The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1893-08-27
DFOPI.ES BANK.
Farnum Is Not to Act as
Receiver.
THE COURT HAD NO POWER.
yudoe Sanderson ReverSes His own
Act in Granting the Applica-
ton of Winterburn.
HE COURT HAD NO POWER.

Superior Judge Sanderson by decision
repdered Yesterday has refused to dissolve
the Pennies Home Savings Bank, aud mas
set aside his former order appointing .. H.
Farnum receiver of the bank.
Farnum was appointed receiver upon an
ex-parte motion made by Joseph winter
burn, depositor and creditor OF the Danh'
against the McDoDalds and other directors,
charging them with gross mismanagemenl
and even fraud In their administration OF
the banks affairs, and asking that re-
ceiver be appointed. The appointment
was made, and the action decided yester-
day was upon an order 10 show cause why
the order appointing the receiver should
not be set aside, it being claimed that the
bank was not ms olvent, and that IL pre-
vented from carrying on business great
losses would be incurred by depoSitors ana
STOCKHOLDERS. Meanwhile an injunction
had been granted restraining the defend
ants from interfering with the property Oh
the bank.
Judge Sanderson commenced by recltlne
the allegations contained in the Origins al
complaint, and said that the relief applied
for was not asked because of the IN
solven3y of the bank, nor from any or
ganic defect therein which would result
in its dissolution" The contention was
merely that the directors, by reason OF Ger,
tain acts specified in the complaint had
shown themselves 10 be quite unfit to carry
on the business of the concern. Conse-
Quently application had been made for
relief that was intended to be merely tenn
porary, namely. an injunction and the ap-
| pOintment Of a receiver until such time a s
the conduct Of the officers could be investi-
gated, and, it necessary. a new board of
| directors appointed. On an eX-parte mo-
ton to this effect Mr.. FarDum had been
4 NnIN Tad atnV1
| ton granted to restrain the directors from
| handling the affairs of the concern.
! The court decided yesterday, after due
deliberation. that it had not the power to
grant the relief desired by either an In
| junction or the appointment of a receiver.
| 1T is conceded" said the Judge, that a
| court of equity might, under the allega-
lions of the complaint. restrain the de-
| PENDANTS from doing certain specific acts
| which would result in loss to depositOrs
or stockholders, and such, l think, is the
law. But to make general order In an
| action or this kind, restraining the de-
| PENDANTS as board of directors from
carrying on and conducting the ordinary
| business of the corporation. which the law
| specifically conferS upon and charges them
with, is quite beyond the power of the
| court.
The law prescribes method by which
| director Tor directorS) who, by reason of
| wrongful acts, has proven unfit 10 be- in
| trusted with the management and affairs
| OF a corporation. may be removed, but 1t
cannot be done. even indirectly, in an
action of this kind, by restraining him
| from acting as such director, and | think
| 1t VIII not be disputed that no action can
| be maintained simply for the appoint
ment of receiver-Ehatis to say, no action
! the object of which is merely to attain
that relief can be maintained"
The court instanced the case of Neall VS.
| Hill, decided in the Supreme Court of this
| State, where in suit brought by stock
| holder a receiver had been appointed by
| the District Court TO take possession of
| the property OF mining corporation, that
| In the absence or a statute comforting
! such power court in equity had no juris-
| diction over corporate bodies for the pur-
| pose of restraining their operations OF
winding up their affairs. The Supreme
| Court held that the decree, If permitted to
| stand, must necessarily result in the disso-
| luton of the corporation, and in that event
| the court would have accomplished in an
| indirect way that which, in this proceed
| Ing, II had no authority TO do directly
| Courts in equity had no power, either
| directly or indirectly to discharge the
| directors Of corporation nor 10 appoint
new ones in their stead
| The Attorney-General, as representing
the State-the sovereign power which
granted the charter-WaS authorized to
and one wherein the court would have
| Jurisdiction, and in such case the court
| would have power to appoint n receiver.
| but no section of the code conferred upon
| private party the right to begin such an
action against a corporation, and, conSe-
| Quently. no court had jurisdiction in such
an action to appoint a receiver of the as
| sets of a corporation.
"The plaintiffs, therefore," concluded
Judge Sanderson. "having failed to show
good cause to the contrary, the restrain
ing order and the order appointing the
receiver therein must be vacated and set
aside, and it is so ordered"
When the Judge had concluded A. E.
Shaw rose and asked the court to grant a
few days stay.
Stay of what. and for what?" asked
! the Judge, with some surprise.
IA stay of your Judgment, your Honor"
was the reply. while we consider what
steps 10 take next"
The attorneys for the bank vigorously
opposed this request, aud Judge Sander
son said he did not see how he could allow
an injunction to stand, which, in his opin.
| ion. should never have been granted
Application denied.
u. F. Dunn saws that tha diraotnrz A.