Bank of Florence v. U.S. Savings & Loan Co.

• Decision Date: 09 August 1894
• Citation: 16 So. 110,104 Ala. 297
• Court: Alabama Supreme Court
• Parties: BANK OF FLORENCE ET AL. v. UNITED STATES SAVINGS & LOAN CO.

16 So. 110

104 Ala. 297

BANK OF FLORENCE ET AL. v. UNITED STATES SAVINGS & LOAN CO.

Supreme Court of Alabama

August 9, 1894

Appeal from district court, Lauderdale county; W. P. Chitwood Judge.

Suit by the United States Savings & Loan Company against the Bank of Florence and others. From a decree appointing a receiver defendants appeal. Reversed.

In addition to the allegations of the bill, which are stated in the opinion, and upon which is predicated the right to have the receiver appointed, the bill also averred that the officers of the bank had, wrongfully and without authority of its stockholders, turned over the assets of the bank to one S. S. Broadus, who had assumed complete control of the same and that he was pursuing reckless methods in disposing of the assets of said bank.

Roulhac & Nathan and Emmet O'Neal, for appellants.

Paul Hodges, for appellee.

BRICKELL C.J.

The material allegations of the original bill, on which is predicated the right to the appointment of a receiver, and the right to the ultimate equitable relief which is prayed are capable of being reduced to a narrow compass. The complainant is a corporation organized and existing under the laws of the state of Minnesota, having a place of business in the city of Florence, in this state. The Bank of Florence was engaged in a general banking business at Florence, and became the agent of complainant for the collection of moneys there due and owing, and which were to become due, and was charged with the duty of remitting such moneys to the complainant as collected. Neglecting the duty of remittance of these moneys, the bank suffered the sum of $538.80 to accumulate in its hands, and suspended payments. Though insolvent, the bank made no transfer or assignment of its property and assets, but proceeded in winding up its affairs, with the acquiescence of its creditors. Judgments were being rendered against it, and it was making preferences in payment of its creditors. These are the material allegations of the bill, upon which is founded the right to the appointment of a receiver; and the specific relief prayed is that, for the payment of the sum due, the complainant be decreed a lien on all the assets of the bank, in priority of all general liens, by which we suppose is intended in priority of all creditors not having a specific lien. When an application is made for the appointment of a receiver, the primary inquiry is whether there is shown a reasonable probability that the plaintiff asking the appointment will ultimately succeed in obtaining the general relief sought by the suit. If ultimate success is a matter of grave doubt, or if, as in the present case, it be clear that the general relief sought cannot be obtained, the appointment ought not to be made. 3 Pom. Eq. Jur. (2d Ed.) § 1331; High, Rec. (2d Ed.) § 8; Randle v. Carter, 62 Ala. 95.

It is true, as a general rule, that, in making or refusing the appointment of a receiver, the court will not forestall or anticipate the decision which may be made on final hearing. This is true when a case is presented upon which there is a reasonable probability the plaintiff may ultimately obtain relief. In such cases the pleadings may not be drawn with technical accuracy. The bill may be subject to demurrer for the want of proper parties, or because of defects of form or the absence of substantial allegations,-insufficiencies curable by amendment. These insufficiencies, of themselves, do not form an impediment to the appointment of a receiver, if a case be made by a party having interests to be protected and preserved entitling him to the general relief which is prayed. Ex parte Walker, 25 Ala. 81.

The relation between the complainant and the Bank of Florence was that of principal and agent, created by their agreement,-a legal relation strictly, though, to attain the ends of justice, and preserve the confidence it involves, courts of equity, under some circumstances, deal with it as a fiduciary relation. The debt created by the breach of duty of the agent is a mere simple contract debt, for the recovery of which legal remedies are adequate. Crothers v. Lee, 29 Ala. 337; Knotts v. Tarver, 8 Ala. 743. The demand being a simple contract debt, purely of a legal character the complainant, in the absence of some peculiar equity, is not entitled to the intervention of a court of equity to enforce its payment. Reese v. Bradford, 13 Ala. 838; Sanders v. Watson, 14 Ala. 198. These well-recognized principles are not controverted. The insistence is that as the agent converted to his own use the money of the principal, commingling it with his own money, or in some form with his other assets, so that it cannot be identified or the specific uses to which it was applied traced, it is sufficient to trace it into...