State v. German Savings Bank

• Citation: 70 N.W. 221,50 Neb. 734
• Decision Date: 16 February 1897
• Docket Number: 9000
• Parties: STATE OF NEBRASKA, APPELLEE, v. GERMAN SAVINGS BANK, APPELLANT
• Court: Supreme Court of Nebraska

70 N.W. 221

50 Neb. 734

STATE OF NEBRASKA, APPELLEE, v. GERMAN SAVINGS BANK, APPELLANT

No. 9000

Supreme Court of Nebraska

February 16, 1897

APPEAL from the district court of Douglas county. Heard below before KEYSOR, J. Reversed.

REVERSED AND ORDER DISCHARGED.

Joel W West, for appellant.

Ralph W. Breckenridge, contra.

OPINION

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 evidence of debts 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 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 eighty 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, 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 disposing of the property, may be appealed to the supreme court in the same manner as final orders and decrees." Nor can any objection to the appeal be urged on the ground that no exception was taken to the original order. That order having been made ex parte and a motion to vacate it having been made and an exception taken to the order overruling such motion, the right to appeal was preserved. (Clarke v. Nebraska Nat. Bank, 49 Neb. 800, 69 N.W. 104.)

We are thus brought to a consideration of the propriety of the order itself. The statute (Compiled Statutes, ch. 8, sec. 35) provides: "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." This provision manifestly applies to the liabilities of stockholders as such, because the mere fact that a person otherwise indebted to a bank was a stockholder would not prevent the receiver under general authority conferred upon him in pursuance of the statute from enforcing such liability. The order was, therefore, strictly in conformity with the statute and made on the showing required by the statute to justify such order, and the precise question, therefore, presented is whether the statute, so far as we have quoted it, is a constitutional enactment. Article 11 of the constitution of 1875 deals with corporations. It is subdivided into three parts, one relating to railroad corporations, one to municipal corporations, the third to miscellaneous corporations. Section 4 of the last subdivision is as follows: "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, and the liability for the unpaid subscription shall follow the stock." Another provision not essentially connected with this, but which is so similar in character that one should never be considered without reference to the other, is section 7 of the same subdivision, which reads as follows: "Every stockholder in a banking corporation or institution shall be individually responsible and liable to its creditors over and above the amount of stock by him held to an amount equal to his respective stock or shares so held, for all its liabilities accruing while he remains such stockholder; and all banking corporations shall publish quarterly statements under oath of their assets and liabilities." It will be observed at once that the general effect of these two provisions is to establish a liability, free from interference by the legislature, on stockholders of all corporations, subject to certain conditions, for their unpaid subscriptions; and in the case of banking corporations, an additional liability for a further amount equal to the amount of stock held by any person for the purpose of paying debts incurred while such person is a stockholder. The conditions attached to the enforcement of the first liability are that its enforcement must be in cases of claims against corporations; that the amount of such claims shall be first ascertained, and that the corporate property shall have been exhausted.

Does the banking act, in so far as it...