Court Opinion

ID: 6670691
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:09:40.67702+00
Date Added: 2024-06-11T16:00:18.984368
License: Public Domain

Talbot, J.
(concurring):
I concur in the foregoing order for the issuance of the writ of prohibition.
Following the bare provisions of section 94 of the general corporation law (Stats. 1903, p. 155, c. 88), the court proceeded on the petition apparently signed by the holders of ten per cent of the capital stock of the bank, -without other parties, to appoint permanent receivers to take over all its property and wind up its affairs. That section in the statute contains no provision for making the corporation or directors or stockholders parties.
In view of section 89 of the same act, which provides that the board of directors or trustees, at a meeting of which all directors shall have had three days’ notice, may pass a resolution that they deem it most for the benefit of the corporation that it be dissolved, and that thereupon notice shall be mailed to all the stockholders and published for four weeks, after which two-thirds of the stockholders may have the corporation dissolved, and which section further provides that nine-tenths of the stockholders may dissolve a corporation without notice, it is not probable that the legislature intended by section 94 that a corporation could be dissolved upon the mere ex parte application of persons holding one-tenth of the stock, but rather that the proceedings could. be initiated by this small percentage of the stockholders, and that, after the other necessary parties have been joined and heard, the court could determine whether good reason existed for the appointment of receivers to close the affairs of the corporation. Notwithstanding that section 94 does not provide for making the *268company or the directors parties nor for notice to them, it is apparent that the ex parte order obtained on the mere application of one-tenth of the stockholders for taking over and closing the business of the corporation through receivers was void, because no one representing the other nine-tenths or the remainder of the stock was made a party or had an opportunity to be heard in court, under the constitutional guaranty that no one shall be deprived of property without due process of law.
The citation issued by the court commanding the corporation to appear and show cause forthwith why a receiver should not be appointed was served upon the secretary, who directed an attorney to represent the bank. Whether this notice was defective or not would be immaterial, if the bank made an appearance which would amount to a waiver of notice. It does not appear that the secretary was authorized by the board of directors, or had any authority by reason of the position he held, to empower an attorney to consent to an order so important as the one which was made. Attorneys are presumed to be employed by litigants for whom they appear and to have authority to represent them in all ordinary legal proceedings; but it has been held that they are not presumed to have the power to confess judgment, unless authority for this purpose is specially shown.
As the statute gave the directors preference in the appointment of receivers, and they were in control of the corporation, I think they, at least before they could be divested of their powers, were necessary parties to the proceedings, before the court could properly make an order appointing permanent receivers and requiring that the directors and officers of the company turn over all the property to the receivers, and directing them to wind up the affairs of the corporation. •
The court found that all the allegations of the petition were true, including the one that the directors were not guilty of negligence or active breach of duty, and under this finding and the statute it became necessary to appoint one or more of the directors as receivers. Nevertheless the court appointed other persons contrary to the terms of the statute.
The petition having been based on the allegation that the *269bank was solvent, but, owing to prevailing financial stringency, it was unable to procure the actual money with which to pay its obligations in full, and that by danger of waste through attachment and litigation the assets were liable to be sacrificed and loss occasioned, being different than the grounds specified in the banking act, which permits receivers to be appointed in suits brought by the attorney-general under the order of the state bank commission when the bank is in an insolvent or unsafe condition, I see no force in the contention that the latter act, being special, would supersede and prevent the appointment of receivers under the general one relating to corporations.
As to the other questions presented, I do not wish to be understood as expressing any opinion.
Sweeney, J., did not participate in the foregoing decision.