Picklesimer v. Judge

• Decision Date: 02 March 1926
• Docket Number: (No. 5675),(No. 5674)
• Parties: Hayes Picklesimer, Petitioner, v. Hon. P. D. MORRIS Judge,etc., et al, Respondents.H. A. Abbott, Petitioner, v. Hon. P. D. Morris, Judge, etc.,et al., Respondents.
• Court: West Virginia Supreme Court

101 W.Va. 127

Hayes Picklesimer, Petitioner,

v.Hon. P. D. MORRIS Judge, etc., et al, Respondents.

H. A. Abbott, Petitioner,

v.Hon. P. D. Morris, Judge, etc., et al., Respondents.

(No. 5674)

(No. 5675)

Supreme Court of Appeals of West Virginia.

Submitted February 23, 1926.

Decided March 2, 1926.

1. Banks and Banking Statute Giving Power to Commissioner of Banking, on Insolvency of Bank, to Appoint Receiver, With Consent of Governor, to Take Charge of Bank's Affairs, Collect Assets, Including Double Liability Against Stockholders, Convert Assets Into Money and Pay it Out to Creditors and Stockholders, Held Constitutional (Code, c. 5U, § 81a [7]J.

Section 81a (7), Chap. 54, Code 1923, which gives power to the commissioner of banking, upon ascertaining that a bank under his supervision and control is insolvent, to appoint a receiver, with the consent of the governor, who shall take charge of the affairs of the bank, collect the assets, including; double liability against the stockholders, convert the assets into money and pay out the same to the creditors and stockholders, all under the supervision of the commissioner of banking, is constitutional and valid. (p. 132.) (Banks and Banking-, 7 C. J. § 487.)

Same Procedure Set Out in Banking Laws for Visitation, Inquisition, Examination, and Control of Banking Institutions and for Liquidation and Winding Up of Affairs of Insolvent Banking Institution by Commissioner of Banking, is Exclusive; Prosecution of Suit by Creditor or Stockholder to Liquidate or Wind Up Affairs of Bank, Where Commissioner of Banking and Receiver Appointed by Him Have Taken Charge and Are Performing Their Duty, Will Be Prohibited (Const, art. 11, § 6; Code, c. 53, § 57, chapter 110, § 1, chapter 54, § 81a, [7]).

The procedure set out in the banking laws for visitation, inquisition, examination and control of banking institutions and for the complete liquidation and winding up of the affairs of an insolvent banking institution, is exclusive, and the prosecution of a suit by a creditor or stockholder for the same purpose, where the commissioner of banking and the receiver appointed by him have taken charge and are faithfully and properly performing the statutory duty imposed in that regard, will be prohibited. (p. 132.)

(Banks and Banking, 7 C. J. §472 [Anno].)

Same Circuit Court Has No Jurisdiction to Entertain General Creditor's Suit, by Creditor or Stockholder of Insolvent Bank in Possession of Commissioner of Banking and His Receiver, for Liquidation, In Absence of Charge of Fraud or Other Improper Conduct of Such Officers (Code, c. 54, § 81a 17]).

A circuit court has no jurisdiction to entertain a general creditor's suit by a creditor or stockholder of an insolvent bank which has been taken over for liquidation by the commissioner of banking and his receiver, in the absence of charges of fraud or other improper conduct on the part of the commissioner and receiver in the performance of the statutory duties imposed upon them whereby the complainant's rights are prejudiced in the process of liquidation, (p. 133.)

(Banks and Banking, 7 C. J. § 473 [Anno].)

4. Same; Receiver of Insolvent Banking Institution, Appointed by Commissioner of Banking, is Not Subject to Control of Courts in Process of Liquidation of Insolvent Bank, Unless He Fails or Refuses to Act or Acts to Prejudice of Another's Rights (Code, c. 5U § 81a 171).

The receiver of an insolvent banking institution appointed by the commissioner of banking, with the consent of the governor, is a statutory receiver and is not subject to the control of the courts in the process of liquidation of the insolvent bank unless he fails or refuses to act, or acts to the prejudice of another's rights in the discharge of his statutory duties. (p. 136.)

(Banks and Banking, 7 C. J. § 487.)

(Note: Parenthetical references by Editors, C. J. Cyc. Not part of syllabi.)

