People ex rel. Barrett v. Shurtleff

• Decision Date: 12 October 1933
• Docket Number: No. 21938.,21938.
• Citation: 187 N.E. 271,353 Ill. 248
• Parties: PEOPLE ex rel. BARRETT, Auditor of Public Accounts, v. SHURTLEFF, Circuit Judge.
• Court: Illinois Supreme Court

353 Ill. 248

187 N.E. 271

PEOPLE ex rel. BARRETT, Auditor of Public Accounts,

v.SHURTLEFF, Circuit Judge.

No. 21938.

Supreme Court of Illinois.

June 15, 1933.

Rehearing Denied Oct. 12, 1933.

Original proceeding by the People, on the relation of Edward J. Barrett, Auditor of Public Accounts, for a writ of mandamus to Edward D. Shurtleff, Judge of the Circuit Court of Lake County.

Writ awarded.

STONE and HEARD, JJ., dissenting in part.

Otto Kerner, Atty. Gen., for petitioner.

Harold O. Mulks, of Chicago, Max Przyborski and Harold J. Tallett, both of North Chicago, and George B. Gillespie, of Springfield, for respondent.

DUNN, Justice.

At the April term the Attorney General, pursuant to leave granted, filed a petition in the name of the people, on the relation of the auditor of public accounts, against Edward D. Shurtleff, judge of the circuit court of Lake county, commanding him to expunge, vacate, and set aside an order entered by him as such judge on March 7, 1933, in the case of the people of the state of Illinois, on the relation of Edward J. Barrett, auditor of public accounts, against the Lake County State Bank (No. 31359), pending in the circuit court of Lake county, ordering William L. O'Connell to cease from functioning as receiver of the defunct Lake County State Bank, and also commanding the respondent to vacate and expunge an order entered by him on March 10, 1933, in the same cause, appointing James H. Clendenin receiver of the assets and property of the Lake County State Bank upon his giving a bond in the sum of $50,000 and directing that upon the presentation and approval of such bond, with sufficient surety, Clendenin be vested with power, as receiver, over the assets and property, real and personal, of the Lake County State Bank. The respondent filed an answer to this petition, to which the relator demurred, and the cause was submitted upon the pleadings and the printed briefs of the parties.

The case No. 31359 in the circuit court of Lake county was a bill in chancery filed by the Attorney General in the name of the people, on the relation of the auditor of public accounts, for the purpose of terminating the corporate existence of the Lake County State Bank. The bank, alone, was made defendant to the bill, which alleged its incorporation on April 3, 1914, with a capital stock of $50,000, increased on December 30, 1929, to $100,000, and its conduct of a general banking business in the city of North Chicago from its organization until January 24, 1933. At a meeting of the board of directors held on January 23, 1933, a resolution was adopted ordering that the bank be not opened for business on January 24, and a majority of the board of directors signed a written instrument which recited the adoption of the resolution and requested the auditor of public accounts to take charge of the affairs of the bank. Upon receipt of this request the auditor took possession and control of the banking house, books and assets of the bank, and caused an examination to be made of its financial condition, as a result of which he ascertained and determined that its capital stock was impaired, and that the deficit in its resources was to an amount in excess of the whole of its surplus, reserve, and undivided profits, and that its condition was such that the impairment could not be made good. The auditor retained possession and control of the banking house, books and assets of the bank until February 24, and during all that time the bank did not carry on the business for which it was organized. On February 24, 1933, the auditor determined that the bank could not be reorganized and should be liquidated through a receivership, and thereupon appointed William L. O'Connell, of Chicago, as receiver, and required that he give bond and security in the sum of $50,000 for the faithful performance of his duties as such receiver. This bond was duly given, with security approved by the auditor, and O'Connell thereby became, and is now, the duly authorized and constituted receiver of the bank and all its property. Pursuant to his appointment, the receiver, under the direction of the auditor, took possession of the books, records, and assets of every description of the bank, and, for the purpose of the receivership, of the title to such property, and proceeded to collect, and was still collecting, and debts, dues, and claims belonging to the bank, and the auditor caused the notice required by the statute to be given by advertisement, calling on all persons who might have claims against the bank to present them to the receiver and to make legal proof of them. The bill continued that it would be necessary, in order to protect the interests of the bank and all persons interested, for the receiver to compromise some of the debts due the bank and any claims which the bank might have about which there might be a controversy and to sell the personal property and real estate owned by the bank; that the receiver should be permitted by the court to file with the court from time to time, as the interest of the bank might require, petitions asking the court to hear such petitions and grant such orders as would properly authorize the receiver to compromise such debts or claims or to make such sales of personal property and real estate upon such terms and at such times as the court should order; that the receiver should promptly make a report to the court of all such sales of real or personal property, and such report, when approved by the court, should be binding upon all persons interested in such property; that the receiver should be permitted to present to the court, from time to time, petitions seeking its aid and direction relative to the other problems which might arise in the course of the receivership; and that upon the settlement of the affairs of the bank and the disposition of its assets the corporate existence of the bank should be terminated by decree of the court.

