Opinion
06-16-1900
UNA et al. v. NEWARK SAV. INST.
Henry Young, for exceptant John A. Miller, for receiver.
Bill by William Una and others against the Newark Savings Institution. Heard on exceptions to master's report. Exceptions overruled, and report confirmed.
Henry Young, for exceptant John A. Miller, for receiver.
M AGIE, Chancellor.The purpose and prayer of the petition and the proofs presented before the special master in support of the petitioners' claim are so fully and accurately stated in the master's report that it is unnecessary to repeat them. Upon tne proofs, the special master has determined that it was established that Wilkinson, the former receiver of the insolvent institution, induced the managers to pay him $100,000 in settlement of the claims made against them in the action by the receiver, upon a promise that if the assets in his hand, supplemented by the sum so paid by the managers, should suffice to pay to all the depositors the amount of their deposits, without interest, any balance remaining should be returned to the managers, to be divided among them in proportion to their respective contributions to the money so paid. I deem it unnecessary to review the evidence to determine whether or not the conclusion of the special master is justified. If it be assumed that the receiver made the promise claimed, and if it be further assumed that he had power to make such a promise, the claim of the petitioners to the benefit of that promise is not established, because the compromise was not made with the receiver acting upon such assumed power. It appears that the managers, by their counsel, made a written offer to Wilkinson, as receiver, to pay $100,000 in settlement of the action against them. The sole stipulation annexed to the offer was that each manager should be formally released. There was no suggestion therein that the amount offered was to be repaid, in whole or in part, upon a contingency such as is now claimed. Thereafter Wilkinson applied to the chancellor by petition setting out the offer, and praying the direction of the court therein. The petition did not disclose that the receiver had made any such promise as is now claimed. The matter thus presented was referred to Vice Chancellor Van Fleet, who, after the prescribed notice, advised an order directing the receiver to accept the $100,000 in full settlement of all claims and demands against the managers, and authorizing him to execute complete releases to them. The order advised was made, and afterwards the sum was paid and the releases given. When the receiver obtained this order, and made the settlement which it directed, it is obvious, in my judgment, that he possessed no power to deplete the fund received, in favor of those whom he had released from his claim, because of some secret promise that he would do so in a certain contingency. Ifhe could, as receiver, make the compromise upon the conditions, and if the petitioners could enforce such conditions upon his compromise, they cannot annex such conditions to the unconditional settlement directed by the chancellor.
It is urged that the chancellor had power to ratify and validate the promise of the receiver, and ought to do so. It is suggested that he may fairly take into account the fact that the assets in hand, after payment of all costs and expenses, will amount to so little that, considering the great number of depositors and the amount of deposits, it will be practically impossible to distribute them. It is stated by counsel that upon a large number of small deposits the dividend would be so little that there would be no coin small enough to use in payment. But the embarrassment it may occasion the receiver or the court ought not to enter into this question. The validation or ratification of the alleged promise of the former receiver ought not to be directed, in my opinion, unless it is perfectly clear that, had the existence of such promise been disclosed to the chancellor who directed the settlement, he would have made that order upon such conditions as petitioners now claim. I am unable to conclude that such a course would have been advised by Vice Chancellor Van Fleet. While the contract of the savings bank with its depositors does not, in general, require the payment of interest on deposits, it is well known that interest is expected by the depositors, and is generally paid. Considering the situation of the insolvent institution at the time the managers' offer was accepted, I am unable to agree that the chancellor would have received from those whose failure in duty was charged to have imperiled the assets any sum of money upon an agreement that contemplated a distribution to depositors of the amount of their deposits, without interest. The result is that the exception to the master's report must be overruled, and the report be in all respects confirmed.