State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_53 > GS_53-20

§53‑20.  Liquidation of banks.

(a)        When Commissionerof Banks to Take Possession. – Whenever any State bank shall neglect or refusefor a period of 60 days to make a report to the Commissioner of Banks, as hemay demand, or shall, after demand under seal of the Commissioner of Banks,fail, neglect or refuse to comply with any of the rules, regulations orrequirements of the State Banking Commission, or the provisions of the bankinglaw, or if at any time the Commissioner of Banks shall find a bank subject tothe supervision of the Commissioner of Banks, in an insolvent, unsafe orunsound condition to transact the business for which it was organized, or in anunsafe, or unsound condition to continue its business, or if such institutionshall neglect or refuse to correct any irregularity which may be called to theattention of the president, cashier or board of directors, by the Commissionerof Banks, or any of his assistants, then, in either of such events, theCommissioner of Banks, or any duly authorized agent of the Commissioner ofBanks appointed under seal of the Commissioner of Banks, shall forthwith takepossession of such bank, and all of its assets and business and shall retainpossession thereof until such bank shall be authorized by the Commissioner ofBanks to resume business, or its affairs shall be fully liquidated as hereinprovided, or possession thereof shall have been surrendered under order of ajudge of the superior court under the provisions of this section.

(b)        Directors May Act.– Any bank may place its assets and business under the control of theCommissioner of Banks for liquidation by a resolution of a majority of itsdirectors upon notice to the said Commissioner of Banks, and, upon takingpossession of said bank, the Commissioner of Banks, or duly appointed agent,shall retain possession thereof until such bank shall be authorized by theCommissioner of Banks to resume business or until the affairs of said bankshall be fully liquidated as herein provided, and no bank shall make any generalassignment for the benefit of its creditors save and except by surrenderingpossession of its assets to the Commissioner of Banks, as herein provided.Whenever any bank for any reason shall suspend operations for any length oftime, said bank shall, immediately upon such suspension of operations, bedeemed in the possession of the Commissioner of Banks and subject toliquidation hereunder.

(c)        Notice of Seizureto Court Bar to Attachment, etc.; Transfers Void. – When the Commissioner ofBanks, or duly appointed agent, shall take possession of any bank undersubsections (a) or (b) hereof he shall, within 48 hours, file with the clerk ofthe superior court in the county where said bank is located, a notice of hisaction which shall state the reason therefor; and such notice shall be deemedthe equivalent of a summons and complaint against said bank in an action in thesuperior court except that it shall not be necessary to make service thereof,and the taking possession of any bank shall thereupon date from the time whensuch authority was exercised and from and after such time all assets andproperty of such bank, of whatever nature shall be deemed to be in possessionof the Commissioner of Banks, and the exercise of such authority shall operateas a bar to any attachment, or other legal proceeding, against such bank or itsassets and, after such exercise of authority, no lien shall be acquired, in anymanner binding or affecting any of the assets of such bank and every transferor assignment made thereafter by such bank, or by its authority, of the wholeor any part of its assets, shall be null and void; and the Commissioner ofBanks shall be substituted in place of the bank in all actions in the State orfederal courts, pending at the time of the exercise of such authority.

(d)        Notice to Banks;Corporations and Persons Holding Assets; Liens Not to Accrue. – On takingpossession of the assets and business of any bank, the Commissioner of Banks,or duly appointed agent, shall forthwith give notice, by mail or otherwise, ofsuch action to all banks or other persons or corporations holding, or having inpossession, any assets of such bank. No bank or other person or corporationshall have a lien or charge for any payment, advance or clearance made, orliability incurred against any of the assets of said bank after possession hasbeen taken as provided under this section, except as hereinafter provided.

(e)        Permission toResume Business. – After the Commissioner of Banks has taken possession of anybank, such bank may resume business as provided in G.S. 53‑37.

(f)         Remedy by Bank forSeizure; Answer to Notice; Injunction, etc.; Appeal. – Whenever any bank, ofwhose assets and business the Commissioner of Banks has taken possession asaforesaid, except where possession is taken under subsection (b) hereof, shalldeem itself aggrieved thereby, it may, at any time within 10 days after thefiling of the notice with the clerk of the superior court, file an answer tosaid notice and may also upon notice to the Commissioner of Banks, apply to theresident or the presiding judge of the district for an injunction to enjoinfurther proceedings by the said Commissioner of Banks, and the said judge maycite the said Commissioner of Banks to show cause within 10 days thereafter whyfurther proceedings should not be enjoined, and after hearing the allegationsand proof of the parties with respect to the condition of said bank, maydismiss such application for injunction or may enjoin further proceedings underthis section by the Commissioner of Banks. If the judge shall enjoin furtheraction of the Commissioner of Banks and permit the reopening of the bank, heshall have authority to require of the bank such surety bond as he may deemnecessary to insure its solvency, payable to the Commissioner of Banks for thesole benefit of the general creditors of the bank, and upon such terms as saidjudge may deem proper. Either party shall have the right to appeal to theSupreme Court as in other actions.

