State ex rel. Barker v. Sage

• Citation: 184 S.W. 984,267 Mo. 493
• Parties: THE STATE ex rel. JOHN T. BARKER, Attorney-General, Appellant, v. D. H. SAGE, Doing Business Under Name of SAGE BANKING COMPANY
• Decision Date: 10 April 1916
• Court: Missouri Supreme Court

184 S.W. 984

267 Mo. 493

THE STATE ex rel. JOHN T. BARKER, Attorney-General, Appellant, v. D. H. SAGE, Doing Business Under Name of SAGE BANKING COMPANY

Supreme Court of Missouri

April 10, 1916

Appeal from Clark Circuit Court. -- Hon. N. M. Pettingill, Judge.

Reversed and remanded.

John T Barker, Attorney-General, and W. T. Rutherford, Assistant Attorney-General, for the State, plaintiff and appellant; T L. Montgomery for McDermott Turner, Receiver, intervener and appellant and W. M. Fitch and James P. Gilmore for Erwin Fox George W. Cannon and James Fulton, interveners and appellants.

(1) The Sage Banking Company was and is, under the laws of Missouri, a corporation, or corporate or artificial entity, separate and apart from D. H. Sage, individually, its organizer, and its assets, therefore, are not, and cannot be, affected by, nor subjected to, any proceeding in bankruptcy in and by any Federal courts. Sec. 11, art. 12, Mo. Constitution; Sec. 2963, R. S. 1909; Section 1, Clause 6, Bankruptcy Act, Collier on Bankruptcy, p. 2; Secs. 1117-1119, 1095, 1081, 1088, R. S. 1909; Clark & Marshall on Private Corporations, sec. 18; Dwight on Law of Persons and Personal Property, p. 580; State v. Turlery, 142 Mo. 410; Jones v. Williams, 139 Mo. 25; State ex rel. v. Payne, 129 Mo. 477; Matthews v. Skinker, 62 Mo. 329; Sec. 2990, R. S. 1909; Fargo v. Railroad, 6 F. 767; Insurance Co. v. Oliver, 10 Wall. 507; Society v. Brown, 213 U.S. 43. (2) In any view of the case, an individual or private banker or bank, created by and organized under the statutes of Missouri, is not a natural person within the meaning of the bankruptcy acts of Congress, and the assets of the Sage Banking Company, therefore, are not, and cannot be, affected by, nor subjected to, any proceedings in or by any Federal court. Articles 1 and 2, Chap. 12, R. S. 1909; In re Guaranty & Trust Co., 121 F. 74; Perkins v. Smith, 116 N.Y. 441; People v. Young, 207 N.Y. 529; Ratcliffe v. People, 22 Colo. 78; Bassmet v. Jackson, 19 Fla. 667; Shadwell v. Phillips, 72 Minn. 521; Helena v. Rogan, 27 Mont. 138; United States v. Bashaw, 50 F. 753; Sener v. Ephrate, 176 Pa. St. 87; Nudgett v. Leibes, 14 Wash. 485; Ashland W. Co. v. Ashland Co., 87 Wis. 485; Lucas Co. v. Railroad, 67 Iowa 211. (3) The Sage Banking Company, or D. H. Sage doing business under that name, if the court should hold