Independence Trust Co. v. Keesler

Adams, J. In 1933 the General Assembly enacted laws for the reorganization of banks in North Carolina. Public Laws, 1933, chap. 271. Pursuant to authority thus conferred the board of directors of the Independence Trust Company proposed a plan for its reorganization and the appellants objected for the assigned reason that the act was passed in disregard of the organic law and is therefore null and void. The plan was approved; but on 6 October, 1933, the board of directors of the Independence Trust Company rescinded the resolution previously adopted, abandoned the reorganization, and requested the Commissioner of Banks to revoke such action as he had taken. With this request the commissioner complied by a formal order filed in the clerk’s office on 28 October, 1933, a copy of which was duly certified to this Court. Indeed, the judge refused to find as a fact that the plaintiffs proposed to consummate a merger or consolidation of the Independence Trust Company with other banks. This we interpret as equivalent to a finding that no such purpose was contemplated. Whether the act of 1933 is constitutional is therefore a moot or academic question which requires no further consideration. The appellants next insist that the stock assessments are invalid because the Independence Trust Company was not lawfully engaged in the business of banking. This position calls for reference to the act under which the company was organized and to subsequent acts by which its powers were enlarged. The Charlotte Realty Company, incorporated on 26 July, 1905, was authorized to deal in and dispose of real and personal property, to lend money on bonds secured by mortgages, etc., and to transact on commission the general business of a real estate agent. Public Laws, 1901, chap. 2; 1 Pell’s Revisal, chap. 21. In 1908 its charter was amended by increasing the authorized capital stock from $100,000 to $300,000; and afterwards by changing the corporate name to Charlotte Trust and Realty Company and by conferring upon it authority to act as guardian, trustee, etc., and to negotiate loans and to guarantee the payment of collections. On 19 February, 1912, the charter was again amended by changing the name to Independence Trust Company and *17 authorizing the corporation to “do the business of a commercial bank and of a savings bank” in addition to other enumerated powers. It is contended by the appellants that corporations organized under the act of 1901 were not permitted to engage in the business of banking (Public Laws, 1901, chap. 2; sec. 5, 8; Pell’s Revisal, chap. 21, see. 1134, 1137), and by the appellees it is contended that this prohibition was remedied by a subsequent act which provided that all the provisions of law relating to private corporations not inconsistent with the business of banking should be applicable to banks. Public Laws, 1903, chap. 275, sec. 4; Revisal of 1905, sec. 234. It seems that the last amendment of the charter was made by virtue of this provision; but in any event the Independence Trust Company conducted a general banking business for a period of more than twenty years, during which its charter was never challenged by the State or the shareholders, and the appellants are now estopped to assail its corporate existence as a banking institution. Holding certificates of its stock under a claim of corporate capacity they cannot set up “either for themselves or on behalf of the corporation any irregularity in the organization for the purpose of shielding the corporation or freeing themselves from personal liability.” 1 Thompson on Corporations, sec. 255. Exception was taken to the adjudication that the Commissioner of Banks is in lawful control of the assets and business of the Independence Trust Company. It is argued that the General Assembly cannot transfer to the Commissioner of Banks the constitutional jurisdiction of the Superior Court and that section 218(c) (13) of the Consolidated Statutes, under which the assessments of stock were levied, is void. The argument is founded on a misapprehension. The Superior Court is not deprived of its constitutional jurisdiction. The act under consideration is procedural, and all the questions presented by this exception have been considered by the court and decided adversely to the contention of the appellants. Corporation Commission v. Murphey, 197 N. C., 42; Murphey v. Corporation Commission, 280 U. S., 534, 74 L. Ed., 598; In re Trust Co., 197 N. C., 613; Corporation Commission v. Stockholders, 199 N. C., 586; Corporation Commission v. Bank, 200 N. C., 422; Corporation Commission v. McLean, 202 N. C., 77; Hood, Comr. of Banks v. Martin, 203 N. C., 620; Hood, Comr. of Banks v. Holding, 205 N. C., 451. It is further contended that the obligation of the stockholders’ contract is impaired by the levy of the assessments without a showing of its necessity; but this question, also, was exhaustively considered in the case of Corporation Commission v. Murphey, supra. Referring to chapter 113, section 13, of the Public Laws of 1927, Connor, J., observed: “The contention that the foregoing statute is in violation of provisions *18 of tbe Constitution of this State, in that stockholders of insolvent banking corporations, under tbe procedure prescribed therein, may be deprived of their property without due process of law, or contrary to the law of the land, cannot be sustained.” The reasoning upon which this conclusion was reached was clearly set forth in the opinion and was approved on appeal to the Supreme Court of the United States. Murphey v. Corporation Commission, supra. We have examined the record in its relation to all the exceptions noted in the brief of the appellants and find no adequate cause for reversing or modifying the judgment of the trial court. The statutory provisions for the liquidation of insolvent banks by the Corporation Commission under the former law and by the Commissioner of Ranks under the existing law do not purport to interfere in any manner with the equitable jurisdiction of the Superior Court. These statutes, as pointed out in the cases herein cited, do not deprive the holders of stock of any constitutional rights, since they have reasonable opportunity to be heard on all material questions before judgment is finally rendered. No merger is planned; no diversion of assets is contemplated or menaced; and as to the procedure we regard the verification of the answer as sufficient and the denial of the appellants’ motion for judgment on the pleadings as free from error. Judgment Affirmed. ClaeksoN, J., not sitting.