Court Opinion

ID: 6973430
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:06:44.025523+00
Date Added: 2024-06-11T16:08:52.799540
License: Public Domain

Mr. Justice Scott delivered the opinion of the court: The Auditor of Public Accounts contends that he was empowered to file the bill herein by section 11 of chapter 16a, Hurd’s Revised Statutes of 1905, which, so far as material, is as follows: “Should the capital stock of any bank organized under this act become impaired the Auditor shall give notice to the president to have the impairment made good by assessment of the stockholders or a reduction of the capital stock of such bank, if the reduction should not bring the capital below the provision of this section; and if the capital stock of said bank shall remain impaired for thirty days after notice by the Auditor, he shall have power, and it is hereby made his duty to enter suit against each stockholder in the name of the People of the State of Illinois, for the use of said bank; for his or her pro rata proportion of such impairment, and when collected shall pay over the amount thereof to said bank, and the judgment in such case shall be for the amount claimed, with all costs and reasonable attorney’s fees, which fees shall be fixed by the court, or he may, in his discretion, file a bill in the circuit court of the county in which said bank is located, in the name of the People of the State of Illinois, against said bank and its stockholders, for the appointment of a receiver for the winding up of the affairs of said bank. And said court, upon the presentation of said bill, and upon being made satisfied that the capital of said bank has become impaired, shall immediately appoint a competent and disinterested person as such receiver, and shall determine and fix his bonds, and shall prescribe his duties. And said cause shall proceed as other cases in equity.” • The arguments of counsel have taken a wide range. We find it necessary to discuss but one of the questions presented. The bill does not aver that the Auditor gave notice to the president of the bank to have the impairment of the capital stock made good by the assessment of the stockholders or otherwise, and it is the view of the Attorney General that this notice is not necessary when the Auditor elects to proceed in equity and not at law. In other words, that the giving of the notice is not a condition precedent to filing a bill by the Auditor “for the appointment of a receiver for the winding up of the affairs of said bank.” If this construction be correct the Auditor would have the right to file the bill and it would become the duty of the court to appoint a receiver, however trifling the impairment of the capital might be, without the stockholders having had an opportunity to make good the impairment. The discretion lodged in the Anditor as to the method by which he shall proceed is an arbitrary one, and when the time for its exercise arrives, the manner of its exercise does not depend upon the existence or non-existence of facts which lead him to believe that the financial condition of the bank and its stockholders is such that the impairment of the capital stock cannot be made good, or that the bank is insolvent, or that the bank is about to become insolvent, or that the bank is of .doubtful solvency. We think the plain intent of the statute is, that if the Auditor finds the capital stock impaired he shall give a thirty day notice to the president, or if, as here, it is not feasible to do that, then to the officer or officers upon whom devolves tjae performance of the duties of the president, and in the event that the impairment of the capital stock is not made good during that period, then the Auditor may elect to proceed at law or in equity, as he sees fit. We think it was not the purpose of the legislature to malee it optional with him to give the thirty day notice and proceed at law after the expiration of that period, or to proceed in equity without giving any notice. It is urged that this construction leaves the Auditor without power to secure the appointment of a receiver for a period of thirty days in cases (such as the present) where it was practically certain that the stockholders would not make good the impairment of the capital stock, and that this would expose the creditors and stockholders to the danger of greater loss than was made necessary by conditions existing when the Auditor first ascertained that the capital stock had been impaired. This argument, while persuasive, is, we think, one that should be addressed to the legislature rather than to the courts. The present General Assembly has passed an act amending section n, supra. (Session Laws of 1907, p. 52.) This amendment, if ratified by a vote of the people, will eliminate the question we have been discussing, in litigation arising after it takes effect. The amendment does not give to the Auditor the power to obtain the appointment of a receiver merely upon discovering an impairment of the capital stock, but provides that if it appears to the Auditor that the conditions are such that the impairment cannot be made good, or that the business of the bank is being conducted in an illegal, fraudulent or unsafe manner, he may at once file a bill for a dissolution of the corporation and the appointment of a receiver. This amendment, which is remedial in character, is, we think, in itself an indication that the legislature did not regard the present law as conferring the right which is claimed for the Auditor. It is perhaps true that the interests of stockholders and creditors would be better conserved if we could give to the statute now in force the construction for which the Attorney General contends, but that we .cannot do without disregarding the plain provisions of the act. We are of the opinion that the demurrers were properly sustained, for the reason that it did not appear from the bill that the notice required by section n, supra, had been given. Accordingly, the decree of the circuit court will be affiimed. Decree affirmed.