The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-06-12
The Supreme Court Stops
Proceedings
lNTHE PEOPLES BANK CASE.
Judge Hebbard Acted in Excess
of His Jurisdiction
u !. ISSUING AN INJUNCTION.
A Decision Which Knocks Out Re-
.ceiver Sheehan and Gives Full
: Power to the Directors.

ASSN the case Of the Pacific Bank, the
Srpreme Court has decided against Judge
5Iebbard IN bis method of controlling the
,virdiDg up of the Peoples Home Savings
Bank.
!" II Is decided that the Superior Court had
absolutely DO rover whatever to issue an
*I9junetiOn and appoint receiver, and un-
der this decision John F. Sheehan will
pQw. have to step down and out. leaving
the winding up Of the banks affairs to the
diTectOrs, four Of whom are awaiting trial
upon Grand Jury indictments charging
them with EN- bezzling the funds of the
:. bank inTusted TO them
/: Furthermore. it appears that in q pro-
-ceedjng Of this description the bank dIrec-
:. tors should not have been made parties TO
=: Tie suit. az the power is given TO the At
:<toTney- General TO bring suit on behalf of
the state 10 dissolve the corporation only.
:. and therefore the corporation IS the only
: Legitimate defendant to such an action.
=: There has been an endless amount of
- legal 'WTanglinE over the affairs of this
bar /, and motion 10 modify the original
:: IN Jun cti0n SO far as to enable some Of the
:direCtOEs To resign and elect others in their
#plaCes. has been on trial before Judge Heb
bard 81 Odd times Tor the past three weeks,
. and was only taken under adYisemeDt yes
teTdRy. However, these proceedings will
; have mo value now, as under the Supreme
:. GGuEt's decision the injunction IS dis
Solved and the directors are now at liberty
To resign or not, just as il may please them.
s'ID any case there has been a deal Of time
and JT0uble wasted.
:: =. The Supreme Courts decision was
;: haTded q at a late hour yesterday after
:. uO0Ij..: IRE court reviews the facts and
r , p rFr0z tan 0r q q ff-rr
: 8pp8ihtmenL of a receiver TO the Rppliea-
:>tion for writ Of prohibition preventing
:. the Superior Court from proceeding fur
tEef In the matter. Coming down 10 the
;. arguments, the Supreme Court holds that
: there is only one question at issue: Did
Or.did tot Judge Hebbard act in excess of
: his Jurisdiction il Issuing an Injunction
-Rn9 appointing receivers" Tie court
DECADES as follows:
We tblnk IT clear that the Superior Court in
making these orders exceeded It's Jurisdiction.
::Ebe only authority for institutlng The action is
70 Ie. founc IN section II of the Bank Commits
SISTERS act, u&ssed March 80, 1873. That sec
: tlgn Contains nothing 10 warrant these proceed
Engs.:
by lis provisions the Atorney-G General is en-
:: Fe*|5Ie0 IN his discretion, upon receiving a
report from the Bank Commissioners that il is
.%u1Saie Ter banking corporation TO continue
:: EIS5ness, 10 commence an action against tie
: c9ipof dtlOh I'D Inc proper court 10 en1oin ana
y I:OI!i III from transaelng any further busi-
::ress.: and the court IL which the action is
trled--if-after hearing il is of the opinion that
- the Dank. cannot safely continue buslneSS-mUst
:.lsEue the Injunction prayed for and must then
e rtct the Commissioners 10 take such proc ed
:: LIS 2gaiBst The corporation as may be de-
~ UPON by its creditors. This Is the whole
:TLkenf. of The power conferred upon the At
r0t hey-G eneTal and the court by The statute,
.i:nE. tIe ptOce cling Is purely statutory.
-. Z lie .AtIOTney-GeneTal is authorized to pro-
peed.zRainst The corporation alone and for the
:s50fe purpose, in effect, CT winding Up its bust-
ness Ip oIhei words, be represents the inter
.es.s Of the people IN a matter Of public concern.