(g)        Collection of Debtsand Claims; Sale or Compromise of Debts and Claims; Commissioner Succeeds toAll Property of Bank. – Upon taking possession of the assets and business ofany bank by the Commissioner of Banks, the Commissioner of Banks, or the dulyappointed agent, is authorized to collect all money due such bank, and to dosuch other acts as are necessary to conserve its assets and property, and shallproceed to liquidate the affairs thereof, as hereinafter provided. TheCommissioner of Banks, or the duly appointed agent, shall collect all debts dueand claims belonging to such bank, by suit, if necessary; and, by motion in thepending action, and upon authority of an order of the presiding or residentjudge of the district may sell, compromise or compound any bad or doubtful debtor claim, and may upon such order, sell the real and personal property of suchbank on such terms as the order may provide or direct, except that, where thesale is made under power contained in any mortgage or lien bond or other paperwherein the title is retained for sale and the terms of sale set out, sale maybe made under said authority.

Upon taking possession of anybank under this section, the Commissioner of Banks and/or the duly appointedagent shall have the possession and the right to the possession of all theproperty, assets, choses in action, rights and privileges of the said bank,including the right to resign the trust or exercise the power in all mortgages,deeds of trust, and all other papers executed to secure the payment of money inany form in which the said bank shall have been named as trustee and/orpledgee, and such property rights and privileges shall vest in the saidCommissioner and/or duly appointed liquidating agent absolutely, for thepurpose of liquidating, and sales and conveyance of the same, together with anyand all other incidental rights, privileges, and powers necessary andconvenient for the enjoyment of the right of conveyance and sale and for theexercise of the same. Upon the motion made, the bank or any person interested,may be heard, but the judge hearing the motion shall enter his order as in hisdiscretion will best serve the parties interested. The powers granted by thesecond preceding sentence shall be in addition to and not in derogation of anyexisting acts ratified at the 1931 session of the General Assembly.

The officers and directors ofany bank, or any bank that is in liquidation as provided by law, shall nothereafter exercise any powers herein declared to be vested in the NorthCarolina Commissioner of Banks, and/or the duly appointed liquidating agent.

(h)        Bond ofCommissioner of Banks; Surety; Condition; Minimum Penalty. – Upon takingpossession of any bank, the Commissioner of Banks, or the duly appointed agent,shall execute and file a bond payable to the State of North Carolina, with somesurety company as surety thereon, with the clerk of the superior court of thecounty where the bank is located, conditioned upon the faithful performance ofall duties imposed by reason of the liquidation of such bank by the saidCommissioner of Banks, or the duly appointed agent, or any agent or assistantassisting in the liquidation of the said bank, the penal sum of said bond to befixed by order of the Commissioner of Banks, which in no case shall be lessthan five thousand dollars ($5,000). Any person interested, by motion in thepending action, shall be heard by the resident or presiding judge as to thesufficiency of the bond; the judge hearing the motion may thereupon fix thebond; provided, that where such bank under this section is taken possession ofby the Commissioner of Banks, he may, in his discretion with the approval ofthe State Banking Commission, appoint as his agent with the powers, duties andresponsibilities of such agent under this section, the Federal DepositInsurance Corporation or any corporation or agency established under and byvirtue of the laws of the United States of America which is established for thepurposes for which the said Federal Deposit Insurance Corporation was createdunder the Banking Act of 1933, enacted by Congress; and provided further thatsuch appointment may be made when and only when the liabilities of such bank toits depositors are insured by said corporation or agency, either in whole or inpart. In the event of such appointment such corporation or agency, with theapproval of the Commissioner of Banks, may serve as such agent without givingthe bond required under all other circumstances in this subsection.  Also, inthe event of such appointment, the Commissioner of Banks shall thereafter beforever relieved from any and all responsibility and liability in respect tothe liquidation of such bank.

(i)         InventoryNecessary. – Within 30 days after the filing of the notice of the takingpossession of any bank in the office of the clerk of the superior court, theCommissioner of Banks, or the duly appointed agent, shall make and state aninventory of the assets and liabilities of the said bank, and shall file onecopy thereof with the clerk of the superior court in the pending action andshall keep one copy on file in the said bank. Such inventory shall be open forinspection during the usual banking hours, provided, that nothing herein shallrequire said bank to remain open unnecessarily.

