263 F. 304 | 9th Cir. | 1920
Lead Opinion
(after stating the facts as above).
The appellant contends that there remained due only $4,510.67 of the appellee’s original claim after applying the $25,000 payment of August 6, 1912, and the net amount which was realized on the foreclosure sale, and that the remainder of the appellee’s claim, as allowed by the court below, represents interest, which the appellee was not entitled to receive out of the estate in the hands of the receiver. The court below applied the rule established in Merrill v. National Bank of Jacksonville, 173 U.S. 131, 19 S.Ct. 360, 43 L.Ed. 640, that the creditor can prove for and receive dividends upon the full amount of his claim, regardless of any sums received from his collateral after the transfer of the assets from the debtor in insolvency.
We are not convinced that the court below was in error in so ruling. A pledge which secures an interest-bearing debt secures the interest as much as the principal of the debt. In Richmond & I. Const. Co. v. Richmond, N. I. & B. R. Co., 68 F. 105, 116, 15 C.C.A. 289, 300 (34 L.R.A. 625), Judge Lurton said: “If interest is properly due, as between creditor and debtor, the interest is just as much a part of the principal claim as the principal thereof.”
In Chemical Nat. Bank v. Armstrong, 59 F. 372, 378, 8 C.C.A. 155, 161 (28 L.R.A. 231), Judge Taft, after reviewing the authorities, said: “The exact point which is common to all the foregoing authorities, and which they all sustain, is that a creditor who has proved his claim against an insolvent estate under administration can collect his dividends without any deduction from his claim as proven for collections made from collateral after his proof of claim is filed.”
Cases of similar import are Hitner v. Diamond State Steel Co. (C.C.) 176 F. 390; New York Security & Trust Co. v. Lombard Invest. Co. (C.C.) 73 F. 537; Savings Bank v. Robert H. Jenks Lumber Co. (C.C.) 194 F. 732.
The appellant’s principal contention is that the payment to the appellee was prohibited by a law of the state of Nevada, which gave priority to the claims of “depositors for deposit” and the claims of “holders of exchange” over all other claims, except taxes, and declared such claims to be a first lien on all of the assets of banking
In 2 Mor.Priv.Corp. § 967, it is said: “The charter contract alone is recognized. It is the charter alone which is recognized by the laws of comity, and not the general legislation of the state in which the corporation was formed. The general laws and regulations of a state are intended to govern only within the limits of the state enacting them, and a state would have no power to give them extraterritorial force.”
In Guilford v. Western Union Tel. Co., 59 Minn. 332, 61 N.W. 324, 50 Am.St.Rep. 407, the court held: “It is only the charter of the corporation, constituting the agree
In Warren v. First Nat. Bank of Columbus, 149 Ill. 9, 38 N.E. 122, 25 L.R.A. 746, it was held that the charter alone of a foreign corporation, and not the general legislation of the state in which it was created, will have effect to limit its powers outside of the state, and that a New York statute prohibiting assignment or transfers by insolvent corporations has no extraterritorial force and does not affect the validity of an assignment by an insolvent corporation executed in Ohio of a transfer of funds in Illinois. In Ohio Life Ins. Co. v. Merchants Ins. Co., 11 Humph. (Tenn.) 1, 53 Am.Dec. 742, it 'was held that the general law of a state prohibiting corporations from engaging in the banking business, unless expressly formed for that purpose, has no force beyond the limits of the state, but that it is otherwise if such a restriction is contained in the charter. In Borton v. Brines-Chase Co., 175 Pa. 209, 34 A. 597, it was held that — “A general assignment or confession of judgment may be made by a foreign insolvent corporation in Pennsylvania, though the laws of its own state prohibit insolvent corporations from doing so.”
Of similar import is Pairpoint Mfg. Co. v. Phila. Optical Co., 161 Pa. 17, 28 A. 1003.
