Court Opinion

ID: 3571732
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:24:49.497943+00
Date Added: 2024-06-11T13:48:03.259381
License: Public Domain

I concur in the result. Also in much that is said in the majority opinion written by Mr. Justice WATSON upon the purpose and effect of the provisions in the Banking Act *Page 211 
affecting the liquidation and winding up of insolvent banking corporations. And, if the mere determination of whether this was to be a liquidating receivership vel non were the decisive question, I could accept the reasoning which follows such a conclusion.
However, as I view the matter, the mere conclusion that a liquidating receivership is contemplated by given proceedings no more settles the question here at issue in the case of a banking corporation than it does in the case of any ordinary private corporation. The decisive question in the case before us is whether title to the corporate assets passed to the receivers appointed by the court. If it did so pass, and if it does pass in the case of a banking or any other corporation, it passes only at the time and in the manner prescribed by the statute. And I here refer to the insolvency statute, not the Banking Act, since it does not speak on the subject.
I entertain no doubt that a liquidating receivership was contemplated by the proceedings in which the appellees in this cause were appointed receivers of the First Savings Bank  Trust Company of Albuquerque, N.M. When Cooper v. Otero, 38 N.M. 164,29 P.2d 341, was before us, that fact was taken for granted. The opinion in that case assumes, and correctly, I think, that a liquidating receivership was applied for.
But how and under what conditions does the receiver, even in a liquidating receivership under our Corporation Insolvency Act, take title to the corporate assets? It was not until the enactment of chapter 67, Laws 1915, relating to banks and banking, that we find specific direction, as we do in section 85 thereof, that "such [insolvency] proceedings shall be governed by the provisions of the general incorporation laws for the winding up of insolvent corporations." So this direction remained in identical language through various changes until the enactment of chapter 32, Laws 1933, when we find the slight amendment by the addition of the word italicized in the quotation to follow, to wit: "Such proceedings shall otherwise be governed by the provisions of the general incorporation laws for the winding up of insolvent corporations."
The enactment of this statutory direction was, however, more or less surplusage, in view of the holding of this court in State v. First State Bank of Las Cruces, 22 N.M. 661, 167 P. 3, L.R.A. 1918A, 394. We there called attention to the fact, in an opinion by Mr. Justice Roberts, that the provisions of our Corporation Insolvency Act, under section 1014, Code of 1915 (now section 32-234, Comp. St. 1929), by specific direction were made applicable to banking corporations. Hence it required no further legislative action to make it plain that banking corporations were just as much subject to the Corporation Insolvency Act as other corporations.
I turn then to an examination of the Corporation Insolvency Act to ascertain how the receiver appointed pursuant to its provisions acquires title. It is solely by force of the statute. *Page 212 
Comp. St. 1929, § 32-177. Title acquisition, of course, must follow appointment of the receiver contemplated by the statute, viz., the statutory receiver. None will question the assertion that a void appointment carries no title into the appointee.
Under Comp. St. 1929, § 32-175, it is provided, touching the question when a receiver may be appointed, as follows: "The district court, at the time of ordering said injunction, or atany time afterwards, may appoint a receiver or receivers," etc. (Italics mine.)
Our Corporation Insolvency Act, as has been many times mentioned by this court, was adopted from New Jersey. Vice Chancellor Stevenson, who displays a profound knowledge of the act which we adopted from his state, in two learned opinions states unequivocally that the court is without jurisdiction to appoint the statutory receiver until the statutory injunction authorized by the act has been ordered. Even though his remarks were unnecessary to a decision in either case, in my opinion they furnish a correct construction of the language of the act. In Gallagher v. Asphalt Co. of America, 67 N.J. Eq. 441, 58 A. 403,406, he said: "And now we come right to the sharp point, whatever they may think in the federal court: no statutory receiver can be appointed in this court excepting at the time when the statutory injunction is ordered, or at some time thereafter; in other words, the ordering of the statutory injunction which places the corporation under disabilities with reference to the exercise of its franchises, is the jurisdictional fact — the condition precedent — which must occur before any statutory receiver can be appointed. That, I think, has been the settled rule of the court from the very origin of our statute."