Il STATE which has granted 10 lis creature the
..rEivil-.Ge. OF doing a banking business, by its
inlerYt tion reEOkes hat privilege for violation
6T:tEie: conditions expressed and implied upon
:. T-fEh-it: was granted. II does not pretend 10
Gems i<uJe itself the guardian OF merely private
TitEts OF individual stock bOlde or creditors OF
.t:a { go p0ratiOn, and has not empowered the
Attorney General in lis name 10 MAINTAIN an
.Ectf0utfn tnsir behalf against the directors OF
the coThoraIiOn for violation OF their trust, as
: has been attempted in this case. His function
as agent Of the 81 ale IS, as above stated, simply
aIid solely o revoke the privilege granted by
She STATE Of doing banking business, ana
:EeadTe: The court can issue its injunction for
:tffaJ- pufpOse. 1be. corporation IS entitled 70
'NeaEinG and an opportunity TO contest Inc ale
:. and. even alter the injunction of the
CONT. rs. issued. as We have held lately
I'm IJnpE: vs.. Superior Court, the corpora
L iqu:c0nfipues IL existence for the purposes OF
= Qu Ida ten. and unless some further proceed
is instituted by or on benaIf OF It's creditors
Or. l0ckhOlQers VIII cOn0uct Such HQuioation
;:tnrough. ITS own officers and employees, subject
:oulv.rI the supervision of the Bank Commits
-sioG6rs and their direction and control IN GER
Tain SPECIFIED particulars.
::sTife terms Of the act are very clear and ex-
<EIfcirto- this Ell CT and The only argument 2d-
wanted 10 ius1lfy the proceedings IN question,
which clearly transcend tue statute, IS that un-
less :sQIBetliiBg~ is ADDED by construction 10 the
:. FERNS of the act and larger rover given 10
:: III E. AJtorney- General ana the Bank CoInmls-
Sionefs. the stoc- holders and depOsliOTs Of
: banking corporation VIII be left without any
means Of protection against such acts oil mis-
and Fr1T b Ian q
: eli afged in tits case.
:. Bar: tifs argument, even il well founded.
: Wgu;d hot Justify US IN InseTpolatlng into the
.stal ute something that the Legislature has
oiritted. and besides, the argument is on It's
own premises self-dssIructive. for If the exist
efrcg:Qf d legal remedy could be inferred from
+Ihe mere necessity Of 1t, there must have been
a. remedy for such abuses before TIE Bans Com
fnissouers' act was lasSed, Tor the necessity
Wasfas Great-then as now, and II there Was an
ifLple remedy tnen the same remedy sum
= efBaanS, for be Bank commissioners act mas
. not taken Il away, and, therefore, the assump-
: ton upon which the argument IS founded Is
wholly understandable.
= : ri il has never been held that creditors and
-StOCkhOldeTs of banking corporations have no
: Ttmedy independent Of the Bank Commission
:ers' act against the buses here charged. we
know Ol 30 case Ia which this court has beio
thacthey were without remedy in court Of
equity and certainly nothing of tie sort was
Ge:idEd1n the only case 10 which we have Dren
: q led fy.cOuDsel. tie FT Dcb Bank case.
=: All tadt was decided IN thai case was that
..u.l.t OF t1uilb LAS 10 luiiSuiCtlOH Sulb ny
: :. private person against a corporation alone 10
: APP 0!nl a receiver to wind up its business, the
:-iIa ctIcal effect OF sucn . decree being disso
: l1tiQE Of th- corporation, result which II was
held could b. ACCOMPLISHED only al be suit OF
The Slate Bur that an action might be MAIN
: iGfned against the directors OF a corporation in
& pf0peT Case was expressly conceded.
- We see DO reason, therefore, TO enlarge by
= eoD stfuction the provisions Of a statute which
:. vfas.neyer designed 10 put the protection OF
private ~. eTests under The exclusive care OF
The. Sta e. and we are compelled 20 hold that
ihe eN faIte orders OF the Superior Court above
sci 9QtweFe unauthorized and void, and that
: ,tuEther proceedings hereunder should be pro-
hlbued.
Lei: a .peremptory writ OF prohibition issue
las mayed for.
= The. decision of the court was written by
:Cbief Justice Beatty ana concurred in by
Justices Mcfarland, Harrison, Garoutie,
Fi{ZgeIaId and Van Fleet. Justice de
=; HaYeb,. being depOsitor 10 the Peoples
Bank, was disqualified from participating
jim the decision.
i PROCEEDINGS IN COURT.