Schofield v. Baker

• Decision Date: 01 March 1914
• Docket Number: 1.
• Citation: 212 F. 504
• Parties: SCHOFIELD v. BAKER et al.
• Court: U.S. District Court — Western District of Washington

212 F. 504

SCHOFIELD v. BAKER et al.

No. 1.

United States District Court, W.D. Washington, Northern Division.

March, 1914

[Copyrighted Material Omitted] [Copyrighted Material Omitted]

Bausman & Kelleher, of Seattle, Wash., for plaintiff.

B. S Grosscup and W. C. Morrow, both of Tacoma, Wash., and Corwin S. Shank and H. C. Belt, both of Seattle, Wash., for defendants.

NETERER District Judge (after stating the facts as above).

The defendants contend, first, that the preference right to purchase tidelands given to riparian owners is not a vested right nor a right which could be exercised by the receiver of a national bank. This contention, I think, is definitely disposed of by the state of Washington Supreme Court in the case of Allen v. Forrest, 8 Wash. 700, 36 P. 971, 24 L.R.A. 606, where the right granted by the Legislature is confirmed as against the world except the state prior to the exercise of the option, and becomes a vested right after the exercise of the option by the riparian owner as will be later shown.

It becomes important in determining the issue here whether the preference right thus given a riparian owner is personal and chattel property or real estate. In the order of court, under which it is claimed the land in issue was sold, the receiver was authorized and empowered to 'compromise, compound or sell at private sale all assets of said insolvent bank consisting of bills receivable, judgments, overdrafts, stocks, warrants, securities, assessments upon the stockholders of said bank, all other personal property and chattel property and evidences of indebtedness. ' The order is concise, clear, and certain. If the interest of the bank's receiver in the tidelands is real estate, it would not be comprehended by the order, and the receiver could not under such an order make the sale.

The powers of the Comptroller of the Currency and the receiver are defined by act of Congress (section 5234, Rev. St. (U.S. Comp. St. 1901, p. 3507)), which provides: 'Such receiver, under the direction of the Comptroller * * * of the Currency * * * upon the order of a court of record of competent jurisdiction * * * may sell all the real and personal property. * * * '

To make any sale of assets of a defunct bank, an order of a court of record of competent jurisdiction is essential. The receiver cannot sell the real or personal property of the bank without an order of the court, and a sale which is not authorized by an order of court of competent jurisdiction is void. Ellis v. Lytle, 27 Kan. 707, 41 Am.Rep. 434; Richardson v. Turner, 52 La.Ann. 1613, 28 So. 158; Tourtelot v. Booker (Tex.) 160 S.W. 293.

A reading of the order of sale is conclusive of the fact that the receiver was limited to a sale of personal and chattel property. No real estate is comprehended either in the petition for or order of sale. Personal and chattel property is a thing movable, which may be annexed to and is attendant on the person of the owner and carried about with him from one part of the world to another. 2 Bla.Com. 14. 'Real property' has been defined as an interest which a man has in land. 32 Cyc. 662. It sometimes is difficult to determine what is personal and what real property; yet, where property has been defined as real property by the state court, such holding should be adopted by this court.

In Washington Iron Works v. King County, 20 Wash. 150, at page 153, 54 P. 1004, at page 1005, appellants had purchased under contract certain tidelands in the city of Seattle, paying one-tenth of the purchase price, and covenanted to pay the balance in ten equal annual payments pursuant to a similar contract as in evidence in this case. The assessor of King county assessed the land as real estate, and suit was brought to enjoin the collection of the taxes. The Supreme Court said:

'In equity, appellants are the owners, possessing a real and substantial interest, which they can assign, transfer, and dispose of as they choose; and the state cannot deprive them of this right. The term 'property,' as applied to land, comprehends every species of title, inchoate or complete.'

In State ex rel. Wilson v. Grays Harbor & Puget Sound R. Co., 60 Wash. 32, at page 34, 110 P. 676, at page 677, the Supreme Court of Washington says:

'There is a distinction between the granting of a privilege which may or may not be exercised, and the exercise of that privilege by the person upon whom it has been conferred. In the one case, the state merely confers a right the acceptance of which is optional. In the other, the option has been exercised, and the faith and credit of the state has become involved in its fulfillment.'

