Williams v. Hall

• Decision Date: 05 October 1926
• Docket Number: Civil 2450
• Citation: 249 P. 755,30 Ariz. 581
• Parties: PERRY M. WILLIAMS, as Receiver of the BANK OF PHOENIX, Appellant, v. ERNEST R. HALL and NATIONAL SURETY COMPANY, a Corporation, and STATE OF ARIZONA, Appellees
• Court: Arizona Supreme Court

249 P. 755

30 Ariz. 581

PERRY M. WILLIAMS, as Receiver of the BANK OF PHOENIX, Appellant, v. ERNEST R. HALL and NATIONAL SURETY COMPANY, a Corporation, and STATE OF ARIZONA, Appellees

Civil No. 2450

Supreme Court of Arizona

October 5, 1926

APPEAL from a judgment of the Superior Court of the County of Maricopa. W. R. Chambers, Judge.

Affirmed.

Mr. J H. Moeur and Mr. J. Early Craig, for Appellant.

Mr John W. Murphy, Attorney General, Mr. Earl Anderson and Mr Frank J. Duffy, Assistant Attorneys General, and Messrs. Stockton & Perry, Mr. Earl F. Drake and Messrs. Sloan, Holton, McKesson & Scott, for Appellees.

Lockwood, J. McAlister, C. J., and Ross, J., concur.

OPINION

Lockwood, J.

Ernest R. Hall became Secretary of State January 1, 1921, and gave the required statutory bond of ten thousand dollars in the form provided by law, with the National Surety Company, a corporation, as surety thereof. As Secretary of State, he collected certain fees which, under the law, were the property of the state, and were required to be turned over by Hall to the State Treasurer. Instead of doing this immediately upon their receipt, he deposited them in the Central Bank of Phoenix and accounted with the Treasurer from time to time therefor. The bank closed its doors in March, 1921, there being on deposit with it to the credit of Hall of such state moneys approximately sixteen thousand dollars. Before Hall opened this account with the bank, and from time to time thereafter, he took from it certain securities to protect him in making the deposits. When the bank closed, he turned these securities over to the State Treasurer, together with a check on the bank for the amount on deposit; but the treasurer being unable to obtain the cash thereon, the check and securities were returned to Hall. The bank was not liquidated in the usual manner, but, by the consent of the banking department of the state, was reopened on July 1st, 1921, under the name of the Bank of Phoenix, and continued business until February 28th, 1922, when it closed its doors finally, and in due course of time Perry M. Williams became receiver of the defunct bank. On this last-named date Hall's deposits had been reduced to the sum of $ 11,317.25. In August, 1921, the bank having reopened under the new name, Hall brought back to it the securities then in his possession, and took a receipt therefor, which after listing the securities, read as follows:

"Received in trust for Ernest R. Hall, the holder of the above-described notes, demands and bonds enumerated above, which the undersigned agree to hold for the benefit of Ernest R. Hall on account of secretary of state, and subject to the order of the said Ernest R. Hall, for the purpose of collecting, selling and paying the proceeds, together with the interest thereon to the said Ernest R. Hall, or his order, or holding the paper or security for which the same may be exchanged in all respects as the original, as said Ernest R. Hall may direct; and the undersigned acknowledges itself to be a bailee of said notes for said Ernest R. Hall, and the said Ernest R. Hall is the owner of said notes regardless of the party named thereon, or in any indorsements thereon, as payee, indorsee, or obligee."

"The said Bank of Phoenix hereby agrees to collect on said notes as fast as possible, and shall notify said Ernest R. Hall immediately upon the collection of said notes, bonds or demands, or the interest thereon, and shall immediately place such proceeds to the credit of Ernest R. Hall, Secretary of State. Bank of Phoenix, by D'n Stafford, President; by Ed. C. Bradford, Cashier."

The reduction of Hall's account from the amount due July 1st, 1921, to that remaining unpaid on February 28th was accomplished through the collection and the application of the proceeds of part of these securities. Apparently the reason that Hall did not withdraw the account in full, after the bank had reopened, was because of the fact that it had on deposit some three or four hundred thousand dollars in various state funds. An attempt to withdraw all of these state funds would have caused the immediate reclosing of the bank, and, in order to protect both the bank and the state, it was presumably informally agreed that Hall's account, together with the other state deposits, should not be withdrawn except as all could be worked out without causing the bank to be closed.

After a receiver was appointed, Hall petitioned the superior court of Maricopa county, which had jurisdiction of the receivership proceedings, for a return of the securities which were then in the receiver's hands. The court denied the petition and Hall appealed from the order, but for some reason the appeal was dismissed. Thereafter an action was commenced by the state of Arizona against the Bank of Phoenix and the receiver, setting up the deposit by Hall, the arrangement in regard to the securities, and the failure of the bank, and praying judgment against the receiver for the amount still due on the deposit and for possession of the securities. At about the same time, the state filed this suit against Hall and the National Surety Company, setting up the facts in regard to the deposit of state money by Hall, that there was a balance of such state money of $ 11,317.25 remaining on hand when the bank finally closed, and asking for judgment against Hall for the full amount of the deposit and against the surety company for the ten thousand dollars principal of its bond.

The suit against the bank and the receiver apparently remained in statu quo while the present one was pressed. Hall and the surety company answered, and also filed a petition setting up the facts in regard to the securities, and asked that the receiver of the bank be made a party defendant, which petition was granted. The receiver appeared and moved to dismiss as to him. The motion being denied, he then filed a plea in abatement, setting up the suit against the bank and himself above referred to, a demurrer on the ground of misjoinder, the action on the petition of Hall in the receivership asking that the securities be turned over to him, as a plea in bar of res adjudicata, and an answer of a general denial.

Defendants Hall and the surety company having filed a second amended answer after the receiver had been made a party, asking for affirmative relief against the receiver, and urging that the latter should be required to account for the proceeds of the securities above mentioned, and that such proceeds should be applied on the deposit in question, the receiver again raised the same issues by proper pleadings. The demurrers, pleas in abatement and pleas in bar were overruled and the court rendered judgment in favor of the state against Hall and the surety company as prayed for in the complaint, and against the receiver in favor of Hall for $ 11,242.65, which was the amount of the proceeds of all the securities in question, and ordered that such sum be paid to the state and credited on the judgment against Hall and the surety company. The receiver has appealed from the judgment rendered by the trial court against him, and the matter is before us on his appeal.

There are some thirteen assignments of error, presenting questions of law only. We will not restate them, but will discuss the legal propositions raised in what seems to us to be the logical order. The first question is whether or not in this particular suit the receiver was a proper party. The ultimate purpose of all these proceedings was one and the same thing to wit, that the state of Arizona should recover the money belonging to it which was on deposit with the Bank of Phoenix at the time...