Bieringer-Hanauer Co. v. Cosmopolitan Trust Co.

DeCourcy, J. When the bank commissioner, Joseph C. Allen, took possession of the Cosmopolitan Trust Company under the liquidation statute, he found among the assets of the savings department a note of the plaintiff for $9,000 dated September 7, 1920, and payable to the order of said trust company. WThen this note became due, on January 7, 1921, the plaintiff had on deposit in the commer 75 cial department the sum of $6,206.82. It then tendered to the agent of the bank commissioner a check on the trust company for that balance, and also the sum of $2,793,18, the difference between the amount on deposit and the face of the note. The commissioner credited the $2,793.18 on the note, but refused to credit thereon the plaintiff’s deposit in the commercial department; and he brought an action at law to recover the balance due. This bill in equity seeks to enjoin the commissioner from prosecuting the action at law, to compel him to credit on the note the said deposit, and for general relief. The note being an asset of the savings department, admittedly the plaintiff did not have a right to apply its deposit in the commercial department as a set-off, G. L. c. 172, § 62. Bachrach v. Commissioner of Banks, 239 Mass. 272. Bailey v. Commissioner of Banks, 244 Mass. 499. Nor did its tender of a check on an insolvent bank in liquidation constitute payment. Cosmopolitan Trust Co. v. Lyons, 244 Mass. 115. Cosmopolitan Trust Co. v. S. Vorenberg Co. 245 Mass. 317. Its contention that the note should be transferred to the commercial department is based on the fact that the original note of February 5, 1920, for $9,500 was given as security for money borrowed from that department, and that it was turned over to the savings department without its knowledge or consent. But this note, with others, was so transferred in exchange for other notes of the savings department and cash on February 28, 1920. When it fell due on May 5, the plaintiff paid $500, and a new note for $9,000 was issued and invested in the savings department; and this was renewed September 7, 1920, in that same department. The fact, that the plaintiff did not have actual knowledge that the outstanding loan made to it was from the funds of the savings department, is immaterial, and cannot affect the rights of the savings depositors to the investments made with their deposits. Kelly v. Commissioner of Banks, 239 Mass. 298. Nor is this result affected by the fact that the note may have been an investment that was illegal for the savings department. Cosmopolitan Trust Co. v. Rosenbush, 239 Mass. 305. It is difficult to see how 76 the commissioner, if he so desired, could transfer this note to the commercial department and apply the funds of that department in payment of it, as the plaintiff urges, without violating the statute as construed in the cases above cited. But, even assuming, without so deciding, that a state of facts might exist where he could legally make such a transfer, his judgment and discretion in refusing to do so cannot be controlled and overridden by the court. Decree affirmed, with costs.