Union Savings & Investment Co. v. District Court of Salt Lake County
|140 P. 221,44 Utah 397
|30 April 1914
|UNION SAVINGS & INVESTMENT CO. v. DISTRICT COURT OF SALT LAKE COUNTY
|Supreme Court of Utah
Original Proceedings in the Supreme Court by the Union Savings & Investment Company for prohibition against the District Court of Salt Lake County, Utah.
WRIT OF PROHIBITION ISSUED.
N. V Jones and B. J. Stewart for plaintiff.
C. S Patterson and J. D. Skeen for defendant.
The plaintiff, an incorporated building and loan association of Utah, commenced this proceeding in this court against the district court of Salt Lake County to prohibit that court from passing upon an application for, and from appointing a receiver in a certain action commenced against, the plaintiff in said court.
This proceeding is based upon the following facts:
One Albert C. Fisher, as a member or shareholder of the plaintiff, commenced an action in the district court aforesaid to recover the withdrawal value of his shares, stating specifically the value thereof. While said action was pending in said court a number of other shareholders of plaintiff intervened therein for the purpose of recovering from it the withdrawal value of their shares. After said shareholders had intervened Fisher dismissed his complaint, and he is no longer interested in the action. The interveners, in their complaints in intervention, in substance alleged that the affairs of the plaintiff have been grossly mismanaged; that it is about to wrongfully divert certain property and assets to another corporation to the detriment and prejudice of its shareholders, including the interveners, and that it has been guilty of gross extravagance in paying salaries, and is insolvent and unable to further conduct its business as a building and loan association. The interveners, therefore, prayed judgment for the withdrawal value of their shares, and in their complaints further prayed "that an immediate order be issued directing and requiring the defendant corporation (plaintiff) to appear . . . to show cause . . . why a receiver . . . should not be appointed to take charge of the assets of the defendant corporation and to wind up its business, and that at such hearing the court do appoint some suitable and discreet person to take charge of all the assets of said corporation, to convert the same into money and under the direction of the court to distribute the same among those found to be lawfully entitled thereto, and to do all things usual, necessary and proper to be done in matters of receivership." The plaintiff appeared in the action, and by demurrer challenged the sufficiency of the complaints in intervention, and in view of our statute, also challenged the power of the district court to hear the application for the appointment of a receiver or to appoint one. The district court overruled the demurrer, whereupon the plaintiff invoked the aid of this court upon an application duly made, wherein it asks us to prohibit the district court from appointing a receiver for the purposes prayed for by the interveners in their complaints.
All the parties in interest appeared in this court, and, in a most commendable spirit fully submitted the whole matter of whether, under the statute, the district court upon the application of a shareholder has the power to appoint a receiver for the purposes prayed for by the interveners. It was conceded at the hearing that those who are seeking for the receiver constitute about four or five per cent. of the entire number of shareholders or members of the plaintiff. The sole question which we are called on to determine in this proceeding is whether, under our statute, the district court at the instance of a shareholder may, over the objection of the plaintiff, and without its consent, appoint a receiver to take charge of its assets, convert them into cash, and distribute them among its shareholders and thus terminate and wind up its business affairs. The powers conferred and duties imposed on building and loan associations, domestic and foreign, are found in Comp. Laws 1907, sections 392 to 402, inclusive. Under section 392 building and loan associations may be incorporated as are other corporations for profit, and, except as otherwise provided in the sections just referred to, are governed by the general statute relating to such incorporations. What we are now specifically concerned with are the provisions of the statute which specially relate to domestic building and loan associations. Section 397 provides that before doing any business in this state all foreign building and loan associations must make out and file with the Secretary of State a verified statement, containing the matters specified in the statute, and if such statement is in all respects satisfactory to the Secretary of State, and is in compliance with the statute, he is required to issue a certificate authorizing such building and loan association to do business in this state. Section 398 provides that on or before the first day of March in each year every building and loan association, whether domestic or foreign, shall file with the Secretary of State the statement required in section 397, and shall cause a copy thereof to be published at least four times in some newspaper published and having a general circulation in this state. Such publication must be completed on or before the 1st day of May, and proof of publication must be filed with the Secretary of State.
Section 399 provides:
"If any domestic building and loan association shall refuse to submit to examination by the bank examiner, the Secretary of State shall advise the Attorney-General, who shall proceed to wind up its affairs; and if any foreign association refuse, the Secretary of State shall revoke its certificate of authority."
Section 400 reads as follows:
"When, in the opinion of the Secretary of State, any such corporation is conducting its business illegally or in violation of its articles of incorporation or by-laws, or is practicing deception upon its members . . . or if he is satisfied that its affairs are in an unsafe condition, he shall notify its directors or managers, and if it shall not immediately amend its course or put its affairs upon a safe basis, he shall in the case of a domestic corporation advise the Attorney-General thereof, who shall take the necessary steps to wind up its affairs, and in the case of a foreign corporation, he shall revoke its certificate of authority."
Section 401 is not material here.
There is no allegation in the complaints in intervention that the provisions of our statutes have not been fully complied with, and hence counsel for plaintiff insist that we must indulge the presumption that both the officers of plaintiff and the Secretary of State have performed the duties imposed by statute. Such, in the absence of any allegation to the contrary, is no doubt the law. It is contended by plaintiff's counsel that in view of the foregoing statutes the district court has no power to entertain an application made by a shareholder or member of the plaintiff, for the purpose of winding up the affairs of the association, without alleging that he has applied to the Secretary of State to have that officer notify and demand from the plaintiff that it comply with the requirements of the Secretary of State and with the provisions of section 400. It is further contended that in case the Secretary of State shall find that the conditions specified in section 400 exist, and the building and loan association shall fail to comply with that officer's request, it is his duty to forthwith advise the Attorney-General of the state of that fact, and that it is then the duty of the Attorney-General to commence an action to wind up the affairs of the plaintiff, and that the district court cannot appoint a receiver for the purposes aforesaid except upon the application of the Attorney-General. Upon the other hand, counsel for the interveners contend that the remedy provided by the statute is not exclusive, and that any one or more of the shareholders, if they have sufficient cause therefor, may commence an action to appoint a receiver and wind up the affairs of the association and to distribute its assets among those to whom they should be legally distributed. It is settled law that the power to wind up the affairs of a corporation and to dissolve it is not one which inheres in the courts. It is therefore contended by plaintiff's counsel that where a statute prescribes how and by whom an action to wind up the affairs of a business corporation and to dissolve it shall be brought, such a statute is exclusive. We have no statute authorizing our courts to dissolve a corporation without its consent; that is, without the consent of its duly authorized officers, although we have a statute authorizing such to be done upon the application of the officers of the corporation. Comp. Laws 1907, sections 3661 to 3667, inclusive. We also have a statute in case a corporation has been dissolved or is insolvent, or has forfeited its corporate rights, which authorizes the court to appoint a receiver for such defunct corporation. The only statute, therefore, that we have which in terms authorizes a court to dissolve a corporation without its consent, that is, to "wind up its affairs," is section 400, supra. There is, therefore, much force to the contention of plaintiff's counsel that the method provided by the statute, where one is provided, to dissolve a corporation is exclusive.
There are, however, other cogent reasons why the provisions of our statutes relating to...
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