Wise v. Potomac Nat. Bank

• Decision Date: 20 March 1946
• Docket Number: No. 29336.,29336.
• Citation: 65 N.E.2d 767,393 Ill. 357
• Parties: WISE et al. v. POTOMAC NAT. BANK et al.
• Court: Illinois Supreme Court

393 Ill. 357

65 N.E.2d 767

WISE et al.

v.POTOMAC NAT. BANK et al.

No. 29336.

Supreme Court of Illinois.

March 20, 1946.

Appeal from Circuit Court, Vermilion County; George W. Bristow, judge.

Action by Benjamin W. Wise and another against Potomac National Bank of Potomac, Illinois, and another for damages for waste and forfeiture of bank's title to realty or in the alternative, for permanent injunction against waste. From a decree awarding damages and enjoining future waste, both plaintiffs and defendants appeal to the Appellate Court which transferred the case, 327 Ill.App. 203, 63 N.E.2d 531, to the Supreme Court.

Affirmed.

Steely, Steely, Graham & Dysert and Hutton, Clark & Hutton, all of Danville (H. Ernest Hutton and Benjamin I. Norwood, both of Danville, of counsel), for appellants.

Rearick & Rearick, of Danville, for appellees.

STONE, Justice.

This cause is here by transfer from the Appellate Court for the Third District on the ground that a freehold is involved. Appellants seek the reversal of a decree of the circuit court of Vermilion county awarding appellees, in their own right and as representatives of the interests of any and all persons not in being who could or might hereafter be entitled to some remainder interest in the subject matter, damages for waste in the sum of $3000, and enjoining further waste by appellants. Judgment was entered against the Potomac National Bank of Potomac, Illinois, a corporation, and Albert Rice as liquidating agent for the said bank and not individually. The waste found committed by appellants was upon the land in which appellees and those represented by them claim an interest in fee in the remainder. It was ordered that the judgment be paid to the clerk of the court to be held by him until the further order of the court directing its disposition. An injunction was granted restraining and enjoining appellants from committing or suffering any waste upon the lands involved, to the detriment of appellees and those represented by them, from the date of the order henceforth, and for costs. Appellant bank is a national bank and was, at the time of the filing of this suit and prior thereto, in voluntary liquidation. Appellant Rice was its liquidator. Numerous errors and cross errors are assigned, which will be discussed herein.

Appellees' complaint alleged that by the will of Benjamin D. Wise a life estate in land, in excess of two hundred acres, in Vermilion county (describing it), was vested in Elmer J. Wise with remainder in fee to the heirs of his body; that Elmer J. Wise is still living and appellees and two of this three living children; that appellees acquired the interest of Doris Wise Hubbard, the other child of Elmer J. Wise, by quitclaim deed and that they own the remainder, after the termination of the life estate, subject to letting in after-born children; that the life estate of Elmer J. Wise was acquired by appellant bank through a judgment against Elmer J. Wise and that appellants are in possession of said land. The complaint described the improvements thereon, alleged various acts of waste and prayed for an injunction, pending the hearing, restraining further waste, and a decree declaring a forfeiture of the title of appellants and assessing damages for waste; or in the alternative that appellants be permanently enjoined from committing waste and made answerable for damages theretofore committed by them.

Appellants moved to dismiss the complaint on the ground that it failed to set forth a cause of action and the further ground that appellees have no interest in or title to the real estate. This motion was overruled and appellants filed an answer in which they denied title and interest of appellees in the land, denied the commission of waste as alleged in the complaint and denied the right of appellees to any of the relief prayed for. A hearing was had before the chancellor, after which he appointed a trustee for the protection of the interest of any unborn heirs of the body of Elmer J. Wise. After a trustee was appointed, appellants sought leave to file an amended answer. This was denied and the decree above referred to was entered.

Appellants' first contention is that as the complaint does not aver and the evidence does not show that appellees, before instituting this suit, presented their claim to the bank, its liquidating agent or the Comptroller of the Currency, for allowance, and that the same was rejected, they are precluded from recovery and it was error to refuse to dismiss the complaint. In support of this contention appellants insist that the plan of liquidation of national banks is prescribed by Federal law and is a plan of uniform application to conserve assets, reduce expenses of liquidation to a minimum and preserve for distribution among the bank's creditors its assets sufficient to pay all just claims in full or pro rata in as large an amount as possible, and so, before a suit may be instituted by a claimant he must allege and prove that he has presented his claim as above indicated, and that it has been disallowed. With this broad statement we cannot agree. When a national bank voluntarily goes into liquidation, as here, it retains its corporate existence, may sue and be sued, and the effect of a judgment against it is only to fix the amount of the debt. Central National Bank v. Connecticut Mutual Life Ins. Co., 104 U.S. 54, 26 L.Ed. 693;Merchants' National Bank v. National Bank of Lillington, D.C., 231 F. 556.

An action for waste presents an issue of fact as to whether waste has been permitted and, if waste is established, the extent of the damage resulting therefrom. There was also here an action for injunction to prevent further waste as well as for damages to the land and buildings from the waste committed prior to the institution of the suit. The remedy against waste by injunction is fully established, and has not only virtually superseded the old common-law ‘action of waste’ but has, to a great extent, taken the place of the ‘action on the case’ for damages. An injunction may be granted in all cases where a legal action would lie to recover possession of the land wasted, or to recover damages. 4 Pomeroy's Equity Jurisprudence, 5th Ed., sec. 1348. The trial court did not err in denying appellants' motion to dismiss.

Appellants next contend that the chancellor erred in granting an injunction against the bank and its liquidating agent and in rendering judgment for the amount found, and in issuing a mandate to pay the same to the clerk of the court. The first contention under the above assignment of error is that the decree, by ordering that the judgment be paid to the clerk of the court, to be held until further order of the court, attempted to create a preference in favor of appellees over all other claimantsagainst the bank. We believe appellants misconstrue the effect of the decree in this regard. The decree did not order execution to issue. If found the amount due from the bank and its liquidator, but not from him personally, and by reason of the fact, as shown by the decree, that there may be other heirs of the body of Elmer J. Wise at the time of his death and so appellees would not, in such a situation, be entitled to all the proceeds of the judgment, if and when paid, directed that the judgment be paid to the clerk. No preferences were established and the matter of preference will arise, if at all, when and if it is attempted to establish such preference. That question is not before us and is not decided. Though it is said that the liquidator is not a necessary party, yet he is the party in actual custody and management of the farm, and whether a party or not, a judgment or decree against the bank is binding upon the liquidator in the absence of fraud or collusion. Denton v. Baker, 9 Cir., 79 F. 189. The money judgment against appellant as liquidator expressly provides that it is not against him personally. It was not error to enter the decree in this form. It is next contended that the decree erroneously grants as injunction against the bank and also against the liquidator. This contention is based upon the theory that under the national banking...