It was there held that the preference right of a riparian owner to tidelands is an interest in land and subject to condemnation for railroad right of way. The Supreme Court of Washington, in State ex rel. Trimble v. Superior Court, 31 Wash. 445, at page 455, 72 P. 89, at page 92, 66 L.R.A. 897, speaking of tidelands purchased under similar contract, says:

'The interest of the relators is, to say the least, an interest in land, and as such may be taken for a public use by condemnation, upon payment of just compensation therefor.' In State v. Frost, 25 Wash. 134, 64 P. 902, speaking of state school lands held under a similar contract of purchase, the court held that to be such an interest in land that may be sold for taxes.'

In Hotchkin v. Bussell, 46 Wash. 7, 89 P. 183, the Supreme Court of Washington holds that tidelands held under contract under section 6750, Rem. & Bal. Code, descends directly to the heirs subject only to the debts of the deceased.

It appears as a conclusive fact, when the phraseology of the order is considered together with the action of the court and conduct of the receiver with relation to similar property in this trust, the holding of the Supreme Court of Washington that tideland held as was the land in issue was real estate after the exercise of the option to purchase by a riparian owner, and that the sale of land was not contemplated by the order entered.

It is further contended by the defendants that the receiver acquired nothing by the contract of purchase from the state; that the receiver and Comptroller of the Currency acted without authority in the securing of the contract from the state; and that their act in so doing was ultra vires. Section 5137 (U.S. Comp. Stat. 1901, p. 3460) is cited in support of this contention. This section provides:

'A national banking association may purchase, hold, and convey real estate for the following purposes, and for no others: First. Such as shall be necessary for its immediate accommodation in the transaction of its business. Second. Such as shall be mortgaged to it in good faith by way of security for debts previously contracted. Third. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings. Fourth. Such as it shall purchase at sales under judgments, decrees, or mortgages held by the association, or shall purchase to secure debts due to it. But no such association shall hold the possession of any real estate under mortgage, or the title and possession of any real estate purchased to secure any debts due to it, for a longer period than five years.'

The powers of the receiver of a national bank are defined by the following sections of the Revised Statutes:

'5234. Such receiver, under the direction of the Comptroller, shall take possession of the books, records, and assets of every description of such association, collect all debts, dues, and claims belonging to it, and, upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts, and, on a like order, may sell all the real and personal property of such association, on such terms as the court shall direct.'

'5236. From time to time, * * * the Comptroller shall make a ratable dividend of the money so paid over to him by such receiver on all such claims as may have been proved to his satisfaction or adjudicated in a court of competent jurisdiction, and, as the proceeds of the assets of such association are paid over to him, shall make further dividends on all claims previously proved or adjudicated.'

Act of March 29, 1886 (page 3514 of U.S. Comp. Stats. (U.S. Comp. St. 1901, pp. 3507, 3508)), provides:

'That whenever the receiver * * * shall find it in his opinion necessary, in order to fully protect and benefit his said trust, to the extent of any and all equities that such trust may have in any property, real or personal, by reason of any bond, mortgage, assignment, or other proper legal claim attaching thereto, and which said property is to be sold under any execution, decree of foreclosure, or proper order of any court of jurisdiction, he may certify the facts in the case, together with his opinion as to the value of the property to be sold, and the value of the equity his said trust may have in the same, to the Comptroller of the Currency, together with a request for the right and authority to use and employ so much of the money of said trust as may be necessary to purchase such property at such sale.'

An examination of these sections of the statute appears to be conclusive of the fact that there is no merit in the contention of the defendant. It must be assumed, in the absence of a contrary showing, that the ownership of the upland by the bank was authorized. The ownership of the upland carried with it a valuable privilege which was a part of and appurtenant to the upland, which passed to the bank at the time it acquired the upland, of which privilege the receiver could avail himself by making certain payments assessed by the state, in the way of appraisals of the value of the land. These assessments...