The morning call., 1893-08-22
A WRIT OF PROHIBITION OUT.
Hart Wins a Point in the Su-
preme Court.
FOR AND AGAINST A RECEIVER.
Judge Levy Advises McDade to De-
fend His Position-The Attorney
General Talks.

The Supreme Court granted a writ of
prohibition yesterday in the case of the
Pacific Bank upon applications presented at
short notice.
The applications are two in number, and
have for their object the dissolution of
the recent insolvency proceedings and the
removal Of Sheriff McDade as receiver of
the banks property. One application was
filed by Attorney General Hart and j. l..
Cogswell, while the other was presented
by Attorney Maxwell on behalf of E. w.
Chapman. Both COgswelI and Chapman
are large depositors in the bank.
The reasons alleged in the applications
are based On the same lines as those re-
Gently presented before Judge Levy. These
are: First. that the Superior Court had no
Jurisdiction TO appoint receiver ih this
case; that the Bank Commissioners are
the proper persons to take the affairs of
the concern in hand, and that Sheriff Nc
Dads, being an interested party, is preju-
diced. and is not a fit and proper person
to be appointed as such receiver.
1t will be remembered that before the
insolvency proceedings were Instituted
the McDonslds made a voluntary cOnfes-
sion of insolvency. in which they stated
that the liabilities OF the bank were
100000, of which no less than 81. 800, 600
was due to depOsitors. In the applications
presented to the Supreme Court yesterday
1t is alleged that these confessions of in
s0lvency were wholly unauthorized by the
majority of the stockholders.
The Supreme Court Immediately granted
the writs of prohibition, and cited both
Judge Levy and Sheriff McDade to appear
on September to show cause why the in-
eoIvency proceedings should not be set
aside. Meanwhile all such proceedings
are stayed.
Attorney General Hart said In regard to
the matter:
''The position of the Attorney General
is that no bank in the State of California
can be adiudged an insolvent debtor un-
der the inSolvent act; that such proceed
Ing must be had, if at all, by the Bank
Commissioners under the Bank Commits
erS' act, and that the Pacific Bank was
savings bank, and could not be put into
insolvency in any event; that even if the
Pacific Bank was liable TO he put into in
solvency, the act of Judge Levy declaring
it lnsolvent nine days before the return
day was absolutely void.
The next point" said Mr.. Hart, 'is
that r. II. Mcdonald Jr., as vice-presi-
dent. could not, under the law, sign an
answer confessing insolvency; that the
insolvency proceedings in reference 10
banks is expensive, and that if wound up
under the Bank Commissioners act the
expenses would not exceed one-fifth of
those incurred under the other process.
hn Il IOfs, 1icef a h. A
tcrney-General be sustained in this pro-
ceedng 1t will be good thing for the de-
DosltorS and banks generally, aud Will es-
tablish the jurisdiction of The Bank Com
missioners and Attorney-General in such
matters, which was no doubt the intention
of the Legislature"
a CALL reporter conveyed the first in
formation of the courts action relative to
the writ of prohibition to Judge Levy
last night. and he expressed some sur
prise at the action of the Attorney-Ge
eral, The Judge said:
1.-THE appointment of McDade as re-
ceiyer of the Pacific Bank was made in
pursuance of an answer VIII ch was filed by
the Pacific Bank, a corporation which
was authorized by the statutes of this
State to file an answer in any proceeding
Instituted against said corporation.
'The paper presented to me was petj-
tion signed by five creditors alleging the
insolvency of the Pacific Bank The
answer filed to this petition admitted the
insolvency Of the defendant corporation.
The duty Of the court under section Il Of
the insolvency act was TO appoint a re-
ceiver to take charge of the assets for the
benefit of the creditors.
The appointment of the Sheriff as
receiver was made for the reason that he
is public officer and the court is COM
pelled to appoint him receiver in all vol
untary proceedings in insolvency. The law
liz b !
voluntary proceedings, it was o more than
proper that he should be appointed in in
voluntary proceedings. Besides. had the
utmost confidence In the receivers honesty,
Integrity and ability to discharge the
duties of his Office. The appointment, in
my opinion, will DE of benefit to the de-
posit0Ts and the creditors of the bank.
They appeared to be we'll satisfied. The
only ones complaining are persons who
hays no interest excepting to attempt to
control the appointment Of a receiver for
their own benefit and gain.
The necessity of appointing a receiver
has been disputed by the Attorneg-Gen-
eral, which he admitted in court, and the
instructions which [ have given 10 the
receiver are TO allow the Bank Commits
si0ners and the Attorney-General to ex-
anime books, papers. notes. ETC., at any
and all times for the purpose of allowing
the Attorney-General to institute suit to
forfeit the charter of the bank, but in no
event have they right to the assets of the
corporation.
IF the officer who signed the answer to
the petition had no authority to do so. then
the proper remedy is by bill in equity TO
set aside the Judgment of the court, the
papers being regular upon their face
"Depositors and creditors are entitled to
their money. 1t is of more interest that
they should receive the same-which they
will do through this medIum-than to sat
isfy the pretended whims and authority OF
the Attorney-Gsneral and Bank Commits
sioners. who ought not to have any inter
est in the assets of this insolvent institu-
tion."
Judge Levy said, in conclusion, that he
should strongly advise Sheriff McDade to
employ able counsel to defend the order of
the court appointing him receiver of the
defunct bank.
RIE c DEcEyxTa n