The State Ex Inf. Hadley v. People's United States Bank
| Decision Date | 20 June 1906 |
| Docket Number | 2 |
| Citation | 95 S.W. 867,197 Mo. 605 |
| Parties | THE STATE ex inf. HADLEY, Attorney-General, v. PEOPLE'S UNITED STATES BANK; SPENCER, Receiver, Appellant |
| Court | Missouri Supreme Court |
Appeal from St. Louis County Circuit Court. -- Hon. John W McElhinney, Judge.
Affirmed.
Selden P. Spencer pro se.
(1) The court had jurisdiction over the subject-matter, and its appointment of the receiver was not void. Greeley v Bank, 103 Mo. 212. Where there is no person who can handle the property of a corporation, a receiver may always be appointed to preserve the estate. (2) Acting under the apparently valid appointment by a court having general jurisdiction, he is entitled to reasonable compensation and his expenses out of the trust fund, even though he was subsequently removed. Hepfersack v. Hepfersack, 61 How. Pr. 498; Ferguson v. Dent, 46 F. 88; Hembree v. Dawson, 18 Ore. 475. "If the property remains in the hands of the receiver his expenses in taking care of it are charged upon it regardless of ownership." Heise v. Starr, 44 Ill.App. 406; Pa. Co. v. Railroad, 66 F. 421; Land & Cattle Co. v. Bindle, 11 Tex. 263; Alderson on Receivers (1905), sec. 632; High on Receivers (1894), sec. 796; Beach on Receivers (1897), p. 132, p. 840; Gluck & Becker on Receivers (1896), p. 100. (3) Even if under sections 1305 and 1307, Revised Statutes 1899, the court had no authority to appoint a receiver "to wind up the affairs and business of the bank" nevertheless, under the general power of section 1305, "to grant such relief as the evidence situation of the parties, and the interests involved may seem to require," as well as under its general equity power, the court could appoint its agent to preserve the estate if it appeared that it was "inexpedient for the corporation to conduct its business." R. S. 1899, sec. 1305. (4) In any event the receiver is entitled to reasonable compensation out of the trust fund because it was necessary for him to preserve the fund and incur expense in ascertaining who were the depositors entitled to payment, and in paying them, inasmuch as the payment of depositors was expressly ratified by the bank. The action of the bank in ratifying the acts of the receiver entitled him to the reasonable cost of doing that which was for the benefit of the bank, and was accepted by them. (5) The case is one brought by the State, and not by private parties. The good faith of the transaction is undisputed. The right of the State to do that which is necessary in the superintendence of banking institutions and in the preservation of their estates cannot be questioned. The reasonable cost thereof ought to be paid out of the funds of the bank. R. S. 1899, secs. 1305, 1307. Actions brought on behalf of the State are on somewhat different footing from litigation between private parties. State ex rel. v. Dobson, 135 Mo. 19. (6) The amount of the compensation allowed by the court, considering the large sum of money for which the receiver was responsible, and the character of services required of him, was inadequate. State ex rel. v. Grabill, 69 Mo.App. 536; Smith on Receiverships, p. 548, sec. 350. (7) The allowance for the receiver and for his attorney and expenses ought to have been made out of the fund which the receiver preserved, and was a proper charge against it, and should not have been taxed as general costs in the case. St. Louis v. St. Louis Gas Light Co., 87 Mo. 224, 11 Mo.App. 237. (8) The court could not tax the compensation of the receiver as costs, for items of cost must have a definite statutory authority, and there is no such warrant in this case. Jackson County v. Stone, 168 Mo. 581. (9) The receiver is but the agent of the court. Even if the court has made a mistake, the party against whom the mistake is made must look for compensation to the person who invited it. He cannot defend against the expense incurred under the order of court and necessary in the administration of the estate. 23 Am. and Eng. Ency. Law, 1106, 1107; Smith on Receiverships, p. 589, sec. 350 (f.)
Carter, Collins & Jones and Barclay, Shields & Fauntleroy for respondent.