the company not to be a corporate entity, is not a "natural person" within the meaning of the bankruptcy laws of the United States, but is, in any event, a separate entity from D. H. Sage, or David H. Sage, individually, and the assets of the Sage Banking Company, therefore, cannot be affected by, nor subjected to, any bankruptcy proceeding solely against David H. Sage. People v. Doty, 80 N.Y. 251; In re Kehler, 153 F. 237; In re Funk, 101 F. 244; In re Funk, 117 F. 786; Curtis v. Hollingshead, 14 N. J. L. 409; Lumber Co. v. Covert, 35 Mich. 260; Bank v. Burt, 93 N.Y. 245; Forsyth v. Woods, 11 Wall. 486; Walker v. Wait, 50 Vt. 675; Cooley v. Corsett, 39 Mich. 784; Cross v. Bank, 17 Kan. 340; In re Bertenshaw, 157 F. 363; Fidelity Trust Co. v. Gaskell, 195 F. 865; In re Junk & Balthazard, 169 F. 482. (4) No title passed to the trustee in bankruptcy in the proceedings in the Federal court of Iowa, for the reason that, prior to the filing of the petition in bankruptcy therein, said David H. Sage could not have by any means transferred the assets of the Sage Banking Company, and the same could not have been levied upon and sold under any judicial process against him, and, by reason thereof, the State court was without power to transfer said assets to said trustee. Maynard v. Bond, 67 Mo. 315; Casey v. Cavaroc, 96 U.S. 467; Kennedy v. Gibson, 8 Wall. 506; Casey v. Sociate, 2 Woods 77, 5 Fed. Cases 265; 3 Am. & Eng. Ency. Law, 98; Fish v. Olin, 76 Vt. 120; Relf v. Rundle, 103 U.S. 225; Parson v. Ins. Co., 31 F. 305; Gilman v. Ketchum, 84 Wis. 69; Ford v. Gilbert, 44 Ore. 262; Barnes v. Newcomb, 80 N.Y. 113; Walling v. Miller, 108 N.Y. 173; Thompson v. McCleary, 159 Pa. St. 183; Edwards v. Norton, 55 Tex. 410; In re Tyler, 149 U.S. 164; Ells v. Water Co., 86 Tex. 109; Campau v. Club, 130 Mich. 417; Groscup v. Society, 162 F. 947; Martin v. Davis, 21 Iowa 535. (5) The money, assets and property of the Sage Banking Company were in custodia legis long prior to the filing of the petition in bankruptcy, or were so situated as not to be affected thereby, and the circuit court of the State having first acquired jurisdiction thereover, has the right, and should be required, to retain jurisdiction and administer the estate and wind up the affairs of the Banking Company, under the statutes of Missouri. Collier on Bankruptcy, par. b, p. 992; Casey v. Cavaroc, 96 U.S. 488; Metcalf v. Barker, 187 U.S. 175; Jaquith v. Rowley, 188 U.S. 625; In re Rathman, 183 F. 924; Harris v. Bank, 216 U.S. 382; In re McMahon, 77 C. C. A. 668; Frank v. Volkmmoer, 205 U.S. 521; Hiscock v. Bank, 206 U.S. 41; Skilton v. Coddington, 185 N.Y. 80.