Again, in Pierce v. Old Dominion Copper Mining  Smelting Co.,67 N.J. Eq. 399, 58 A. 319, 324, speaking upon the same subject, Vice Chancellor Stevenson said: "The power of the court of chancery under this statute, if such power exists, to strip a defendant corporation of the right to exercise its franchises — to condemn it and suspend its life, if not put it practically to death, before giving it a hearing — has never, so far as I am aware, been exercised. Immediately upon filing the bill, also, a receiver of the corporate assets may be appointed in a proper case, without notice to the defendant corporation; but unless the defendant corporation has appeared, and the `summary hearing' has thereupon been held, and the statutory injunction has been ordered, such a receiver is a mere custodian, takes no title under the statute, and is appointed under the general equity power of the court, which always appertains to the court, whether exercising its ancient jurisdiction or some special and novel jurisdiction conferred by statute. One reason why novel statutory equitable actions are created is because the court of chancery is equipped with these special institutions, such as injunctions and receiverships, for the preservation of property and the accomplishment of justice. The language of our statute which prescribed the appointment of a receiver for an insolvent corporation has remained unchanged since its original enactment in 1829. The power of the court can only be exercised `at the time of ordering *Page 213 
the said injunction, or at any other time afterwards.' No statutory receiver can be appointed unless the statutory injunction, which is the object of the suit, is also ordered or has been already ordered. It is perfectly plain that a mere restraining order, or a preliminary writ of injunction, `limited' in its operation, is not a sufficient basis for the making of an order appointing the statutory receiver. Laws 1828-29, p. 60, § 8; Corporation Act (Laws 1896, p. 298, c. 185) § 66."
In Sacramento Valley Irrigation Co. v. Lee, 15 N.M. 567,113 P. 834, and Eagle Mining  Improvement Co. v. Lund, 15 N.M. 696,113 P. 840, 842, the territorial Supreme Court cited and quoted from the opinion of Vice-Chanceller Stevenson in the Pierce Case, touching the history and purport of the New Jersey act.
Again, in State ex rel. Parsons Mining Co. v. McClure, 17 N.M. 694,  133 P. 1063, 47 L.R.A. (N.S.) 744, Ann. Cas. 1915B, 1110, we cited his opinion in the Pierce Case and quoted approvingly a passage from his opinion in an earlier report of the Gallagher Case, 65 N.J. Eq. 258, 55 A. 259, 265, in which among other things, he said: "The discretionary power to appoint a receiver can only be exercised at the time the injunction is ordered, or at some time thereafter. * * *"
The New Jersey courts have consistently held, and we have followed them in holding, that the injunction order disabling the corporation is the final decree in such proceedings. It is, of course, from it alone that an appeal lies where only final judgments and decrees are reviewable. See the Gallagher and Pierce Cases from New Jersey, cited supra, and the New Mexico cases of Sacramento Valley Irr. Co. v. Lee, and Eagle Mining 
Improvement Co. v. Lund, supra.
In Maxwell Lumber Co. v. Connelly, 34 N.M. 562, 287 P. 64, 66, we said: "The statutory proceeding by injunction and receiver to wind up an insolvent corporation has for its principal object the termination of the corporation's existence as a matter of protection to the public and the stockholders. It is in the nature of a quo warranto proceeding. The question of administering and distributing its assets is purely incidental and arises out of the necessities of the case."
The jurisdictional fact which must be found to warrant the ordering of injunction and the appointment of a receiver is insolvency. But a litigant may not appeal from a finding of fact, even though it be a jurisdictional fact. It is the relief predicated upon such finding which affords him the basis for review. In Eagle Mining Co. v. Lund, supra, the district court found the jurisdictional fact of insolvency and appointed a receiver. The order appointing a receiver failed to carry the statutory injunction. The insolvent corporation sued out a writ of error in this court from the order appointing a receiver. The territorial Supreme Court dismissed the same in an opinion which said: "The wording of the decree in the case at bar in itself indicates that the decree appointing such receiver should be merely an interlocutory order. Such being the case, the order as it now stands appointing a receiver, being *Page 214 
purely interlocutory in form, is not subject to appeal or writ of error. If the decree appointing a receiver in this case had been drawn with an order or decree granting the injunction provided in the statute, there could be no question whatever but what such decree would be a final decree and as such subject to appeal or writ of error."
While it is true the Appellate Procedure Act in force at that time authorized appeals only from final decrees, and the act was later so amended as to authorize appeals from such interlocutory orders or decisions as practically dispose of the merits of the action, this circumstance has no material bearing on the point at issue. Indeed, it is difficult to understand how a mere order appointing a receiver could be considered such an interlocutory order as is appealable even under the amended Appellate Procedure Act.
And, if it is not appealable as the law stands to-day, as it certainly was not as it stood before appeals from interlocutory orders were authorized, a protesting corporation, banking or private, might find itself stripped of its entire assets through distribution by a receiver appointed by the court before opportunity for review was ever afforded it through entry of the final decree of injunction from which it might appeal or sue out a writ of error.