(j)         Notice and Timefor Filing Claims; Copies Mailed. – Notice shall be given by advertisement oncea week for four consecutive weeks in a newspaper published in said county; ifno newspaper is published in said county, then in some newspaper having ageneral circulation in said county, calling on all persons who may have claimsagainst the bank to present the same to the Commissioner of Banks at the officeof the bank, and within the time to be specified in the notice, not less,however, than 90 days from the date of the first publication. A copy of thisnotice shall be mailed to all persons whose names appear as creditors upon thebooks of the bank. Affidavit by the Commissioner of Banks, or agent mailing thenotice, to the effect that said notice was mailed shall be conclusive evidencethereof.

(k)        Power to RejectClaims; Notice; Affidavit of Service; Action on Claim. – If the Commissioner ofBanks, or the duly appointed agent, doubts the justice and validity of anyclaim or deposit, he may reject the same and serve notice of such rejection uponthe claimant or depositor, either personally or by registered mail, and anaffidavit of the service of such notice shall be filed in the office of theclerk of the superior court in the pending action, and shall be conclusiveevidence of such notice. Any action or suit upon such claim so rejected must bebrought by the claimant against the Commissioner of Banks in the proper courtof the county in which the bank is located within 90 days after such service,or the same shall be barred. Objections to any claim or deposit not rejected bythe Commissioner of Banks, or the duly appointed agent, may be made by anyperson interested by filing such objection in the pending action and by servinga copy thereof on the Commissioner of Banks, or duly appointed agent, and theCommissioner of Banks or duly appointed agent, after investigation, shalleither allow such objection and reject the claim or deposit, or disallow theobjection. If the objection is not allowed and the claim or deposit notrejected, the Commissioner of Banks or the duly appointed agent, shall file anotice to this effect in the pending action; and within 10 days thereafter, theperson filing objection by motion in the pending action, a copy of which noticeshall be served upon the person whose claim or deposit is objected to, maypresent to the court the question of the validity of said claim or deposit; andthe questions of law and issues of fact shall thereupon be determined as inother civil actions.

(l)         List of ClaimsPresented and Deposits; Copies; Proviso. – Upon the expiration of the timefixed for presentation of claims, the Commissioner of Banks, or the dulyappointed agent, shall make a full and complete list of the claims presentedand of the deposits as shown, including and specifying any claims or depositswhich have been rejected by him, and shall file one copy in the office of theclerk of the superior court in the pending action, and shall keep one copy onfile with the inventory in the office of the bank for examination. Any indebtednessagainst any bank which has been established or recognized as a valid liabilityof said bank before it went into liquidation, for which no claimant has filedclaim, and/or any liability for which claim has been filed and disapproved,shall be listed in the office of the clerk of the superior court of the countyin which the bank is located, by the liquidating agent, and the dividendsaccruing thereto shall be paid into the said office and shall be held for aperiod of three months after said liquidation is completed, and shall then bepaid to the escheator of the State Treasurer. Any claim which may be presentedafter the expiration of the time fixed for the presentation of claims in thenotice hereinbefore provided shall, if allowed, share pro rata in thedistribution only of those assets of the bank in the hands of the Commissionerof Banks, and undistributed at the time the claim is presented: Provided, thatwhen it is made to appear to the judge of the superior court, resident orpresiding in the county, that the claim could not have been filed within saidperiod, said judge may permit those creditors or depositors who subsequentlyfile their claim to share as other creditors.

(m)       Declaration ofDividends; Order of Preference in Distribution. – At any time after theexpiration of the date fixed by the Commissioner of Banks, or the dulyappointed agent, for the presentation of claims against the bank, and from timeto time thereafter, the Commissioner of Banks, out of the funds in his hands,after the payment of expenses and priorities, may declare and pay dividends tothe depositors and other creditors of such bank in the order now or hereafterprovided by law; and a dividend shall be declared when and as often as thefunds on hand subject to the payment of dividends shall be sufficient to payten per centum (10%) of all claims entitled to share in such dividends. Inpaying dividends and calculating the same, all disputed claims and depositsshall be taken into account, but no dividend shall be paid upon such disputedclaims and deposits until the same shall have been finally determined. Thefollowing shall be the order and preference in the distribution of the assetsof any bank liquidated hereunder:

(1)        Taxes and fees duethe Commissioner of Banks for examination or other services;

(2)        Wages and salariesdue officers and employees of the bank, for a period of not more than fourmonths;

(3)        Expenses ofliquidation;

(4)        Certified checks andcashier's checks in the hands of a third party as a holder for value and theamounts due on collections made and unremitted for or for which final actualpayment has not been made by the bank;

(5)        Amounts duecreditors other than stockholders.