In East Side Bank v. Columbus Tanning Co., 170 Pa. 1, 32 A. 539, it was held that the statute of New York forbidding preferences by insolvent corporations did not render void a preference judgment taken in Pennsylvania against an insolvent corporation organized under the laws of New York, but holding its entire property in Pennsylvania. In Franklin Trust Co. v. State of New Jersey, 181 F. 769, 104 C.C.A. 629, where a corporation organized under the laws of New Jersey, but whose business interests and all of its property were in another state, had become insolvent and was being wound up in that state, it was held that a franchise tax imposed upon it under the law of New Jersey, after the commencement of the insolvency proceedings, could not be enforced in the court of the foreign jurisdiction, and given priority of payment over the claims of bona fide local creditors. In United States Mortgage
In brief, the Washington-Alaska Bank, as its name indicates, was incorporated in Nevada for the purpose of engaging in business elsewhere than in that state. As to its corporate powers it was governed by its charter, but when it engaged in the banking business in Alaska it became subject to the local laws. Depositors and others who dealt with it as a bank were not required to'search the statute of Nevada to ascertain what their rights were. They were entitled to rely upon the laws of the territory where the bank was engaged in business. The act of March 24, 1909, was, as its title indicates, a general act to define and regulate the business of banking, and to create a state banking board and a bank examiner. In the body of the act are found numerous expressions of the purpose to regulate banking “in this state.” It contains no indication of the intention of the Legislature to inject any of' its provisions into the charters of banking corporations theretofore or thereafter to be incorporated. Two years later the Legislature passed a new act “to regulate banking and other matters relating thereto” (St.1911, p. 291), which expressly repeals all prior acts and parts of acts in conflict with its provisions. It gives no preference to claims of
The appellant contends that the judgment in the foreclosure proceeding is void, for the reason that no permission was obtained from the court below to bring the suit against its receiver, and Barton v. Barbour, 104 U.S. 126, 26 L.Ed. 672, is cited as holding that consent to sue a receiver is jurisdictional. This contention was not made in the court below, and it is not embraced in any of the assignments of error. It is based upon the proposition that the judgment of foreclosure is absolutely void for want of jurisdiction. In Barton v. Barbour a plea to the jurisdiction was interposed, and the question before the Supreme Court was the sufficiency of that plea. In the foreclosure suit in question here, not only’ was there no plea- to the jurisdiction, but the court beiow directed its receiver to appear and answer the suit, which he did without raising the defense that prior permission had not been given to bring the suit. In 3 Street’s Fed.Eq.Prac. 2676, it is said: “It is a general principle of equity practice that a suit cannot be brought against a receiver, in his capacity as such, to recover any property in his hands, or to recover on any debt, demand, or claim whatever against him, unless upon previous leave first duly obtained. This rule applies to suits brought either in that court or in any other court; and if an unauthorized suit be brought against the receiver, he may successfully plead the disability of the plaintiff.”
We think the instruction which the Alaska court gave to its receiver is in effect an order permitting the institution of the foreclosure suit, and the fact that the receiver in compliance therewith appeared in the suit and defended the same, and acquiesced in the course of the plaintiff in prosecuting the same, should be held to have cured the informality which attended, the commencement of the proceeding, and that the judgment in the foreclosure suit cannot be regarded as absolutely void. Elkhart Car-Works Co. v. Ellis, 113 Ind. 215, 15 N.E. 249; Mulcahey v. Strauss, 151 Ill. 70, 37 N.E. 702; Flentham v. Steward,
The decree is affirmed.
Dissenting Opinion
(dissenting).
It is contended on behalf of the appellants, among other things, that by reason of the laws of the state of Nevada, under which the insolvent bank was incorporated, the appellee was not entitled to any payment out of the funds in the hands of the receiver until all of the depositors of the bank, as well as all holders of exchange against it, were paid in full, which full payments, it is undisputed, have never been made; the record showing the unsecured creditors to have been paid but 50 per cent, of their allowed claims.
