Hill v. May

Decision Date01 July 1927
Docket Number25881
Citation214 N.W. 637,115 Neb. 690
PartiesFAY C. HILL, RECEIVER, APPELLANT, v. LOUIS E. MAY ET AL., APPELLEES
CourtNebraska Supreme Court

APPEAL from the district court for Dawes county: EARL L. MEYER JUDGE. Affirmed.

AFFIRMED.

C. M Skiles, John M. Stewart, E. D. Crites and F. A. Crites, for appellant.

Courtright Sidner, Lee & Gunderson, Allen G. Fisher, Samuel L. O' Brien and Crossman, Munger & Barton, contra.

Heard before GOSS, C. J., ROSE, DAY, EBERLY and THOMPSON, JJ., and SHEPHERD, District Judge.

OPINION

GOSS, C. J.

The plaintiff appeals from a final order and decree of the district court sustaining demurrers of six defendants and, upon refusal of the plaintiff to plead over, dismissing the action as to these six defendants, and sustaining the special appearances of the remaining two defendants.

A statement of the main facts alleged in the petition is necessary to an understanding and disposition of the case. The plaintiff is the receiver of the Citizens State Bank of Chadron, in Dawes county. The bank was capitalized at $ 75,000 and was under the jurisdiction of the department of trade and commerce. On January 17, 1925, the department took possession of the property and business of the bank to examine into its condition, and on January 19, 1925, after examining into its affairs for two days, a special examiner of the department, acting for the department, informed the officers of the bank that, on account of the impairment of its capital stock and the lack of cash reserve, the bank could not continue as a going concern nor reopen for business unless its cash reserve was replenished and the impairment of the stock made good. Thereupon on the same day there was held a stockholders' meeting at which more than two-thirds of the stock was represented. The directors were authorized by a unanimous vote of these stockholders to levy an assessment of 100 per cent. on its capital stock. The stockholders also authorized, upon consent thereto by the department, a reduction of the capital stock from $ 75,000 to $ 50,000, directed the board to charge off the surplus account of $ 25,000 and use that amount and the amount of the reduction of capital in taking out worthless paper from the bank. All of the defendants were present in person and voted for the resolutions except defendant Joseph H. May, who was represented by his proxy, defendant Louis E. May, who, as such proxy, voted for the resolutions. Louis E. May was not a stockholder, nor was the defendant Charles H. Loewenthal who represented Ben Loewenthal. On the same day the board of directors met and made the assessment authorized, aggregating $ 50,000, to be paid on or before February 12. The defendants, as a pledge to secure the payment of said assessments, thereupon executed their several negotiable promissory notes payable to the bank, or order, totalling $ 50,000. There were ten notes, but the discrepancy between the number of notes and number of defendants is accounted for by the fact that, apparently in order to furnish prompt pledges for the payment of the assessments, some of the parties present signed their individual notes covering their own assessment liability and also signed individual notes covering assessment liabilities on the stock for others not present. The notes were delivered to the special examiner then in charge of the bank, and by him delivered to the bank to be returned to the makers when the several assessments were paid. In reliance on the notes, the bank was permitted by the department to continue its business on the plans above stated, and on the 22d day of January the department refreshed the reserve of the bank with a cash deposit of $ 16,000 from the conservation fund. The bank continued its banking business, receiving deposits, incurring obligations and generally operating as a going concern. About February 10, 1925, defendant Louis E. May demanded a return of the notes executed and delivered by him, being one for $ 15,800 and one for $ 3,800, denying his liability, claiming that said notes were given without consideration and asserting that his notes were not to be valid until the bank's losses had been made good. The petition alleges that the other defendants, who had been ready and willing to pay the amounts agreed by them, on learning of Louis E. May's action, refused to pay the amounts of their notes and joined with him in refusing to pay their assessments.

In view of the discussion later, we quote the last paragraph and the prayer of the petition: "Plaintiff alleges that said notes were executed by the defendants, respectively, at the same time and place, and under the same agreement and circumstances, and that the defendants have a common interest in the question as to their liability thereon; that, on account of defendant's denial of plaintiff's title to said notes and their liability thereon, the plaintiff is unable to advantageously sell said notes, and that action at law would involve a multiplicity of suits; that plaintiff has no adequate, efficient or prompt remedy at law. Wherefore, plaintiff prays (1) that the plaintiff's title to the promissory notes herein described be quieted and confirmed; (2) that it be adjudged and decreed that said promissory notes are the valid and unconditional obligations of the makers thereof, and that plaintiff is entitled to recover judgment thereof; (3) for such other and different relief as equity and justice may require."

Several of the defendants lived in and were served in Dawes county where the action arose and where suit was brought. Joseph H. May was served in Cherry county and Louis E. May in Dodge county. The defendants other than the Mays severally filed demurrers, on the grounds of improper joinder of parties, of improper joinder of causes of action, and that the petition does not state a cause of action. The defendants May severally filed special appearances and objections to jurisdiction because of service on them in other counties than Dawes. The court sustained the demurrers and the objections to jurisdiction, and dismissed the action as to all defendants, without prejudice, however, as to the defendants May, saving plaintiff the right to sue them individually in a suit in a court having jurisdiction.

Plaintiff contends that this is a proper suit for equity. Defendants vigorously assert that it seeks to combine eight law actions in one equity suit and to deprive them of a right to separate jury trials. The defendants May particularly stress their legal and constitutional right to a jury in a forum, not of plaintiff's choice alone, but in a jurisdiction where they may be served with process as individual defendants and may contest their liability unhampered by codefendants sued on other and different contracts with different defenses.

In the several briefs various questions are argued. The chief proposition in the case, as contended for by the appellant is this: That equity has jurisdiction in this action because there is a common and decisive point of litigation between the plaintiff and the separately liable defendants, both as to the facts and as to the law involved; and that, in such situation, the...

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