State of Missouri v. Angle

• Decision Date: 04 October 1916
• Docket Number: 166.
• Citation: 236 F. 644
• Parties: STATE OF MISSOURI et al. v. ANGLE. In re SAGE.
• Court: U.S. Court of Appeals — Eighth Circuit

236 F. 644

STATE OF MISSOURI et al. v. ANGLE.

In re SAGE.

No. 166.

United States Court of Appeals, Eighth Circuit.

October 4, 1916

[Copyrighted Material Omitted]

James P. Gilmore, of Tulsa, Okl., and W. T. Rutherford, Asst. Atty Gen. (John T. Barker, Atty. Gen., T. L. Montgomery, of Kahota, Mo., and W. M. Fitch, Asst. Atty. Gen., on the brief), for petitioners.

J. O Boyd, of Keokuk, Iowa (Boyd & McKinley, of Keokuk, Iowa, on the brief), for respondent.

Before HOOK and CARLAND, Circuit Judges, and MUNGER, District Judge.

MUNGER District Judge.

By an appeal, and also by a petition to revise (the latter being the proper procedure-- In re Hecox, 164 F. 823, 90 C.C.A. 627), there is called in question a decision of the District Court of the Eastern District of Missouri, which directed a receiver appointed by a state court of Missouri to turn over certain property in his possession, to a trustee in bankruptcy. The bankrupt, David H. Sage, had been engaged in mercantile business at Keokuk, Iowa, and also in Missouri. On November 19, 1914, there was filed in the United States court at Keokuk, Iowa, a creditors' petition asking that Sage be declared a bankrupt, and he was so adjudged on November 27, 1914, and the respondent was chosen as trustee. Prior to 1911 the bankrupt, David H. Sage, and William N. Sage, had associated themselves together, furnished the capital, and established a bank at Alexandria, Mo. It is stipulated that on or about January 10, 1911, D. H. Sage became the sole owner of the bank, having purchased the interest of his associate, by proceedings had under sections 1116 and 1117 of the Revised Statutes of Missouri of 1909, and signing a certificate as follows:

'Form for Establishing a Private Bank.

'Be it known that the undersigned D. H. Sage have associated themselves together for the purpose of establishing a bank under the provisions of sections 1116 and 1117; Revised Statutes of Missouri, 1909.

'1. The names and places of residence of all persons interested in the business are (who shall be residents of Missouri):

Names.

D. H. Sage,

Residence. Alexandria, Mo.

'2. The amount of capital invested is $10,000.00.

'3. The name in which the business is to be conducted is Sage Banking Company.

'4. The business is to be conducted at Alexandria, Mo., county of Clark, in the state of Missouri.

'In witness whereof we hereunto set our hands this 31st day of December, A.D. 1910.

D. H. Sage.'

This certificate was verified and acknowledged by David H. Sage and filed with the recorder of deeds. The bank commissioner of Missouri then issued a certificate establishing the bank and authorizing it to do business as a bank of deposit and discount. The bank continued in business, making reports and being examined as provided by statute, until October 15, 1914. On that date Sage notified the bank commissioner of Missouri that the bank had closed its doors and requested the bank commissioner to take charge of its affairs, and on the same day he posted on the bank's doors a notice that it was in the hands of the bank commissioner.

On October 16, 1914, a bank examiner acting under the direction of the state bank commissioner, took charge of the bank, and instituted an examination of its affairs. On the following day, the bank commissioner appointed McDermott Turner as special agent to take charge of the bank, pending the appointment of a receiver. On November 21, 1914, the Attorney General of Missouri applied to the state court for the appointment of a receiver for the bank. McDermott Turner was appointed as such receiver, qualified, and at once took possession of the bank and its assets. The bank had a large amount of deposits and its assets had a face value in excess of the amount owing to depositors.

