Cooper v. Otero

• Decision Date: 23 January 1934
• Docket Number: No. 3957.,3957.
• Citation: 29 P.2d 341,38 N.M. 164
• Parties: COOPER et al.v.OTERO, District Judge.
• Court: New Mexico Supreme Court

38 N.M. 164

29 P.2d 341

COOPER et al.

v.OTERO, District Judge.

No. 3957.

Supreme Court of New Mexico.

Jan. 23, 1934.Rehearing Denied Feb. 20, 1934.

Original proceeding in prohibition by Lester Cooper and William H. Powell, as receivers of the First Savings Bank & Trust Company of Albuquerque, and E. E. Enderlin, against M. A. Otero, Jr., District Judge of the First Judicial District, pretending to act and sit as judge of the Second Judicial District in the place and stead of Hon. Milton J. Helmick, District Judge of said Second Judicial District, to stay further proceedings in an action pending before respondent.

Writ made absolute.

Pleading is not to be tested by name alone, but also by its allegations and relief, sought.

Hanna & Wilson, George C. Taylor, and William A. Brophy, all of Albuquerque, for relators.

E. K. Neumann, Atty. Gen. (Hugh B. Woodward, of Albuquerque, of counsel), for respondent.

BICKLEY, Justice.

Certain creditors sued for a receiver of the bank. The state bank examiner, a defendant, answered and otherwise participated in the proceedings, requesting, among other things, that he be appointed as receiver.

Receivers Cooper and Powell were appointed by Judge Helmick, the resident judge of the Second district court, who declined to name the state bank examiner as such receiver. The examiner and his counsel, the Attorney General, made no objection to the proceedings therein for some time. Afterwards the Attorney General, on behalf of the state, in a separate action, sued to have the examiner appointed receiver of the bank (cause No. 21029). The issues were the same as were or might have been litigated in the first suit (cause No. 20779). On the same day the Attorney General, on behalf of the plaintiff, state of New Mexico, filed an affidavit stating that he believed that Hon. Milton J. Helmick, judge of the court wherein the cause was pending and before whom it would in due course come on for hearing, could not preside over said cause with impartiality. After some proceedings on this affidavit the respondent, the judge of the district court of the First district, having been designated by the Chief Justice to sit as judge of the Second district, made orders granting the relief sought by the Attorney General.

The receivers appointed by the court in the first case, having qualified and taken possession of the property and assets of the bank, declined to recognize the orders of the court made in the second case and refused to turn over the assets and property of the bank to Mr. Bingham, the examiner appointed by the court in the second case. Thereupon, they were cited to show cause why they should not be held in contempt of court. The action now before us seeks to stay further proceedings by respondent in said cause No. 21029.

Relators contend that the court in the first cause having had jurisdiction and acting regularly in the appointment of the receivers Cooper and Powell, the court was without power on the second case presented, to treat as null and void its action in the first case.

The respondent claims, on the other hand, that the court in the first case acted without jurisdiction, and that it properly proceeded in the second case because all orders theretofore made relative to the subject-matter were void and of no effect. This view is based upon the proposition that chapter 32, Laws 1933, provides an exclusive procedure for the appointment of a receiver of an insolvent state bank.

That enactment, so far as material, is as follows: “Section 1. Upon taking charge of any bank the State Bank Examiner shall as soon as possible ascertain by a thorough examination of its affairs its actual condition and if he shall become satisfied that such bank cannot resume business or liquidate its business to the satisfaction of all of its creditors, he shall make a full and complete report of such examination and this opinion to the Attorney General who shall institute forthwith proper proceedings in the proper court for the purpose of having the State Bank Examiner appointed as receiver to take charge of such bank and wind up its affairs and the business thereof for the benefit of its depositors, creditors and stockholders. Upon such application the court to which application is made shall appoint the State Bank Examiner as such receiver and may in its discretion require the State Bank Examiner to furnish a bond, in addition to his official bond, conditioned upon the faithful performance of his duties as such receiver and his faithful accounting for all moneys or assets of such bank which may come into his hands as receiver thereof. Such proceedings shall otherwise be governed by the provisions of the general incorporation laws for the winding up of insolvent corporations.”