The prayer of the bill was (1) that the defendant, the Lake County State Bank, a corporation, might be compelled to make full and direct answer to the bill but not under oath, the answer under oath being waived; (2) that a hearing might be had on the bill and a decree entered finding that on January 24, 1933, the auditor took possession and control of the banking house, furniture, and fixtures, books, records, and assets of every description of the bank, for the purpose of examination and adjustment and reorganization or liquidation through receivership, and that he retained possession and control until February 24, 1933, when he determined that the bank could not be reorganized, but that it should be liquidated through a receivership; (3) that a decree might be entered finding that the auditor appointed William L. O'Connell receiver for the bank, and required of him bond and security in the sum of $50,000 for the performance of his duties as receiver; that O'Connell, as receiver, gave his bond as required, with security approved by the auditor, and that O'Connell thereupon became the duly authorized receiver of the bank and all of its property, assets, and effects, and took possession, for the purpose of the receivership, of the title to the banking house, books and assets of the bank; (4) that the receiver might, upon proper retition, be authorized by the court, by orders to be entered from time to time, to sell or compound all bad or doubtful debts due the bank and to sell all real estate and personal property belonging to it, on such terms and in such manner as such orders might provide; that he might be authorized and directed to make compromises of claims and debts owing to the bank when the best interests of the creditors require that compromises be made, on condition that all such compromises, adjustments, and settlements should be made subject to the approval of the court; (5) that the receiver might be authorized to present, from time to time, petitions to the court seeking its aid with reference to various problems which might arise in the administration of the assets, property, and estate of the bank; (6) that the receiver might be directed to exhibit to the court from time to time, as the court might require, a full and perfect inventory showing all the assets, property, and effects of the bank coming into his hands, possession, or knowledge; (7) that, in case there be a remainder of the proceeds of the assets of the bank after the payment of all claims previously proved or adjudicated as required by law, and all the costs and expenses of the suit and receivership, the receiver might be directed to report the amount of such remainder to the court for its further order and direction in the premises; (8) that the receiver might be directed to file with the clerk of the court, after he had collected and distributed all the proceeds of the assets of the bank, an itemized report of all moneys received and disbursed by him; (9) that upon the settlement of the affairs of the bank and the disposition of its assets its corporate existence might be terminated and dissolved; (10) that the complainant and the receiver might have such other and further relief in the premises as equity might require and to the court might seem meet, and that all orders, steps, and proceedings necessary or proper in the premises might be had and taken as equity might require.

The only independent relief prayed by the auditor's bill was the dissolution of the corporation and general relief. The prayer of the bill consists of ten distinct clauses, but none of these asks for any relief except the last two. The bill does not ask the appointment of a receiver or the approval, expressly, of the auditor's appointment of one, or of the qualification of the receiver or of any action of the auditor or the receiver. The first three clauses of the prayer merely ask the court, after a hearing, to enter a decree finding that the auditor took and retained possession and control of the...