The word "asset"used herein shall not be deemed to include bailments or other property to whichsuch bank has no title. Provided, that when any bank, or any officer, clerk, oragent thereof, receives by mail, express or otherwise, a check, bill ofexchange, order to remit, note, or draft for collection, with request thatremittance be made therefor, the charging of such item to the account of thedrawer, acceptor, indorser, or maker thereof, or collecting any such item fromany bank or other party, and failing to remit therefor, or the nonpayment of acheck sent in payment therefor, shall create a lien in favor of the owner ofsuch item on the assets of such bank making the collection, and shall attachfrom the date of the charge, entry or collection of any such funds. A statementof all dividends paid shall be filed in the office of the clerk of the superiorcourt in the pending action, and said statements shall show the expensesdeducted and the disputed claims and deposits considered in determining saiddividend.

(n)        Deposit of FundsCollected. – All funds collected by the Commissioner of Banks, in liquidatingany bank, shall be deposited from time to time in such bank or banks as may beselected by him, and shall be subject to the check of the Commissioner ofBanks. The payment of interest on the net average of such sums on deposit shallbe controlled by the Governor and Council of State, who shall have full powerand authority to determine for what periods of time payment of interest on suchdeposits shall or shall not be required, and to fix the rate of interest to bepaid thereon.

(o)        Employment of LocalAttorneys; Expert Accountants and Other Experts; Compensation. – TheCommissioner of Banks, for the purpose of liquidating banks as herein provided,shall employ such liquidating agents, competent local attorneys, accountantsand clerks as may be necessary to properly liquidate and distribute the assetsof said bank, and shall fix the compensation for all such agents, attorneys,accountants and clerks, and shall pay the same out of the funds derived fromthe liquidation of the assets of said bank: Provided, that all expenditure forthe purpose herein provided shall be approved by the resident or presidingjudge in the pending action at such time as the same may be reported, and suchcharges shall be a proper charge and lien on the assets of such bank untilpaid.

(p)        Unclaimed DividendsHeld in Trust. – The unclaimed dividends remaining in the hands of theCommissioner of Banks for six months after the order for final distributionsshall be held in trust for the several depositors and creditors of theliquidated bank; and the money so held by him shall be paid over to the personsrespectively entitled thereto as and when satisfactory evidence of their rightto the same is furnished. In case of doubtful or conflicting claims the Commissionerof Banks shall have authority to apply to the superior court of the county, bymotion in the pending action, for an order from the resident or presiding judgeof the superior court directing the payment of the moneys so claimed. Whenissues of fact are raised by said motion, the same may, upon request of anyclaimant, be submitted to the jury for determination as other issues of factare determined. The interest earned on the unclaimed dividend so held shall beapplied toward defraying the expenses incurred in the distribution of suchunclaimed dividends. The balance of interest, if any, shall be deposited andheld as other funds of the banking department to the credit of the Commissionerof Banks. After the Commissioner of Banks has held the unclaimed dividends heldin trust by him under the provisions of this statute for the several depositorsand creditors of the liquidated bank for a period of 10 years, he is herebygiven the authority to pay the principal amount of such unclaimed dividends tothe State Treasurer, to be held by the State Treasurer without liability forprofit or interest until a just claim therefor shall be preferred by theparties entitled thereto. Upon payment of the said unclaimed dividends to theState Treasurer, the Commissioner of Banks shall be fully discharged from allfurther liability therefor.

(q)        Report byCommissioner of Banks. – If the assets of any bank when fully collected by theCommissioner of Banks are not more than sufficient to pay the depositors andcreditors of said bank, the Commissioner of Banks after he shall have fullydistributed as herein provided the sums so collected, then he shall cause to befiled in the office of the clerk of the superior court in the pending action afull and complete report of all his transactions in said liquidation; and thefiling of such report shall act as a full and complete discharge of theCommissioner of Banks from all further liabilities by reason of the liquidationof the bank.

