State ex rel. Bettman v. Court of Common Pleas of Franklin Cnty.

• Court: United States State Supreme Court of Ohio
• Citation: 124 Ohio St. 269,178 N.E. 258
• Docket Number: No. 23179.,23179.
• Parties: STATE ex rel. BETTMAN, Atty. Gen., v. COURT OF COMMON PLEAS OF FRANKLIN COUNTY et al.
• Decision Date: 23 October 1931

124 Ohio St. 269
178 N.E. 258

STATE ex rel. BETTMAN, Atty. Gen.,
v.
COURT OF COMMON PLEAS OF FRANKLIN COUNTY et al.

No. 23179.

Supreme Court of Ohio.

Oct. 23, 1931.

Original action by the State, on the relation of Gilbert Bettman, Attorney General, for writ of prohibition to be directed to the Court of Common Pleas of Franklin County, and Dana F. Reynolds, judge thereof.-[By Editorial Staff].

Writ granted.

This is an original action in this court, and was instituted by the Attorney General of the state to procure the issuance of a writ of prohibition restraining the common pleas court of Franklin county and Dana F. Reynolds, a judge of that court, from appointing a receiver for the Columbian Building & Loan Company in an action now pending in that court, wherein Florence Dressel is plaintiff, and the Columbian Building & Loan Company is a defendant.

In the case in the common pleas court, the plaintiff brought her action as a creditor on behalf of herself and all persons similarly situated. That suit is one for an accounting and the appointment of a receiver. The action is based on the claim asserted in the petition that plaintiff on December 9, 1930, deposited with the defendant, the National Savings & Loan Company, which was organized and doing business under the building and loan laws of the state of Ohio, the sum of $500, evidenced by entry in a passbook issued to her by said company, which sum and no part thereof has been repaid to her; she avers that on January 31, 1931, without notice or knowledge to the plaintiff, the National Savings & Loan Company, acting through its board of directors, pretended to sell all its assets, exceeding $2,500,000, to the defendant the Columbian Building & Loan Company, which company was also organized and is doing business under the building and loan laws of Ohio, and thereafter filed its certificate of dissolution with the secretary of state, and thereby dispossessed itself of all property, real and personal, out of which the indebtedness to plaintiff could be paid, and that all of the assets of the National have been taken possession of by the Columbian and mingled with its own assets. Plaintiff charges that at that time the controlling majority of the board of directors of the National Savings & Loan Company were also the controlling officers and members of the board of directors of the Columbian Building & Loan Company, and that the members of the board of directors of the former, by reason of the ownership of stock, were able to control the board of directors of the latter; that the Columbian undertook to and did pay to the National the sum of $100,000, which sum was distributed to the stockholders of the National, who were also directors of that company.

It was asserted that by the ownership and control of the stock of the Columbian, its directors and officers are able to and will perpetuate themselves in office in said company, and will prevent a proper accounting of the assets of the National; that the Columbian has many creditors which it is unable to pay, and that it is preferring creditors of the Columbian over and to the exclusion of the creditors of the National. The plaintiff in her petition further alleges that the Columbian Building & Loan Company is insolvent, and that the substitution of that company as and debtor of plaintiff and those similarly situated works a fraud upon them. Plaintiff prayed for an accounting between said two companies; that the assets of the National, so far as they could be traced, should be found to be the property of that company, and a trust declared in favor of the creditors of the National on all the available property of the Columbian. She also sought therein the appointment of a receiver for each of said companies.

The relator in the action now before us, after setting out in his petition in this cause the essential averments of the petition in the action pending in the court of common pleas, substantially as above stated, alleged that the sole purpose and intent of the plaintiff and her counsel in filing said petition and motion for the appointment of a receiver were to procure the liquidation of the business, property, and affairs of the Columbian Building & Loan Company, by securing and obtaining the appointment of a receiver for said company by the consideration, order, and decree of said common pleas court. Relator further alleged that for some time prior to the institution of that suit, the superintendent of building and loan associations of Ohio, through his duly appointed and qualified examiners, was fully investigating the affairs of the Columbian Building & Loan Company for the purpose of ascertaining its true condition and determining the course to be pursued by him under the law, and that he is still engaged in an examination of the business, property, and affairs of said company, and relator directs attention to the fact that in the case pending in the court of common pleas there is no charge of any failure or dereliction of duty of the superintendent of building and loan associations or any refusal, present or prospective, of that officer or the Attorney General to perform any duty required of them by law.

