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STATE EX REL SORENSEN V. FIRST STATE BANK OF ALLIANCE (City of Alliance Intervener)
Filedy December 16, 1931.
Attorney General-Skiles & Skiles, D. Beynon-Boyd & Metz, Attorneys. 1.8 A city that exacts from a state bank collateral security for deposits, receives the proceeds of the security after insolvency of the bank and presents to the receiver a claim for excess of deposits over such proceeds, is in the class of depositors "otherwise secured" and not entitled to share the assets of the bank on an equality with depositors in the class "not otherwise secured" within the meaning of the statute providing that depositors and holders of exchange in the latter class shall have the first lien, with the exception of taxes. Comp. St. 1929, sec. 8-1, 102. 2. The legislature has power to make reasonable classifications of persons and objects for the purposes of legislation affecting diversely the different classes. 3. Legislative classification of depositors in state banks for the purpose of determining priority of claims in the event of insolvency held valid. Heard before Goss, C. J., Rose, Dean, Good, Eberly, Day and Paine, JJ. ROSE, J
In a proceeding by the state to wind up the affairs of the First State Bank of Alliance, an insolvent banking corporation, the city of Alliance intervened, and presented a claim for deposits on an equality with all un paid depositors having preferred claims. The First State Bank suspended the business of commercial banking December 30, 1929, when the city had on deposit therein $14,691.56 on which there was accrued interest of $189.15, making a total of $14,880.71. As security for city deposits the First State Bank, September 20, 1929, had pledged seven 1,000-dollar 5 cent. Federal Land Bank bonds, all of the face value of $7,000, which, for that purpose, were delivered to the Lincoln Trust Company. The borids were sold June 4, 1930. The net proceeds were $7,158.09 which were credited on the city's deposits. For the difference between the deposits and interest amounting to $14,880.71 and a credit of $7,158.09 derived from the sale of the bonds, or $7,722.62, the as a valid unsecured preferred claim against the assets of the First State Bank entitling claimant to participate in the depositors' final settlement fund. The receiver treated the city's claim as a general one payable only from assets of the First State Bank after payment of preferred claims of depositors. Later the city intervened by petition, pleaded in detail the facts constituting its claim and asserted the right to have it adjudged a preferred claim entitling intervener to share the assets of the bank on an equality with other preferred creditors and to participate in the depositors' final settlement fund. An answer of the receiver to the petition contained a general denial and a plea that intervener's claim was "otherwise secured" and therefore not a preferred claim within the meaning of the statute which in part provides: "The claims of depositors, for deposits, not otherwise secured, and claims of holders of exchange, shall have priority over all other claims, except federal, state, county and municipal taxes, and subject to such taxes, shall at the time of the closing of a bank be a first lien on all the assets of the banking corporation from which they are due and thus under receivership, including the liability of stockholders, and, upon proof thereof, they shall be paid immediately out of the available cash in the funds of the receiver. If the cash in the hands of the receiver available for such purposes, be insufficient to pay the claims of depositors whose deposits are not otherwise secured, and holders of exchange, not given for a previously existing debt of the bank other than a deposit, the court in which the receivership is pending, or a judge thereof, upon hearing shall determine the amount required to supply the deficiency and cause the same to be certified to the department of trade and commerce as a claim entitled to the benefits of the depositors' final settlement fund." Comp. St. 1929 sec. 8-1, 102. The facts pleaded by the receiver as defense were put in issue a reply.
Upon a trial of the issues raised by the pleadings the district court found that intervener had a valid preferred claim on the assets of the First State Bank for $7,722.62; that intervener was entitled to the benefit of the depositors' final settlement fund; that the receiver had in his hands sufficient cash to pay a dividend of 45 per cent. on preferred claims, including the claim of intervener. The decree directed the receiver to pay forthwith to intervener, in common with other preferred depositors in the same class, a dividend of 45 per cent, or $3,475.18, and requiring certification of the balance of the claim, or $4,247.44, to the department of trade and commerce as an adjudicated claim entitling intervener to participate in the depositors' final settlement fund. The receiver appealed.
The appeal presents this question: Was the city of Alliance a preferred creditor of the First State Bank within the meaning of the statutes? Stated differently, did the city, by exacting bonds as security for its deposits, prevent itself from participating in the assets of the bank and in the depositor's final settlement fund for the difference between the amount of the deposits and the proceeds of the bonds, on an equality with preferred creditors or depositors "not otherwise secured?" In the briefs and in the arguments at the bar the question was skilfully presented on both sides. The solution depends on what the legislature meant by the term, "not otherwise secured," as used in that portion of the statute already quoted, when considered with all statutes relating to banks and banking, to the winding up of insolvent banks, to the distribution of assets among creditors and to the depositors' final settlement fund. There is no dispute about any material fact. The facts relating to the deposits of the city, to the bonds pledged as security and to the application of the proceeds of the bonds are as herein recited in the statement of the case.
