The morning call., 1894-06-15
STILL HANGS ON.
Receiver Sheehan Re-
mains in Office.
UNDER KNIGHTS INJUNCTION
Judge Hebbard Will Not Modify
His Order
UNDER KNIGHTS INJUNCTION
UNLESS COMPELLED TO Do so.
Held That the Knight and Goldtree
Cases Present Points of Law Yet
Undetermined.

be asked to pass further upon the legal
proceedings connected with the Peoples
Home Savings Bank, this time upon the
powers of the court to act in the case of a
suit brought by a stakeholder.
The suits of Knight and Goldtree against
the bank and its directors came up before
Judge Hebbard yesterday.
AS preliminary proceeding Judge Heb
bard announced that under the writ of
prohibition granted by the Supreme Court
in the case of the people of the State
against the Peoples Bank the injunction
in that case would be dissolved and the
appointment of receiver set aside. 1t
was ordered that John f. Sheehan file his
account as receiver.
S. NJ. Shortridge then proceeded with his
argument TO dissolve the Injunction and
GUST the receiver in the Knight case. He
maint tanned that the court had no power to
appoint a receiver for a going or 'liye"
concern at the instance OF private party.
IL that was so, any man might walk out
on the street one day, purchase one share
OF the Bank of California. file some sort of
allegations against the directors, and by
causing an Injunction to be issued prac-
tically ruin the Bank OF California without
ever being called upon to prove his aSser-
tions.
All Shortridge's argument went to show
that IN appointing receiver and Issuing
an Injunction in this case the court ex-
ceeded its authority. He asked that the
orders be vacated and set aside.
Highton informed the court that all be
had to say about the matter was so far as
concerned his clients, Graves and Jen-
kins. They would positively refuse to exer-
else any function whatever as directors,
h,x- -, 81. IA
Out of the four names proposed as sue
cessors they would be willing TO accept
any two. Therefore" said Highton,
"why not let us get outY"
Hiram Il. Graves occupied a seat in
court. and nodded approvingly as Highton
said this.
Spelling said 1t would save time at this
juncture to say something about the Gold
tree case. He said that the statutes of
California had created NO new jurisdiction
applicable to this case. There was such
thing as a receiveTship over a corporate
entity. But, on common law principles,
where a trustee abandoned his trust, a
court could appoint a receiver of that
trust.
THE court" said Mr. Spelling, himself
the author of O work upon corporations,
cannot remove directors from office. That
| power is vested in the stockholders. But,
| suppose the directors, as is charged in this
| become as trust fund, and, to prevent the
failure of that trust. the court can appoint
& receiver. The Supreme Courts of this
anu other States have decided that where
directors disagree on a line OF policy, and
| the business of corporation thereb
comes TO a standstill, IL is as though that
corporation had no head, and a receiver
must be appointed until the directors can
get together and reorganlze."
| In conclusion, Mr. Spelling held that by
reason of the abandonment of that trust,
| the court had jurisdiction.
"Do you claim that these directors vol
UNFAIRLY abandoned their trust?" asked
! Shortridge. IF so, you are wrong; thew
merely bowed to the order of this court. !"
Spelling argued that as the courts in
| junction was void. it could not serve as a
| legal excuse for such abandonment by the
! directors.
Highton then produced a paper which
Fhe wanted signed. 1t was to the effect
that the two directors, Graves and Jen-
kins. were to be permitted to resign, on
| consideration of their conserving TO the
appointment of any two of the four names
| selected as successors.
Judge Hebbard. however, decided that
he would not in any way modify the in
| junction as yet. 1t would only complicate
matters, and if the injunction was good it
must stand as originally made, for the
present. at least So saying. HightoD took
sumed on behalf of DIR. Boushey
John II. burst spoke against Short
ridges motion. He said that there was a
difference between banks and savings
banks. and that none of the recent de-
eisions noted by Shortridge In support Of
his argument applied to the cases at bar.
Mr.. Delmas made the closing argument
He asked, in case the court held the power
to appoint receiver, how long such re-
ceiyer's power was to last? "Then," he
said, from what source OF Jurisprudence
does this b0untiful stream of powers
flow? The court has no power to act
until judicial act of Insolvency shall be
judicially tried and determined"
In conclusion, Mr.. Delmas said be could
not understand bursts attitude as Dr.
Boushey's representative. II these bank
directors are guilty of malveIsation or
malfeasance. then Boushey was as guilty
as anybody else. That being so, where
did he come in.
The Knight case was then ordered sub
mitted, and Judge Hebbard formally de-
MED the motion 10 vacaLe the in junction
and GUST the receiver. He would prefer to
let the Supreme Court pass UPON the mat
ter-let them get out writ of prohibition
at once. For the same reasons the Gold
tree case had better also be submitted.
Mr.. Delmss said that if the only scope
asked on behalf of the receiver in the
Goldtree case were that he should hold
any moneys recovered from the persons
alleged to have made away with em, he
will admit the courts jurisdiction and not
object to the appointment of receiver.
Mr.. Spelling said there was more than
that in it. The complaint was then handed
to Delmas. who. when he read the words
'snce the 21st day of May, 1894. have will
fully abandoned their trust" waxed in
dignant, and said, "Whoever has sworn to
that complaint, will prosecute him for
perjury"
Finally. after some discussion. the Gold
tree case went over until next Friday, by
which time Delmas will file cOunter-affi-
davits, intending to show that the directors
never abandoned their trust. On motion
of Delmas, Judge Hebbard agreed to in
crease the bond of Receiver Sheehan.