CORPORATION COMMISSION v. TRUST CO

Factual and Procedural Background

The Central Bank and Trust Company of Raleigh was a banking corporation. At the February Term, 1922, of the Superior Court of Wake County in an action entitled "Corporation Commission v. Central Bank and Trust Company," the bank was closed and J. C. Little, J. B. Ball and W. G. Barnes were appointed receivers. The Chemical National Bank filed a claim with the receivers for $40,919 and held certain notes of the Central Bank and Trust Company as collateral security for that indebtedness. The receivers took the position that the Chemical National Bank "was not entitled to receive a dividend upon its entire claim, but only a pro rata dividend on the amount of said claim less the value of the securities held by it." The Chemical National Bank appealed this ruling to the Superior Court, which decreed that the receivers pay the Chemical National Bank "an amount of money which shall equal such percentage of $40,919 as has heretofore been paid to other creditors of Central Bank and Trust Company." The receivers appealed to the Supreme Court of North Carolina.

Legal Issues Presented

1. Whether a creditor holding collateral (the Chemical National Bank) is entitled to receive a dividend calculated as a percentage of its full claimed amount ($40,919) rather than a pro rata dividend on the claim reduced by the value of the collateral.
2. Whether the receivers' reduction of the claim by the value of the securities held as collateral was a correct basis for dividend calculation.

Arguments of the Parties

Chemical National Bank (Appellant to the Superior Court)

• Filed a claim for $40,919 and sought a dividend calculated as a percentage of that full claimed amount (as reflected by the Superior Court's decree ordering payment based on such percentage).

Receivers

• Posed that the Chemical National Bank was not entitled to a dividend on its entire claim but only to a pro rata dividend on the amount of the claim less the value of the securities held as collateral.

Table of Precedents Cited

Court's Reasoning and Analysis

The opinion is per curiam and concise: the Supreme Court affirmed the Superior Court's judgment. The court expressly relied on the authority of Central Bank and Trust Co. v. Jarrett, 195 N.C. 798, and cited Merrill v. Bank, 173 U.S. 131, as supporting authority. No additional factual findings or extended legal analysis are presented in the opinion.

Holding and Implications

Affirmed.

Direct effect: The Superior Court's decree ordering the receivers to pay the Chemical National Bank an amount equal to the percentage of $40,919 paid to other creditors is upheld; the receivers' contrary position was rejected. The opinion does not announce a new precedent beyond affirming the judgment on cited authorities.