(r)        Action byCommissioner of Banks after Full Settlement. – Whenever the Commissioner ofBanks shall have paid all the expenses of liquidation and shall have paid toeach and every depositor and creditor of such bank, whose claims shall havebeen duly proven and allowed, the full amount of such claims, and shall havemade proper provision for unclaimed and unpaid deposits and disputed claims anddeposits, and shall have in hand other assets of said bank, he shall call ameeting of the stockholders of said bank by giving notice thereof bypublication once a week for four consecutive weeks in a newspaper published insaid county, or if no newspaper is published in said county, then in anewspaper having general circulation in said county, and by mailing a copy ofsuch notice to each stockholder addressed to him at his address as the sameshall appear upon the books of the bank. Affidavit of the officer mailing thenotice herein required and of the printer as to the publication shall beconclusive evidence of notice hereunder. At such meeting any stockholders maybe represented by proxy and the stockholders shall elect, by a majority vote ofthe stock present, an agent or agents who shall be authorized to receive fromthe Commissioner of Banks all the assets of said bank then remaining in hishands; and the Commissioner of Banks shall cause to be transferred anddelivered to the said agent, or agents, all such assets of said bank. TheCommissioner of Banks shall thereupon cause to be filed in the office of theclerk of the superior court in the pending actions a full and complete reportof all his transactions, showing the assets of said bank so transferred,together with the name of the agent or agents receipting for the same; and thefiling of such report shall act as a full and complete discharge of the Commissionerof Banks from all further liabilities by reason of the liquidation of the bank.Such agent, or agents, shall convert the assets coming into his hands, or theirhands, into cash, and shall make distribution to the stockholders of said bankas herein provided. Said agent, or agents, shall file semiannually a report ofall transactions with the superior court of the county in which the bank islocated, and with the Commissioner of Banks, and shall be allowed for suchservices such fees not in excess of five percent (5%), as may be fixed by thecourt. In case of death, removal or refusal to act, of any agent or agentselected by the stockholders, the Commissioner of Banks shall, upon report ofsuch action on the part of such agent or agents to the superior court of thecounty in which the bank is located, turn over to said superior court for thestockholders of said bank, all the remaining assets of the bank, file hisreport and be discharged from any and all further liability to the stockholdersas herein provided. Said assets, when turned over to the superior courthereunder, shall remain in the hands of the superior court until such time as,by order of court or by action of the stockholders, distribution shall beprovided for.

(s)        Annual Report ofCommissioner of Banks; Items in Report of. – The Commissioner of Banks shallfile, as a part of his annual report to the Governor, a list of the names ofthe banks so taken possession of and liquidated; and the Commissioner of Banksshall, from time to time, compile and make available for public inspection,reports showing the condition of each and all the banks so taken possession of;and the annual report of the Commissioner of Banks shall show the sum ofunclaimed and unpaid deposits, with respect to each bank and shall show alldepositories of all sums coming into the hands of the Commissioner of Banksunder the provisions of this section.

(t)         Compensation ofCommissioner of Banks. – The Commissioner of Banks, for his services renderedin connection with the liquidation of banks hereunder, shall be entitled toactual expenses incurred in connection with the liquidation of each bank,including therein a reasonable sum for the time of the bank examiners and otheragents of the Commissioner of Banks, which expenses shall be a prior lien onthe assets of such bank so liquidated until paid in full; and the Commissionerof Banks shall have authority to prescribe reasonable rules and regulations forfixing such expenses.

(u)        Exclusive Methodsof Liquidation. – No bank created under the Banking Act or the IndustrialBanking Act, and under the supervision of the Commissioner of Banks, shall beliquidated in any other way or manner than that provided herein.

(v)        Application of Act.– The applicable provisions of this section as enacted by Chapter 113 of thePublic Laws of 1927 shall apply to all banks which on March 7, 1927, havesuspended operations or are in the process of liquidation but for which nopermanent receiver has been appointed by the court.

(w)       Liquidation byCommissioner of Banks of All Banks in Receivership Required. – On and after thefirst day of January, 1936, the provisions of this section shall apply to allbanks included in the definition or classification of banking institutionsunder this Chapter, and/or any amendment thereto, which at said time shall bein receivership in the State courts; and the said banks shall be liquidatedexclusively in accordance with the provisions of this section and by saidBanking Commissioner. The liquidation of said banks shall be made strictly inaccordance with the terms of this section and the words "competent localattorneys," as set forth in subsection (o) of this section shall bedefined to be any attorney or attorneys resident of the county in which thebank is being liquidated.

(x)        UnlocatedDepositor. – Any funds due a known but unlocated person shall be disposed inaccordance with Chapter 116B of the General Statutes, except where theprovisions of this Chapter specifically provide otherwise. (1921,c. 4, s. 17; C.S., s. 218(c); 1927, c. 113; 1931, c. 243, s. 5; cc. 385, 405;1933, c. 175, s. 2; c. 546; 1935, c. 81, s. 4; c. 231, s. 1; c. 277; 1939, c.91; 1947, c. 621, s. 1; 1971, c. 1135, s. 4; 1979, 2nd Sess., c. 1311, s. 4;1991, c. 677, s. 1; 1995, c. 129, ss. 4, 5.)