Court Opinion

ID: 6679591
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:19:31.722145+00
Date Added: 2024-06-11T16:00:48.299794
License: Public Domain

The opinion of the Court was delivered by
Mr. Justice Jones.
The Bank of New Hanover, a corporation created under the laws of North Carolina, having its principal place of business at Wilmington, being insolvent, on tire 19th of June, 1893, made an assignment for benefit of creditors of all its property to the defendant, Davis, as assignee. Soon thereafter, under a creditor’s bill, this assignment was set aside as void, and the defendant, Davis, was appointed receiver by the Superior Court for New Hanover County, in North Carolina. Then in July, 1893, in the'suit of Tate, Treasurer of the State of North Carolina, against the Bank of New Hanover, said Davis, as assignee under the assignment, and said Davis, as receiver under the creditor’s bill, the Superior Court for Wake County, in said State, appointed the defendant, Davis, as receiver of all the assets and property of said bank, pursuant to a statute of that State which provides that whenever the State’s bank examiner reports a bank as insolvent or in imminent danger of insolvency, the State Treasurer shall file a bill- for winding up the affairs of the bank, and administering its. assets amongst all of its creditors, without any preference or priority. The plaintiff, as well as all other creditors *552of the bank residing in South Carolina, appeared in the proceedings above mentioned, established their claims, and- from time to time received their pro rata dividends from the bank assets distributed by said receiver. The greater part of the bank assets from which these payments were made were situated in the State of North Carolina. Among the assets of the bank was the bond and real estate mortgage of Mary E. Keels, defendant, a citizen of this State, and this bond and mortgage went into the actual custody of the said Davis as receiver, who, as receiver, brought an action in the Court of Common Pleas for Sumter County to foreclose said mortgage, and in February, 1897, obtained judgment of foreclosure thereon. But before sale of the land, plaintiff, for himself and all creditors of said bank in South Carolina, brought this action, claiming that he and the other creditors in this State were entitled to be paid out of the assets of said bank in this State before any part thereof is removed from the State, to the exclusion of the creditors not citizens of this State, and to this end prayed for a receiver here to administer the assets in this State. It appears that in April, 1897, Judge Buchanan made an order appointing D. M. Young as receiver in this State, and among other things ordered the master of Sumter County to proceed to sell the land under the said foreclosure proceedings, and to' pay proceeds to D. M. Young, as receiver. These proceeds, $2,294.27, are now in the hands of Young, receiver. A number of creditors in this State have proved their claims before Young as receiver, but it appears that all these creditors, like plaintiff, Wilson, had established their claims under the procedings m North Carolina, and had likewise received their pro rata of the funds disbursed there. Inasmuch as all the creditors ‘of said bank in South Carolina are in like plight with the plaintiff, Wilson, no further reference to such creditors need be rhade. The Circuit Court, whose decree is officially reported herewith, sustained the contention of defendant, Davis, and dismissed the complaint herein, on the ground that plaintiff having established his claim in the cause pending in North *553Carolina, and participated in the proceeds arising in said cause by receiving his pro rata of said funds, he thereby became a party to the cause of action in North Carolina, and he is now estopped to question the power or authority of the receiver so appointed.
