Guarantee Co. of North Dakota v. Hanway

• Decision Date: 09 October 1900
• Docket Number: 1,318.
• Citation: 104 F. 369
• Parties: GUARANTEE CO. OF NORTH DAKOTA v. HANWAY.
• Court: U.S. Court of Appeals — Eighth Circuit

104 F. 369

GUARANTEE CO. OF NORTH DAKOTA v. HANWAY.

No. 1,318.

United States Court of Appeals, Eighth Circuit.

October 9, 1900

(Syllabus by the Court.)

E Ashley Mears (W. H. Standish, on the brief), for plaintiff in error.

John S Watson (W. F. Ball and D. G. Maclay, on the brief), for defendant in error.

This is an action at law for damages in the sum of $4,000 for the wrongful sale of a pledge. It was commenced in August, 1897 in one of the courts of the state of North Dakota; and the original complaint counted upon a personal liability of, and prayed for a personal judgment against, Joshua A. Hanway, who was described in the title of the action as stockholders' agent of the National Bank of North Dakota, at Fargo, N.D. On April 16, 1898, the plaintiff, the Guarantee Company of North Dakota, a corporation, filed an amended complaint in which it alleged that the defendant, Joshua A. Hanway, held and wrongfully sold the pledge in his official capacity of shareholders' agent of the National Bank of North Dakota and prayed for judgment against him as such agent, and not against him personally. Thereupon, and upon May 13, 1898, the defendant filed a petition and bond for the removal of the case to the United States circuit court for the district of North Dakota. This petition alleged that the National Bank of North Dakota was a corporation organized under the laws of the United States; that the comptroller of the currency appointed a receiver of this bank in 1893, who served as such until August, 1895, when the petitioner was chosen shareholders' agent, and qualified and acted as such; that upon his final accounting as such agent on December 20, 1897, the United States circuit court adjudged him to be indebted to the trust estate in a sum exceeding $10,000; that he then resigned his office as agent, and that court appointed one D. B. Holt, as receiver, to wind up the affairs of the bank; that the action now before us was brought to obtain a judgment against Hanway in his official capacity, and to enforce the same as a claim against the proceeds of the assets of the bank; that it related to the winding up of the affairs of a national bank, and was ancillary to the administration of the trust; that he, as stockholders' agent of the bank, was an officer of the United States; that the original complaint stated no cause of action against him as such officer, but this cause of action first appeared in the amended complaint; and that the time to answer, demur, or otherwise plead to the amended complaint had not expired when he presented his petition. Upon this petition the case was removed to the United States circuit court. No motion was ever made to remand it, but an answer to the amended complaint was filed, a motion for judgment on the pleadings was made by the plaintiff and denied by the court, the case was tried without a jury, and judgment was rendered for the defendant. The writ of error challenges this judgment.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge (after stating the facts as above).