Counsel for respondent say that this language means, first, that no suit for a receiver of an insolvent bank shall be brought by any person other than the Attorney General; second, that no court shall appoint such a receiver except upon application of the Attorney General; and, third, that the state bank examiner is the sole and only person and officer who may be appointed by the court as such receiver.

[1][2] Courts of equity have inherent power to appoint receivers of corporations. There is no reason except where statutes interfere why this rule does not apply to banks. Clark on Receivers (2d Ed.) §§ 700, 885.

Section 55 of chapter 67, Laws 1915 (Bank Act), 1929 Comp. Stats. § 13-156, provides: “ Corporate status of banks. Except as herein limited, incorporated banks shall exercise and enjoy all the rights and privileges and be subject to all the liabilities and restrictions provided by law for corporations in general.”

It is not claimed on the argument here that, if chapter 32, Laws 1933, has not interfered, the statutes relative to the appointment of receivers for corporations in general are not sufficient authority for the appointment of a receiver of a bank upon the application of a creditor thereof.

The contention of counsel for respondent apparently is that said act of 1933 has supplied such interference, and that such interference extends not only to the power of the district court to appoint a receiver for a bank under the law governing corporations in general, but further has served to abrogate the inherent power of the courts over such matters. We are not persuaded of the correctness of respondent's third contention that the court must appoint the state bank examiner receiver, and as to the first and second contentions we express no opinion.

The problem of the fitness of courts of equity to administer corporate receiverships is not a new one. In the case of banks it has frequently been argued, as by counsel for respondent, that procedural difficulties make judicial handling of liquidation and reorganization of banks particularly difficult. It is said that not only is expert management a requisite in such a case, in order to best preserve assets for depositors and creditors, but that, in the time between application to a court for a receiver and his appointment, wholesale withdrawals by depositors may cause disaster to a bank otherwise able to continue business. A case supporting this view strongly is Craughwell v. Mousam River Trust Co. (1915) 113 Me. 531, 95 A. 221.

On the other hand, the adequacy of an exclusively executive or administrative receivership has been challenged.

To remedy this situation in regard to national banks, the National Bank Act (see 12 USCA § 21 et seq.) has given the Comptroller of the Currency wide discretion and summary power in appointing receivers of such institutions. Upon being satisfied of the existence of the facts which the act sets forth, as the grounds for his action, he may immediately appoint a receiver. Court action is not required.

Most states have statutes authorizing the taking possession of the assets of state banks by the state bank examiner or other state officer. State statutes further are frequently found authorizing a receiver of a bank under certain restrictions and conditions and also restricting the appointment of a receiver of a bank.

In several states, including New Mexico, the visitorial power conferred upon the state banking officer to take possession of a state bank is only preliminary to court action, in order to give the state officer more than temporary standing. Several of the states go so far as to provide that no suit for a receiver shall be brought by any person other than the state banking officer. See Alabama Code (Michie 1928) § 6360; Colo. Ann. Stats. (Mills' 1930) § 381i; Georgia Civil Code Ann. (Michie 1926) § 2366 (134); Illinois, Smith-Hurd Rev. St. 1929, c. 16 1/2, § 11, Revised Statutes (Cahill 1929) c. 16a, par. 11. A provision that the statutory receivership of the state officer shall not destroy creditors' or stockholders' rights to sue is not unknown. There are some states allowing suit by creditor or stockholder if the state banking officer fails, neglects, or refuses to act. Statutes of other states preserve the right of an interested party to sue and make a receiver appointed on his application give way to one appointed by the state bank officer or one appointed on his application. Statutes of Montana, Ohio, Oregon, and Washington afford illustrations of the system last mentioned. In other states, including our own, the statute allowing the state bank examiner the right to act does not provide whether this right is exclusive or not. An examination of the decisions on this question from the class of states last mentioned displays a contrariety of views. Many of them are of little value because of the dissimilarity of the statutes to our own.

The opinion of the Supreme Court of Nebraska in State v. State Bank of Minatare (1932) 123 Neb. 109, 242 N. W. 278, 280, is most persuasive with us on account of the similarity of statutory and constitutional provisions. We make free use of the argument therein employed.

Our s...