Montana Attorney General Opinion 15-368

Opinion No. 368 Banks and Banking-Reconstruction Fi- nance Corporation-Superintendent of Banks--Closed Banks, Borrow- ing l\loney for. HELD: '.rhe State Superintendent of Banks may borrow money from the Heconstruction Finance Corporation for the purpose of paying diddends to creditors of closed banks being liqui- dated under his supen'ision and pledge the assets of said closed banks as se· curity. October 20, 1933 You havc submitted the following question: "This Department is being asked to obtain loans through the He- construction Finance Corporation for the purpose of paying dividends to creditors of closed banks being liquid- a ted under its supervision. This Cor- poration requires, before any applica- tions for such loans are considered, that it be furnished with opinions of the attorney generals of the various states as to the extent of authority granted by banking laws to liquidating agents for the purpose of making such loans. 'We would therefore appreci- ate your opinion as to whether or not the banking laws of Montana give this office power to borrow money and pledge assets of closed banks for the purpose of paying dividends." It is doubtless true that when the Huperintendent of Banks takes over a hunk for the purpose of control 'or liquidation he has no authority out- ~ide of that conferred by statute. His jurisdiction and power must be found in some particular statute. (1 Mitchie Banks and Banking, Section 70, page 65; 3 Mitchie, Section 17, page 34; Section 25, page 44.) The same rule applies to a bank receiver. (3 Mitchie, Section 98, page 14!); Section 102, page 155.) A liquidating agent who is an agent "to assist him and act for" the Superintendent of Bunks (Section 12!), Chapter 89, Laws 11)27) has no greater power than his pricipal, the Superin- tendent of Banks. The powers of the Supelintendent of Banks on the clos- ing of a bunk are set forth in Section 127, Chapter 89, Laws 1927:, "Upon taking the assets and busi- ness of any bank into his possession, the Superintendent is authorized to 256 OPINIONS OF TIm ATTOHXEY GENERAL collect nIl moneys due to such bank, and to flo such other acts ns are nec- essary to consen'e its assets and busi- ness, and he shall proceed to liquid- ate the affairs thereof, He shaU have general and inclusive power and authority, except as otherwise limited by the terms of this Act, to do any and all aets, to take any and all steps necessary, 01', in his discretion, de- sirable fOl' the protection of the prop- erty and assets of such bank amI the speedy economical liquidation of the assets and affairs of such bank and t·he payment of its creditors, or for the reopening and resumption of busi- ness by said bank, whel'e that is prac- ticable 01' desirable. He may insti- tute, in his own name as Superinten- .dent, or in the name of the bank, such suits and actions and other legal proceedings as he deems expedient for such purposes, and by making ap- plication to the District Court of the county in which such bank is located, or to the judge thereof, in chambers. may procure an order to sell, com- promise or compound any bad or doubtful debt or claim, and to sell and dispose of any or all the assets, which sale may be made to stockhold- ers, officers, directors, or others in- terested in such bank, on consent of the court." Is the power to make a loan and pledge the assets of a closed hank given in the phrase in the above sec- don quoted? ("to sell and dispose of") It 'has been held that the phrase "dis- pose of" taken by itself and without qualification may confer broader power than the words "to selL" These ,yords qualified by associated words or other restrictive provisions have '.!Cen held to grant only the power to sell. (Phelps v. Harris, 101 U. S. 370, 381; Killmer Paint etc. Co., v. Daven- port etc Co., 136 Okla. 252, 277 Pac. 653, 63 A. L. R. 997 ; Words and Phrases, Volume 7, page 6407. See also cases cited in note 19, 57 C. J. p. 114.) In view of these authorities and the fact that the words "to sell and dispose of" are followed by the phrase "which sale" and not by the phrase "which sale or other disposi- tion" or other similar words, I am of the opinion that the words "dispose of" are synonymous with the words "to sell" and that this phrase confers authority to sell only. The words un- derscored in the section above quoted are quite sweeping, and confer a great deal of power upon the Superintendent of Banks. The only limitation in the act seems to be that the consent of the court must be obtained in order to give the Superintendent power to sell. Can it be said that pledging the as- sets of the bank for a loan. in order to pay depositors in part, or in full, is an act "for the protection of the prop- erty and assets of such bank and the speedy and economical liquidation of the assets and affairs of such bank and the payment of its creditors'!" It is not difficult to imagine a situation where a small loan secured by a pledl-{e of part of the assets might save the l:ank from loss and thus be a conser- vation of the assets and therefore most desirable. It is possible that a larger loan pledging all the assets of the bank may have the same effect, as well as to enable the Superintendent to pay the creditors or to enable him to re- open the bank. It is possible, too, that such may tend to the "economical li- quidation of the assets and affairs of such bank." 'Vithout knowing facts in a given case I am unable to say that such loan and pledge, as a matter of law and (liYorced from the facts, would not be for the purpose described above. I am therefore inclined to the opinion that the statute should be gh'en a liberal construction and that the Superinten- dent of Banks has such power to be exercised according to his sound judg- ment and discretion upon the facts in a given case, with due regard to the protection and benefit of the creditors, as well as the character and terms of the loan and the liberal policy of the lender authorized and contemplated by the Federal statute creating the Re- construction l!':inance Corporation. In the li!llited time at my disposal I have been unable to find that our court has passed upon this or a similar question nor do I find any other au- thorities directly in point or interpret- ing a similar statute. I am therefore free to admit that the question is an open one and not entirely free from doubt.