I do not agree with the majority that the facts in this case do not establish a preference. The majority opinion correctly states the issue as follows: "The question now presented by the complaint is whether, in making distribution in the future, in order to prevent a preference, the Bank Commissioner should be required to distribute to the depositors who did not accept stock a sum equal to the amount of the exchange value of the stock accepted by the other depositors."
The majority opinion states: "The general doctrine is well settled that preference in distributing trust property is forbidden."
Therefore the majority holds that, if there was a preference, it would be unlawful. The question then is: was there a preference?
The majority opinion supposes that A and B were depositors in the Bankers' Trust Company each in the sum of $1,000. They were paid 50 per cent. of their deposits so that A and B afterwards held deposit claims each in the sum of $500. Both were requested to exchange a certain per cent. of their claims for a certain number of shares of stock in the new bank. A declined to purchase stock in the new bank. B purchased stock to the amount of $150, and was paid $150 of his $500 deposit. Neither of them were required to purchase the stock, but the stock was offered to stockholders and others at a fixed price.
I think it makes no difference whether they paid B $150 of his deposit in money or permitted him to use it *Page 544 in the purchase of stock of the value of $150. In either event, he received $150 of his deposit, and A received nothing.
But suppose that B was a depositor in the sum of $5,000 and A in the sum of $500. When the 50 per cent. dividend was paid, B's deposit would be reduced to $2,500 and A's to $250. Then, if B purchases $1,250 worth of stock in the new bank and A does not purchase any stock, B's deposit then would be $1,250 and A's would be $250. The plaintiffs contend that, since B has received $1,250 of his deposit in stock, he is not entitled to any further dividend until A receives the same per cent. that B has received. It is true that A is not asking that the trade between the Commissioner and B be rescinded, but he is asking that he receive the same per cent. of his deposit that B received. How it can be contended that when A has received 50 per cent. in dividends and B has received 75 per cent. of his deposit in dividends, that this is not a preference or discrimination, I am unable to understand. According to the opinion of the majority, it is conclusively presumed that B received $1,250 in value on his deposit and that A received nothing. But it is said that this is not the character of preference that the law condemns.
It is true that the law authorizes the Bank Commissioner under the supervision of the chancery court to compound debts, sell assets in piecemeal, and exchange property for deposits. I think a complete answer to this is that the trade in the instant case was not made under the supervision of the chancery court. No order was made by the chancery court authorizing the sale, and the chancery court refused to approve it.
This court has never held that these things could be done except under the supervision of the chancery court. The majority opinion cites two cases only: Dunkin v. Taylor, 185 Ark. 1033, 50 S.W.2d 978, and Lummus Cotton Gin Company v. Taylor, 188 Ark. 100, 64 S.W.2d 90.
In the Dunkin case it was held that the order of the chancery court did not go any further than the statute, and that the parties were endeavoring to carry out the *Page 545 letter and spirit of the order of the chancery court. The chancery court had made an order authorizing the Bank Commissioner to do just what he did in that case.
In the Lummus Cotton Gin case the court said: "The only difference between the two cases is that in the Dunkin case all order was obtained from the chancery court to compound or settle the claims before the Commissioner compounded or settled them. In the instant case, the chancery court confirmed the settlement of the claims after they were adjusted with the depositors by the Bank Commissioner. The confirmation in the instant case of the several settlements had the same effect as if the settlement had been ordered originally by the chancery court."
The court therefore impliedly held in that case that the settlement would have been void without the order of the chancery court. I think the decisions in both cases would justify the affirmance of the instant case.
As I have already said, there was no order of the chancery court either authorizing the settlements or confirming them. Moreover, the question that we have here was not involved in either of the above cases.
It is not contended here that the sale of the stock or the trade of deposits for stock was a preference, but the contention is that, after B has received stock for a part of his deposit, it would give him a preference to pay him any further dividends until A had received the same per cent. of his deposit that had been paid to B.
Of course it is not contended that A could be required to purchase stock. I think we may assume that A's deposit had all the money he had to provide food for his family, and that he could not afford to go into the banking business, even if he had desired to do so. But it is immaterial whether he was unable or unwilling to go into the banking business. The payment to B of any dividend after he had received the stock was wrongful of his deposit that B had received, and any such payment constituted a preference.
It seems to me that the decision of the majority is an application of the rule announced in Matthew 25:29: *Page 546 "For unto every one that hath shall be given, and he shall have abundance; but from him that hath not shall be taken away even that which he hath."
"The general rule that a private debtor may lawfully prefer one creditor over another, as expressed in the case of Jackson v. Citizens' Bank Trust Co.,55 Fla. 265, 44 So. 516, does not apply in a case where the debtor, a banking institution, is charged with quasi-public duties and obligations and its business is so burdened with a public interest as to require the exercise by the State of its police power to regulate and supervise." Leyvraz v. Johnson, 154 So. 159; Baird v. First Nat. Bank, 55 N.D. 856, 215 N.W. 810, 56 A.L.R. 200; Baird v. Reinerston, 253 N.W. 159.
"With such a spirit and understanding of the law, may the officers of a bank, knowing its insolvency realizing that its receivership is imminent, thus prefer certain depositors over all others by the subterfuge of trading the best assets in the bank's note case for deposits, in some instances not yet due? We think not. To decide otherwise could be a manifest travesty upon justice." Luikart v. Hunt, 124 Neb. 642, 247 N.W. 790; Divide County v. Baird, 55 N.D. 45, 212 N.W. 236.
"A preference, however, is the paying or securing to be paid in all or in part of one claim to the exclusion of other claims." Preference-Security Savings Trust Company v. Portland Flour Mills Co., 124 Or. 276,261 P. 432-454.
I think that payment to B until A has an equal per cent. paid on his deposit is clearly a preference, and that the decree of the chancellor is correct and should be affirmed.