Original proceeding by H. A. Abbott, Commissioner of Banking, and Hayes Picklesimer, receiver of the Bank of Benwood, for a writ of prohibition, to be directed to Hon. P. D. Morris, Judge of the Circuit Court of Marshall County, and another.

Writ awarded.

IT. A. Abbott, by Wright Hugus, his Attorney; Hayes Picklesimer, by Schmidt, Hugus & Laas, his Attorneys.

McCamic & Clarke, Jay T. McCamic, Martin Brown, and D. B. Evans, for respondents.

Lively, Judge:

By these writs II. A. Abbott, Commissioner of Banking, and Hayes Picklesimer, receiver of the Bank of Benwood, and appointed as such by said Commissioner of Banking, ask that Honorable P. D. Morris, Judge of the Circuit Court of Marshall County, and Jacob Miibaugh who is a creditor of said bank and who sues in behalf of all other creditors of said bank similarly situated, be prohibited from further proceeding in a suit in chancery instituted by Miibaugh in said court.

It appears from the pleadings that the Bank of Benwood is a West Virginia corporation, and on June 9, 1925, Abbott, the Commissioner of Banking, declared it to be insolvent and appointed Picklesimer as receiver therefor, by and with the consent of the Governor, and that the receiver qualified as such by giving a large bond, and took charge of the bank and began to wind up its affairs as directed by the banking laws; that Milbaugh instituted suit in chancery returnable to December Rules, 1925, in behalf of himself and all other creditors of the bank (he being a depositor of about $2,500.) against Abbott, commissioner, Picklesimer, receiver, the officers, directors, stockholders (as far as he knew them) and various persons thought to be debtors of the bank, praying for an account of the assets and liabilities of the bank; that the stockholders be ascertained and their liability for double the amount of the stock held by them, the indebtedness of the officers and directors to the bank; that such indebtedness be asserted, as well as the double liability of the stockholders; that the commissioner of banking and a former commissioner be made to pay damages for not properly examining the bank and sooner ascertaining its insolvent condition; that the debts against the bank be ascertained in the order of their priority, and paid out of the assets when collected under direction of the court, and for general relief. The bank, as such, does not seem to have been made a party. No relief is prayed for against the receiver.

The bill filed is a general creditor's bill and is for the purpose of marshalling assets and converting them into money, ascertainment of the indebtedness in the order of dignity and priority; in short, for winding up the affairs of the insolvent bank in the interest of the creditors and stockholders. Abbott, commissioner, and Picklesimer, receiver, demurred and answered. Picklesimer offered a plea in abatement to the jurisdiction of the court. The demurrers were overruled, and the plea was rejected. However, the demurrer was sustained as to Abbott, commissioner, and Jackson, former commissioner, and the bill dismissed as to them. The court assumed jurisdiction and referred the cause to a master commissioner to make a comprehensive report, required the receiver to bring his books and doings before the commissioner, and, in effect, stayed his hand in further collecting or distributing the assets. Suits which the receiver had instituted against the officers and directors for negligent discharge of their duties were consolidated with Milbaugh's suit. At this stage of the case, plaintiffs obtained this rule in prohibition, on the ground that the court below had no jurisdiction to entertain the bill.

The only question we have before us is, whether the circuit court lias jurisdiction of a general creditor's bill to wind-up the affairs of an insolvent bank which has been closed and its affairs taken charge of and being wound up under the commissioner of banking; or having jurisdiction, has exceeded its legitimate powers. Prohibition lies as a matter of right where there is lack of jurisdiction to perform any judicial act. Code, Chap. 110, Sec. 1. To sustain jurisdiction in the lower court counsel attack that part of the banking act which gives authority to and directs the commissioner of banking to take charge of an insolvent bank by appointment of a receiver, by and with the consent of the governor, and to administer the affairs and liquidate the bank for the benefit of all persons concerned, as unconstitutional. It is argued that the commissioner is not a court, and cannot appoint a receiver to the exclusion of a court in the appointment of its own receiver; that a count has that inherent power, and it cannot be legislated into discord. Courts are never quick to nullify an act of the law-making power, a co-ordinate branch of the government, unless there is a plain and positive conflict in the act with some part of the Constitution. All doubts are solved in favor of the constitutionality of the banking act. The Constitution says that banks may be created by the legislature by a general banking law. Art. 11, Sec. 6. The power granted, is very broad and comprehensive. The only restriction is that the stockholders shall not be exempt from double...