In addition to bank assets available to creditors in case of insolvency, the legislature made provision for the creation of what is called "De- fund is not the property of insolvent banks. It is a trust fund created for the benefit of unpaid depositors "not otherwise secured" and of holders of exchange.- How it be disken sed: depends on legislation. It competent for the legislature to provision for the disbursement this fund and the proceeds of bank For purposes of legislation the power to classify objects and persons in different! situations is undoubted In the statute under consideration the legislative intent to divide deposits into different classes seems clear. One class includes deposits of creditors who rely for, security on the bank assets, on the depositors' final settlement fund and.on the integrity of the bank and its officers. Another class, not relying on such security, includes deposits of creditors that exact security in the form of bonds or other obligations-a class "otherwise secured. This classification must be considered in determining priority of claims for deposits, The legislature did not say that a depositor may have in single deposit in both classes, if the PEO, ceeds of collateral security pledged to him are insufficient to claim in full. he/legislative classification and the general import of the statute indicate the contrary. A depositor "not otherwise secured' cannot resort to The proceeds of bonds pledged to another depositor as security for the latter's depositive a depositor partially protected by collateral security were permitted to share the proceeds of bank assets as a preferred creditor on an equality with other depositors not so protected, he would have an advantage over them: The legislation as a whole does not seem to indicate such an intention. An interpretation to that effect would extend the term "otherwise secured" beyond its natural int port, when the context is considered. Intervener elected to take bonds as security and afterward made deposits in double the amount of the bonds. It thus became a depositor "otherwise" secured" and voluntarily kept its deposits in that class." Excess deposits over proceeds: of the pledged bonds are not in the other class. Even in that situation intervener appears to have fared better than depositors "not otherwise secured." From proceeds of its Security it realized more than 50 per eent. of its deposits, while the "record shows that preferred creditors "not otherwise secured" shared a dividend of 45 per cent. The record does not show that the legislative class ification is unreasonable or that it is inhibited by that part of the federal Constitution relating to due process of law and to the equal protection of the laws. Between the persons and objects classified there is a substantial difference in situations. Persons in one class of depositors have security not available to the other class. There is substantial ,reason; for diverse legislation relating to the persons and objects classified. The statute operates uniformly on all persons and objects in a class.- The classification therefore was within legislative power. Wenham V. State, 65 Neb. 394; Cleland Anderson, 66 Neb. 252; Althaus, Y. State, 94 Neb. 780. In this view of the law intervener was "otherwise secured" and not in the class entitled to share as preferred creditors the Assets of the bank and the. depositors! final settlement fund. Within the meaning of the statute intervener's claim should have been allowed only as a general one and the district courts erred in holding otherwise. K/TNe judgment from which the appeal was taken is therefore reversed and the cause remanded for..a decree conforming to this opinion. REVERSED of apees & prf of serv Barry V Horton Lane mot & brfs of aplt for rehear & prf of serv Cedar Co V Taylor Lane brfs of apee Yant Const Co Village of Campbrfs of aplt & prf of serv Sorensen V Wood, KFAB, Lane Johnson V Weskamp Frontier brfs of apee Woods Bros Corp V Francke Lane brfs of apee & prf of serv S. Theatre Supply Co V Creal Doug brfs of apee & prf of serv Gledhill State Sarpy bill of ex Plong V Roberts: Dairy stip for contin, allowed, cause contd to Jan 18 session Resnick V/ Kasakés Doug mot of apees in re brfs Newman Natl Union Fire Ins. Co of Pittsburg mot of apees to tax atty fee as part of cost of showing Polyzois Resnick mot of apees in re brfs Barry V Horton Lane mot & brf of aplt for rehear & prf Byant Co of Cedar stip in re brfs, brf day ext Febr 13 Cohurn Loetscher Dixon stip in re brfs, brf day ext March Blackwell v Omaha Athletic Club Doug stip in re brfs, brf day ext Jan Bliss V Schlund Morrill mot & stip in re brfs, brf day ext Jan 30 Grantham V Chadron Dawes sug of dim & mot for leave to file sup trans, brfs of apee McCarter V Cover Buff stip in re brfs, brf day ext Dec 28 First Natl Bank of Hastings Davis Adams brfs of apee & prf of serv, stip in re brfs
