State v. German Sav. Bank

• Court: Nebraska Supreme Court
• Citation: 50 Neb. 734,70 N.W. 221
• Decision Date: 16 February 1897
• Parties: STATE v. GERMAN SAV. BANK.

50 Neb. 734
70 N.W. 221

STATE
v.
GERMAN SAV. BANK.

Supreme Court of Nebraska.

Feb. 16, 1897.

Syllabus by the Court.

[70 N.W. 221]

1. In a proceeding under chapter 8, Comp. St., to wind up an insolvent banking corporation, the corporation, even after consenting to the appointment of a receiver, remains an interested party, and may be heard to resist an application for an order conferring authority upon the receiver not within the original order appointing him.

2. An order was made, ex parte, directing a receiver to sue stockholders for their unpaid subscriptions. The defendant corporation moved to discharge the order. The motion was overruled, and the corporation excepted. Held, that it might appeal from this order.

3. The constitution provides that, “in all cases of claims against corporations and joint stock associations, the exact amount justly due shall be first ascertained, and after the corporate property shall have been exhausted, the original subscribers thereof shall be individually liable to the extent of their unpaid subscriptions.” Const. art. 11, § 4. The banking act (Comp. St. 1895, c. 8, § 35) provides that, “whenever any receiver of any incorporated bank shall file a report with the court or judge thereof, setting forth the fact that in the opinion of such receiver, the assets of such bank are not sufficient to pay the liabilities of such bank within a reasonable time, the court or judge may order such receiver to proceed at once to collect from the several stockholders of such bank, who are liable therefor, any or all such liabilities as shall be necessary for the payment of all the liabilities of such bank.” Held, first, that this statute refers to liabilities of stockholders upon their stock; second, that the constitution makes the liability of subscribers for unpaid subscriptions for the purpose of paying debts of the corporation a secondary liability, to be enforced only after the amount of the debts has been judicially ascertained, and other corporate property has been exhausted; third, that a proceeding by the receiver of an insolvent bank to collect unpaid subscriptions to its capital stock is on behalf of creditors of the corporation, and is a “case of claims” against the corporation, within the meaning of the constitution; fourth, that the statute quoted, in so far as it attempts to authorize actions to recover unpaid stock subscriptions before the corporate debts have been judicially ascertained and the corporate property exhausted, is in conflict with the constitution and void.

Appeal from district court, Douglas county; Keysor, Judge.

Action by the state against the German Savings Bank of Omaha, in which a receiver was appointed. From an order refusing to vacate an order directing a receiver to sue stockholders, the bank appeals. Reversed.

[70 N.W. 222]

J. W. West, for appellant.

R. W. Breckenridge, for appellee.

IRVINE, C.

The attorney general, acting under authority of chapter 8 of the Compiled Statutes, entitled “Banks,” applied, in the name of the state, for the appointment of a receiver of the German Savings Bank, a corporation conducting a banking business in Omaha. A receiver was appointed, without objection by the defendant, to take possession of the books, records, assets, and property of said bank, together with all debts and evidences of debt due thereto, and empowered to collect all such debts, dues, and claims, and reduce all assets, as speedily as possible, to money; to sell and dispose of all property belonging to the bank; to compound any and all bad or doubtful debts, on such terms as should be thereafter ordered; and, in general, to do all acts essential and necessary to a speedy closing up and winding up of the affairs of said bank. On the 25th of November, 1896, the receiver made a report to the court of the assets, together with his estimate of their value; and he further reported that in his opinion such assets were not sufficient to pay the liabilities of the bank within a reasonable time, whereupon the court entered an order, apparently ex parte, reciting that only $100,000 of the $500,000 subscribed capital stock had been paid in, and directing that an assessment be levied on the subscribers, of 80 per cent. of their respective subscriptions, and that the receiver institute actions against all stockholders in default of payment of said assessment to collect the amounts so assessed. On the 6th of January, 1897, the bank filed a motion to vacate the order because it was made without notice to the defendant, because it was made contrary to the provisions of section 4 of article 11 of the constitution, entitled “Miscellaneous Corporations,” and because it was prematurely and improvidently made. This motion was overruled, and the bank appeals.

Two questions suggested in the briefs, but not much insisted upon in oral argument, relate to the right of the corporation to resist the order complained of, and to the appealability of such order. The theory of the appellee seems to be that from the time the receiver is appointed the corporation, as such, is without standing in court to object to or resist such applications as the one in this case made. But we think this contention without merit. The action is against the corporation. It has for its object, as a provisional and immediate remedy, the appointment of a receiver to take charge of the assets of the corporation, to liquidate such assets, and to apply them, all under the direction of the court, to the satisfaction of the corporate debts. If the assets prove more than sufficient to discharge the debts, the surplus, both by direction of the statute and by general principles of equity, is to be returned to the persons entitled thereto, to wit, the officers of the corporation. The proceeding is not one merely ex parte, whereby the court, as a sort of administrator, winds up the estate, but it is in its nature an adversary proceeding. The fact that the corporation consented or acquiesced in the appointment of the receiver, and in the general directions given him by the first order, might properly estop the bank from afterwards asserting that such order was improvidently made. But the corporation remains the defendant in the case. It has rights which it is entitled to protect. The corporation, as such, is interested in an economical and prudent management of its affairs, and as the defendant in the case, and the only defendant, it has the right to be heard in subsequent proceedings. Its consent to the first order does not imply an entire abandonment of its corporate functions, or estop it from resisting applications for further orders, at least when such further orders are not clearly for the purpose merely of carrying out the order to which it did consent. While its property has been taken from its possession by the order appointing the receiver, the corporation is not by such order dissolved; and there remains in the corporation at least a contingent residuary interest in such property, which makes it not only nominally, but actually, an interested party in the further proceedings, entitled to protect itself against improvident or unauthorized dealings with such property. The statute, by express terms, makes such orders appealable; section 275 of the Code of Civil Procedure providing that “all orders appointing receivers, giving them further directions and...