Commissioner of Banks in re Cosmopolitan Trust Co.

Rugg, C. J. These are two petitions in equity by the commissioner of banks in possession of Cosmopolitan Trust Company. The petition with respect to O’Keefe sets out (1) the pendency against him and numerous other defendants of a suit wherein the commissioner of banks seeks to hold the defendants for a large amount on allegations that the defendants are liable for losses to the trust company, being the suit reported in some of its aspects in Cosmopolitan Trust Co. v. Mitchell, 242 Mass. 95; (2) the pendency of a suit against O’Keefe to enforce his liability as the holder of fifty shares of capital stock in the trust company; and (3) a claim against O’Keefe on a note for $370,000; that all these claims are disputed by O’Keefe; that O’Keefe has offered [146] in substance that, if the equity suits shall be dismissed as against him without prejudice and the note cancelled and delivered up, and the petitioner shall execute and deliver suitable covenants not to sue or pursue O’Keefe further in respect to those or other claims, O’Keefe will pay forthwith to the petitioner in return, therefor sums aggregating $30,000. There is an affidavit of O’Keefe that his total assets do not exceed $30,000, and affidavits by the commissioner of banks, by his liquidating agent in charge of Cosmopolitan Trust Company, and by his attorney, that a settlement on the terms proposed will be to the advantage of Cosmopolitan Trust Company on the ground among others that the amounts likely to be collected at the end of protracted and expensive litigation are uncertain and conjectural. The petition with respect to Magrane sets out that he is one of the defendants in the suit described in 242 Mass. 95; that suit is pending against him to enforce his liability as the holder of one hundred shares of the capital stock of the trust company, and that there is an action pending against him to collect a note for $10,500 with interest; that Magrane disputes liability on all these claims and has offered to pay to the commissioner sums aggregating $150,000 upon the same general conditions as to covenants not to sue and surrender of note as are alleged in the O’Keefe petition. There are similar affidavits as to the advantage to the trust company of a settlement upon these terms, but there is no affidavit that the amount offered is all the debtor possesses. The statements of fact in each petition have been found to be true by the single justice. There is also a finding that Magrane is a man “ well along in years, and should he die pending the final determination of the several suits long further delays in the matter of obtaining decrees and judgments are likely to occur, and the difficulties of collection of such, decrees and judgments when entered will be correspondingly increased.” It further is found that Magrane has available property in excess of $150,000 but there is no finding as to the amount of such excess. The single justice was of opinion that the'petitions ought to be granted and decrees entered authorizing and empower [147] ing the commissioner of banks, upon payment to him of the several sums, to take all necessary steps to cause the equity suits to be dismissed without prejudice against these two defendants, to execute the covenants not to sue and to deliver up the notes. No direct parties to this suit object to the allowance of the petition. Four codefendants in the suit reported in 242 Mass. 95, appeared in opposition before the single justice and at their request the cases were reported. The findings of fact made by the single justice must be accepted as true. No evidence is reported. The order that the petitions ought to be granted imports a finding of all subsidiary facts necessary to warrant the decrees. If any evidence could have been introduced which in law would support the conclusion reached, it must be presumed that there was such evidence and that the orders for decrees rest upon it. The only question is, whether these orders for decrees could have been entered on the allegations of the bill and the facts found. First Baptist Society in Brookfield v. Dexter, 193 Mass. 187, 189. Hale v. Blanchard, 242 Mass. 262, 264. Nelson v. Wentworth, 243 Mass. 377, 378. The claims of the commissioner of banks, so far as they relate to collection of notes and the enforcement of stockholders’ liability, are of no interest to the opponents of the orders for decrees. The issue is confined wholly to the suit to enforce liability of directors of the trust company for breaches of. duty as directors in the many particulars wherein they are alleged in the bill in 242 Mass. 95, to have violated that duty. It is manifest from the discussion in 242 Mass. 95, that the extent of the liability of the several directors for malfeasance, or nonfeasance,. must ultimately be established upon the conduct of each director as revealed by the facts to be ascertained upon a trial. The allegations of the bill in that suit show loans by the trust company by authority of the directors to individual borrowers in excess of the statutory limit, loans made while the reserves were less than the statutory requirement, loans from the savings department in violation of law, loans to persons without credit or business [148] reputation, and loans otherwise in violation of settled principles of banking. There are further allegations of reckless and negligent conduct in the management of the affairs of the trust company and of liability arising from violation of the fiduciary duty owed to the trust company by the defendants as directors. There is nothing in the nature of the liability of the defendants in the suit referred to in 242 Mass. 95, or in the character, of the relationship between the several directors which prevents the entry of decrees for the petitioner in these cases. If any one of the directors, made defendant in that suit, prefers to buy his peace upon terms which a justice of this court finds just and reasonable, from the point of view of the depositors in the trust company, there is nothing in his legal relation to the other defendants which enables them to interpose an effective objection. As has been said in numerous decisions, the object of our law as to closed trust companies is to reach a distribution of the assets among the creditors as soon as is reasonably practicable. No one or all of the defendant directors, who prefer to litigate the claims of this nature against them, can compel-those, who desire to adjust upon terms found to be advantageous to the public interest the claims against them, to remain parties to the litigation merely in order to make them contribute to the expenses thereof. The case at bar is distinguishable from Nickerson v. Wheeler, 118 Mass. 295, where the liability imposed on directors 'was strictly statutory and of a nature permitting enforcement of contribution from his fellow directors by one compelled to pay. The single justice had power under G. L. c. 167, § 24, to order the decrees for the petitioner. His opinion in each case that the petitions should be granted and decrees entered as prayed for was right. / Decrees accordingly.