DiCkerson v. Cass Cnty. Bank

• Decision Date: 02 October 1895
• Citation: 95 Iowa 392,64 N.W. 395
• Parties: DICKERSON v. CASS COUNTY BANK ET AL. (TRAILER ET AL., INTERVENERS).
• Court: Iowa Supreme Court

95 Iowa 392

64 N.W. 395

DICKERSON

v.CASS COUNTY BANK ET AL. (TRAILER ET AL., INTERVENERS).

Supreme Court of Iowa.

Oct. 2, 1895.

Appeal from district court, Cass county; N. W. Macy, Judge.

This is an appeal by interveners William Trailer, John A. Frank, N. R. Williams, Barth Frank, George B. Prall, and T. N. Hesselgrave from an order overruling their motion to set aside a former order appointing a receiver of the defendant bank, on the petition of the plaintiff, a stockholder therein, and for the discharge of said receiver. Affirmed.De Lano & Meredith and Willard & Willard, for appellants.

Phelps & Temple, John Hudspeth, John W. Scott, J. B. Rockafellow, R. G. Phelps, H. M. Boorman, Curtis & Follett, Swan & Bruce, and Geo. M. Lyon, for appellee.

GIVEN, C. J.

1. The parties to this record are many, their interests various, and consequently the pleadings and proceedings are somewhat lengthy and complicated. Counsel have discussed the case with much care and elaboration, and with extended quotations from authorities, with the view, no doubt, of anticipating every question that might suggest itself upon an examination of the case. As we understand the record, the controlling questions are these: (1) Whether, in this state, a court of equity has power to appoint a receiver of a state banking incorporation on the application of a stockholder; (2) if so, whether the plaintiff stated in his petition sufficient grounds for such relief; (3) whether, under the law and the facts, appellants should be held to be now estopped from denying the legality of the appointment in question.

2. We first inquire whether our courts of equity have power to appoint a receiver of a state banking incorporation on the petition of a stockholder. In French v. Gifford, 30 Iowa, 148, this court says: “The doctrine best sustained and most in consonance with reason and justice seems to be that courts of equity, aside from statutory provisions, do not exercise a jurisdiction over a corporation as over a partnership to dissolve it and distribute its assets, but that they will afford a stockholder relief from the malfeasance of those intrusted with the management of the corporate business.” Section 2903 of the Code provides as follows: “On the petition of either party to a civil action or proceeding, wherein he shows that he has a probable right to or interest in any property, which is the subject of the controversy, and that such property or its rents or profits are in danger of being lost or materially injured or impaired, * * * the court, or in vacation, the judge thereof, if satisfied that the interests of one or both parties will be thereby promoted, and the substantial rights of neither unduly injured, may appoint a receiver to take charge of, and control such property under its direction during the pendency of the action.” This statute is general, and applies to corporations as well as individuals, and every petitioner who brings himself within its provisions, whether it be as stockholder in a corporation or otherwise. Authorities are cited to the effect that a receiver will not be appointed on the application of the corporation. They are not in point, as this appointment was not upon such application. Others are cited to the effect that a receiver will not be appointed upon the petition of an individual stockholder. That depends upon whether his relation as stockholder gives him a “probable right to or interest in the assets of the corporation.” Authorities are also cited to the effect that a receiver will not be appointed because of the insolvency of the corporation. That depends upon whether, by reason of the insolvency, the assets are in danger of being lost, injured, or impaired. These inquiries arise upon the sufficiency of the showing, and not upon the question of jurisdiction. Appellant cites section 1572 of the Code, providing that the auditor, when satisfied from its report that such an institution is insolvent, shall direct the attorney general to commence proper proceedings to have a receiver appointed. They also cite chapter 6, tit. 20, of the Code, providing for ousting corporations from their franchises and winding up their affairs. It is contended that the jurisdiction to appoint receivers of corporations is limited to these sections. In one case the application is by officers of the state, and in the other the power is exercised by the court in a particular case. Surely these special provisions do not exclude any rights given to private individuals under that general statute (section 2903). We think it is entirely clear that courts of equity have jurisdiction to appoint receivers of corporations, partnerships, and individuals upon the petition of any person showing himself entitled to such relief.

3. We next inquire whether, by his petition, the plaintiff brought himself within the requirements of section 2903. It is contended that, by the petition upon which the appointment was made, the plaintiff did not bring himself within the requirements of said section 2903, in this: That he was not a party to a civil action or proceeding, for that he makes no demand against the defendant; that he does not show that he has a probable right or interest in the assets of the corporation, as, upon his showing there will be no surplus for distribution to stockholders; that it is not shown that the assets are in danger of being lost, injured, or impaired; and that the only ground for the relief asked is that creditors will pursue their legal remedies against the bank and its assets. The petition shows, in substance, this: That the defendant bank was incorporated under the laws of this state for the purpose of transacting a banking business, and had been so engaged for a number of years, and that plaintiff was a stockholder therein; that said bank was heavily indebted and so involved that it was impossible for it to meet the claims due and to become due upon it; that its assets were scattered, and of a kind that it was impossible to realize on at once without great sacrifice; that the bank was running its business at a large daily expense and constantly losing money; that it had not exceeding $200 in cash, which was not sufficient to meet its daily checks, and that its business was decreasing; that its creditors were pressing payment, which it would be impossible for the bank to make, and that there was danger that some creditor would commence suit by attachment or otherwise, and involve the bank in disastrous and costly litigation, and compel the assets to be sacrificed by creating a run on the bank. Plaintiff, as a stockholder, was subject to the liability created by section 1, c. 208, Laws 1880 (Miller's Code, p. 443). Under that section he is liable to creditors of the bank to an amount equal to his stock, in case the assets are found insufficient to pay the debts. He has, therefore, a greater right and interest in the assets of the bank than the mere right to share in any surplus that may remain. It was to his interest that the indebtedness of the bank should not be increased by continuing in a losing business, and that the assets should be preserved from all unnecessary loss, sacrifice, or depreciation. It was to protect this “probable right to or interest in” the property that this action was commenced. As plaintiff he demands, against the defendant, that its assets be taken from it, and administered by a receiver under the orders of the court, to the end that he may be...