Whitney v. Hanover Nat. Bank

• Decision Date: 09 April 1894
• Docket Number: 7749,7459,7460
• Court: Mississippi Supreme Court
• Parties: GEO. Q. WHITNEY v. HANOVER NATIONAL BANK ET AL. (TWO CASES), AND SAME v. BANK OF GREENVILLE ET AL

15 So. 33

71 Miss. 1009

GEO. Q. WHITNEY v. HANOVER NATIONAL BANK ET AL. (TWO CASES), AND SAME v. BANK OF GREENVILLE ET AL

No. 7749, 7460, 7459

Supreme Court of Mississippi

April 9, 1894

FROM the chancery court of Washington county, HON. W. R. TRIGG Chancellor.

The facts appear from the opinion.

Affirmed.

S. H King, for appellant,

Filed a very elaborate and voluminous brief and argument, and, as to the questions passed on by the court, cited the following authorities:

The appointment of a receiver in the absence of a pending suit is void. Hardy v. McClellan, 53 Miss. 507; 52 Ala. 220; 53 Cal. 553; Wait on Insolvent Corp., §§ 254-258; 20 Am. & Eng. Enc. L., 24.

The bank could not, on its voluntary petition, have a receiver appointed. Wait on Insolvent Corp., §§ 149, 170 183; 32 Mich. 10.

A corporation cannot be dissolved, and charter privileges taken away, by collateral proceedings, but by scire facias or information in the nature of quo warranto in a court of law. Bayles v. Orne, Freeman Ch., 161; 1 Hopkins, 354; 3 Paige, 225; 1 Edw. Ch., 84; 3 Iowa 148; Ib., 77; 99 Mass. 267; 124 N.Y. 337; Pom. Eq. Jur., §§ 112, 138, 171; Morawetz on Priv. Corp., § 1040; High on Receivers, §§ 287-307; Kerr on Bus. Corp., 383; 20 Am. & Eng. Enc. L., 57; High on Inj., § 1189; 130 Mass. 194.

The proceedings in which a receiver was appointed being void, the assets are subject to the lien of the judgment. High on Receivers, § 431; 59 N.Y. 548.

Nugent & Mc Willie, on the same side.

A banking corporation cannot, any more than any other debtor, have a receiver of its own property appointed. Hardy v. McClellan, 53 Miss. 507; 20 Am. & Eng. Corp. Cas., 554; 32 Ill. 95; Chase, 466; 33 Mich. 303; 52 Ala. 220; 1 Ark. 578; 15 Vesey, 445.

Under neither bill could a receiver be appointed. A court of equity has not power, by virtue of its general jurisdiction, to dissolve a corporation, or wind up its affairs and sequester its property. 43 Barb. 504; 52 Ib., 537; 16 Cal. 145; 32 Ill. 95.

In the absence of a statute, a general contract creditor cannot, before judgment, have a receiver of the property of his debtor, whether a corporation or individual. Brown v. Bank, 31 Miss. 454; 10 Md. 500; 16 Ib., 74; 28 Barb. 451; 43 Ind. 532; 2 Johns. Ch., 144; 18 N. J., 26; 9 Ib., 465; 18 Ill. 305; 6 Rand., 188; Edwards on Receivers, 13.

There was no bona fide defendant to the second suit. It is subject to all the objections applicable to the first.

Whitney had the right to become a party to the bill at his own instance, since it appeared from the case made that the ends of justice demanded it. 16 Ga. 137; 2 J. J. Marshall, 377; 5 Wall., 205; 1 Blatch, 232.

Yerger & Percy, for appellee.

It requires no citation of authority to establish that the appointment of Pollock receiver can be assailed in this proceeding only if it be a nullity. An adjudication that a particular case is of equitable cognizance cannot be disturbed by original suit. 131 U.S. 352; 45 Ohio St. 133; Ex parte Wimberley, 57 Miss. 437. It cannot he questioned that the chancery court may, on the petition of creditors, under certain circumstances, take charge of and wind up an insolvent corporation. There is no reason why this may not be done on the request of the corporation itself. The appointment was for the benefit of the creditors. See Morawetz on Corp., § 863. If particular creditors should threaten to obtain an advantage over other creditors by attachment or otherwise, it is the duty of managing agents of a corporation to apply to the court to secure a general distribution for the benefit of all the creditors. Gluck & Becker on Receivers of Corp., 45. See 64 How. Pr., 320; Wait on Insol. Corp., § 181. For illustration of cases where receivers were appointed at the instance of corporations themselves, see Railroad Co. v. Humphreys, 12 S. C. Rep., 787; 22 F. 272.

