Court Opinion

ID: 3997327
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:55:14.082969+00
Date Added: 2024-06-11T07:44:29.687749
License: Public Domain

The questions presented in the three several writs before the court all turn on the interpretation that is to be given to the statute relating to the appointment of receivers for building and loan associations. If the receivership therein contemplated is the ordinary receivership of a court of equity, then the conclusion of the majority is correct and the several writs are properly denied. *Page 561 
In my opinion the proceeding is controlled by the statute. The directions contained in the very first sentence of the statutory provision (Rem. Comp. Stat., § 3735) respecting liquidation of such associations, are mandatory and cover every proceeding thereafter until final disposition, whether restored to the shareholders or dissolved. Otherwise, there was no purpose in enacting this law. The first sentence of the statute reads as follows:
"Whenever it shall appear to the state auditor [now state director of efficiency] that the affairs of any savings and loan association are in an unsound condition or that it is conducting its business in an unsafe and unlawful manner, the state auditor [director of efficiency] may direct the inspector of savings and loan associations to take possession of all books, records and assets of every description of such association and hold andretain the possession of same pending the further proceedingsherein specified." (Italics ours.)
If my position is sound, then the power of the court appointing a receiver is limited by the statute, and the orders made by the court naming the attorneys for the receiver, discharging the receiver it had first appointed, and appointing another, and again naming attorneys for the new receiver, are erroneous, and should be reversed by this court.
While the statutes relating to the matter are not as full and complete as could be desired, in my opinion they are sufficiently definite to evince the intent of the legislature. As I view the statutes, they contemplate the appointment of a state officer as receiver by the court, and this officer is required to proceed in his own way to wind up the affairs of the association. The majority seem to affirm that there can be but two forms of receivership; that is to say, one appointed by the court and subject to the absolute control of the court, or a purely statutory receivership. With that I can *Page 562 
not agree. My view is that the statutes here in question contemplate a mixture of both; that is, the statute names the receiver, and requires the court to appoint as such receiver the person named, and that the interference of the court with the administration thereafter can only be where the receiver himself comes into the court and seeks direction as to some particular question, or where some one feeling aggrieved at the action of the receiver may go into the court and there have his complaint determined. If this is a proper construction of the statute, then, of course, the trial court had no right to name any employee of the receiver or dictate to him in any way the persons he should employ to assist him in his work.
It will be observed that the statute (Rem. Comp. Stat., § 3735) clearly defines the duties of the state officers, when it is discovered that a building and loan association is in an unsound condition. The director of efficiency is required to at once take possession of the association, ascertain the condition of the association, and give to the directors thereof twenty days in which to restore the affairs of such association to a sound condition. If the directors of the association fail during that time to make the restoration required, the director of efficiency is directed to report the facts to the Attorney General of the state, and it thereupon becomes the duty of the AttorneyGeneral
". . . to institute proceedings in the superior court of the proper county for the appointment of the director of efficiency as receiver, and for the dissolution of such association."
There is no alternative provision in the statute. The court's power is limited to the appointment of this particular officer as the liquidator of the association. The court is given no power to name any one else as such *Page 563 
receiver, and no power to remove the state officer from the receivership after he has once been appointed.
In obedience to the statutory mandate, the court on March 3, 1931, appointed the director of efficiency as receiver of the Puget Sound Savings and Loan Association. It will be presumed that the director possessed the moral and other qualifications essential to the performance of the duties of the office of receiver. By virtue of his office, the director became receiver. He would have the right to review the refusal of the trial court to appoint him in the first instance as receiver. It follows that the director may question and secure a review of his removal as receiver. It is possible to conceive that the statutory officer might so far mismanage the affairs of the receivership as to necessitate a change, and that the court, in such an instance, would have power to make the change; but no such question is presented here. He could not be removed upon the ground of incompetency or lack of integrity, unless specific charges were filed and the proof clearly and convincingly sustained the charges.
On the same date the director was appointed receiver, the court appointed two Seattle lawyers as attorneys for the receiver. Those attorneys are eminently qualified for that service. On March 6, 1931, the receiver filed a motion praying the court to vacate its order appointing those attorneys, and to permit him to appoint attorneys of his own choosing to represent him as receiver. It appears from affidavits and counter-affidavits read on the hearing on that motion that there was a disagreement between the appointed attorneys for the receiver and the receiver. The court summarily removed the director of efficiency as receiver, and appointed another in his stead. The court construed the act of the receiver in moving for authority to appoint attorneys of his own choosing, and the *Page 564 
refusal of the receiver to permit the attorneys appointed by the court to act for him, as constituting contemptuous disregard of the orders of the court, and sufficient justification for the receiver's removal; that the receiver thereby demonstrated his unfitness to perform the duties of the office of receiver. On the same day, the attorneys who were originally appointed were appointed as attorneys for the new receiver.
