Opinion
05-03-1932
TOUSSAINT et al. v. B. & R. MFG. CO., Inc.
Ziegener & Brenner, of Jersey City, for Lionel Isaacs, receiver of defendant. McDermott, Enright & Carpenter, of Jersey City, for B. C. Schram, receiver of National Bank of North Hudson at Union City.
Syllabus by the Court.+++
On an application on order to show cause, held, where facts are disputed, summary relief will not be granted.
Where the right of a receiver of this court to retain money depends upon the construction and effect for a federal statute, it would appear that the proper forum for the determination of the right is in the federal court.
Suit by Alfred J. Toussaint and others against the B. & R. Manufacturing Company, Incorporated, wherein Lionel Isaacs was appointed as receiver for the defendant. On application by the receiver for an order to show cause to compel the receiver of the National Bank of North Hudson at Union City to allow the moving party access to a safe deposit box in the bank.
Decision in accordance with opinion.
Ziegener & Brenner, of Jersey City, for Lionel Isaacs, receiver of defendant.
McDermott, Enright & Carpenter, of Jersey City, for B. C. Schram, receiver of National Bank of North Hudson at Union City.
LEWIS, Vice Chancellor.
This matter is before the court on an application, on an order to show cause, to compel the receiver of the National Bank of North Hudson, at Union City, to allow the moving party access to a safe deposit box in the bank.
Lionel Isaacs was appointed by this court receiver of the B. & R. Manufacturing Company, Inc., the defendant in this cause. As such receiver, Mr. Isaacs reduced to cash certain assets of the defendant corporation and deposited them, in an account as receiver, in the National Bank of North Hudson. On August 5, 1931, there was on deposit in this account approximately $6,500.
On August 6, 1931, the bank did not open its doors for business, having been closed in the interim by the Comptroller of the Currency. Mr. B. C. Schram was appointed receiver of the bank in accordance with the federal practice.
Shortly before the close of business on August 5th, Mr. Isaacs, hearing that a run was taking place on the bank, and with the idea of safeguarding the funds of which he was in charge as receiver, presented a check to the bank for the full amount of the deposit and received cash therefor. This cash he immediately placed in an envelope, went to the safe deposit department of the bank in its basement, and locked up the envelope containing the cash in the personal safe deposit box which he was there maintaining.
The next morning, after the bank had been taken over by the representatives of the Comptroller of the Currency, Mr. Isaacs went to the safe deposit department for the purpose of removing the cash left there the afternoon before, but was refused access to his box.
The federal receiver resists the present application. He asserts that at the time Mr. Isaacs cashed the receiver's check on August 5th, the bank was insolvent, and that this insolvency was known to Mr. Isaacs; and that therefore to allow Mr. Isaacs to remove the cash now in the safe deposit box would constitute a preference in violation of the Revised Statutes of the United States relating to national banks, which voids all transfers in contemplation of an act of insolvency. The federal receiver further asserts that the safe deposit vaults were a department of the bank and in the same building, that the proceeds of the check were taken directly from the banking department to the safe deposit department, and that the holder of a safe deposit box could not open his box without the use of a second key retained by a safe deposit official. He argues, therefore, that the cash in question never left the custody of the bank, and is to be deemed an asset of the bank in his hands.
The affidavits disclose certain facts in regard to the situation of the bank at the time Mr. Isaacs received the cash. Certain of these facts are conceded and certain other facts are controverted, or at least diverse conclusions are sought to be drawn from them. The closing of the bank was decided upon around midnight of August 5th, at a conference of the officials and directors of the bank with the federal banking officials. Mr. Isaacs was a director of the bank and participated in this conference. Up to the last moment it was hoped that outside aid could be secured, but this proved vain.
The federal receiver claims that Mr. Isaacs knew the hopeless condition of the bank at the time he drew the cash, whereas Mr. Isaacs claims that this condition did not develop until that night, and that therefore themoney was not paid to him in contemplation of insolvency.
It is very doubtful if this court has jurisdiction to grant the relief prayed for. In essence, this court is asked to require a federal receiver to allow the removal of cash to which he lays claim in his capacity as such federal receiver. His right to retain the money depends upon the construction and effect of a federal statute, and it would seem that the proper forum for the determination of the rights of Mr. Isaacs is the federal court.
In any event, in view of the disputed facts, this matter should not be determined summarily on affidavits, but at a final hearing on issues formally brought into court. The application will be held in abeyance meanwhile.