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    United States Shipping Bd. Merchant Fleet Corp. v. Rhodes, 297 U.S. 383 (1936)

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    The Supreme Court affirmed the decision of the Court of Appeals that allowed the respondent's suit against the Comptroller of the Currency and others to proceed without a prior demand. The Court of Appeals found that the Comptroller and receiver were actively involved in the allegedly unlawful transactions at issue. Moreover, the receiver had since filed its own suit regarding the same issues. As such, the exceptional facts of the case supported an exception to the general rule requiring demand. The Supreme Court affirmed based on the exceptional facts and left further coordination of the proceedings to the discretion of the trial court.

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    United States Shipping Bd. Merchant Fleet Corp. v. Rhodes, 297 U.S. 383 (1936)

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    The Supreme Court affirmed the decision of the Court of Appeals that allowed the respondent's suit against the Comptroller of the Currency and others to proceed without a prior demand. The Court of Appeals found that the Comptroller and receiver were actively involved in the allegedly unlawful transactions at issue. Moreover, the receiver had since filed its own suit regarding the same issues. As such, the exceptional facts of the case supported an exception to the general rule requiring demand. The Supreme Court affirmed based on the exceptional facts and left further coordination of the proceedings to the discretion of the trial court.

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    Filed: 1936-03-02 Precedential Status: Precedential Citations: 297 U.S. 383 Docket: Nos. 546, 547

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    The Supreme Court affirmed the decision of the Court of Appeals that allowed the respondent's suit against the Comptroller of the Currency and others to proceed without a prior demand. The Court of Appeals found that the Comptroller and receiver were actively involved in the allegedly unlawful transactions at issue. Moreover, the receiver had since filed its own suit regarding the same issues. As such, the exceptional facts of the case supported an exception to the general rule requiring demand. The Supreme Court affirmed based on the exceptional facts and left further coordination of the proceedings to the discretion of the trial court.

    Copyright:

    Public Domain
    Download as COURT, PDF, TXT or read online from Scribd
    Download as court, pdf, or txt
    31 views3 pages

    United States Shipping Bd. Merchant Fleet Corp. v. Rhodes, 297 U.S. 383 (1936)

    Uploaded by

    Scribd Government Docs
    The Supreme Court affirmed the decision of the Court of Appeals that allowed the respondent's suit against the Comptroller of the Currency and others to proceed without a prior demand. The Court of Appeals found that the Comptroller and receiver were actively involved in the allegedly unlawful transactions at issue. Moreover, the receiver had since filed its own suit regarding the same issues. As such, the exceptional facts of the case supported an exception to the general rule requiring demand. The Supreme Court affirmed based on the exceptional facts and left further coordination of the proceedings to the discretion of the trial court.

    Copyright:

    Public Domain
    Download as COURT, PDF, TXT or read online from Scribd
    Download as court, pdf, or txt
    of 3

    297 U.S.

    383
    56 S.Ct. 517
    80 L.Ed. 733

    UNITED STATES SHIPPING BOARD MERCHANT FLEET


    CORPORATION et al.
    v.
    RHODES. O'CONNOR, Comptroller of Currency of the
    United States, et al. v. SAME.
    Nos. 546, 547.
    Argued and Submitted Feb. 14, 1936.
    Decided March 2, 1936.

    Mr. George P. Barse, of Washington, D.C., for the petitioners O'connor


    and others.
    Messrs. Stanley F. Reed, of Washington, D.C., and Homer S. Cummings,
    Atty. Gen., for petitioners United States Shipping Board Merchant Fleet
    Corporation and others.
    Mr. Hugh H. Obear, of Washington, D.C., for respondent.
    PER CURIAM.

    Respondent, Thomas E. Rhodes, suing in his own right and on behalf of other
    creditors of the Commercial National Bank of Washington, sought the
    restoration of amounts alleged to have been illegally paid to petitioners by the
    bank's receiver. The payments were of amounts deposited with the bank by the
    United States Shipping Board Merchant Fleet Corporation and the Alien
    Property Custodian, respectively. The bank had pledged assets to secure the
    deposits, and recognizing the pledges as valid, the receiver under the direction
    of the Comptroller of the Currency had paid the amount of the deposits in full.
    Similar relief was sought against the Comptroller of the Currency with respect
    to payments to the Comptroller, in like circumstances, of deposits made by him
    of moneys belonging to insolvent banks. Unsecured creditors and depositors
    had received a dividend of but 50 per cent. of their claims. Respondent alleged
    that the above-mentioned pledges and the preferential payments were unlawful.