It so happened that, in the proceedings out of which arose the appointment of the appellees as receivers, the banking corporation acquiesced in the appointment of the receivers, by defaulting and failing to appear. It just so happened. Let us put in its place, however, in the proceedings with which we are concerned, a banking corporation which resisted and disputed the claim of insolvency and denied the right in movants to the appointment of receivers. The injunction here was not issued for more than a year after the appointment of the receivers. In the meantime the assets of the bank were being administered and distributed. And yet, unless we overrule Eagle Mining Co. v. Lund, supra, there was no order in the case from which the protesting and objecting corporation might have appealed.
I have heretofore indicated my opinion that title to assets of a bank in insolvency proceedings passes to a receiver appointed by the court in the same manner and subject to the same conditions as apply and govern in the case of any other insolvent corporation. The very fact that the statute ties authority in the district court to appoint a receiver to the time of ordering the injunction or at some time thereafter to my mind reflects an unwillingness on the part of the Legislature to invest the receiver with title until an injunction has disabled the corporation and thus rendered necessary the incidental purpose of administering and distributing its assets. Title investiture is only essential to the execution of this incidental purpose. A mere custodial receiver holding in the meantime, not having been invested with title, can convey none. And contemporaneously with entry of the injunction order, which alone can support appointment of the statutory receiver invested with title, there arises in the corporation a corresponding right to review such order. *Page 215 
Coming now to the situation in the case at bar, I agree with the opinion of Mr. Justice WATSON "that the decree [appointing receivers] should not be subjected to fine analysis for inaccurate expression or inadvertent omission. * * *" Nevertheless, I cannot find in the receivership proceedings warrant for holding these appellees statutory receivers, and hence invested with title to the corporate assets prior to the time when the order of injunction called for by the statute was actually entered, unless, as may be the case, we are entitled to give nunc pro tunc effect to the injunction order contemporaneous in point of time with the order appointing them receivers.
The appellees were appointed receivers of the First Savings Bank  Trust Company of Albuquerque in cause No. 20779 on the docket of the district court of Bernalillo county. On August 31, 1933, the court found insolvency and decreed that a receiver should be appointed. On September 7, thereafter, and pursuant to such decree, the appellees were named receivers. More than a year later, and on September 12, 1934, but prior to the institution of the present suit, the same court, with a different judge presiding, entered its order reciting that, at the time of the order adjudging the bank insolvent, "the court inadvertently omitted from said order the statutory injunction as provided for in section 32-174, Comp. St. 1929." It then ordered injunction.
The language of this order strongly suggests an effort, as in State ex rel. Parsons Mining Co. v. McClure, supra, to make a nunc pro tunc order, although lacking any express direction that it should be so entered. I am far from convinced that it does not have such effect. The court says that its omission to order injunction at the time of finding insolvency and authorizing receivership was "inadvertent." The statutory injunction was certainly authorized at that time, if, through inadvertence, it was not actually ordered.
But whether the subsequent order for injunction could have the legal effect of nunc pro tunc entry need not be determined. For here it is admitted the statutory injunction had been ordered before appellant was sued upon the note in question. If, under views which I have suggested but leave undetermined, title had not passed to the receivers theretofore; if, until the formal injunction order, the receivers were mere "custodians" (Pierce v. Old Dominion Copper Mining  Smelting Co., supra), or only "custodial receivers whose function is to preserve" (Smith v. Washington Casualty Ins. Co., 110 N.J. Eq. 122, 159 A. 510), they become something more now. Their status as "statutory receivers," whatever doubt may have beclouded the question theretofore, now becomes settled, fixed, and determined. From the actual time of the injunction order, if not before, by virtue of contemplated nunc pro tunc effect, they possessed all the rights bestowed by the statute upon receivers which it authorized, including possession of title. If held to be statutory receivers at the time of suing him, I do not understand appellant to question their right to maintain the action. *Page 216 
When Cooper v. Otero, supra, was before us, the absence of the statutory injunction was not noted. Its existence was assumed. The same appears to have been the case in State v. First State Bank of Las Cruces, supra, and State v. People's Savings Bank 
Trust Co., 23 N.M. 282, 168 P. 526. In each of these two last-cited cases we held the receivers of the respective banks to have been invested with title to the corporate assets. But the fact that such receivers had been appointed without ordering of the statutory injunction went unobserved, and the existence of facts essential to the appointment of statutory receivers was presupposed.
For the reasons given I concur in the affirmance of the judgment appealed from.