprove the: plan in the exercise of a sound discretion. Thus the problem of reorganization is first formulated by the board of directors and then submitted to every interest, with the power in one-third in interest of those affected to defeat the proposal. The method is simply an extension of the principle in corporate affairs
that the majority decides and rules 2
Machen on Corporations;'see.
.129,6.,' The. duties of'.the bank-commissioner ar e defined by'the act, tod 'article 11 of the Code,-which created the office..Nothing’ more definite-than'these requirements'is demanded or advisable in order-to- secure the'submission of an adequate, so-und,- ■ and- feasible plan. for. the adoption or rejection of the-stockholders, depositors, and other -creditors. ETo -party in interest .is bound to-assent, but every one'may dissent. .Any dissenter.may receive the--value of his interest provided the number of dissents is not sufficient to prevent the adoption o-f the-plan. The provisions of, the- section contemplate a reasonable exercise- o-f.thapower-conferred,, and afford no so-und basis for objection on constitutional grounds.
Weer v. Page,
155 Md. 86, 141 A. 518;
Fischer v. St. Louis,
194 U. S. 361, 24 S. Ct. 673, 48 L. Ed. 1018.
3. ,'The third contention is.-that the plan itself is inequitable and the. incidence of its burden is.unjustly imposed and distributed,, and that unlawful preferences and priorities are created. .The.wisd-om and justness -o-f the plan is not for the court, but for -the respective-parties- , in interest to- take into account in reaching their decision to- accept or reject the submitted plan .of- reorganization. ETor is.it perceived how the parties ■ in interest-• may not .agree, among themselves that preferences. and priorities may be given .and recognized in the plan o-f- reorganization, when .those in interest who do- not agree..are .not bound -by such, provisions-, but, by their dissent, seasonably interposed, may -thereby receive, the present cash-.value of.their interests onthe-basis o-f a judicial liquidation in- which there- wo-uld -be - neither- preference nor priority-except-as.necessarily allowed by virtue of statute or principle of equity.
Ghingher v. O’Connell,
165 Md. 267, 167 A. 184.
It is not -unlawful -for -those who-, by choice, become parties to the plan of'reorganization, to-agree that--all deposits of ten dollars or-less .shall have the-privilege of-payment in full. ETo- -other-.requirement: for' -this preference is-required than thq.-agreement-of .all who-become parties"to- the plan, since the dissenters .receive^ without-any abatement-on: account of
this or other preference,. the present cash value of .their several interests. It may be inferred, that the inclusion of such small deposits, upon the same basis as the-others might involve a net loss greater than that entailed by the preference accorded, because of the time .and expense, involved in the adjustment and accountancy necessary to the bringing and keeping these small accounts -in conformity with the plan proposed. ■ ' • ,.
The further objection that the contemplated reorganization releases the stockholders of their liability is.met by the similar answer th-at those affected in interest may waive or release this liability if they believe it for their pecuniary advantage in a-plan for-the reorganization of a- financially embarrassed banking .-institution; and- that the dissenting minority-will, have; so far as-the ■ same may be-found collectible, this statutory liability of the -stockholders enter as one -of the assets in the ascertainment of the present cash value of the objecting parties’ interest, on the basis of a judicial liquidation of the banking institution. Code, art. 23, sec. 147;
Homer v. Crown Cork & Seal Co.,
155 Md. 66, 141 A. 425.
The request that the defendants furnish a mass of specified details with respect to the financial affairs of the trust company 'was made,' ás alleged, to enable the plaintiffs intelligently to elect, whether or not they would assent to or dissent from the submitted plan. As the plaintiffs have. dissented, they are left without'their ground for the' demand, 'whieh was, furthermore,' not for ail inspection' of the books of the trust company, but, a demand for information, which would have to he furnished by the. labor-and at the cost of the defendants.
-The effect- of the rulings by -the chancellor was-to retain íhé bill'of-complaint in-so' far-as it was an application for the determination of the íairliquidating valué of the interest of the plaintiffs, pursuant, to section '71-1 of the statute, the defendant'trust company having 'declared in its answer'that it was willing to discharge this value by a payment in cash.
Although the bill is framed with a double aspect, as it asks for one form of relief on the theory that section 71-I is unconstitutional, and another form of relief in the event that they fail in this contention, the retention of the bill by the chancellor for the ascertainment of the value of the interest of the plaintiffs as contemplated by section 71-1 was, under the circumstances, in the exercise of a sound discretion. See
Phelps, Jurid. Equity,
sec. 56;
Story’s Eq. Pl.,
sec. 42;
Seton on Decrees
(7th Ed.), vol. 1, 45, 3; 1
Daniel, Ch. Pr.,
pp. 385, 608, 609;
Lingan v. Henderson,
1 Bland, 236, 252;
Burch v. Scott,
1 Bland, 112, 123;
Townshend v. Duncan,
2 Bland, 45, 48.
In view of the importance of a decision in this case, and of the fact that no question was raised of the right to appeal on the present state of the record, the court has not considered that question.
Decree affirmed, with costs.