The answer of the respondent admits the essential and material facts stated in the petition, and then avers that the superintendent of building and loan associations of the state had been made a party in said action in the court of common pleas at his own instance, and that continuances of said cause have been granted upon his application. He denies that the appointment of a receiver in said case will, as a matter of law, in effect, inevitably operate as a dissolution of said company. The other averments of the answer are mere assertions of the jurisdiction and authority of the court of common pleas in the premises.

The relator filed a general demurrer to respondent's answer.

Syllabus by the Court.

[Ohio St. 269]The Legislature, recognizing the quasi public character of building and loan associations, has enacted laws not only providing for their inspection, supervision, and control, but also prescribing the method of their dissolution and the liquidation of their assets, and has conferred upon the superintendent of building and loan associations the authority essential to accomplish that result expeditiously and economically.

The method prescribed by the Legislature for the regulation, supervision, and control of the affairs of building and loan associations, and the method of procedure prescribed for their dissolution and liquidation, conserve and secure an equitable distribution of the assets of such company to those entitled thereto; it is specific, adequate, complete, and exclusive; and action of a court of common pleas in contravention thereof will be restrained by a writ of prohibition.

MARSHALL, C. J., and ALLEN, J., dissenting.

[Ohio St. 273]

[178 N.E. 260]

Gilbert Bettman, Atty. Gen., and William J. Ford, of Columbus, for relator.

Charles S. Druggan, of Columbus, for respondent.

MATTHIAS, J.

The relator challenges the jurisdiction of the court of common pleas to hear the issue or matter with respect to the appointment of a receiver for the Columbian Building & Loan Company in the case now pending in that court. He does not seek to restrain or limit the hearing and determination of any other issue presented in that case.

The jurisdiction of the court of common pleas is prescribed by statute, and it is conceded that court has authority generally in the matter of appointment of receivers, but it is contended that such power is limited by statutes providing for the control and regulation of building and loan associations, and that the proposed action of the common pleas court, which is here challenged, is not within, but is in excess of, its authorized power and jurisdiction; and that is the sole question presented by the pleadings for our consideration and decision in this case.

We are not so much concerned in the object and purpose of those who instigated or instituted the action asking the appointment of a receiver for the Columbian Building & Loan Company as we are in what seems to be not only the probable, but the necessary and certain result of that proceeding. If the allegations of the petition in that case are true, that proceeding is in fact one for the dissolution of the [Ohio St. 274]building and loan company under a receiver appointed by that court upon the application of a depositor. It is predicated upon the express and definite assertion of the insolvency of the building and loan company. True, in this instance, the applicant claims as a depositor in a building and loan company whose assets she alleges are now improperly in the possession and under the control of another building and loan company, and she seeks to recover same from the latter company; but we regard the principle involved with reference to the issue now presented to be the same as though the plaintiff in that case were a depositor of the Columbian Building & Loan Company, and, as such, seeking the appointment of a receiver and a dissolution of that company.

The report of the superintendent of building and loan associations of Ohio for the fiscal year ending December 31, 1930, shows that seven hundred and ninety-one associations filed annual reports, a compilation of which discloses total assets of $1,246,864,413, of which loans on mortgage security constitute $1,108,681,799. These reports also show the total number of stockholders to be 1,815,005; the number of borrowers, 419,846; and the number of depositors, 1,142,017.

It would be unfortunate if any single dissatisfied or offended depositor or shareholder of one of these institutions could institute extended and expensive litigation for its dissolution to the great detriment of the many identified with such association, whose interests, and incidentally those of the general public, would be thus seriously jeopardized. The success or failure of such institutions...