Court Opinion

ID: 8042045
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:41:22.753148+00
Date Added: 2024-06-11T16:37:21.462726
License: Public Domain

Norcross, J.,
dissenting:
I am unable to concur in the opinion and judgment of my associates in this case.
The prevailing opinion is based on the provisions of the act of the legislature of 1913. Upon the oral argument in this case, the attorney-general specifically disclaimed any authority under that act, and the act is not even referred to in the brief. While I think the attorney-general was clearly correct in his views that the state or the attorney-general derived no rights from the act of 1913, in so far as the orders under consideration are concerned, nevertheless respondent is entitled to be heard upon this question before it is made the basis of the court’s decision, especially when the prevailing opinion holds against the contention upon which the attorney-general rested the case upon appeal. The act of 1913 does not in any of its provisions, as held in .the prevailing opinion, authorize the attorney-general to intervene on behalf of the creditors. Whatever rights the attorney-general has under that act. is as the representative of the state.
The prevailing opinion also holds that the notice to creditors was insufficient and void and, hence, that the orders in question were merely ex parte orders. No question was or could be raised on the appeal as to the sufficiency of the notice to creditors and stockholders, but it was virtually admitted that the notice as to them *70was sufficient. Similar notices were admitted to be sufficient in the Esmeralda County cases recently decided. No person other than a creditor or a stockholder could question the sufficiency of the published notice as affecting their rights. In the absence of the sufficiency of these notices being so questioned, it is without the province of this court to consider the same. This is in accordance with an established rule that has no exception that I am aware of. The attorney-general could question the sufficiency of the published notices as giving legal notice to the' state, if the state had an interest in the matter as contended, but that is as far as the attorney-general could go or has sought to go. If these orders were void because of the character of the published notices, then there must have been a great many void orders entered in the various bank receiverships pending in different district courts during the past seven years.
The third ground of the notice of motion to set aside the orders fixing the compensation of. the receiver and his attorneys, quoted and referred to in the prevailing opinion, has no place in the case on appeal. The record does not show it was relied on in the court below, and it could not be relied on in this court upon the record as presented and was not relied on or even referred to in the briefs or oral argument.
The prevailing opinion says: " At the time the orders fixing the compensation were made there was no statute authorizing the attorney-general to oppose them nor providing that he should be served with notice of these motions.” This statement is an adverse ruling upon the sole contention of the attorney-general made upon the hearing on appeal and is the only proposition of law in the prevailing opinion with which I concur.
The learned chief justice avoids the effect of this ruling by holding, contrary to the views of all the counsel in the case, that the act of 1918 authorized the attorney-general to appear in the receivership proceedings "on behalf of the creditors.” The attorney-general did not appear on behalf of the creditors, but appeared on behalf *71of the plaintiff — the state on the relation of the bank commissioners — in the original action, and he then claimed and still claims no right to appear in the proceedings except by virtue of the banking act of 1907, under which the action against the State Bank was instituted and the judgment entered.
It is asserted in the prevailing opinion that, notwithstanding the state had no further interests in the proceedings after final judgment of insolvency was entered under the act of 1907, nevertheless the state, under the police power, can again interfere in the winding-up proceedings, and that the act of 1913 was an exercise of such police power. This reasoning, I think, is erroneous in at least two respects. The act of 1913 is a special act which does not purport, in any way, to prescribe any regulations for banks which are going concerns or in the hands of a receiver. It is not a police regulation. It does not purport to create any new rights, but merely authorizes him to take any proceedings "he may deem necessary * * * in the name of any proper party plaintiff or in the name of the State of Nevada.” It does not authorize the attorney-general to appear for any party, state or otherwise, having no beneficial interest in the matter, and, if it did, it would be void. While the legislature unquestionably, under its police power, may enact laws regulating banks which include compulsory liquidation of insolvent or unsafe banks, and can prescribe the methods of such liquidation, it cannot, after one method has been established and a final judgment entered in pursuance of that method and the state’s public interest determined by that judgment, enact other legislation enlarging the state’s rights to interfere where only private rights are involved and where no public interest is affected. Such an attempted exercise of power cannot be sustained on the theory of a police regulation.
The authorities referred to in the opinion of the chief justice only sustain regulations made prior to an adjudication of insolvency. As well could it be said that the legislature could pass an act compelling all the now existing *72state banks to contribute to the depositors of the State Bank and Trust Company. In State, ex rel. Howell, v. Wildes, 34 Nev. 94, 116 Pac. 595, we held that the legislature was without power to change the force and effect of a final judgment in the State Bank case by taking the liquidation of the bank out of the hands of a receiver appointed by virtue of the act of 1907 and putting it in the hands of the bank examiner under the provisions of the banking act of 1907.
