Francestown Bank Case , 63 N.H. 138 ( 1884 )

The depositors, on the day their accounts were reduced to eighty per cent. of their value, as previously shown upon the books of the bank (February 5, 1877), were the equitable owners of the securities and other property of the bank. The value of all the assets of the bank on that day was not sufficient, if divided among the depositors, to restore to each one the par value of his deposit account. The bank, being insolvent, could not pay all its depositors in full. If it should pay some in full, it could pay others only in part, and those who should come last for their money might receive nothing. The situation was one that called for some action whereby the rights of the depositors among themselves could be protected. To meet an emergency of this character, the act of 1874 was passed. It provided for a reduction of the deposit account of each depositor, so as to divide the loss equitably among the depositors. Laws 1874, c. 71, s. 10; G. L., c. 170, s. 20. In such case, when the accounts are reduced so as to equal the value of the assets, no more and no less, and the assets are divided among the depositors according to the accounts as reduced, each will receive his proportionate share of the assets, and justice will thereby be done to all the depositors.

By the so-called reduction, the right of the depositors to the property of the bank was not concluded nor affected; nor were they deprived of their right to an equitable share upon a division of all the assets of the bank. The statute expressly provides that if a bank, after such reduction, shall realize from the assets a greater amount than that fixed upon at the time of the reduction, he amount so realized shall be equitably divided and credited to the accounts of the depositors which had been reduced. Laws 1874, c. 71, s. 10; G. L., c. 170, s. 20. It is a statute of partition that does not attempt to transfer any right of property from one depositor to another, nor require any depositor withdrawing his deposit to the extent of the limited partition, to give his share of the undivided property to those who withdraw nothing. The rule must be the same in the absence of any statute. The funds being held by the bank as trustee for the benefit of the depositors, the gain on the funds, as well as the funds themselves, belongs to the depositors. A depositor, by withdrawing his account after a reduction, does not thereby abandon his property in the assets in excess of the amount of the accounts as reduced, nor does the statute undertake to deprive him of his property in such excess. The action of the tribunal making the reduction is not a judgment depriving him of his property in any of the assets of the bank. In Simpson v. City Savings Bank, 56 N.H. 466,477, Cushing, C. J., said, — "If there was anything conclusive as to the final result in the action under the statute of 1874, I should be extremely doubtful of its constitutionality, in so far as it attempted to provide for permanent adjudication without notice to all the parties who are entitled to be heard." Rand, J., said (p. 470), "It will be noticed that s. 10 * * does not relieve the bank from the claim of the depositor upon payment of his reduced dividend." And Ladd, J., said (p. 478), "I cannot see that it [the statute] does anything more than a court of equity would be bound to do upon proper application without any statute, namely, secure a pro rata division among its equitable owners of a common fund, which has been placed in the hands of a common agent, to be used by such agent for the common purpose of making gain and profit for the principals." By the reduction of the depositors' accounts to eighty per cent. of their par value, the value of the assets of the bank was not affected. They were neither increased nor diminished thereby. They still remained in equity the property of the depositors, and held for their benefit. The reduction fixed the amount which a depositor might withdraw without doing injustice to such as might choose to allow their accounts to remain. The value of the assets being equal to or greater than eighty per cent. of the par value of all the accounts, a depositor, by withdrawing his account as reduced, obtained no more than his share of the assets of the corporation.

But it is said that the depositors who withdrew obtained an unfair advantage over those who remained, in this, that those who remained were left to bear the whole risk of loss from further depreciation in the value of the assets. It is argued that those who bore the risk of loss ought to reap the benefit from any gain; and the maxim, "Qui sentit onus, sentire debet et commodum," is invoked in aid of this position. Those who did not withdraw their eighty per cent., voluntarily assumed the risk of losing it by not withdrawing it. They allowed their eighty per cent. to remain because they preferred its risk in the bank to its risk elsewhere. By choosing that risk for their eighty per cent. they acquired no title to any part of the excess above eighty per cent. belonging to the other depositors. The title of the undivided deposits in excess of eighty per cent., like the title of other undivided property owned in common, was not divested, without the owners' consent, or due process of law, by anything that has been done in this case under the statute of limited partition. When one withdrew eighty per cent., he left eighty per cent. for others; and any excess above eighty per cent. remained the undivided property of those who owned it before the partition was temporarily limited to eighty per cent. In many transactions, like the business of a partnership there is sometimes a presumption of fact that the parties intend and understand that each bears a chance of loss because he takes a chance of profit. Eastman v. Clark, 53 N.H. 276, 288, 303, 308. But that presumption does not transfer a share of undivided property from its owner to his cotenants. In this case the excess above eighty per cent. remained undivided.

The neglect of some of the depositors to appear before the commissioner and claim their proportionate shares of the assets to be distributed, is not in law an abandonment or surrender of their shares or property in the assets. In this respect there is no distinction between depositors who withdrew all their deposits as reduced, and depositors who withdrew a portion or none of their deposits. If their neglect to appear and make claim to a share of the assets is evidence that they intended to surrender their proportion of the surplus and gains to the other depositors, the fact of such intention has not been found; and in the absence of such finding they are not precluded from sharing in the distribution. The depositors are stockholders and not creditors. Savings Bank v. Nashua, 46 N.H. 389, 399; Simpson v. Savings Bank, supra; Cogswell v. Savings Bank, 59 N.H. 43; Hall v. Paris, 59 N.H. 71; and the provisions of Gen. Laws, c. 166, s. 16, do not apply. Creditors who neglect to present and prove their claims are precluded from all benefit of the assets of an insolvent savings-bank. They have precedence over the depositors in the distribution of the assets (s. 17), but only upon condition that they present and prove their claims (s. 16), and not because they as creditors own the assets.

The accounts of depositors are allowed upon such evidence as may be accessible. The books of the bank, it is presumed, generally furnish sufficient evidence for that purpose.

The case finds that some of the depositors withdrew their deposits as reduced, and surrendered their deposit-books, not expecting to receive anything more, — but appeared before the commissioner and claimed to have their accounts allowed. Such depositors are not precluded from sharing in the distribution of the surplus and gains of the bank, unless it is made to appear that they intended to surrender their share in the surplus and gains to the other depositors. The commissioner by allowing their accounts must have found that in giving up their deposit-books they acted in ignorance of their legal rights, and did not knowingly or intentionally surrender their right to share in the surplus and gains. Their accounts were therefore properly allowed.

It may not be possible to adjust the matter of interest between the various classes of depositors with mathematical exactness. It appears that the depositors who withdrew were paid their deposits as reduced, with interest at the rate of five per cent. per annum. In view of all the circumstances, we think it would be equitable to credit the reduced accounts of the depositors who did not withdraw with interest at the same rate, namely, five per cent. per annum, and that the assets be distributed as follows: First, to the depositors who have not withdrawn, to the amount of their accounts as reduced, with interest as above mentioned; and secondly, any balance remaining, to all the depositors at the time of the reduction, in proportion to the amount of their respective accounts as if there had been no reduction.

Case discharged.

CLARK, J., did not sit: the others concurred.