Barbour v. National Exchange Bank

• Decision Date: 25 April 1887
• Citation: 45 Ohio St. 133,12 N.E. 5
• Parties: BARBOUR, Receiver, v. NATIONAL EXCHANGE BANK.
• Court: Ohio Supreme Court

12 N.E. 5

45 Ohio St. 133

BARBOUR, Receiver, v. NATIONAL EXCHANGE BANK.

Supreme Court of Ohio.

April 25, 1887

Error to district court, Seneca county.

The plaintiff in error, Anson C. Barbour, commenced the action below in the court of common pleas of Seneca county, as receiver of the Ohio Shoe Company, an Ohio corporation against the defendant, to recover twice the amount of interest greater than that allowed to be taken by a national bank, and alleged to have been paid by the Ohio Shoe Company for money borrowed by it from the bank.

The defendant answered, among other things, that the appointment of the receiver was without authority and void. The answer set forth the substance of the petition filed in the action in which the receiver was appointed. The averments of that petition, so far as they reflect upon the power of the court in that proceeding to appoint a receiver, are that the Ohio Shoe Company was a corporation duly incorporated under the statutes of Ohio; that, for the purpose of conducting and carrying on its business at the city of Tiffin, the shoe company had purchased and then owned a large amount of machinery, steam-engine, boiler, sewing-machines, tools, and implements, and had also erected its factory or building wherein to operate said machinery, upon certain real estate which it had purchased, and then owned for such purpose to-wit, (describing it; ) that the shoe company then owned and held a large amount of accounts, claims, and assets against various persons and corporations, in the city of Tiffin, Ohio, and else where, due to it for shoes manufactured, sold, and delivered; that there was also then due to the shoe company unpaid subscriptions to its capital stock from various persons; that in the transaction of the business of the company, and for the purpose of raising the means necessary to conduct and operate its machinery and business, the plaintiff in that case, Alfred G. Sneath became and then was the surety for the company in a large amount, and which was then due and payable, to-wit, (describing indebtedness amounting to more than $20,000; ) that he (Sneath) had no security whatever for his liability, and that he was the surety of the company without any consideration whatever; that the company was then indebted to other creditors in considerable amounts; that the company was not making any effort to pay off or discharge the debts upon which he (Sneath) was surety, as before stated; that the assets and property of the company, above mentioned, and of whatever kind and description, would be entirely insufficient to pay off and discharge its debts and liabilities; that the company was insolvent and that its business could not be continued without loss and the wasting of its assets; that it was necessary to sell all the property, of whatever consisting, real, personal, and mixed, of the company, and to collect all its accounts, claims, and demands, and its unpaid stock subscriptions, in order to meet its liabilities, and pay off and discharge its debts; that the petition contained no other or further averments or allegations whatever.

The petition prayed that the company be compelled to pay off and discharge the notes upon which Sneath was surety as above set forth, and save him from the payment thereof; that a receiver be appointed to take charge and control of the property, real and personal, and of all the assets, of the company, and convert the same into money as speedily as possible, to collect all the claims and demands due to it, and to collect the unpaid subscriptions to the capital stock; that the real estate, factory, fixtures, and all personal property belonging to the company, be sold by order of the court, and according to law; that the money so collected, and the proceeds of the sale of the real estate and personal property, be paid to all the creditors of the company in proportion to their debts and claims against it; and for such other or further relief as might be proper in the premises.

The answer proceeds, after alleging the appointment of the receiver, (which was in due form,) with averments reflecting upon the motives and purposes of Sneath in procuring the receiver to be appointed, but not affecting the question of jurisdiction to make the appointment. It is conceded that this question depends upon the case made in the petition, and whether it was one in which a receiver was proper.

The cause was tried upon the issues, and a judgment rendered against the bank in the court of common pleas, which was reversed on error in the district court. To reverse this judgment the present proceeding is prosecuted. Aside from a question of pleading which is not material, three questions are presented: (1) Can usury be recovered back by any one except the company itself? (2) Was the receiver, if legally appointed, authorized to bring the action below? (3) Was there jurisdiction in the court, in Sneath's case, to appoint a receiver?

George E. Seney and Lutes & Lutes , for plaintiff in error.

Nelson L. Brewer and Pillars & Pillars , for defendant in error.

OWEN C. J.

1 and 2. The action below was prosecuted under section 5198 of the Revised Statutes of the United States, which provides: ‘ The taking, receiving, reserving, or charging a rate of interest greater than in allowed by the preceding section, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back, in an action in the nature of an action of debt, twice the amount of interest thus paid from the association taking or receiving the same, provided such action is commenced within two years from the time the usurious transaction occurred.’

It is maintained by counsel for the defendant that the receiver was not the ‘ legal representative’ of the shoe company, and he also maintains that ‘ it is common learning that usury is a personal matter, and can be set up or claimed only by the person himself who saw fit or chose to pay it.’ The principles involved in these two propositions are settled by National Bank v. Trimble , 40 Ohio St. 629, where it was held: ‘ If the payor of such interest, before action brought, was adjudged a bankrupt, his assignee in bankruptcy became his ‘ legal representative,’ and as such was entitled to bring the action.' The court was construing the section involved in this case. We are content with the disposition there made, and are of opinion that the principle of that case reaches the case of an action by a receiver.

3. The question, however, which has chiefly engaged the consideration of this court is, was the plaintiff legally appointed receiver of the shoe company? The distinguished counsel for the defendant simplifies the discussion of this question by the statement that ‘ I would not undertake to call in question here the legality of the appointment of this receiver if enough appeared in the case in which he was appointed to give jurisdiction to make the appointment. But an examination of the answer contained in the record will show that there was no such jurisdiction.’ This places the inquiry upon the true ground. It will be conceded that, if there was jurisdiction to make the appointment, no...