I am unable to see the force of the reasoning to be found in the concurring opinion of my learned associate. The law of receiverships is well settled. A receiver is entitled to a reasonable compensation for his services to be fixed by the court. If a court should refuse to fix any compensation, there is a way open to compel it do so. The intercession of the state could add nothing to the power that exists in any interested party to take appropriate action. If the court ordered too great or too little compensation, ample remedy under the law now exists and always has existed to correct such errors, which do not rise to the dignity of requiring the exercise of the police power of a state to remedy.
As assumed by the attorney-general and associate counsel for appellant, this case is determined by the provisions of the act of 1907, under which the judgment appointing the receiver was entered, and, considered in the light of that statute, the question involved on the appeal is settled by numerous authorities.
This case was originally assigned to the writer of this dissenting opinion, and shortly after its submission I submitted to my associates a draft of an opinion which I then believed and still believe is the law of this case. With some immaterial modifications, what follows is the draft of that opinion, which expresses my views:
The motion to dismiss upon the ground that the state is neither an aggrieved nor adverse party raises a question decisive both of the motion and the merits, for if the appellant could not be considered an adverse party, or could not have been aggrieved by the orders allowing *73receiver's fees and the fees of the attorneys for the receiver, then appellant was not entitled to notice of the hearing of the application for such orders, had no appeal-able interest therein, and was without standing upon a motion to set the same aside. Rev. Laws, sec. 5327, provides: "Any party aggrieved may appeal in the cases prescribed in this title.”
In the recent case of Esmeralda County v. Wildes, 36 Nev. 526, 137 Pac. 400, dismissing an appeál taken by the receiver of the State Bank and Trust Company from an order affecting only the rights of creditors as between themselves, McCarran, J., speaking for the court, said: "It must be observed that our statute prescribes that parties aggrieved may appeal. The word 'aggrieved' refers to a substantial grievance. The imposition of some injustice, or illegal obligation or burden, by a court, upon a party, or the denial to him of some equitable or legal right, would constitute a grievance in the contemplation of this statute. * * * Any creditor or any set of creditors of the insolvent bank might have appeared in the lower court pursuant to the notice given at the time of the hearing of this matter and resisted the making of the order, and it was within their power to prosecute an appeal to this court from such order; they being properly the parties aggrieved.” See, also, 2 Cyc. 628, 631; 23 Cyc. 949; 15 Enc. Pl. & Prac. 249.
A vital question presented upon this appeal is: Has the state any beneficial interest in the orders sought to be set aside? If it has no such interest, it could not be an "aggrieved” party, and hence has no right of an appeal.
The banking act of 1907, under the provisions of section 10 thereof (Stats. 1907, p. 229), authorized the state, through its attorney-general, upon request of the state bank commissioners, to institute proceedings against a bank doing business under state laws, to obtain a decree ordering the bank into involuntary liquidation and appointing a receiver for such purpose of liquidation. If, upon the hearing, the court determined the bank *74to be insolvent or in a condition rendering it unsafe to continue business, such a final judgment could be entered. It was this character of a judgment which was entered against the State Bank and Trust Company. (State v. State Bank and Trust Co., 31 Nev. 463, 103 Pac. 407, 105 Pac. 567; State, ex rel. Howell, v. Wildes, 34 Nev. 94, 116 Pac. 595.) Such a proceeding is purely statutory, and the extent of the state’s rights and powers in the premises is limited by the statutory proceedings. The right of the state to interfére at all in the proceedings of a bank is dependent upon its police power. The interest which the state had in instituting the suit and forcing the bank into involuntary liquidation was a public one growing out of its powers to regulate the banking business. (Ex Parte Pittman, 31 Nev. 43, 99 Pac. 700, 22 L. R. A. n. s. 266, 20 Ann. Cas. 1319; State v. State Bank, 31 Nev. 456, 103 Pac. 407, 105 Pac. 567; State v. Wildes, 34 Nev. 94, 116 Pac. 595; Marymont v. Banking Board, 33 Nev. 333; Eureka Bank Cases, 35 Nev. 80.)
The right of the state to institute a suit against a banking company for the purpose of forcing it into involuntary liquidation is a part of the state’s plan of regulation. (State v. State Bank, supra.)
What was the subject-matter of the controversy in which the state was an interested party in the suit against the State Bank and Trust Company? Manifestly, whether the bank was insolvent or was in an unsafe condition and, for that reason, should be forced into involuntary liquidation. After it had obtained that judgment it had accomplished the only purpose which the statute authorized it to perform. The question of public interest in the bank was determined by the judgment. As to whom were entitled the assets of the bank, involved no public question. Process of liquidation then follows as a matter of course under established equitable rules governing receiverships. The creditors and stockholders were interested in the disposition of the assets in the hands of the receiver. Either singly or collectively, through depositors’ organizations or otherwise, they had *75a right to appear and object to any action of the receiver which they might deem injurious in their rights, and they had the right of appeal. The state was not their representative and could not bind them in matters growing out of the liquidation of the bank.
