On appeal from the Supreme Court.
For the plaintiff-respondent, Abe P. Friedman and Morris Spritzer.
For the defendant-appellant, Edward R. McGlynn.
The opinion of the court was delivered by
CASE, J. The appeal is by the defendant from a judgment entered for the plaintiff in the Supreme Court following the striking out of the answer and separate defenses.
On January 15th, 1934, the plaintiff was a depositor in a savings account in the defendant trust company. On that date he received a treasurer's check in the sum of $2,300, which check was presented for payment in the usual course
of business on January 18th, 1934. After delivery of the check but before presentment, defendant had been directed by the commissioner of banking and insurance, acting under the terms of the so-called Altman act (laws of 1933, chapter 66), to postpone the payment of deposits, and defendant, assuming that the direction was controlling, refused payment. Simultaneously with delivery of the check, defendant charged the withdrawal of $2,300 in plaintiff's deposit book. Defendant reduced the deposit account on its own books accordingly and increased its treasury account by the same sum. Thereafter, the defendant was reorganized under chapter 116, Pamph. L. 1933, known as the Reorganization act. The plan of reorganization included the issue of class A preferred stock for sale to the Reconstruction Finance Corporation with preference over the common stock and class B preferred stock, and also contained this provision:
"All depositors and creditors other than those which are required by law to be paid in full will waive fifty (50%) per cent. of their respective net unsecured claims against the Trust Company (after all legal offsets). The remaining fifty (50%) per cent. will be available for immediate and unrestricted use and/or withdrawal upon the reopening of the Trust Company. In exchange for the fifty (50%) per cent. waived by the unsecured depositors and creditors, the Trust Company will issue to each of such depositors and creditors shares of the aforesaid Class 'B' Preferred stock of a par value of $10 per share at the rate of one share of such stock for each $40 so waived."
This plan was approved by the required number of creditors and stockholders and by the commissioner of banking and insurance, and the defendant was permitted to resume its normal and usual banking business in accordance with the terms of those statutes. Although plaintiff did not consent to the plan of reorganization, he received, without prejudice to his rights, one half the amount of the treasury check. The dispute is whether he must accept class B preferred stock for the remainder of his claim or is entitled to full cash payment.
The issue upon which the controversy comes to us is whether
the answer and defenses were frivolous and therefore properly struck. Appellant resolves its argument contra that proposition into two contentions; first, that the respondent at the time of the presentation of his check for payment was a claimant to a deposit and as such was subject to the postponement feature of the Altman act; second, that under the Reorganization act and the plan ...