As I read the record, I fail to find any warrant for the removal of the director as receiver. To stigmatize one as unfit because his understanding of the statutes differed from that of the court, is unjustifiable. There is nothing indicative of the director's unfitness for the performance of the duties of receiver. The receiver has not been guilty of anything to merit the stigma placed upon him by the court. He was discharged solely because of a difference of opinion between himself and the attorneys the court assumed to appoint for him over the question of fees. The court was required in the first instance to appoint the director as receiver. He cannot be removed legally except for cause. No cause for his removal has been shown.
That the legislature had a purpose in naming the person who should be appointed the receiver of associations of this character, is made clear by an examination of the statutes. The first of the acts relating to such associations, which provided for the manner of their dissolution, contained much of the matter of the existing statute. It provided, however, that, after the twenty days' notice was given of its impaired condition, and the directors failed to restore the association to a sound condition, the state officer taking possession of the association should report the facts to the Attorney General, and thereupon it became the duty of the Attorney General to institute proceedings in the superior court "for the appointment of a
receiver and *Page 565 
for the dissolution of such association." Laws of 1913, p. 342, § 20.
This power, it will be observed, was general. The court was not limited as to the person whom it might appoint. The statute first above quoted, which is the statute now in force, appeared in a subsequent amendment to the statute. There was a reason for this change. It was felt that the costs and expenses of winding up the association were unnecessarily large, and that these could be reduced if a state officer could be made receiver who would serve without compensation, other than the salary of his official position, and who would have an inducement to bring the affairs of the association to a conclusion as rapidly as possible.
There was, I think, another reason. The Attorney General is made, by the constitution and the statutes, adviser of all state officers. I think it was the intent of the legislature that, by appointing a state officer as receiver, the Attorney General
would ipso facto become his adviser, and there would be eliminated the fees and charges of independent counsel. The legislature intended that the duties of conducting the affairs of such insolvent institutions should be imposed upon the state officials (the director of efficiency and the Attorney General) to the end that the loss incurred by those who placed their savings in such institutions would be minimized, and also to assure neutrality and impartiality. Whether these were considerations which the court would think of moment, is beside the question. It is enough that the legislature has so declared; and, since it has so declared, in my opinion the courts should give its declaration force.
Certain questions are asked in the majority opinion, apparently on the assumption that those questions involve the whole controversy. The first of these is: "Does the act of 1919 create a statutory receiver?" *Page 566 
In my opinion, as hereinbefore stated, this is not the question before the court. The real question is, does the statute create a modified form of receivership controlled in part both by the statute and by the court, and in which the court has only a subsidiary part? If the question were as the majority stated, I might concede that there is not in the statute anything in the language used, or anything necessarily implied by the language used, indicating a statutory receivership, but there is, in my opinion, abundance in the statute to indicate and to imply that a modified form of receivership was intended.
It is said in the majority opinion that the statute supplies no machinery for, or authority in, receivers to proceed by so much as a single step with the liquidation of the association without the direction and authority of the court. This I deny. The very fact that the state officer is appointed as receiver and directed to liquidate the corporation, implies power to take such steps as are necessary to work the dissolution. To liquidate a corporation presents no serious legal question. It is the duty of the liquidator to collect the assets of the corporation and disburse them to such persons as are entitled to them; and why any order of any court would be necessary to give him power so to do, when the very fact of his appointment implies the power, is not to me readily understandable.
True, questions can and will arise between the receiver and those indebted to the association, and between the receiver and those having claims against the association, as to the amount of the respective indebtedness or the respective claims, which will need to be determined by some judicial body. But questions of this sort arise in every case where there is an officer named to wind up a public corporation. All such questions are presented under the system adopted for *Page 567 
liquidating insolvent banks in this state. Rem. Comp. Stat., §§ 3266 to 3275, incl. Either party has always been allowed to resort to the court to determine the question.
Also, it is said that the liquidator has no power to give notice to creditors to present claims, and thereby cut off their right if not presented within a certain time. I answer this by saying that he has the same right in that respect that a court has. If the statute does not make the provision, the power is implied as well to a receiver as it is to the court; the only question in either case being whether a party subsequently complaining had reasonable notice of the requirement, and whether the requirement was in itself reasonable. This may be a judicial question, but, like the others mentioned in this dissent, the court can determine it when it is presented to it in a proper way. These are not such obstacles as require the court to ignore the plain mandate of the statute.
It must be remembered that, in all of these instances, the court is dealing with a creature of the legislature. Building and loan associations are of such a nature that they partake of a public character. They have their existence and they derive their powers from the grant of the legislature, and the legislature has the same power to provide the manner of their dissolution as it has to provide the method of their creation; and the courts, when these methods are indicated, should not disregard them.
For the foregoing reasons I dissent.
FULLERTON, HOLCOMB, and BEELER, JJ., concur with MILLARD, J. *Page 568