The cases holding that a party, in order to be entitled to have any affirmative relief in an action or to have the right of appeal, must have a beneficial interest are numerous and without conflict. The mere fact that a person is a necessary or proper party to an action does not signify that he is interested in every order that may be entered in the case or in every part of the judgment. A single judgment may determine the rights of several parties to a suit and each have no interest in portions of the judgment affecting the rights of others. (Douglas v. Thompson, 35 Nev. 196, 201.)
In the suit against the State Bank and Trust Company, the state was interested to the extent of having the bank decreed into involuntary liquidation and a receiver appointed to effectuate such liquidation. With the entry of the judgment, the state’s public interest was fully accomplished. With the disposition of the assets, no public question was involved, nor is there statutory authority for further interference.
This precise question has been before the courts in a number of cases and the decisions are all to the same effect.
Hawley, J. speaking for the Circuit Court of Appeals, Ninth Circuit, in the case of Murray v. American Surety Company, 70 Fed. 341, held that a proceeding under the California banking act was a statutory proceeding and that the powers of the attorney-general and the court were limited by the provisions of the statute. After quoting extensively from the opinion in the case of People’s Home Savings Bank v. Superior Court, 103 Cal. 27, the opinion contains the following excerpt:
"In State Inv. & Ins. Co. v. Superior Court of San Francisco, 101 Cal. 135, 149, 35 Pac. 549, the court, in discussing a similar question, said: 'The only parties to the *76present action are the people of the state and the delinquent corporation. When the object for which the action is authorized — the revocation by the state of the franchise which it conferred — has been accomplished, there would naturally be no further action for the court to perform. The state has no interest in either the assets of the corporation or its debts; and, when it has secured the dissolution of the corporation, its functions in the action have ceased. ’ ”
Harrison, J., speaking for the Supreme Court of California, in the State Investment and Insurance Company case, supra, further said: "The statute does not authorize either the attorney-general or the insurance commissioner to exercise any further direction or control in the affairs of the dissolved corporation, or in the distribution of its assets; nor has the state or any of its officers any interest in having the creditors receive from the assets of the corporation the amounts in which it may be indebted to them; and it is no concern of the state how or when the assets of the corporation shall be divided between the stockholders.”
The banking act of California, involved in the earlier cases herein referred to or quoted from, provided a different method of liquidating a bank after it had been adjudged by a court to be in an unsafe or insolvent condition, and enjoined from continuing to do a banking business, than that prescribed under the Nevada banking act of 1907. These differences in method, however, do not affect the controlling question determined in those cases and applicable to the case at bar.
In People’s Home Savings Bank v. Superior Court, 103 Cal. 32, Beatty, C. J., speaking for the court, said: "The attorney-general is authorized to proceed against the corporation alone, and for the sole purpose, in effect, of winding up its business. In other words, he represents the interest of the people in a matter of public concern. The state, which has granted to its creature the privilege of doing a banking business, by his intervention revokes that privilege for violation of the conditions, express and *77implied, upon which it was granted. It does not pretend to constitute itself the guardian of merely private rights of individual stockholders or creditors of the corporation, and has not empowered the attorney-general in its name to maintain an action in their behalf against the directors of the corporation for violation of their trust, as has been attempted in this case. His function as agent of the state is, as above stated, simply and solely to revoke the privilege granted by the state, of doing a banking business, and, before the court can issue its injunction for that purpose, the corporation is entitled to a hearing and an opportunity to contest the allegations against it. * * * We see no reason, therefore, to enlarge, by construction, the provisions of a statute which was never designed to put the protection of private interests under the exclusive care of the state, and we are compelled to hold that the ex parte orders of the superior court above set out were unauthorized and void, and that further proceedings thereunder should be prohibited.”
In Murray v. American Surety Co. (C. C.) 59 Fed. 348 (same case as 70 Fed. 341, 17 C. C. A. 138, supra), Ross, J., said: "The remedy pursued by the attorney-general in the name of the people of the state in the case of the savings bank in question being statutory only, the court that took jurisdiction for its enforcement was limited in its powers by the statute under which it acted. (East Tennessee, V. & G. R. Co. v. Southern Tel. Co., 112 U. S. 306, 5 Sup. Ct. 168, 28 L. Ed. 746; Windsor v. McVeigh, 93 U. S. 274, 23 L. Ed. 914). It will be seen that the suit the attorney-general is by the statute authorized to commence is one 'to enjoin and prohibit the transaction of any further business by such corporation.’ * * * That 'is the extent of the judgment authorized by the statute to be entered in the suit authorized by the attorney-general; that is to say, the enjoining of any further transaction of business by the insolvent corporation, and an order that the commissioners take such proceedings against such corporation as may be decided upon by its creditors.”