One of the provisions of the Constitution of Nevada in force at the time the insolvent bank was organized declared: “The Legislature shall pass no special act in any matter relating to corporate powers except for municipal purposes; but corporations may be formed under general laws, and all such laws may from time to time be altered or repealed.” Article 8, § 1.
The subsequent act of March 24, 1909 (St. 1909, p. 251), of its Legislature, provided, among other things, as follows:
“Sec. 3. The term ‘bank’ or ‘banking corporation,’ as used in this act, shall be construed to mean any incorporated banking institution which shall have been incorporated under the laws of this state, as they existed prior to the taking effect of this act, and to such banking institutions as shall hereafter become incorporated under the provisions of this act. The term ‘commercial bank’ shall be construed to mean any such banking institution as shall, in addition to the exercise of other powers, follow the practice of repaying deposits upon check, draft, or order, and of making commercial loans chiefly; the term ‘savings bank’ shall be construed to mean any such banking institutions as shall, in addition to the exercise of other powers, follow the practice of repaying deposits only upon the presentation of passbooks, and whose loans aré chiefly made on real estate security.”
“Sec. 59. The powers, privileges, duties and restrictions conferred and imposed upon any corporation or individual, existing and doing business under the laws of this state are hereby abridged, enlarged or modified as each particular case may require, to conform to the provisions of this act notwithstanding anything to the contrary in their respective articles of incorporation- or charters. The legality of investments heretofore made, or of transactions heretofore had, pursuant to any provisions of law in force when such investments were made or transactions had, shall not be affected by the provisions of this act, except as the same can be done gradually by the sale or redemption of the securities so invested in, in such manner as to prevent loss or embarrassment in the business of such corporation or individual, or unnecessary loss or injury to the borrowers of such security, subject always to the approval of the state banking board.”
“Sec. 61. Each section of this act, and every part of each section is hereby declared to be independent sections and parts of sections, and the holding of any section or part thereof to be void, or ineffective for any cause, shall not be. deemed to affect any other section or part thereof.”
The court below gave no effect to the foregoing provisions of the Nevada statutes, but in its opinion said, in effect, that but for the contract entered into July 13, 1912,
The court, however, holding the contract to be valid and binding upon the parties to it, summarized their rights thus, and gave judgment accordingly: “The claim on January 5, 1911, was for the sum of $129,465.62, on which there was a payment of $25,000 August 6, 1912. The proceeds of the sale of the Gold Bar stock January 30, 1914, amounted to $99,954.95. There was therefore due the Dexter Horton Bank on that date the sum of $27,225.47. The petitioner asks for interest on this sum at 8 per cent, per annum from January 30, 1914. In my opinion the Washington courts have determined that the original contract was a contract under the laws of the state of Washington. Interest will be allowed at 6 per cent, per annum.”
There is here express recognition of what, it seems to me, would otherwise be very plain, that the rules governing courts of equity in the distribution of insolvent estates are never so applied as to violate any statutory provision regulating the rights of the parties. The court below was bound to take judicial notice of the statutes of Nevada, under which the insolvent bank was organized and which constituted its charter. Bank v. Francklyn, 120 U.S. 751, 7 S.Ct. 757, 30 L.Ed. 825; Lamar v. Micou, 114 U.S. 223, 5 S.Ct. 857, 29 L.Ed. 94; Owings v. Hull, 9 Pet. 607, 9 L.Ed. 246; Jesson v. Noyes, 245 F. 46, 157 C.C.A.
