Murray v. American Surety Co.

• Decision Date: 02 January 1894
• Docket Number: 557.
• Court: U.S. District Court — Southern District of California
• Parties: MURRAY v. AMERICAN SURETY CO. OF NEW YORK.

59 F. 345

MURRAY v. AMERICAN SURETY CO. OF NEW YORK.

No. 557.

United States Circuit Court, S.D. California.

January 2, 1894

Luce &amp McDonald, for plaintiff.

Allen &amp Flint, for defendant.

ROSS District Judge.

This action was commenced in the superior court of San Diego county, and, on motion of the defendant, was transferred to this court. The action is for damages for the alleged breach of the conditions of two certain bonds, executed by the defendant to the California Savings Bank of San Diego, a corporation, to indemnify that institution against any pecuniary loss by it sustained by the fraud or dishonesty of one J. W. Collins, its vice president, and one Frederick T Hill, its cashier.

The demurrer filed by the defendant raises, among other questions, the right of the plaintiff to bring the suit. That right is thus alleged in the complaint:

'That on the 12th day of November, 1891, the said California Savings Bank became and was insolvent and suspended business, and thereafter, to wit, on the 4th day of March, 1892, an action was commenced in the superior court of the county of San Diego, state of California, in the name of the people of the state of California, against said California Savings Bank, in which, among other relief demanded by the plaintiff, it was prayed that a temporary receiver be appointed to take possession of all the assets of said savings bank, and to make collection of all claims held by it; and that, upon the final trial of said action, said savings bank be adjudged insolvent, and a permanent receiver appointed to take charge of and collect, preserve, and distribute its assets, and that said corporation be closed and liquidated in the manner provided by section 11 of an act [of the state of California] entitled 'An act creating a board of bank commissioners, and prescribing their duties and powers,' approved March 30, 1878, and as amended by an act approved March 10, 1887; and that such proceedings were thereafter duly had in said action that, by an order of said superior court on that behalf duly made and entered of record, this plaintiff was, on the ___ day of March, 1892 appointed temporary receiver of said savings bank, and authorized and directed to take possession of all its assets of every kind and character, and to collect and preserve the same pending said action. That on the 2d day of August, 1892 said action came regularly on for trial, and judgment was duly recovered by the plaintiff therein, and entered, 'that the defendant corporation, the said California Savings Bank of San Diego, and all its managers, officers, counselors, attorneys, agents, and others acting in aid or assistance of it or them, be, each and every one of them, and are, each and every one of them, enjoined and prohibited from the transaction of any further business as said corporation.' And it was further in and by said judgment and decree 'ordered and adjudged that Eli H. Murray, of the city of San Diego, is hereby appointed receiver of all the assets and properties of the said defendant corporation, and that he is hereby empowered to sue for and prosecute to determination all indebtedness due said defendant, and to collect, adjust, and settle all claims in favor of said defendant, and that he shall have the right to defend all suits instituted against said corporation, and that he shall allow and adjust, under the control of this court, all the claims against said bank, and, when determined, shall pay to the creditors of said bank such dividends as may from time to time be declared by this court, and to do and perform such further acts as may be provided by law or the further order of this court;' and that thereupon this plaintiff duly qualified as such receiver, and entered upon the discharge of his duties as such; and that said judgment has never been set aside or modified, but still remains in full force and effect; and this plaintiff ever since has been, and now is, the duly-qualified and acting receiver of said savings bank.' It is clear that the proceeding in the name of the people of the state of California, of which the superior court, at the instance of the attorney general of the state, took jurisdiction, was by virtue of section 11 of the act of the state creating the board of bank commissioners, and prescribing their duties and powers, of March 30, 1878, (Stat. 1877-78, p. 740,) as amended by an act approved March 10, 1887, (Stat. 1887, p. 90.) As so amended, the section reads:

'Sec. 11. If such commissioners, on examination of the affairs of any corporation mentioned in this act, shall find that any such corporation has been guilty of violating its charter or law, or the provisions of this act, or is conducting business in an unsafe manner, they shall, by an order addressed to the corporation so offending, direct discontinuance of such illegal and unsafe practices, and a conformity with the requirements of its charter and of law under this act; and, if such corporation shall refuse or neglect to comply with such order, or whenever it shall appear to said commissioners that it is unsafe for any such corporation as in this act mentioned to continue to transact business, they

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