59 P. 393 | Cal. | 1899
Merced Bank, a corporation, passed resolutions resolving to go into liquidation. At that time the Bank of British Columbia was its creditor, holding collateral in the form of promissory notes as security for the debt. One Ivett was also a creditor of the Merced Bank to the extent of about twenty thousand dollars. The Bank of British Columbia was threatening to realize upon its collaterals, whereupon the Merced Bank entered into a contract with Ivett by which he was to pay off the claim of this bank, take up these collaterals, and hold them as security for the money advanced, and also as security for his claim of twenty thousand dollars. This contract was carried out. At this time it may be conceded the Merced Bank was insolvent. Some eight months after this transaction the Merced Bank was thrown into liquidation under the banking act of this state by a decree of court, and thereafter it brought this action against this defendant as successor in interest of Ivett, in claim and delivery, to recover the possession of these collaterals, having first paid her the amount theretofore advanced to the Bank of British Columbia. To sustain its claim plaintiff relied upon the proposition that it was insolvent at the time the contract was entered into with Ivett, and therefore had no right to prefer him as a creditor. There are various questions discussed by counsel incidental to the main one, but we pass them by without consideration.
We attach no importance to the fact that this bank had resolved to go into liquidation. This was a purely voluntary act upon its part, and in no way changed the relative status of itself and its creditors. The board of directors that resolved the bank into liquidation at the next regular meeting had the same power to resolve it out of liquidation. Indeed, it is not an unusual practice for solvent banks to resolve themselves into liquidation. This court held in the very recent case of Lanz v.Fresno etc. Sav. Bank,
It has been held in this state in Bonney v. Tilley,
There is a broad conflict of authority upon the question as to whether or not insolvent corporations may prefer one creditor above another. And this conflict of authority largely presents itself between the text-writers upon the one side and judicial decisions upon the other. As opposed to the doctrine of preference we find Taylor on Private Corporations, sections 668-759, Morawetz on Corporations, section 803, Wait on Insolvent Corporations, section 162, and Thompson on Corporations, section 6492 et seq. As opposed to the views of these text-writers we find the following statement made in that excellent work, the American and English Encyclopedia of Law, volume 7, page 742: "In most jurisdictions, however, this doctrine is repudiated, and it is held that in the absence of charter or statutory restrictions, and in the absence of actual fraud, every corporation, though insolvent, and though it has ceased or determined to cease doing business, may prefer certain creditors over others whenever a natural person can do so." Then follows a citation of cases supporting the text of the author, taken from twenty-six different states. This long list of authorities may be supplemented by the very recent case of Grand De Tour Plow Co. v.Rude Brothers Mfg. Co.,
It would seem that in this state we are not directly concerned as to the general principles of law governing cases of the class here presented. Beyond question the whole matter is one under legislative control, and the legislature of this state, recognizing that fact, has dealt with it accordingly. Section
For the foregoing reasons the order denying a new trial is reversed and the cause remanded.
Harrison, J., and Van Dyke, J., concurred.