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District Court of Appeal, Second District, Division 2, California.

BURKET et al. v. BANK OF HOLLYWOOD et al.*

Civ. 11050.

Decided: September 29, 1936

Clock, McWhinney & Clock and Merritt D. Jergins, all of Long Beach, for appellants. West & McKinney, of Santa Ana (George H. Tobias, of Los Angeles, of counsel), for respondents.

F. O. Burket, Sr., deposited with the Bank of Hollywood in an “escrow” account certain moneys received from the operation of an oil well, the bank agreeing to disburse the same to the various royalty owners and holders entitled thereto. Mr. Burket was killed in an automobile accident November 1, 1930, and on December 8, 1930, the bank's doors were closed and it was taken over for liquidation by the state superintendent of banks. Virginia Burket, surviving widow, was appointed executrix of her husband's estate and thereafter handled its affairs, including the matter of the deposit at the Bank of Hollywood. Through her attorney she presented to the superintendent of banks “general claims” against the moneys held in the F. O. Burket, Sr., account or “escrow,” and accepted dividends in liquidation amounting to $1,228.32 out of the original sum of $3,534.83 deposited by deceased with the bank. After the estate was distributed to Mrs. Burket and to her son, and more than four years after the death of Mr. Burket and the closing of the bank, they discovered, so they allege, that this particular account, which had been treated by all parties as constituting a “general claim” against the bank, was in fact entitled to a preferential rating, and that they as distributees of the estate were entitled to recover, from the moneys belonging to the bank and in process of liquidation, the full balance of the original deposit, to wit, $2,296.61. In a suit brought for that purpose the trial court ruled in their favor, and from the judgment accordingly entered defendants appeal.

Section 136 of the State Bank Act (Act No. 652, Deering's Gen.Laws, vol. 1, p. 215) sets up the machinery governing the superintendent of banks when taking possession of an institution for the purpose of liquidation. That section specifically provides that “all claims of every kind or nature * * * must be presented to the superintendent of banks in writing, verified by the claimant or someone in his behalf, within four months after the first publication of the notice to creditors; * * * and any claim not so presented shall be forever barred.” It is also provided that a claim, the justice or validity, of which is in doubt, may be rejected, and that action upon such rejected claim must be brought within six months after service of notice of rejection. After the expiration of the date fixed for the presentation of claims, the superintendent of banks under authority of the superior court is permitted to declare dividends in the manner set forth in the act.

In the instant case it is undisputed that respondents filed their claim upon the “general claim” form furnished by the superintendent of banks within the time fixed by law. It was duly allowed as a general claim, and thereafter four separate dividends, declared pursuant to authority of the superior court, were disbursed to respondents in common with the hundreds of other general claimants.

It is apparent from a reading of the pertinent provisions of the Bank Act that the Legislature has set up a comprehensive and exclusive system for the liquidation of banks and has removed from the superintendent of banks or courts the power to alter or amend the terms upon which claims may be filed. As pointed out in Matter of Horowitz, 235 App.Div. 248, 256 N.Y.S. 705, 707, a case construing a situation where an attempt was made to file a claim after the statutory period fixed by the New York banking law: “The liquidation of banks under the superintendent of banks is not a judicial function but an administrative power conferred by the Legislature, and the * * * Court has no inherent power to ameliorate the rigor of the provision of such statutory directions as are prescribed for the administrator.” The tardy claimant in that case was denied relief. So in the present case respondents cannot claim, after the lapse of four years, the right to refile their claim or amend their demand so as to place them in the preferred class of claimants. In the first instance they elected to file as general claimants, and there is no suggestion in the law that they may change their position with a new filing at this date. In fact, every inference from the wording of the act is against such a course of procedure.

Although the point has never been treated in this state, a very similar situation arose under a like banking act in the state of Missouri [Ogan v. Farmers, etc., Bank (Mo.App.) 90 S.W.(2d) 438, 442], where plaintiff claimed as respondents do in this case, that, having filed an original claim within the time limited by the act, he might at a later time, and after the time for filing claims had expired, seek its reclassification as a preferred claim. The Missouri Court of Appeals there held that “the statute relative to the department of finance and to banking institutions was designed to and does provide a complete and exclusive scheme for the liquidation of insolvent banks and the distribution of their assets; that such statutory provisions contemplate and were intended to require the prompt presentation and disposition of all claims of whatever character against an insolvent bank, on which the claimant seeks to recover and practically can recover only by an award to be paid out of the assets in the hands of the liquidating commissioner; * * * that, until all such claims are presented and determined the bank's assets cannot be properly distributed and its affairs wound up.” Because the claim for preference was not presented within the period limited by statute, the court in that case held that an action for preference instituted beyond the statutory time was untimely and therefore barred. By parity of reasoning it follows that respondents in this case are limited to their original status as general claimants and may not at this late date seek preference over other claimants.

In defense of their delay respondents urge that they were unfamiliar with the business of F. O. Burket, Sr., and were not apprised of the nature of his claim against the defunct bank until they conducted an investigation through an attorney more than four years after his death. No good excuse is shown why they did not make the discovery in the first instance. They signed and verified claims against the bank, the executrix of the estate was represented then by an attorney, and the bank's records as well as deceased's private papers were available to disclose the exact status of his account and deposit. Moreover, there is merit in appellant's position that respondents, having accepted four dividends and having stood silent while the affairs of the bank were being liquidated upon the basis of their claim being a general one, are now estopped from asserting their claim of preference. Such preferential rating would impose a greater burden on the other claimants and would necessitate a corresponding readjustment of accounts. In fact, it was testified by appellants' witness A. J. McFaul that the allowance of respondents' claim as preferential would necessitate the sacrifice of some bank assets to make up the amount necessary to pay off dividends. Four dividend payments to the bank's claimants have been made, it was testified without dispute, upon superior court orders and decrees based upon schedules of assets and allowed claims, in which respondents' claims were certified as general. No sufficient reason is asserted by respondents to invoke the equity jurisdiction of the court to give recognition to their tardy claim of preference, and statutory and equitable considerations militate against any change in their status.

Judgment reversed.

GOULD, Justice pro tem.

We concur: CRAIL, P. J.; WOOD, J.

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Docket No: Civ. 11050.

Decided: September 29, 1936

Court: District Court of Appeal, Second District, Division 2, California.

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