Boyd & McKinley for respondent.

(1) Where an adjudication of bankruptcy has been made by a court of bankruptcy the jurisdiction of that court to administer the property of a bankrupt is exclusive. Fidelity & Guaranty Co. v. Bray, 225 U.S. 205; Harvester Co. v. Lumber Co., 222 U.S. 300; In re Watts, 190 U.S. 1; Bank v. Gudger, 212 F. 49; In re McLoughlin v. Knop, 214 F. 260; In re Naval Stores Co., 214 F. 563; Morehouse v. Powder Co., 206 F. 204; Dry Goods Co. v. Crating Co., 206 F. 817; In re Telegraph Co., 196 F. 153; Lea v. West Co., 91 F. 237; In re Wagon Co., 110 F. 927; In re Fuller's Earth Co., 186 F. 578; In re Zeigler Co., 189 F. 259; In re Knight, 125 F. 35; Hooks v. Aldridge, 145 F. 865; In re Electric Supply Co., 175 F. 612. (2) The title to all the property of the bankrupt vests in the trustee in bankruptcy as of the date of filing the petition asking for the adjudication of bankruptcy. In re Sage, 224 F. 525; County Commissioners v. Hurley, 169 F. 94; Pugh v. Loisel, 219 F. 417; Toof v. Bank, 206 F. 250; In re Contracting Co., 212 F. 691; Bryan v. Bernheimer, 181 U.S. 188; Mueller v. Nugent, 184 U.S. 1; Everett v. Judson, 228 U.S. 474; Remington on Bankruptcy (2 Ed. 1915), secs. 117, 1112; Sec. 70, U. S. Bankruptcy Act, 30 Stat. L. 565; Sec. 47, U. S. Bankruptcy Act, 36 Stat. L. 840; Lazarus v. Prentice, 234 U.S. 263. (3) The title to the property of D. H. Sage, doing business under the firm name and style of Sage Banking Company, passed to the trustee in bankruptcy on the adjudication of bankruptcy in accordance with the provisions of the Bankrupt Act. Sec. 4-B, U. S. Bankruptcy Act, 36 Stat. L. 839; Sec. 1-A6, Bankruptcy Act, 30 Stat. L. 544; Sec. 1116-1118, R. S. 1909; In re Salmon & Salmon, 143 F. 395; In re Purl's Estate, 147 Mo.App. 105; 1 Remington on Bankruptcy (2 Ed. 1915), sec. 79; Burkhart v. Bank, 137 F. 958; In re Surety Trust Co., 121 F. 73; Couts v. Townsend, 126 F. 249; In re Kersten, 110 F. 929; In re Sage, 224 F. 525. (4) The special agent of the Missouri Banking Department and the receiver, McDermott Turner, were not and are not adverse claimants having a beneficial title to or claim upon the property of D. H. Sage, doing business under the firm name and style of Sage Banking Company. Bryan v. Bernheimer, 181 U.S. 188; Mueller v. Nugent, 184 U.S. 1; Harvester Co. v. Lumber Co., 222 U.S. 300; Shawnee County v. Hurley, 169 F. 94; Lazarus v. Prentice, 234 U.S. 266; Bank v. Cox, 143 F. 91; In re Sage, 224 F. 525. (5) State insolvency laws are superseded by or give way to Federal insolvency laws. In re Salmon & Salmon, 143 F. 395; In re Sage, 224 F. 525; In re Watts & Sachs, 190 U.S. 1. (6) The State court cannot incumber the assets of the bankrupt estate with any liens or make any order appropriating or distributing any of the assets of the bankrupt estate after the bankruptcy proceedings attach. In re Sage, 224 F. 540; Black on Bankruptcy, sec. 27; Remington on Bankruptcy (2 Ed. 1915), sec. 1620; In re Hecox, 164 F. 875; In re Stave Co., 199 F. 952; In re Fuller's Earth Co., 186 F. 578; In re Rogers, 116 F. 435. (7) The Supreme Court of Missouri has no jurisdiction to determine this controversy as the act of the State court in appointing the receiver was coram non judice. In re Stave Co., 199 F. 952; In re Sage, 224 F. 540; Hickman v. Parlin-Orendorff Co., 88 Ark. 519; Harvester Co. v. Lumber Co., 222 U.S. 300; Pugh v. Loisel, 219 F. 417; County Commissioners v. Hurley, 169 F. 94. (8) The receiver appointed by the State court, McDermott Turner, has complied with the order of the lower court and paid or satisfied the judgment, and therefore this appeal should be dismissed. Noah v. Insurance Co., 78 Mo.App. 370; King v. Campbell, 107 Mo.App. 496; Cassell v. Fagin, 11 Mo. 207; Aull v. Trust Co., 149 Mo. 15; 3 Corpus Juris, 360, 368, 665, 675.

Division Two: WOODSON, C. J. Graves, Blair and Revelle, JJ., concur; Bond, J., dissents; Walker and Faris, JJ., absent. On Motion to Modify: GRAVES, J. Faris, Blair and Revelle, JJ., concur; Woodson, C. J., dissents to this opinion; and Bond, J., dissents as to both opinions.

OPINION

In Banc.

WOODSON C. J.

-- This suit was instituted in the circuit court of Clark County, under the banking laws of this State, to determine the priority of the rights of the depositors and other creditors of the Sage Banking Company, of Alexandria, Missouri, a private bank, duly organized under the laws of this State, to the assets thereof, to the rights of the general creditors of D. H. Sage, the owner of the bank, who is a bankrupt.

The facts, in so far as this case is concerned, are briefly as follows:

On December 31, 1910, D. H. Sage subscribed and swore to, and acknowledged, the regular application or form for establishing or creating a private...