Court Opinion

ID: 6561526
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:15:58.734674+00
Date Added: 2024-06-11T15:56:33.511492
License: Public Domain

PETITION FOE EEHEAEING.
Per Curiam.
In support of the jurisdiction of the district court to appoint a receiver for the. defendant in *478error, it is earnestly argued that in the opinion filed the court mistook both the facts and the law.
One of the errors of fact pointed out is the assumption that no one acted for the corporation, in the matter of the application for a receiver, “except George R. Fisher, in his official capacity in the company as cashier,” whereas the petition filed was the petition of the corporation, being only verified by its cashier. Another objection is that the opinion assumes a final decree was rendered in the equity proceeding, which did not dissolve or attempt to dissolve the corporation, whereas no final decree was rendered in that proceeding, but an interlocutory or provisional order merely, appointing the receive!’, so far as disclosed by the records before this court.
The language of the opinion may be liable to criticism in the instances referred to, but if the district court was without jurisdiction to either appoint a receiver for the bank upon its petition, or to dissolve the corporation and close up its affairs, no ground exists for a rehearing.
Conceding, then, as we think the opinion in fact does, that the petition' filed was the petition of the corporation, an essential prerequisite to the jurisdiction of the court or judge to appoint a receiver was that there should be an action pending. We think this prerequisite was lacking. The authorities agree that the general jurisdiction of courts of equity does not extend to the dissolution of corporations and the administration of their affairs, but that such powers, where they exist, are statutory. Accepting this as the correct doctrine, the question is, Do our own statutes sustain the jurisdiction assumed in the present instance?
The corporation act (sec. 258, Gen. St.) confers power upon the state courts to dissolve or close up the affairs of corporations; to appoint receivers for them, and to do all things necessary to closing up their affairs. But this section, construed by the ordinary rules of interpretation, indicates plainly that an adversary, and not an ex parte, *479proceeding is contemplated by the legislature in its enactment.
The only other statutory authority for the appointment of a receiver is found in section 144 of the Code of Civil Procedure, which authorizes the appointment to be made, in the cases specified therein, “ by the court in ivhich the action is pending, or by a judge thereof.”
It is not claimed that there was an adversary proceeding in the present case, but it is claimed that there was an action pending when the appointment was made.
“The vital idea of an action,” says Mr. Bouvier, “isa proceeding on the part of one person as actor against another, for the infringement of some right of the first, before a court of justice in the manner prescribed by the court or the law.” We think this definition is in accord with the general understanding of the meaning of the term, and that, to constitute an action in court, there must be not only a petitioner or complainant, but a respondent or defendant.
There being but one party to the proceeding in this case, it follows that the statutory jurisdiction could not be invoked.
Another objection to the jurisdiction in this case, mentioned by Commissioner Macon in his opinion, is that an insolvent party cannot come into a court of equity, and upon its own motion authorize the court to assume the administration of his estate. An attempt has been made to answer this objection in the petition for rehearing, and briefs filed in support thereof, but in our judgment without success. The authorities cited are not directly in point, while very respectable authorit3r is adverse to the jurisdiction. Says Justice Campbell in Kimball v. Goodburn, 32 Mich. 10: “It is also claimed that the assets were in the hands of a receiver who had never been discharged. * * * The evidence of confirmation is wanting. But the order appears to have been made in a proceeding wherein the Bush wick Company itself appears *480to, be complainant, and we are aware of no case where a corporation in its corporate capacity and name can apply tobe put in the custody of a receiver.”
A similar application to the one made in the present case, except as to parties, was presented to Chief Justice Chase, when sitting at the circuit in South Carolina, in 1869. The State Bank of South Carolina filed a bill setting up that it was insolvent; that certain judgment creditors, who were made parties to the bill, were about to procure an inequitable preference over its other creditors by means of executions which they were enforcing, and praying an injunction that receivers be appointed, etc. The chief justice dismissed the bill, saying, among other things: “ The court is not aware of any case which will warrant its assuming the administration of the estate of a debtor simply on the ground of insolvency. * * * A creditor in a proper case might come into a court of equity for the appointment of a receiver, but a debtor could not; this, therefore, is not such a case as calls for the interposition of the court, and the prayer of fcthe bill cannot be granted.” Hugh v. McRae, Chase’s Dec. 466.
The further point is made in the petition for rehearing, that the motion to dissolve the writ of attachment sued out against the bank by plaintiff in error, and levied upon the property in possession of Trimble, was not based alone upon the receivership of Trimble, but upon his appointment as assignee of the bank as well, which latter right to the custody of the property was ignored in the opinion filed. While the above statement is correct, as shown by the record, it does not appear that the deed of assignment was introduced in evidence on the hearing of the motion to dissolve the attachment and to discharge the bank property. This claim of Trimble to the possession of the property was treated, therefore, as not being properly before the court, since the court was not able to judge of its validity, the deed of assignment not being introduced in evidence. The point decided *481in this connection was that the order appointing the receiver was without jurisdiction and void.
Another doctrine urged in the original arguments, and which is strongly contended for upon the application for a rehearing, is that the assets and funds of an insolvent corporation constitute a trust fund for pro rata distribution among all its creditors, and that an equitable lien thereon exists in favor of all the creditors superior to any liens which can be acquired by attachment proceedings in favor of individuals. After careful examination of the numerous authorities cited to the proposition, including ,as well the provisions of our own statute bearing upon the question, we are unanimously of the opinion that no such superior lien exists until the jurisdiction of a court ■of equity has been properly invoked and lawfully exerted for the protection of such assets and the administration ■of the affairs of the insolvent. The writ of the plaintiff in error in this case having been sued out and levied upon the property of the bank before the equitable jurisdiction •of the court lawfully attached thereto, he must be held to have acquired a prior and superior lien, so far as the judicial proceedings had for the appointment of a receiver .are concerned. Whether Trimble was entitled to the possession of the property by virtue of an assignment to him for the benefit of the creditors generally is not decided.
The petition for rehearing is denied.

Petition denied.