Yeargain v. Shull

• Decision Date: 09 June 1931
• Docket Number: Case Number: 20510
• Citation: 149 Okla. 221,300 P. 303,1931 OK 329
• Parties: YEARGAIN et al. v. SHULL, Bank Com''r.
• Court: Oklahoma Supreme Court

1931 OK 329

300 P. 303

149 Okla. 221

YEARGAIN et al. v. SHULL, Bank Com''r.

Case Number: 20510

Supreme Court of Oklahoma

Decided: June 9, 1931

Syllabus

¶0 1. Banks and Banking--Statutory Requirement for Sale of Assets of Failed State Bank Only on Order of District Court.

Under the provisions of chapter 80, Session Laws of 1923-24, a sale of the assets of a failed state bank may be made by the State Bank Commissioner only on the order of the district court of the county in which the bank was doing business, and such a sale is required to be approved and confirmed by said court.

2. Equity--Retention of Jurisdiction to Administer Complete Relief and Avoid Multiplicity of Suits.

A court of equity which has obtained jurisdiction of the controversy on any ground or for any purpose will retain such jurisdiction for the purpose of administering complete relief and doing entire justice with respect to the subject-matter, and to avoid multiplicity of suits.

3. Banks and Banking--Court''s Equity Jurisdiction in Sale of Assets of Failed Bank Continued to Grant Relief to Purchaser of Note That Had Been Paid.

The district court of the county in which a failed state bank is being liquidated by the State Bank Commissioner has equitable jurisdiction to order a sale of the assets of the bank on the application of the State Bank Commissioner and to approve and confirm the sale thereof. That jurisdiction, once having attached, continues to the end that relief in equity may be granted a purchaser at such sale of a note that has been theretofore paid to the agents of the State Bank Commissioner.

4. Same--State Bank Commissioner Held not Officially Liable in Action at Law for Failure of Consideration in Sale of Bank Assets.

The State Bank Commissioner is not liable in an action at law in a proceeding to recover a money judgment against him in his official capacity on a claim arising out of a failure of consideration of the sale of the assets of a failed state bank caused by the note sold having been paid to the State Bank Commissioner prior to the sale thereof.

5. Same--Court Without Jurisdiction to Render Judgment Against Bank Commissioner Affecting Assets of Failed Bank.

A district court has no jurisdiction to render a judgment at law against the State Bank Commissioner in his official capacity that will in anywise affect the assets of a failed state bank in the hands of the State Bank Commissioner during the process of the liquidation of that bank.

Appeal from District Court, Oklahoma County; Lucius Babcock, Judge.

Action by J. D. Yeargain and others against C. G. Shull, State Bank Commissioner. Judgment for defendant, and plaintiffs appeal. Affirmed.

C. W. King and Leon S. Hirsh, for plaintiffs in error.

M. B. Cope and E. S. Lowther, for defendant in error.

ANDREWS, J.

¶1 This is an appeal from the judgment of the district court of Oklahoma county in favor of the defendant in error, defendant in the trial court and hereinafter referred to as defendant, and against the plaintiffs in error, plaintiffs in the trial court and hereinafter referred to as plaintiffs.

¶2 The litigation herein arose out of the failure of the Fidelity Bank of Grove, Okla., which bank became insolvent, was taken over by the State Bank Commissioner, and is now in process of liquidation. The cause was submitted to the trial court on an agreed statement of facts.

¶3 The material facts are as follows: In the course of the liquidation of the bank the State Bank Commissioner petitioned the district court of Delaware county, that being the court having jurisdiction, to permit him to sell certain assets of the bank consisting of notes and judgments, and that court made an order authorizing him to advertise and sell the assets of the bank subject to the approval and confirmation of that court. Notices of sale at public auction to the highest bidder were published. Those notices contained a provision as follows:

"All prospective purchasers are hereby notified that the undersigned Bank Commissioner, his agents, or assistants, do not warrant or guarantee the correctness of the amount due or payments shown on the above listed assets, as set up in detail under separate exhibits listed herein, or the genuineness of the signatures on notes, or the delivery of any notes shown out for collection or warrant title to any real estate shown for sale, is conveying only such title thereto as he has as such Bank Commissioner under the Banking Laws of Oklahoma, and the purchaser at such sale will buy the assets listed herein with notice and at his own risk as to all matters set forth herein."

¶4 The list attached contained a statement of the names of the makers of the notes, the bank number thereof, the due date, the original amount, the payments thereon and the balance due thereon. The plaintiffs, after reading the notices, examined the notes and judgments and conducted an inquiry into the solvency of the debtors. After that inquiry they bid upon a part of the assets and were declared to be the highest bidders for a number of them. Among those purchased are some in which the debtors were solvent and some in which the debtors were insolvent. The sale was approved and confirmed by the district court of Delaware county. Thereafter they found that the notes of the solvent debtors had been paid to the agents of the State Bank Commissioner prior to the sale.

¶5 It is not claimed by the plaintiffs that the Bank Commissioner personally received the proceeds of the collections thereon, and it appears that those collections were made by the liquidating agent and attorney in the regular course of liquidation, without the knowledge of the defendant, prior to the sale of the assets, and that the proceeds thereof were deposited in designated banks by those officers and accounted for in reports made by them to the auditor of the State Banking Department. The original notes were not delivered to the debtors for the reason that they were in the hands of agents other than those to whom the payments were made. It is not here contended that there was any actual fraud on the part of the State Bank Commissioner, and the fraud charged herein is constructive fraud. The plaintiffs called upon the State Bank Commissioner to pay to them the money that had been received by his agents on the notes prior to the sale to the plaintiffs. The State Bank Commissioner refused to comply with the demand, and the plaintiffs then brought an action in the district court of Oklahoma county to recover a money judgment against the State Bank Commissioner for the amount paid by the debtors on the notes prior to the sale of the notes to the plaintiffs. Judgment was rendered in favor of the defendant, and the plaintiffs appealed to this court.

¶6 The contentions are stated by the plaintiffs to be as follows:

"We have consistently contended that the action of the Bank Commissioner, in selling notes which he, himself (not the failed bank), had already collected, constituted a fraud of the most reprehensible sort. And the Bank Commissioner, instead of denying the fraudulent effect of his transactions, admits them and seeks protection upon the technical ground that the district court of Oklahoma county had no jurisdiction in the action.

"It was the contention of the Bank Commissioner, in the trial court, that the sales of the bank assets were judicial sales, and, for that reason, the plaintiffs must seek their relief in the district courts of the counties where the banks were located."

¶7 The issues submitted, as agreed upon, are as follows:

"That the only questions to be determined in this controversy are: First, the jurisdiction of the court to grant relief; second, the measure of plaintiff''s recovery if the court determines plaintiffs are entitled to relief."

¶8 The State Bank Commissioner acted under the authority of chapter 80, Session Laws of 1923-24, which was enacted pursuant to the provisions of section 1, art. 14, of the Constitution of Oklahoma, and which is a valid legislative enactment. Section 2 of that act...