*78In the case of People v. Buffalo S. & T. Co., 181 N. Y. 144, 29 N. E. 948, 15 L. R. A. 240, the court said: "But an action to annul a corporation under article 4 is purely a public action and proceeds upon public grounds. * * * The simple question to be determined in such an action is whether the existence of the corporation shall be permitted to continue, and it in no way concerns the rights and interests of the persons interested in the corporation as between each other.”
In the case of De Forrest v. Coffey, 154 Cal. 444, 449, 98 Pac. 27, 29, a case involving the receivership of the California Safe Deposit and Trust Company, under a later banking act than that involved in the California cases cited, supra, an act similar to our banking act of 1907, the court, by Lorigan, J., said: "There is nothing in the procedure with reference to special proceedings involving the liquidation of insolvent banking corporations, which limits or constrains the exercise of the ample legal and equitable powers of the superior court. * * * While the court in the special proceeding for liquidation takes charge of the assets of an insolvent bank and holds them through its officer, the receiver, it only does so to conserve the interests of those who are properly entitled to share in them. It assumes the administration of the entire estate; controls the conduct of the receiver, who is its officer, and whose possession of the assets is the possession of the court; it holds the property and administers the insolvent estate through the receiver in the interest and for the benefit of those who it may ultimately determine are entitled to it.”
See, also, State, ex rel. Goddard, Attorney-General, v. State Bank of Circleville, 84 Kan. 366, 114 Pac. 381.
Counsel for appellant relies upon the mere fact that the state was a party to the original proceeding to force the bank into liquidation, as ground for claiming that it was entitled to written notice of the proceedings in question, but the foregoing authorities are a complete answer to this contention.- No authorities supporting a contrary *79rule are cited, nor have we been able to find such. It follows that the state, having no interest in the subject-matter of the orders, was not entitled to notice of the hearing of the applications upon which the orders were based, and has no appealable interest therein.
It is the contention of counsel for respondent that the published notice given of the applications for the orders in question were sufficient notice to the state, even conceding it entitled to notice. According to the brief of respondent, the creditors of the bank number over 4,000. It is manifest that personal notice could not be served upon such a vast body of creditors. It is not contended that the notice to creditors was insufficient, nor is that question involved upon this appeal. The question of whether the state would be • entitled to any different character of notice, if entitled to any, is unnecessary to consider.
The State Bank and Trust Company and a number of other insolvent banks have been in course of liquidation in the courts of this state for a number of years, and, if it had been the practice to serve written notice upon the attorney-general of application for orders fixing receiver’s compensation and the fees of attorneys for receivers, doubtless that fact would have been called to our attention. We understand it has not been the practice to make such service. This is of no importance except in that it shows the construction which the courts and attorneys have heretofore placed upon the law, a construction we think clearly correct.
No question was raised in the lower court or is involved upon this appeal relative to the amount of compensation of the receiver or the fees allowed his attorneys in the orders sought to be set aside upon the jurisdictional grounds heretofore stated. The case presents no question of merits but one of jurisdiction exclusively.
When these orders were under consideration, in pursuance of the published notice, an opportunity was open to any creditor, or stockholder, to contest the same *80and to appeal from the orders if dissatisfied. (Esmeralda County v. Wildes, supra.)
We fully appreciate the importance of having the liquidation of insolvent banks proceed with the least possible delay consistent with a due regard to the condition of the banks’ assets, and that excessive allowances for the expenses of administration should not be sanctioned. In the case of State v. Wildes, 34 Nev. 125, we made some pertinent observations upon this subject. What is a just allowance for the expenses of administration may involve a consideration of many questions. The law affords a means for the determination of these questions, where all parties interested may be heard. If any creditor or stockholder of the corporation deems himself aggrieved by the allowances made to the receiver, he has the same right of appeal that any interested party has in any litigation where private rights are involved. The decisions are legion where similar questions have been determined upon appeal by courts of last resort. Whatever may be the rights of the creditors and stockholders in matters affecting the liquidation of the affairs of the bank, it is clear, beyond question, that the state is without interest therein.
No compensation appears to have been allowed the receiver since August 1, 1912. The question is now before the court where any interested party may again have an opportunity to be heard.
For the reasons given, I think the appeals should be dismissed.