    The defendants, the Comptroller of the Currency and the receiver of the bank,
    moved to dismiss the bill of complaint for want of equity, and, in particular,
    because the bill failed to show any demand by plaintiff upon the Comptroller or
    receiver that such suits be brought or their refusal to sue. The defendants, the
    Fleet Corporation and the Attorney General, as successor to the Alien Property
    Custodian, made a similar motion. These motions were denied and a special
    appeal was allowed.

    The Court of Appeals held that, while as a rule a stockholders' or creditors' suit
    could not be maintained 'until demand has been made upon the receiver, the
    Comptroller, or the bank,' the rule did not apply 'where the receiver or
    Comptroller refuses to bring the suit * * * or where it would be a vain thing to
    make demand upon them, and it is shown there is necessity for a suit for the
    protection of the interests of creditors.' The court was of the opinion that the
    facts alleged in the complaint w re sufficient to show that the Comptroller and
    the receiver 'were both actively and personally involved in the transactions
    claimed to be unlawful,' and that this was enough to take the case out of the
    ordinary rule. The court also held that the pledge made by the bank to secure
    the deposits by the Comptroller of the Currency of moneys belonging to
    insolvent banks was a valid pledge in view of the provisions of the Act of May
    15, 1916, 39 Stat. 121 (12 U.S.C.A. 192), but that there was no authority for
    the exaction of pledges to secure the deposits which had been made by the Fleet
    Corporation and the Alien Property Custodian, and hence that those pledges
    were invalid. Accordingly, the order of the Supreme Court of the District was
    reversed and the dismissal of the bill was directed as to the Comptroller of the
    Currency, and with respect to the Fleet Corporation and the Acting Alien
    Property Custodian the order was affirmed. O'connor v. Rhodes, 65 App.D.C.
    21, 79 F.(2d) 146.

    On motion for reargument, the Court of Appeals adhered to its decision. Id., 65
    App.D.C. 27, 79 F.(2d) 152, 153. The court, however, took notice of the
    statement that the receiver, since the decision, had instituted a suit against the
    Acting Alien Property Custodian and the Fleet Corporation to recover the
    assets alleged to have been illegally pledged or the preferential payments made
    in consequence of such pledges'covering the same items, in the same
    circumstances, as are covered in the bill in the instant proceeding.' The court,
    while again recognizing the general rule, reiterated its view that the particular
    circumstances showed that the preferential payments in question 'were made at
    the instance and with the approval of the Comptroller and receiver' and that 'the
    claims for payment were instigated and invited by the Comptroller and the
    receiver.' The case was thus deemed to fall within the exception to the rule
    requiring demand and refusal before the bringing of suit. But the court noted

    the statement of counsel for the Comptroller that he no longer adhered to his
    former position that the payments to the Fleet Corporation and the Alien
    Property Custodian were validly made. As there had been no motion by either
    party to stay further proceedings in the instant suit, pending the prosecution by
    the receiver of the suit filed by him, the court did not press the point which it
    had raised as to its power to direct such a stay. That reservation was expressly
    stated to be 'without prejudice to the right of the trial court, on motion and in
    the exercise of its judicial discretion, and on such reasonable terms as it may
    impose, to arrange the order of trial in the two suits as may result in the most
    economical and speedy determination of the issues involved.' Id., 65 App.D.C.
    28, 79 F.(2d) 153.
    5

    We granted certiorari limited to the question of the right of respondent to bring


    this suit without prior demand upon, or refusal by, the Comptroller of the
    Currency or the receiver, or both, 296 U.S. 568, 56 S.Ct. 249, 80 L.Ed. 401.

    As the case turns on its exceptional facts and suit has been brought by the
    receiver, and the course of procedure in the interest of economical and efficient
    administration is left to be determined by the trial court in the exercise of a
    sound discretion, the decree of the Court of Appeals is affirmed.

    Affirmed.

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