U.S. Nat. Bank v. National Bank of Guthrie
| Decision Date | 30 July 1897 |
| Citation | 51 P. 119,6 Okla. 163,6 Okla. 184,1897 OK 112 |
| Parties | UNITED STATES NAT. BANK v. NATIONAL BANK OF GUTHRIE. CUNNINGHAM v. GRAY. |
| Court | Oklahoma Supreme Court |
On Rehearing.
1. Evidence examined, and held sufficient to show that both the receiver and the judge who appointed him sustained such relations to the insolvent bank and its president, at the time of such appointment, as to be interested in the administration of the trust estate, and therefore improper persons to supervise the settlement and distribution of same.
2. Receivers of insolvent institutions should only be allowed adequate compensation for the amount and character of the services performed by them for the trust estates placed in their charge, and useless and extravagant expenditures made by them should be disallowed.
Action by the United States National Bank against the National Bank of Guthrie for the appointment of a receiver. Harper S Cunningham was appointed receiver, and, after removal presented a claim for compensation to his successor, W. H Gray. From the judgment the United States National Bank and Harper S. Cunningham bring error. Affirmed.
Receivers of insolvent institutions should only be allowed adequate compensation for the services performed by them for the trust estates placed in their charge, and useless and extravagant expenditures should be disallowed.
In May 1892, the United States National Bank held $30,000 of stock in the National Bank of Guthrie as collateral security for a loan of that amount, and brought suit against that institution, L. De Steiguer, its president, and its other officials, alleging in the petition, sworn to by a stockholder, among other things, that the latter bank was insolvent; that its funds had been and were being fraudulently embezzled for his own use and misapplied and squandered by De Steiguer and its other officers, who were also insolent. The petition averred that a large quantity, probably $40,000, of the bank's assets had been made away with by the defendants, and prayed for a receiver and a final winding up of the bank's affairs. The petition was drawn up by Mr. Wisby, who appeared as attorney for the United States National Bank. The answers were drawn in behalf of the bank by Harper S. Cunningham, who appeared for De Steiguer and for the defendant bank, and signed the separate answers of each of them. The answer in behalf of the bank averred that "this association is free from liabilities of all kinds"; to which answer James E. Turner, as qualified and acting cashier of the National Bank of Guthrie, swore to as true "in substance and in fact." Afterwards the signature of Cunningham was stricken from these answers, and they were then signed by Charles A. Berger, as attorney for the defendant De Steiguer, and also as attorney for the National Bank of Guthrie. Thereafter, as testified to by Mr. Cunningham, a private agreement was entered into between Mr. Wisby and himself, whereby, without notice to the creditors or the stockholders, they agreed that Cunningham should be appointed receiver, and that, "if the court would consent to it, that I would employ him [Wisby] as attorney for the receiver." This arrangement was afterwards confirmed by the court. J. W. McNeal, a banker of Guthrie, was at the time also a candidate for the appointment of receiver.
Much testimony was taken before the district court upon the exceptions below, both oral, by deposition, and including the record itself. It appears from the testimony of Mr. Cunningham that the next day after his appointment by the court the judge, Green, came to him, and asked for money, saying that he must have money for an immediate payment demanded by McNeal; that he was not yet in the possession of the assets of the bank; and that he (Cunningham) assisted the judge in procuring a loan of $550 from De Steiguer out of the assets of the bank of which he had the day before been appointed receiver. The judge of the court who had thus made his appointment as receiver, and received the loan as stated, was already indebted to the National Bank of Guthrie in the sum of $1,060, to which the new loan was added, the whole embodied in a single note, then aggregating $1,610, which was dated back 30 days, and made payable to the National Bank of Guthrie 60 days after date. This note became a part of the assets of the bank pending the transference of the assets to the receiver, Cunningham, and was the next day after the loan was made turned over to him as a part of those assets. A day or so after, June 16th, and before the receiver had qualified and taken possession of all of the assets, a representative of the comptroller of the currency came to Guthrie to take charge of the bank and to examine its books and assets. The assets of the bank were at that time in the process of delivery by the president of the bank, De Steiguer, to Cunningham, as receiver, but leaving $40,000 of them uncollected from the insolvent institution; and, as he testified at the hearing before the district court, Judge Burford presiding, he was not "at the time hunting more assets," and after consulting with the judge who appointed him as to what his proper course would be to avoid giving to Mr. McKnight, the representative of the comptroller, an examination of the books, left the territory for a month. Mr. Cunningham further testified that he never made any examination of the books of the bank in order to ascertain what he, as receiver, was entitled to, and whether he had received all the assets which he was entitled to, because he could not understand them himself, and because "De Steiguer and Turner had said that they balanced the books."
