Lewis v. Clark

• Decision Date: 01 March 1904
• Docket Number: 838.
• Citation: 129 F. 570
• Parties: LEWIS et ux. v. CLARK
• Court: U.S. Court of Appeals — Ninth Circuit

129 F. 570

LEWIS et ux. v. CLARK

No. 838.

United States Court of Appeals, Ninth Circuit.

March 1, 1904

This is a suit brought by M. C. Clark, as receiver of the American Savings & Loan Association, formerly the American Building &amp Loan Association, to foreclose a bond and mortgage given by Isaac I. Lewis and his wife on property in the state of Idaho to the said American Building & Loan Association. This association is a corporation organized under the laws of the state of Minnesota. Lewis and his wife are citizens of the state of Idaho. In May, 1889, Lewis made application to the association for a loan of $5,000, and in September of that year received such loan or advancement, and the bond and mortgage upon which this suit is based were then executed. The bond was secured by a pledge of all stock owned by Lewis which was to be the property of the association on maturity of said stock, which Lewis agreed to mature by the payment of certain moneys each month, part being called 'interest,' and part 'dues on the shares of stock,' one-half of which was stock called 'premium for the privilege of obtaining the loan or advancement. ' Lewis made these payments monthly up to January, 1896, when he was notified that a receiver of the association had been appointed, and that no further payments would be accepted. The association was declared to be insolvent in proceedings brought in the state court of Minnesota, and William D. Hale was appointed receiver to take charge of the property and effects of the corporation, on January 14, 1896, and on June 18, 1896, he was made permanent receiver of the association. It appears from the record that said association, in order to engage in business in the state of Wisconsin, and in accordance with the laws of said state, deposited with the State Treasurer of Wisconsin, in trust for the benefit and security of all its members in the state of Wisconsin securities of the value of $100,000. Among the securities so deposited was the bond and mortgage of Lewis and wife, which is sought to be foreclosed in this suit. Thereafter one L. V Lewis, a member of the association, and a citizen of the state of Wisconsin, brought an action in the state court of Dane county, Wis., to have the bonds and mortgage in the hands of the State Treasurer of Wisconsin placed in the hands of a receiver, for the purpose of collecting them for the benefit of the Wisconsin members. In this action, Receiver Hale, who had been appointed by the Minnesota court, intervened, and claimed that the securities in the hands of the State Treasurer should be delivered to him, as the receiver of the association. In the course of the proceedings in that action, M. C. Clark, the complainant in this suit, was appointed receiver of the association for the state of Wisconsin. The contest between the respective receivers with reference to the securities in the hands of the Treasurer of Wisconsin continued until the suit was dismissed, for want of jurisdiction, by the Supreme Court of the United States, in May, 1901. Hale v. Lewis, 181 U.S. 473, 21 Sup.Ct. 677, 45 L.Ed. 959. Pending the controversy therein, the receivers, Hale and Clark, entered into an agreement, by leave of the Wisconsin court, by which the bond and mortgage in question in this suit were to be assigned and transferred by Hale to Clark. For the purpose of carrying out this agreement, a formal assignment was made by Hale to Clark. Thereafter Clark, the Wisconsin receiver, commenced this suit in the circuit court of Idaho, alleging, among other things, that at the time of his appointment as receiver 'the American Savings & Loan Association had no creditors and owed no debts in the state of Idaho. ' The proceedings in this suit finally resulted in a decree of foreclosure of said bond and mortgage, from which decree Lewis and wife have appealed to this court.

Seldon B. Kingsbury, for appellants.

A. A. Frasier and W. E. Borah, for appellee.

Before GILBERT and ROSS, Circuit Judges, and HAWLEY, District Judge.

HAWLEY District Judge, after making the foregoing statement of facts, .

It is contended by appellants that the complainant, Clark, as receiver of the Wisconsin court, has no standing in the court in Idaho, and should not have been permitted to maintain this suit, because he is a foreign receiver, and does not represent the association, its officers, membership, or interests; that the only interests which he represents are antagonistic to the whole membership of the association, opposed to the citizens of Idaho, and against the public policy of that state.

It is true that Clark is not the general receiver of the association. He was appointed by the court in Wisconsin for the purpose of receiving and foreclosing the securities which had been deposited with the State Treasurer as required by the statute of Wisconsin, so as to enable it to transact business in that state. His appointment may have been made for the better protection of the members of the association in said state, but it does not necessarily follow that his interests are entirely antagonistic to the association, its members, shareholders, or creditors. The stockholders authorized the deposit of the securities of the corporation in Wisconsin, and the members of the association are not in a position to question the validity of such deposit, or its binding force and effect, as against them.

We are not called upon in this suit to discuss the relative rights of the receivers, Hale and Clark, in order to determine the rights of the shareholders or creditors of the association under the law of Minnesota, who insist that all the securities held by the association should be deposited in Minnesota for the benefit of all the members of the association, nor to discuss the question as to the validity of the statute of Wisconsin requiring the deposit of $100,000 with the State Treasurer as a prerequisite of the right of the said association to transact business in that state.

In Lewis v. American Savings & Loan Association et al., 98 Wis. 203, 73 N.W. 793, 39 L.R.A. 559, the facts relative to the insolvency of the association, the laws of Minnesota and of Wisconsin, the resolution of the board of directors of the association passed May 1, 1889, authorizing the deposit of securities to the extent of $100,000 in compliance with the Wisconsin statute, as well as the appointments of Hale and Clark, are set forth at length, and the validity of such acts and the legal effect thereof are fully discussed. It was there held that the securities deposited in Wisconsin would be presumed to have been deposited in a bona fide attempt on the part of the association to comply with the laws of that state; that the failure of the association to comply with the statutory provisions of the state of its domicile in making such deposit did not render the transfer void, compliance with such provisions having been intended as a matter of local administration merely, and not as a condition precedent to the right to make it; that such deposit was within the lawful power of the association, as represented by its directors, and the action of the directors in making it was binding upon the terms of the statute under which it was made; that the receiver appointed in Wisconsin was entitled to retain and sell or collect the securities, and apply the proceeds to the redemption in full of all shares held by the residents of Wisconsin, and to the performance and discharge of all the...