State v. People's Savings Bank & Trust Co.

New Mexico Supreme Court

State v. People's Savings Bank & Trust Co.

168 P. 526, 23 N.M. 282

CourtNew Mexico Supreme Court

DecidedAugust 29, 1917

DocketNo. 2042

StatusPublished

Cited by8 cases

This text of 168 P. 526 (State v. People's Savings Bank & Trust Co.) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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State v. People's Savings Bank & Trust Co., 168 P. 526, 23 N.M. 282 (N.M. 1917).

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OPINION OP THE COURT.

PARKER, J.

The People’s Savings Bank & Trust Companjr, of Silver City, N M., closed its doors on June 26, 1915, liavingj on deposit $9,929.08 of state funds. The deposit was secured by a depository bond in the sum of $30,000, with the American Surety Company as surety on the bond. Upon the closing of the bank the state of New Mexico made demand on the surety company for the payment of the amount of state funds on deposit in the bank at the time when it was closed, and the company paid the amount on July 27, 1915. Upon the payment of this amount, the state treasurer, in behalf of the state, receipted and assigned its demand against the People’s Savings Bank & Trust Company to the surety company.' Thereafter the attorney general filed a proceeding to wind up the affairs of the bank under the provisions of section 954 et seq., Code 1915, for the winding up of insolvent corporations, and the surety company filed! with the receiver proof of claim, in which it is set up that the state had a common-law priority in the assets of the bank to the full extent of its deposits, and that by virtue of its payment of the sum representing these deposits the surety company became subrogated to that priority, and therefore entitled to the payment of the claim before any other creditors whose claims were not secured by lien upon such assets. The question .of priority raised by the surety company was decided adversely to the company by the referee. Upon exceptions filed by the surety company to the referee’s report, the matter was brought before the district court, which overruled the exceptions and sustained the referee’s decision, and thereupon this appeal was taken.

[1] The case may be disposed of quite summarily upon a single point. It is conceded that if the state had priority over other creditors of the insolvent corporation, then the surety company, under the facts existing in this case, would become subrogated to the rights of the state. The question, then, which is decisive of the case is whether the state, under the circumstances existing in this case, had a priority over other creditors of the insolvent corporation. We have recently had occasion to examine this question in the case of the State of New Mexico v. First State Bank of Las Cruces, 22 N. M. 661, 167 Pac. 3, not yet officially' reported. In that ease the state itself asserted the priority. After a thorough consideration of many cases the court concluded in that case that the right of priority of the state, even if it existed in this jurisdiction in all of its common-law force and effect the same as it formerly existed in the sovereign in Great Britain, was lost whenever the title to the property of an insolvent corporation was divested out of the corporation and invested in a receiver under the provisions of the statute. Counsel for appellant in this case has cited several cases not referred to in the opinion in the former case, all of which we have examined, but we find nothing in them to change our view of the question as heretofore announced. Counsel for appellant relies much upon the case of American Bonding Co. v. Reynolds, (D. C.) 203 Fed. 356. In that case the commonlaw right of priority was recognized to exist in Montana as a sovereign right of the state. It is held, however, in that ease that the appointment of a receiver of an insolvent banking corporation under the laws of Montana does not so divest title as to cut off the right of priority of the state. In this particular the laws of Montana differ from those of this jurisdiction. As we held in the former case and as is plainly pointed out in our statutes, the appointment of a receiver of an insolvent corporation divests the title of the corporation and vests the same in the receiver. Counsel also cites In re Carnegie Trust Co., 206 N. Y. 390, 99 N. E. 1096, 46 L. R. A. (N. S.) 260, and State v. Foster, 5 Wyo. 199, 38 Pac. 926, 29 L. R. A. 226, 6 3Am. St. Rep. 47, where valuable notes are appended to the cases. These two cases and the notes accompanying the same present no new features which have not been considered in our former opinion.

It follows that the judgment of the court below ivas correct and should be affirmed; and it is so ordered.

HANNA, C. J., and ROBERTS, J., concur.

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OPINION OP THE COURT.

PARKER, J.

The People’s Savings Bank & Trust Companjr, of Silver City, N M., closed its doors on June 26, 1915, liavingj on deposit $9,929.08 of state funds. The deposit was secured by a depository bond in the sum of $30,000, with the American Surety Company as surety on the bond. Upon the closing of the bank the state of New Mexico made demand on the surety company for the payment of the amount of state funds on deposit in the bank at the time when it was closed, and the company paid the amount on July 27, 1915. Upon the payment of this amount, the state treasurer, in behalf of the state, receipted and assigned its demand against the People’s Savings Bank & Trust Company to the surety company.' Thereafter the attorney general filed a proceeding to wind up the affairs of the bank under the provisions of section 954 et seq., Code 1915, for the winding up of insolvent corporations, and the surety company filed! with the receiver proof of claim, in which it is set up that the state had a common-law priority in the assets of the bank to the full extent of its deposits, and that by virtue of its payment of the sum representing these deposits the surety company became subrogated to that priority, and therefore entitled to the payment of the claim before any other creditors whose claims were not secured by lien upon such assets. The question .of priority raised by the surety company was decided adversely to the company by the referee. Upon exceptions filed by the surety company to the referee’s report, the matter was brought before the district court, which overruled the exceptions and sustained the referee’s decision, and thereupon this appeal was taken.

[1] The case may be disposed of quite summarily upon a single point. It is conceded that if the state had priority over other creditors of the insolvent corporation, then the surety company, under the facts existing in this case, would become subrogated to the rights of the state. The question, then, which is decisive of the case is whether the state, under the circumstances existing in this case, had a priority over other creditors of the insolvent corporation. We have recently had occasion to examine this question in the case of the State of New Mexico v. First State Bank of Las Cruces, 22 N. M. 661, 167 Pac. 3, not yet officially' reported. In that ease the state itself asserted the priority. After a thorough consideration of many cases the court concluded in that case that the right of priority of the state, even if it existed in this jurisdiction in all of its common-law force and effect the same as it formerly existed in the sovereign in Great Britain, was lost whenever the title to the property of an insolvent corporation was divested out of the corporation and invested in a receiver under the provisions of the statute. Counsel for appellant in this case has cited several cases not referred to in the opinion in the former case, all of which we have examined, but we find nothing in them to change our view of the question as heretofore announced. Counsel for appellant relies much upon the case of American Bonding Co. v. Reynolds, (D. C.) 203 Fed. 356. In that case the commonlaw right of priority was recognized to exist in Montana as a sovereign right of the state. It is held, however, in that ease that the appointment of a receiver of an insolvent banking corporation under the laws of Montana does not so divest title as to cut off the right of priority of the state. In this particular the laws of Montana differ from those of this jurisdiction. As we held in the former case and as is plainly pointed out in our statutes, the appointment of a receiver of an insolvent corporation divests the title of the corporation and vests the same in the receiver. Counsel also cites In re Carnegie Trust Co., 206 N. Y. 390, 99 N. E. 1096, 46 L. R. A. (N. S.) 260, and State v. Foster, 5 Wyo. 199, 38 Pac. 926, 29 L. R. A. 226, 6 3Am. St. Rep. 47, where valuable notes are appended to the cases. These two cases and the notes accompanying the same present no new features which have not been considered in our former opinion.

It follows that the judgment of the court below ivas correct and should be affirmed; and it is so ordered.

HANNA, C. J., and ROBERTS, J., concur.

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