(1) Under the Missouri statutes, there is no authority for the appointment of a receiver on the facts shown in this case; neither could there be an appointment of a receiver for a solvent corporation, on the facts stated in the first petition, under the general equity powers of the circuit court. R. S. 1899, secs. 1305, 1307; Miller Bros. v. Perkins, 154 Mo. 637. (2) Even if the court had power to appoint a receiver, and the facts would warrant such action, the appointment of the first receiver in this case was absolutely void, for want of proper allegations of fact to show an exigency permitting such an appointment in advance of any notice, or rule to show cause, given to defendant. 17 Ency. Pl. and Pr., 735; Tuttle v. Blow, 176 Mo. 171; Moyers v. Corner, 22 Fla. 422; Rees v. Andrews, 169 Mo. 177; State v. Dearing, 184 Mo. 660; Crowder v. Moone, 52 Ala. 220. (3) Where a receiver is appointed on an order absolutely void in every respect, he cannot recover any compensation whatever out of the fund. Verblank v. Ins. Co., 2 Paige 438; Cooper v. Shirley, 75 F. 168; Bank v. Payne, 140 N.Y. 321; Ogden City v. Bear Lake Co., 18 Utah 279; Weston v. Watts, 45 Hun 219; Moyers v. Corner, 22 Fla. 222; Railroad v. Wear, 135 Mo. 230; Higley v. Deane, 64 Ill.App. 392; French v. Gifford, 31 Iowa 428.
In Banc
-- The Attorney-General at the instance of the Secretary of State on July 10, 1905, filed in the circuit court of St. Louis county, as if under the authority of section 1305, Revised Statutes 1899, a suit against the People's United States Bank, a banking concern doing business in St. Louis county, alleging in the petition that the bank was doing business in an unsafe and unauthorized manner, that a peculiar feature of its business was that its intercourse between it and its stockholders and depositors was conducted largely through the United States mails and that the Post Office Department had issued a fraud order against it which virtually put an end to its operations. The petition prayed the court "to appoint a receiver to forthwith take charge of said People's United States Bank of St. Louis, Missouri, to wind up its affairs and business for the benefit of its depositors, creditors and stockholders, and to do and perform all necessary acts for the purpose of taking possession of the property and assets of said bank, and for the winding up of its affairs and collection of its outstanding accounts, and such other acts as in the opinion of the court may, from time to time, be necessary."
Immediately on the filing of that petition and without notice to the bank the court appointed a receiver and authorized him to take possession of the bank and all its assets and hold the same subject to the order of the court. The receiver gave bond and took immediate possession of the bank and its assets which amounted, according to his report, to $ 2,679,244.79.
Within two days thereafter the bank filed a motion to set aside the order appointing the receiver, which coming on to be heard on July 17, 1905, was by the court sustained and the receiver was ordered to return to the bank all its assets in his hands.
In sustaining the motion the court in a written opinion filed, after summarizing the statements in the petition and showing that there was no averment or evidence of insolvency, said:
In obedience to the order of the court the receiver returned to the bank all of its assets except the money that he had disbursed under orders of the court and except the sum of $ 12,100, which he asked to retain to cover the costs of his receivership and compensation for his services. The court refused that request and the receiver returned the $ 12,100 also to the bank. There was no appeal from the order of the court revoking its order appointing the receiver.
On the next day after his appointment the receiver reported to the court that the total deposits in the bank did not exceed the sum of $ 225,000, and that he had in his hands upwards of $ 1,000,000, and asked authority to pay the depositors, which was granted and he immediately began paying them and had up to the time of his discharge paid $ 24,511.05, under that order, to depositors; the bank afterwards ratified and approved those payments.
On October 21, 1905, the motion of the receiver for an allowance for his costs and compensation came on for hearing, and the court made an order allowing him $ 2,500 for his compensation for seven days' service, $ 500 for his attorney's fees, and $ 150 for legal advice from another attorney, and ordered that the total amount, $ 3,150, "be taxed as costs incurred by the plaintiff in this action subject to the future order of the court in respect to the costs herein." From that order the receiver has prosecuted this appeal.
There are two points urged by appellant, first, that the sum allowed is inadequate, second, that he should have been allowed to retain the sum out of funds that had come into...
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