State v. German Exch. Bank

• Decision Date: 13 May 1902
• Citation: 90 N.W. 570,114 Wis. 436
• Parties: STATE, BY ATTORNEY GENERAL, TO USE OF STATE ET AL., v. GERMAN EXCHANGE BANK ET AL.
• Court: Wisconsin Supreme Court

114 Wis. 436

90 N.W. 570

STATE, BY ATTORNEY GENERAL, TO USE OF STATE ET AL.,

v.GERMAN EXCHANGE BANK ET AL.

Supreme Court of Wisconsin.

May 13, 1902.

Appeal from circuit court, Calumet county; Geo. W. Burnell, Judge.

Action by the state of Wisconsin, by the attorney general, for the use of the state and others, against the German Exchange Bank, a banking partnership, and others, to wind up the bank's business. From an order directing the receiver to deliver the property in his hands to the trustee in bankruptcy of the partners, the receiver appeals. Dismissed.

July 23, 1901, in an action commenced by the attorney general of the state pursuant to chapter 317, Laws 1901, to wind up the business of a banking partnership conducted in the name of the German Exchange Bank and composed of Theodore and Henry Kersten, R. F. Connell was appointed receiver. He took possession of the assets of the banking firm and entered upon the execution of his trust. Subsequently the two Kerstens were duly adjudged bankrupts in the federal district court for the Eastern district of Wisconsin, and thereafter such proceedings were had in such court that John C. Kleist was elected as trustee. Thereafter such trustee appeared in the state court and upon due notice applied for an order requiring the receiver to turn over to him, to be administered by the federal court in bankruptcy, all of the assets in his hands as such receiver. The application was first granted as to all the assets except $4,500. That was retained temporarily, to await a decision as to whether the receiver was entitled to have his expenses and allowance for services adjusted by the state court and paid out of the money in his hands as receiver, and to turn over to the trustee only such part of the $4,500 as might remain after such payment. That was decided against the receiver. An order was then entered requiring him to pay the $4,500 to the trustee, subject to whatever claim he might have for expenses and services rendered in the receivership suit, his account therefor to be adjusted and ordered paid according to the judgment of the federal court in the bankruptcy proceedings. From that order this appeal was taken. After the appeal was taken the receiver died, and an administrator, duly appointed to settle his estate, was substituted to continue the appeal.J. C. Kerwin, for appellant.

O'Connor, Schmitz & Wild, for respondent German Exchange Bank.

J. E. McMullen, for respondent Kleist.

MARSHALL, J. (after stating the facts).

Respondents' counsel, pointing to Allen v. Boberg, 108 Wis. 282, 84 N. W. 421, for support, contend that the order is not appealable. In the case cited the order dismissed the suit as to one defendant, leaving it to proceed to final judgment as to others. We fail to observe any similarity between that situation and the one before us. The order in question was not entered between the parties to the action against the Kerstens. It was entered in a special proceeding instituted therein by the trustee in bankruptcy, who appeared in the state court for that purpose only. If the action were to proceed to judgment, an appeal therefrom would not bring the order up for review. That terminated the special proceeding. It affected a substantial right. Therefore it is appealable under the plain language of subdivision 2, § 3069, Rev. St. 1898, unless it must be held otherwise upon the ground that the order was not proper in the exercise of judicial discretion.

Connell, being a sole trustee, possessed, as such, at the time of his death, of personal property, the legal title thereto passed to his representative, the administrator of his estate. Such representative was bound to execute the trust so far as necessary to preserve the subject thereof till he should account to a successor appointed by the court, and was entitled to take all necessary proceedings to secure a settlement of the deceased receiver's accounts. Perry, Trusts, §§ 341-344; 2 Woerner, Adm'n, § 321; Schenck v. Schenck, 16 N. J. Eq. 174, 182. Therefore it was proper to allow him to be substituted as appellant in this court for the purpose of prosecuting this appeal to a final determination.

The federal court did not decide that the bankruptcy proceeding entirely superseded the jurisdiction of the state court in the receivership case, leaving the latter no authority in the matter other than to order the property in the hands of the receiver turned over to the trustee. That is clearly indicated by the opinion of the district judge, which appears in the record. It was competent for the federal court to declare the Kerstens bankrupts and to take such proceedings as were necessary to have a trustee elected and qualified to administer their affairs in that court, leaving the question of its jurisdiction over the property in the hands of the receiver appointed by the state court, for subsequent determination. It took that course. The trustee then presented to the latter court for consideration the question of his authority over the estates of the bankrupts in its charge. He did not, so far as appears, obtain any adjudication of his right in the matter or judicial advice in respect thereto in his own jurisdiction. On the hearing on such question in the state court all persons interested seem to have consented to its relinquishing jurisdiction of the property to the trustee, except the receiver, and his objection went no further than to question the trustee's right thereto in advance of the former's account for services and expenses being adjusted and paid by the court that appointed him. True, the circuit judge made the order complained of upon the theory that the jurisdiction of his court over the property terminated with the adjudication in bankruptcy,but no such effect of such adjudication had theretofore been asserted by the federal...