Equally clear is it, I think, that all parties dealing with this national bank, including, of course, the appellee Dexter Horton National Bank, were charged with notice that its very charter expressly declared that claims of its depositors for deposits, and claims of holders of exchange against it, shall “have priority over all other claims, except federal, state, county and municipal taxes, and subject to such taxes shall at the time of closing of the bank be a first lien on all the assets of the banking corporation from which they are due and thus under receivership.” In Chemical National Bank v. Armstrong, 59 F. 372, 8 C.C.A. 155, 28 L.R.A. 231 (referred to with approval by the Supreme Court in the cases of Merrill v. National Bank of Jacksonville and Aldrich v. Chemical National Bank, supra), Judge Taft, speaking for the court, said: “The suspension of the bank, and its seizure by the Comptroller and his appointee, the receiver, work, by operation of law, a transfer of the title to the assets of the bank from the bank to the Comptroller and receiver, in trust to reduce the assets to money, and apply them, as directed by the National Banking Act— first, to the redemption of the circulating notes of the bank; and, second, in ratable distribution to the creditors of the bank. Scott v. Armstrong, 146 U.S. 499, 13 S.Ct. 148 [36 L.Ed. 1059]; White v. Knox, 111 U.S. 784, 4 S.Ct. 686 [28 L.Ed. 603]. * * * It is true that under the Bankruptcy Act it was provided that a secured creditor, if he would prove for h-is full claim, must surrender his collateral, or else be content to prove for the difference between his full claim and the value of his collateral. Rev.St. § 5075. The bankruptcy law is not now in force, however, and it was expressly held in the case of Cook County Nat. Bank v. U. S., 107 U.S. 445, 2 S.Ct. 561 [27 L.Ed. 537], that the priorities and method of distribution under the bankrupt law had no application to the winding up of insolvent national banks. It was said that the National Banking Act contained within itself a complete system for distributing the assets and determining the priorities, and that a priority secured to the United States under the bankrupt law would not be enforced in their favor under the banking act.”
A number of cases are cited where state courts have refused to give effect to charter provisions of foreign corporations doing business within their state, some upon the ground that they conflict with the rights of local creditors, or with the laws or public policy of the state within which it was sought to enforce such charter provisions, and some because of the construction that the true intent of the particular legislation in question was that it should not become a part of the charter of the corporation organized under its laws, but apply only to its business within the state. An apt illustration of the latter is the case of Mutual Life Ins. Co. of New York v. Cohen, 179 U.S. 262, 21 S.Ct. 106, 45 L.Ed. 181. That company was organized under the laws of New York, which'State enacted a statute providing that — “No life insurance company doing business in the state of New York shall have power to declare forfeited or lapsed any policy hereafter issued or renewed by reason of nonpayment of any annual premium or interest, or any portion thereof, except as hereinafter provided.”
The insurance policy there involved contained a stipulation that it should not be binding until the first premium had been paid and the policy delivered, both of which acts
It will be observed that there is not in the Nevada statute here involved, as there was in that of New York involved in the case just cited, a reference to the place where the incorporation shall be doing business, but the positive declaration that the term “bank” or “banking corporation,” used in the Nevada statute, shall be construed to mean any incorporated banking institution which shall have been incorporated under the laws of that state as they existed prior to the taking effect of the act of March 1909, and of such banking institutions as should thereafter become incorporated thereunder, with the further express declaration, contained in section 61, that — “Each section of this act, and every part of each section, is hereby declared to be independent sections and parts of sections.”
As is well said by counsel for the appellant, depositors are practically certain to be, holders of exchange are very likely to be, residents of the jurisdiction where a bank does business. Correspondent banks are in many instances, as in that at bar, concerns in foreign jurisdictions. “What principle of public policy requires that such resident depositors and holders of exchange shall not be paid out of insolvent estates before such foreign correspondent banks are paid therefrom?” asks counsel. I know of none, nor do I know of any principle of the common law which forbids it; and it is not claimed that there is any statute in force in Alaska to the contrary.
It does not seem to mé that the Nevada statute can be properly so construed as to limit its provisions to such business as is done by the banks or banking institutions, therein referred to, within the state of Nevada, but that the provision in question was an alteration of the laws under which the appellant bank was incorporated; that is to say, an alteration of its charter, which was expressly authorized by article 8, § 1, of the Constitution of Nevada.
In my opinion the judgment should be reversed, with directions to the court below to dismiss the petition, at the petitioner’s cost.