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Krimke v. Guarantee Building and Loan Association

Decided: February 2, 1934.

SARAH KRIMKE, ADMINISTRATRIX CUM TESTAMENTO ANNEXO OF THE ESTATE OF FANNY FEIST, DECEASED, PLAINTIFF-APPELLANT,
v.
GUARANTEE BUILDING AND LOAN ASSOCIATION OF THE CITY OF NEWARK, NEW JERSEY, AND JULIUS E. FLINK, AS CONSERVATOR, ETC., DEFENDANTS-RESPONDENTS



On appeal from a judgment of the Essex County Circuit Court.

For the appellant, Schotland & Schotland.

For the respondents, Charles Hood.

Donges

The opinion of the court was delivered by

DONGES, J. Plaintiff-appellant, as administratrix cum testamento annexo of the estate of Fanny Feist, deceased, brought suit in the Essex County County Circuit Court to recover four months rent alleged to be due under a lease between appellant's predecessors, as executors and trustees, with the defendant Guarantee Building and Loan Association. It is alleged in the complaint that the defendant Julius E. Flink was appointed conservator of the Guarantee Association by the commissioner of banking and insurance. This appointment was made under the provisions of chapter 258 of the laws of 1933, page 694.

Motion was made to strike the complaint and the Circuit Court judge ordered the complaint stricken.

The question raised on this appeal is whether the act above mentioned deprives the appellant of the right to begin suit

against the association and conservator. The act recites in a preamble that a public emergency exists. In subdivision (g) of the first section it is provided that the commissioner of banking and insurance may, "whenever it is essential, in the public interest," appoint a conservator or conservators for a building and loan association, and "such conservators shall have all the rights, powers and privileges now possessed by, or hereafter given, receivers of corporations * * *" and "during the time that such conservator remains in possession of such association, the rights of all parties with respect thereto shall, subject to the provisions of this subchapter, be the same as if a receiver had been appointed therefor."

The clear purpose of the act was to prevent hard-pressed building and loan associations from being ruined by forced liquidation through one creditor attempting to secure a preference over another creditor by obtaining judgment. It does not suspend the right of the creditor to press for payment of its claim, nor does it prohibit payment of debts, but it does, by providing that the situation shall be the same as in a receivership, prevent the beginning of a suit in which judgment may be obtained, execution issued and the assets of the association sold in part or whole for such debt.

Appellant urges that if the statute provides that "creditors could not sue and could not collect what was due to them, it seems obvious that the obligation of their contracts would be impaired," and the statute would, to that extent, be unconstitutional.

The statute, as stated, recites that "a public emergency exists as the result of a prolonged period of economic depression," and in section 5 provides that it shall become inoperative after three years from the date of its approval.

The exercise of the police power in an emergency to protect large numbers of the public from injury by reason of temporary conditions, and for a limited time, has been sustained in many cases. Block v. Hirsch, 256 U.S. 135; 65 L. Ed. 865; Marcus Brown Co. v. Feldman, 256 U.S. 170; 65 L. Ed. 877; Levy v. Siegel, 258 U.S. ...


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