Sterrett v. Second Nat Bank of Cincinnati, Ohio

• Decision Date: 09 December 1918
• Docket Number: No. 378,378
• Citation: 63 L.Ed. 135,39 S.Ct. 27,248 U.S. 73
• Parties: STERRETT v. SECOND NAT. BANK OF CINCINNATI, OHIO
• Court: U.S. Supreme Court

248 U.S. 73

39 S.Ct. 27

63 L.Ed. 135

STERRETT

v SECOND NAT. BANK OF CINCINNATI, OHIO.

No. 378.

Argued Nov. 8, 1918.

Decided Dec. 9, 1918.

Messrs. Edmund H. Dryer and Forney, Johnston, both of Birmingham, Ala., for petitioner.

Mr. Lawrence Maxwell, of Cincinnati, Ohio, for respondent.

Mr. Justice DAY delivered the opinion of the court.

The plaintiff, as receiver of the Alabama Trust & Savings Company, a banking corporation organized under the laws of the state of Alabama, filed his bill in the United States District Court for the Southern District of Ohio, against the Second National Bank of Cincinnati to recover sums of money for which he alleged the Second National Bank was liable on account of certain transactions which had taken place between the National Bank and the Savings Company and its officers the details of which it is unnecessary to set forth. Upon final hearing the District Court found the defendant liable for the application of a balance of the Savings Company's deposit in the National Bank, upon paper held by it on which the Savings Company appeared as principal maker, but which was found to have been given for the benefit of certain of the Savings Company's officers. Plaintiff's remaining claims were rejected. Both parties appealed to the Circuit Court of Appeals for the Sixth Circuit, which reversed the decree of the District Court, upon the ground that the receiver had no authority to bring the suit (246 Fed. 753, 159 C. C. A. 55), and the case is here on writ of certiorari to the Circuit Court of Appeals.

In the year 1911 certain creditors of the Savings Company, an Alabama corporation, filed a bill against it in a chancery court of Alabama alleging its insolvency.

The chancery court on April 27, 1911, rendered a final administration decree wherein it found that the defendant Savings Company was insolvent; that its assets constituted a trust fund for the payment of its creditors, and the same should be marshaled and administered in that court; that the defendant was a corporation organized under the General Laws of Alabama; that upon final settlement it should be dissolved; that it had suspended business and was not about to resume the same, and could not do so with safety to the public; that, therefore, W. C. Sterrett be appointed receiver of defendant, and empovered and directed to demand and take into his possession all of the defendant's assets and property to which it was entitled and to recover the same and reduce it to money, and administer the same under the further order of the court. And the court further authorized the receiver to employ counsel and to bring such actions at law or in equity as he might be advised and to incur such expenses as might be necessary. Later, on March 8, 1912, the Alabama chancery court specifically directed the receiver, plaintiff herein, to bring this suit in the District Court of the United States for the Southern District of Ohio, Western Division.

The material parts of the sections of the Code of Alabama (1907, vol. 2, pp. 430, 433), pertinent to this case, provide as follows:

'3509. * * * The assets of insolvent corporations constitute a trust fund for the payment of the creditors of such corporations, which may be marshaled and administered in courts of equity in this state.'

Section 3511 provides for the dissolution of corporations by action of the stockholders, and enacts that the court——

'* * * shall appoint a receiver of all the books, property, and assets of the corporation * * * (who) shall, under the direction of the court, collect all debts due the corporation, and sell all the property, real and personal, of the corporation, pay the debts thereof ratably or in full as the funds realized may admit, and divide the residue after the debts and costs are paid, among the several classes of stockholders, according to the amount owned by each, and according to the preferences, if any, of the several classes as provided in the certificates of incorporation.'

Section 3512 covers the application for receivership and dissolution of insolvent corporations upon bill of creditors or stockholders in the chancery court, and provides:

'* * * The court * * * may appoint a receiver of all the property and assets of the corporation * * * (who) under the direction of the court, must exercise the same powers and perform the same duties as are required of receivers in the next preceding section, and otherwise manage the affairs of the corporation pending final settlement thereof as the court shall direct. * * *'

There is also a provision for proceedings by the attorney general (page 444):

'3560. Proceedings when bank found not solvent—Whenever the treasurer finds that a bank or corporation chartered by the laws of this state and doing a banking business, is not in a solvent condition, he shall immediately report the condition of the bank to the governor, and the governor shall direct the attorney general to institute proceedings in a court having jurisdiction in the county where the bank or parent bank is located, to put the bank in the hands of some competent person, who shall give bond in an amount to be fixed by the judge for the faithful discharge of his duties, and said person so appointed shall immediately take charge of the business of said bank, collecting its assets and paying off its liabilities under the law and rules of such court.'

The question presented for our consideration is...