Wilson v. Keels

• Decision Date: 03 April 1899
• Parties: WILSON v. KEELS et al.
• Court: South Carolina Supreme Court

32 S.E. 702

54 S.C. 545

WILSON v. KEELS et al.

Supreme Court of South Carolina

April 3, 1899

Appeal from common pleas circuit court of Sumter county; Ernest Gary, Judge.

Creditors' bill by Thomas Wilson for himself and others, creditors of the Bank of New Hanover, against Mary E. Keels and others. There was a decree dismissing the bill, and plaintiff appeals. Affirmed.

Following is the decree of Judge Gary:

"This action is a creditors' bill, brought by the plaintiff in behalf of himself and all other creditors of the Bank of New Hanover residing in the state of South Carolina. The action comes on for trial before me, upon the pleadings in the cause and an exemplified copy of the record in a cause in the superior court of North Carolina in the case of S McD. Tate, State Treasurer, et al., Plaintiffs, against the Bank of New Hanover, Junius Davis, Receiver, et al Defendants. There is no substantial issue as to any matter of fact in the controversy. It appears that the Bank of New Hanover was a corporation created under the laws of North Carolina, with its principal place of business at Wilmington, in said state. The bank became insolvent, and made an assignment for the benefit of its creditors. At the time of such insolvency the plaintiff Wilson was a resident of South Carolina, and a depositor in said bank. On the 19th day of June, 1893, the deed of assignment just mentioned was set aside by the superior court of North Carolina in the case of Holmes & Watters, who filed a creditors' bill in behalf of themselves and all other creditors who might come in and make themselves parties to the action against the Bank of New Hanover and the said Junius Davis, upon the ground that the said assignment was in contravention of the laws of North Carolina. In this same proceeding, and at the same time, the said Junius Davis was appointed the receiver of the insolvent Bank of New Hanover, with full power and direction to take possession of all and singular the real and personal property, chattels, bonds, stocks, chooses in action evidence of debt, securities, and in fact all of the effects of said bank. It appears that among the assets of said bank was a bond executed by Mrs. Keels to said bank and secured by a mortgage of certain real estate situated in the county of Sumter, this state. As such receiver, the said Junius Davis brought an action upon the bond and mortgage executed by Mrs. Keels to said bank in the county of Sumter, and obtained a decree of foreclosure and sale against the said Mary E. Keels in favor of the said Junius Davis, as receiver of the said Bank of New Hanover. This decree of foreclosure and sale was granted by Judge Benet on the 10th day of February, 1897. Before a sale was had under the foreclosure proceedings had before Judge Benet the plaintiff herein brought this suit, as stated above, in behalf of himself and other creditors of the insolvent bank who reside in this state, the main object of which is to have the proceeds arising from the Keels bond and mortgage and other property of said bank in this state applied to the payment of the debts of the creditors of said insolvent bank who reside in this state.

"The real issues in the case may be summed up as follows: The plaintiff's contention is: (1) That the property of a foreign corporation within this state is applicable first to the payment of debts of residents of this state who are creditors of such foreign corporation; (2) that a receiver appointed by a foreign jurisdiction has no extraterritorial power of official action; and (3) that the receiver of a foreign corporation, appointed by a foreign court, is only entitled to property of such insolvent corporation situated within the state under the doctrine of comity, and then only when creditors who are residents of this state are not injured thereby. The defendant contends: That the plaintiff Thomas Wilson went in person into the state of North Carolina prior to the commencement of this action, established his claim in the cause then pending in North Carolina, and participated in the proceeds arising in said cause, by receiving his pro rata of said funds. He thereby became a party to the cause of action in North Carolina, and he is now estopped to question the power or authority of the receiver so appointed. It is true that there are seven separate defenses set out in the defendant's answer, but, from the view I have taken of the case, if the position above stated is tenable, the other questions need not be considered. Did the plaintiff Wilson become a party to the North Carolina suit? And, if so, is he bound thereby, and estopped to proceed with the present action? If all the parties were in South Carolina, such action on his part would unquestionably make him a party, and he would be bound by the fact that he proved his claim under the proceedings in the cause, and accepted his pro rata of the dividends. In Boyce v Boyce, 5 Rich. Eq. 268, the bill was to marshal assets real and personal. Dunkin, Ch., in delivering the opinion of the court uses this language: 'Every creditor who came in and proved his debt under the master's notice became a party to the decree, and actor in the proceedings, and was entitled to move for any order to speed the cause or carry the decree into successful execution'. In Beach, Rec.§ 713, that author says: 'Any creditor who has a claim upon the fund, but who is not a nominal party to the suit, may make himself a party thereto by coming in and presenting his claim under the decree and submitting himself to the jurisdiction of the court for the settlement and adjustment of his claim upon the fund to be distributed as directed by the decree or order of the court under which such claim is presented.' In Re City Bank of Buffalo, 10 Palge, 382, it is said: 'Creditors who are not nominal parties to the suit may make themselves such parties in fact by coming in and presenting their claims to the master under the decree, and by submitting themselves to the jurisdiction of the court for the settlement and adjustment of their respective claims upon the fund, as directed by the decree or order under which such claims are presented.' 'A creditor who comes in and makes his claim under such decree is quasi a party to the suit, and is entitled to the benefit of the decree as such party; and he may be restrained from proceeding at law for the recovery of his debt after he has made his election to proceed in this court for the recovery of his debt under the decree.' In Herm. Estop. § 1056, that author states the rule to be: 'When a citizen of one state makes himself a party to the proceedings of his debtor, instituted in another state, to obtain the benefit of the bankrupt or insolvent law, and receives a dividend from the assignee of the bankrupt or insolvent, he abandons the extraterritorial immunity which he might otherwise claim from the operation of those laws.' In Cole v. Cunningham, 133 U.S. 107, 10 S.Ct. 269, it is said: 'But this objection [extraterritorial jurisdiction] would not lie where such citizens had become parties to the proceedings. Hence, in Clay v. Smith, 3 Pet. 411, it was held when a citizen of Kentucky sued a citizen of Louisiana, and the defendant pleaded his discharge by a bankrupt law of Louisiana, that the plaintiff who had received a dividend on his debt declared by the assignees of the defendant in Louisiana had voluntarily made himself a party to those proceedings, abandoned his extraterritorial immunity from the bankrupt law of Louisiana, and was bound by that law to the same extent to which the citizens of Louisiana were bound, and it may be considered as settled that state insolvent laws are not only binding upon such persons as were citizens of the state at the time the debt was contracted, but also upon foreign creditors, if they made themselves parties to proceedings under these insolvent laws by accepting dividends, becoming petitioning creditors, or in some other way appearing and assenting to the jurisdiction,'--citing Baldwin v. Hale, 1 Wall. 223; Gilman v....