The first objection to the judgment here is that this case was not removable to the federal court, and that the United States circuit court had no jurisdiction to hear or decide it. But the United States circuit courts have jurisdiction 'of all suits of a civil nature, at common law or in equity, where the matter in dispute exceeds, exclusive of interest and costs, the sum or value of two thousand dollars, and arising under the constitution or laws of the United States,' and every suit of that character may be removed from a state to a federal court. Acts of March 3, 1887, and August 13, 1888 (25 Stat. 434, c. 433, Secs. 1, 2). This is a suit arising under the laws of the United States. It is a suit against a shareholders' agent, chosen by the stockholders of a national bank in pursuance of 'An act authorizing the appointment of receivers of national banks and for other purposes,' approved June 30, 1876, and its amendments, to obtain a share of the trust funds he is administering. 19 Stat. 63, c. 156; 27 Stat. 345, c. 360; 29 Stat. 600, c. 354. An action by or against a receiver of a national bank, appointed under this act, is an act; on arising under the laws of the United States, because the act of congress creates his office, grants his rights and powers, and imposes his duties. In the absence of this act there would be no such receiver, and no suits against him could arise. Every section by or against him necessarily involves the exercise of some of his rights, or the proper discharge of some of his duties and invokes a consideration of the proper construction and effect of the laws of the United States from which he derives them. For these reasons, in contemplation of law every action by or against him arises under the laws of the United States. McDonald v. Nebraska (C.C.A.) 101 F. 171, 172; Auten v. Bank, 174 U.S. 125, 19 Sup.Ct. 628, 43 L.Ed. 920; In re Chetwood, 165 U.S. 443, 458, 459, 17 Sup.Ct. 385, 41 L.Ed. 782; Armstrong v. Trautman (C.C.) 36 F. 275; Grant v. Bank (C.C.) 47 F. 673. The same reasons bring actions by or against a shareholders' agent under the same rule. He is chosen under the same act of congress. He is selected for the same purpose. At a certain point in the administration of the trust the act of congress empowers the shareholders of a national bank to determine by ballot 'whether the receiver shall be continued and shall wind up the affairs of the association, or whether an agent shall be elected for that purpose. ' If they vote to continue the receiver, subsequent actions by or against him arise under the laws of the United States. If they vote to choose an agent for the same purpose under the same laws, it is difficult to perceive why actions by or against him do not also arise under the laws of the United States. Those laws empower the agent, when chosen, to hold, control, and dispose of the property of the banking association which he receives for the benefit of the shareholders, to sue and to be sued, and to do all lawful acts necessary to finally settle and distribute the assets in his hands. They authorize him, with the consent and approval of the circuit or district court of the United States for the proper district, to sell, compromise, or compound the debts due to the association, and require him to report to, and obtain a final settlement of his accounts in, one of those courts. They specifically prescribe the purposes to which the proceeds of all the property which comes to his hands as the agent of the shareholders shall be devoted, and the order in which they shall be applied to those purposes. As Mr. Chief Justice Fuller aptly said in delivering the opinion of the supreme court in Re Chetwood, 165 U.S. 459, 17 Sup.Ct. 391, 41 L.Ed. 787:

'The agent proceeds in the settlement with like authority to that conferred upon the receiver, although at the conclusion of his duty he is required to render to the circuit or district court of the United States, for the district where the business of the bank is carried on 'a full account of all his proceedings, receipts and expenditures as such agent, which court shall, upon due notice, settle and adjust such accounts and discharge said agent and the sureties upon his bond.''

The purpose of this suit was to control the official conduct of this shareholders' agent, and to compel him to pay to the plaintiff out of the trust fund in his hands $4,000, which the agent claimed he was required under the laws of the United States, from which he derived his appointment, to distribute to the shareholders. Since his conduct as agent must be regulated and tried by these laws, this action and every action by or against a shareholders' agent chosen under this act of congress invoke the consideration of, and arise under, the laws of the United States.

Again, by section 4 of the Acts of 1887-88 (25 Stat. 436) it is provided that national banks shall be deemed citizens of the states in which they are located, and that the federal courts shall not derive jurisdiction of suits by or against them from the mere fact that they are organized under the laws of the United States. But this provision is followed by an exception in these words:

'The provisions of this section shall not be held to affect the jurisdiction of the courts of the United States in cases commenced by the United States or by direction of an officer thereof, or cases for winding up the affairs of any such bank.'

This is clearly a case for winding up the affairs of such a bank. It is a suit to take $4,000 from the fund realized from the collection and sale of the assets of the National Bank of North Dakota in the process of winding up its affairs under the act of congress, and to pay it to the plaintiff, instead of permitting it to be distributed to the shareholders.

Moreover it is now well settled that a receiver of a national bank is 'the agent and officer of the United States,' and that the federal courts have jurisdiction of actions by and against him as such an officer, under the provisions contained in section 4 of the Acts of 1887-88, which we have just quoted. In re Chetwood, 165 U.S. 443, 458, 17 Sup.Ct. 385, 41 L.Ed. 782; Frelinghuysen v. Baldwin (D.C.) 12 F. 395; Price v. Abbott (C.C.) 17 F. 506; Armstrong v. Ettlesohn (C.C.) 36 F. 209; Armstrong v. Trautman (C.C.) 36 F. 275. Now, a receiver is not an officer of the United States because the nation has any pecuniary or other interest in his acts or omissions, but simply because an act of congress authorizes his appointment, prescribes his duties, and designates the appointing power. By the same mark, a shareholders' agent is an agent and officer of the United States. The same act creates his...