On February 3, 1915, the trustee made the application heretofore mentioned, requesting the United States Court for the Eastern District of Missouri to direct the receiver to surrender to the trustee in bankruptcy the property of the Sage Banking Company. The court denied the request without prejudice to a new application, and with leave to renew it after making an application to the state court for a similar order against the receiver. On May 8, 1915, the state circuit court, in compliance with the trustee's application, made an order directing the receiver to surrender possession of the assets, after deducting a sum it allowed as compensation to the receiver and his attorney. An appeal was taken to the Supreme Court of Missouri and a supersedeas bond was given. After the decision by the state circuit court, and before the case was heard on appeal by the Missouri Supreme Court, the trustee, on May 24, 1915, renewed his application to the United States District Court for the Eastern District of Missouri, for an order directing the receiver to surrender the assets. Answers were filed to this application, and the issues were submitted to the court upon these pleadings and upon an agreed statement of facts. The court, on August 16, 1915, made an order that the receiver surrender to the trustee all assets in his possession or control belonging to the estate of David H. Sage, doing business as the Sage Banking Company, and it is of this order that complaint is now made.

The principal question presented in the case is whether David H. Sage owned the property that was held by the receiver appointed by the state court. If that property did not belong to David H. Sage, the bankruptcy court was not entitled to administer it. The question of ownership involves a consideration of certain portions of the Constitution and statutes of Missouri. Section 11, art. 12, of the Constitution of 1875 provides:

'The term 'corporation,' as used in this article, shall be construed to include all joint-stock companies or associations having any powers or privileges not possessed by individuals or partnerships.'

Section 21, art. 10, of that Constitution provides:

'No corporation, company or association, other than those formed for benevolent, religious, or scientific * * * purposes shall be created or organized under the laws of this state, unless the persons named as corporators shall, at or before the filing of the articles of association or incorporation, pay into the state treasury fifty ($50.00) dollars for the first fifty thousand ($50,000.00) dollars or less of capital stock.'

Portions of the statutes of Missouri (1909 Revision) are as follows:

Section 1116. Private Bankers Defined.-- Private bankers are declared to be those who carry on the business of banking by receiving money on deposit, with or without interest, by buying and selling bills of exchange, promissory notes, gold or silver coin, bullion, uncurrent money, bonds or stocks, or other securities, and of loaning money, without being incorporated.

Section 1117. Requirements for Private Banker-- Change of Ownership. No person or company of persons shall engage in the business of banking as private bankers without a paid-up capital of not less than ten thousand dollars, and if said banking business is to be carried on in a city having a population of one hundred and fifty thousand inhabitants or more, then without a paid-up capital of not less than one hundred thousand dollars, nor until he or they shall have made a statement, subscribed and sworn to as correct and true before a notary public by each person connected with such business as owner or partner, setting forth: First, the names and places of residence of all persons interested in the business, all of whom shall be residents of this state, and the amount of capital invested; and second, the name in which the business is to be conducted and the place at which it is to be carried on; which statement shall be acknowledged, recorded in the office of the recorder of deeds of the county in which the bank is to be located, and a certified copy of such recorded instrument shall be filed in the office of the bank commissioner: Provided, however, that in order to accomplish a change in the ownership of a private bank, it shall be necessary for all the partners of the new bank to make, record and file in the office of the bank commissioner a statement in form and manner required by this section for establishing a new bank.

Section 1118. No private banker, who receives general deposits after the manner of banks of deposit and discount, shall employ any part of his capital, or any funds deposited with or borrowed by him, in dealing or trading in, buying or selling lands, goods, chattels, wares or merchandise, but he may sell and dispose of all kinds of property which may necessarily come into his possession in the collection of his loans or discounts. Nor shall any such banker use or employ his capital or funds deposited with or borrowed by him in any other manner than banks of deposit and discount are by this article permitted, or loan a greater amount to any person or loan any sum whatever, except upon like security as is required to be taken by banks of deposit and discount. Neither shall the profits of such private bank be distributed to the owners thereof without first setting apart to surplus account at least twenty per cent. of the net profits each year until the surplus equals twenty per cent. of the capital, and said surplus shall not be diminished except for the payment of any losses which may occur: Provided, if there are undivided profits, these shall first be used in payment of such losses.

Section 1119. All the provisions of this article shall, so far as the same are applicable, apply to all private bankers doing business in this state.

Section 1081. If, from an examination made by the bank commissioner or by one of his examiners, it shall be discovered that any bank, private...