1 2 3 We are satisfied that the plaintiff ought not to be permitted to interfere with the collection and disbursement of the proceeds of the bond and mortgage in question by the North Carolina receiver, both upon the ground that he is concluded as to the question of such receiver’s right to collect such assets of the bank by becoming a party to the proceedings in North Carolina, and upon the ground of judicial comity. The bond and mortgage were in the actual custody of Davis, receiver, by virtue of proceedings to which plaintiff was a party, and as to plaintiff, it was the right and duty of the receiver to collect the same. The Court of Common Pleas for Sumter County, in this State, had permitted the said North Carolina receiver to obtain judgment of foreclosure, and thus the bon'd and mortgage in actual custody of the North Carolina receiver were merged into a judgment in favor of the North Carolina receiver. Under this judgment, the land has been sold, and the proceeds are in the custody of the Court. Such proceeds should be paid over to the North Carolina receiver, unless it is made to appear that to do so would conflict with the policy of our laws or infringe th% right of creditors in this State. In 20 Ency. Law, pp. 65, 66, the rule as ho foreign receivers is, we think, correctly stated in the following language: “The rule in this country is said to be that receivers appointed by one jurisdiction are not entitled as of right to recognition in other jurisdictions, and that courts of equity cannot acquire extra territorial jurisdiction over property by appointing receivers. But expressions of this character have been considered to go too far; and the correct and current doctrine appears to be, that under the principle of comity, the Courts of one jurisdiction will recognize the authority arid permit the exercise Of the functions of a receiver appointed in another jurisdic*554tion, except in those cases where a Court of the former jurisdiction finds that its own policy would be displaced or the rights of its own citizens invaded or impaired; and this seems to be especially true where such receiver is by the terms of his appointment to gather the assets wherever found * * * Nor is the right to confer such authority to be questioned upon any theory that the receiver’s power is limited to the property found within the State where he is appointed; for it is not necessary that the property should be within the jurisdiction of the Court.”- See, also, same book, pages 241, 242, where it is stated that “citizens in the jurisdiction of the Court appointing the receiver will not be aided by foreign Courts in evading the effect of the appointment.'” Thus if a creditor of the bank residing in North Carolina and within the jurisdiction of that Court, were here seeking to prevent the North Carolina receiver from collecting and disbursing the fund in question according to appointment, he would not be aided by the Courts of this State. A creditor, though resident in this State, who has voluntarily submitted himself to the jurisdiction of the Court appointing the foreign receiver, has no-stronger claim to evade the effect of the appointment. To permit the fund in question to go into the hands of the foreign receiver in this case, is not contrary to- any established policy of our law, nor injurious to the rights of domestic creditors. As seen, all the creditors residing in this State have established their claims in North Carolina, and have been receiving dividends from the insolvent’s assets there. The North Carolina receiver now represents them, and is seeking to realize this particular asset for their benefit as well as the other creditors of the bank. His claim, therefore, is not hostile to or adverse to their just rights. It appears that under the law of North Carolina, the assets of the bank will be administered among all the creditors of the bank without preference or priority. But plaintiff asserts that under the act approved December 20th, 1893, 21 Stat., 409, entitled “An act to declare the terms on which for*555eign corporations may carry on business and own property within the State of South Carolina,” creditors of said bank resident in this State have an exclusive right to appropriate to their claims the assets of the bank in this State. This contention is based on section 6 of said act, which is as follows : “That it shall and may be lawful for any Court of competent jurisdiction in this State to take possession of, wind up, administer and marshal the assets in this State of any such foreign corporation (in like manner and in like cases as by law may be done with respect to corporations chartered under the laws of the State,) for the protection of any and all citizens of this State who may be stockholders or creditors of such foreign corporation, as in the case of legatees and creditors (citizens of this State) of deceased persons whose domicile was at the time of their decease outside this State, in respect to assets within this State.” We do not construe this act as attempting to give creditors residing in South Carolina t'he right to appropriate to their claims the assets of a foreign corporation in this State to' the exclusion of citizens of other States who are also creditors. There is no doubt that it is the duty of the Courts of this State to protect the interests and rights of domestic creditors concerning assets of a foreign corporation in this State, but there is a vast difference between protecting domestic creditors and sequestrating to them exclusively assets which ought in justice and right be administered for the benefit of all creditors. If so construed as to exclude non-resident citizens, who are creditors, from participating in the assets in this State of a foreign corporation, a grave question as to the constitutionality of the act might be raised. Blake v. McClung, 19 Sup. Ct. Rep., 165, wherein the Supreme Court of the United States recently decided that while a State may, through judicial proceedings, take possession of the assets of an insolvent foreign corporation within its limits, and distribute them or their proceeds among creditors according to their respective rights, yet it cannot under art. 4, sec. 2, of the Constitution of the United States deny the right of citizens of other *556States to participate in such distribution on equal terms with its own citizens. Moreover, the act in question, was passed after the foreign corporation involved here had ceased to do business, and whose property had already been placed in the hands of a receiver; hence such act is not applicable to this case. It thus appears that plaintiff and the creditors of the said bank in this State have by fheir appearance in the jurisdiction of the Court of the domicile receiver, already secured the right to participate in the equal distribution of the assets of the foreign corporation, all that they have a right to do-. Thus no interest of domestic creditors intervene to prevent the exercise of that comity which should induce the Courts of this State to recognize the claim of the foreign receiver to collect for equal distribution the particular assets in question. Nor do we know of any established policy or statute in this State, which prevents the exercise of such comity.
The exceptions to the decree of the Circuit Court are overruled, and the judgment of that Court is affirmed.