After the arrangement by which Cunningham was made receiver, and Mr. Wisby made attorney for him, as receiver, and because of it, the United States National Bank discharge Mr. Wisby from its employment. He was, however, retained by Mr. Cunningham as attorney for him as receiver, and appeared for him upon several applications made thereafter by the United States National Bank and other creditors for his removal. A schedule of assets filed by the receiver showed the nominal assets to be $121,000. Of the money collected out of this sum, the receiver collected during the first 6 months the sum of $6,549.45, and $334.20 from rents; during the second 6 months he collected $3,724.01, and $879.98 from rents; and during the third 6 months the proceeds from collections were $753.81, and from rents $854.95,--making a total collected during the first 18 months of $13,096. During the ensuing 15 months the receiver collected $4,561, making a total of $17.658. A final statement was not made before Judge Green when he went off the bench. His successor, Judge Dale, was interested as one of the bondsmen of the receiver, and the case was taken upon change of venue to Judge Burford.
The receiver, under order from the court, filed a second report of his proceedings on August 23, 1894. On November 5, 1894 exceptions were filed to this report by the United States National Bank and other stockholders, and on the 4th day of May, 1895, the receiver filed his third report. In this report the receiver claims, among other credits to which he is entitled, $1,601.15 for clerk hire, $540 for rent of office, $1,611 for expenses of travel, $2,256 for attorney's fees, $500 attorney's fee for himself, and claims of his own amounting to $997, and, after charging himself with $17,658.70, claims a balance due to him of $1,065.79. He states in his testimony that he had never examined the books, and was "obliged to say that I cannot tell anything about them, and I had never really tried, for what examination I had given them shows that they are too complicated for me to comprehend"; and that, if any trouble arose, Mr. Turner, the cashier, who had sworn to the petition that the bank had no liabilities and had been employed by the receiver as his clerk, would, if any cause arose for it, look it up, and he would adjust it in that way. Receipts for expenditures were in many cases not taken. The bank held a large claim against De Steiguer, who was also indebted to the receiver, De Steiguer came to Guthrie at different times in order to give information to the receiver, about the bank's affairs. The expenses of these trips of De Steiguer were compensated by the receiver to De Steiguer by taking the money out of the assets of the bank, and applying it upon an amount claimed to be due from De Steiguer to himself upon private account; thus by the arrangement recouping himself at the cost of the bank, while the bank's account due from De Steiguer remained unpaid. Mr. Cunningham was, under an engagement prior to his appointment as receiver, to conduct litigation in behalf of the bank against the provisional governments of Guthrie. He afterwards received warrants in compensation therefor, and turned them into the assets of the bank after its failure, taking out of the bank at the same time $997 in cash, although the warrants were then repudiated and in litigation. The testimony shows that during the period of the receivership he was also attorney for De Steiguer, and was demanding and receiving compensation from him. It appears from his own evidence that while the National Bank of Guthrie was thus insolvent and unable to pay its debts, and its stock of no value, he turned over these promissory notes to the makers of them, respectively, in exchange for the blocks of stock which they each respectively held; that among the assets of the bank, when he took charge of it, he found the note of J. E. Turner for $10,000, one of E. Randall for $5,000, and one of F. H. Thwing for $10,000, one of De Steiguer for $3,000, one of the Guthrie Lumber Company (a company in which De Steiguer...
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