The chancery court certainly had jurisdiction to appoint Thomas receiver. It was done in a suit regularly brought by creditors. The allegations of the bill were sufficient to authorize the appointment. We contend (1) that equity had inherent power, independently of statutory enactment, to appoint a receiver; (2) that the assets were a trust-fund for the benefit of creditors; (3) that, under the facts averred, the receiver was properly appointed. In support of the jurisdiction, see Beach on Eq. Jur., 997; Gluck & Becker on Receivers of Corp., 31; High on Receivers, § 40; 20 Am. & Eng. Enc. L., 56; 16 Wall., 203; Waterman on Corp., § 355; Story on Eq. Jur., § 1252; Pomeroy on Eq. Jur., § 1046; 8 Peters, 284; 91 U.S. 56; 15 How., 312; Taylor on Corp., § 654; Perry on Trusts, § 242; 57 N.Y. 587; Morawetz on Priv. Corp., § 803. The propriety of the appointment of a receiver in any case must largely depend on its peculiar features. See Mays v. Rose, 1 Freeman Ch., 703. The court having decided that the circumstances warranted the appointment, and that it had the jurisdiction on the bill filed to appoint, its decree is valid, at least on collateral attack. For cases warranting the appointment of a receiver for a corporation, see Foster on Fed. Pr. (2d ed.), 397; Wait on Insol. Corp., § 173; 1 Hopkins' Ch. Rep., 429; 1 Paige (Ch.), 587; 134 U.S. 530.

The argument that the court cannot, by its decree, dissolve a corporation and deprive it of its franchises falls to the ground, because the bank had been abandoned by its officers, and had appealed to the court to administer its assets. There is no halo of sanctity about a defunct corporation. On this point, see 4 F. 849; 43 F. 204.

The appointment was binding on the corporation, and no one else can question it. Beach on Eq. Jur., 934.

Argued orally by S. H. King, for appellant, and Leroy Percy, for appellees.

OPINION

CAMPBELL, C. J.

These three cases were argued and submitted together, and will be so considered. Their history is this: The Bank of Greenville was found to be insolvent, and came to a stop on the twenty-second day of December, 1891, when the directors, headed by the president, applied, by petition, to the chancellor to take charge of the assets of the bank by appointing a receiver to collect and manage its affairs. The chancellor appointed the president of the bank receiver, and, on his application, enjoined all persons from proceeding by suit against it. The receiver appointed entered upon his duties as designated, and continued until he resigned, on the sixth of July, 1892. On the eleventh of July, 1892, the Hanover National Bank and other creditors of the Bank of Greenville exhibited their bill in the chancery court in which the receiver had been appointed against the Bank of Greenville, and averred the foregoing facts, and that, since the twenty-second of December, 1891, the officers and directors of the bank had ceased to manage it, and that its affairs had been managed wholly by Pollock, as receiver, who had collected a large sum of money due said bank, and that the appointment of another receiver was necessary for the preservation of the assets of the bank and the protection of the rights of its creditors, with other specific allegations designed to show the necessity for the immediate appointment of a receiver. Upon due notice to the defendant, a receiver was appointed in this proceeding on the eighteenth of July, 1892, and the former receiver was directed to deliver to him all the assets of the bank in his hands.

On July 23, 1892, George Q. Whitney and other creditors of the Bank of Greenville united in a bill against the bank and G. D. Thomas, who had qualified and was acting as receiver by virtue of his appointment on July 18, and against other defendants in said chancery court. This bill set forth the suspension of the bank on December 22, 1891, and the appointment by the chancellor of Pollock as receiver on the application of the president and directors of the bank, and that Pollock took exclusive control of all the assets of the bank, and acted as receiver, but that defendant, Thomas, at the time of exhibiting said bill, claimed to be receiver of said bank by virtue of an appointment by the chancellor of said court; that the application to the chancellor on December 22, 1891, and all the proceedings had, including the procurement of the appointment of Thomas as receiver, were devices to hinder, delay and defraud creditors, and "invalid and void." Discovery was sought by the bill as to all the assets of the bank of whatever kind, and a lien upon them prayed to be established from the date of filing the bill, and their appropriation to the demands of the complainants. The Bank of Greenville interposed a plea to this bill of the proceeding by the Hanover National Bank et al. v. The Bank of Greenville, and the appointment, in that case, of Thomas as receiver, and that he had qualified as such, and was in possession of the assets of the bank under that appointment, and relied on this plea as a bar to the bill filed July 23, 1892. The plea was set down for hearing upon its sufficiency, and was sustained and the bill dismissed. From that decree an appeal was taken, and case No. 7460 on the docket of this court is that appeal.

On October 4, 1892, George Q. Whitney petitioned the chancery court of Washington county, in which these cases were pending, and which had been consolidated, setting forth that he was a creditor to a large amount of the Bank of Greenville, and had recovered judgment for a large sum against it in the court of the United States, at Vicksburg Miss. July 28, 1892, which had been duly enrolled, and, he claimed, was a paramount lien on all the assets of said bank, notwithstanding all the various proceedings in the said chancery court, which are set forth with detailed particularity, and denounced as void, and no...