Rumble v. Tyus

Cobb, J. The assets of the Barnesville Savings Bank were placed in the hands of a receiver under an equitable petition filed by some of its creditors. A copy of the petition is not in the record, but it is to be inferred that it was an equitable petition in the nature of a creditor’s bill, filed in behalf of all the creditors of the bank, and especially in behalf of depositors. While this case was pending and the receiver was proceeding to gather in the assets and wind up the affairs of the bank, it filed an application to the court, asking that its assets be returned to it, so that they might be used and appropriated in furtherance of a scheme to rehabilitate the- bank, which is set forth in the motion. It was distinctly averred in the motion that there were depositors, whose claims aggregated $6,000, who had not consented to the scheme proposed; and it was also stated in emphatic terms that at the time the motion was filed the bank was solvent. Upon this representation the court permitted the bank to take possession of its assets and use them for the purpose stated in the motion. It is inconceivable that the judge would have for a moment entertained the application except. for the unequivocal statement that the bank was solvent; which could convey no other idea to the mind of any one to whom the representation was made than that the bank was able to meet all demands of every creditor, and was in a position where the rights of creditors would not at all be imperiled by the court releasing the assets from its custody. It is hardly necessary to state that under no circumstances would a judge of the superior court have granted such an application to embark the assets of an insolvent bank into the uncertain scheme set forth in the application, except for the positive statement that the bank was in a position where the rights of its creditors would not be imperiled if its assets were placed in its hands. It does not appear that the plaintiffs in the intervention were parties to the original receivership proceeding. [299] Even in a creditor’s bill filed in behalf of all the creditors of an insolvent the suit is between the actual parties thereto, and the actual plaintiffs have control of the case and may dismiss it at any time, or the defendant may make satisfaction to them and compel a dismissal. McDougald v. Dougherty, 11 Ga. 570 (7, 8); Stinson v. Williams, 35 Ga. 172. Any one interested in such a suit, not a party thereto, must come in and be made a party, before it is necessary that he should be consulted as to a dismissal of the case; but when in such a case the extraordinary powers of the court have been invoked, the assets of the insolvent seized by the court, and as a result an equitable lien attaches to the property in the custody of the court in favor of every creditor who sees fit to come in before decree, or even under some circumstances after decree, and claim his portion of such fund, while the plaintiffs have power to retire as litigants and therefore dismiss the casó so far as their rights are concerned, the question as to what shall be done with the assets in the hands of the receiver is one addressed to the sound discretion of the judge, who may, on his own motion, give the matter such direction as the principles of equity require, either by imposing conditions in behalf of those interested in the fund although not parties, or by holding possession of the fund for a reasonable time to allow others to come in and assert their rights. The judge evidently thought that the rights of all persons interested in the assets were fully protected, or, as said above, the order would never have been granted. The scheme of the bank was a failure. It now appears that the bank was not solvent, that it not only was not in a position where it could pay all the depositors, but was not even in a position where it could pay those depositors who consented to the use of the assets for the purpose of carrying out the scheme of rehabilitation. The failure of the scheme was followed by an assignment, and the assignment was followed by' a second petition in the nature of a creditor’s bill. What is left of the assets of the bank is again in the custody of a court of equity; and those depositors who did not consent to the scheme, which was allowed a trial simply because of the misinformation which the court had as to the condition of the bank, now come into court and ask that their rights be protected as against the bank [300] and those depositors who saw fit to enter into what now appears to have been a visionary scheme to place the .bank upon a firm footing. Those who have' appealed to the court of equity in the present proceeding are depositors who entered with the bank into the scheme proposed in the motion which resulted in the assets of the bank being restored to it. It would seem there could be no question that in equity those depositors who had refused to consent to the scheme were entitled at least to, be placed iu the position where they were before the assets of the bank were turned over to it. Certainly they have this equity against those for whose benefit the assets of the bank have been used, and this equity must be accorded by those persons before they will be entitled to any of the equitable remedies which, they invoke. But it may be said that it is impossible now to determine what amount would have been received by the non-assenting depositors under a final decree in the original case. This is undoubtedly true. But whose fault is it that the court can not now restore the status as it existed at the time the assets were released to the bank ? It is certainly not the fault of the intervenors; for they have taken no part in the management of the bank’s affairs, nor have they directly or indirectly caused any of them to be handled for their benefit. These assets, which are admitted to have been of large amount, have become commingled with other assets, and some have been entirely lost, though it is admitted that there is in the hands of the present receivers a sufficient amount of the original assets of the bank to more than discharge the claims of the intervenors. How much these intervenors would have received under a decree in the original case will never be known, but the reason that it can not be known is due entirely to the bank and those who consented for it to enter into the scheme above referred to. Loss must fall on some one. Shall it fall upon those who are not in any way responsible for the misleading statement which caused the judge to release the. hold of the court upon the ‘assets of the bank ? Or shall it fall upon those who made the misleading statement and those who have consented that the bank should use the assets thus obtained for their benefit ? It seems to us there can be bub one answer to this question. The loss should fall upon those who sought [301] to benefit themselves by a proceeding which would never have been allowed but for the misleading statements; and this would be true even though they were nob directly responsible for the statement and even though they might have believed that it was true, it being now demonstrated that it was not true, and the officers of the bank, through whose conduct they hoped to be benefited, could certainly have ascertained the exact truth before the statement was made to the court. The case is indeed peculiar and exceptional, but it seems to be one where those who have been guilty of wrong-doing should not be permitted to be heard in regard to equities which they might have against others in reference to the assets now in the hands of the receiver, until they have allowed whatever equity and good conscience would require should be accorded to those creditors interested in the fund of the insolvent bank who were nob parties to the misleading statement upon which the court acted, nor responsible for the condition of affairs which has brought about a tolling of the fund resulting from an assignment and a second receivership. If the court had been allowed to administer the fund under the first receivership, all creditors would have been paid pari passu and each would have been compelled’ to receive his pro rata without a murmur; and if it could be ascertained what would have been that pro rata, it may be that all would still be required to receive it. But certainly the creditors who took no part in the application to have the funds released by the court or in the subsequent transactions should nob be charged with any expenses or losses incident to the management of the bank under the scheme, or the assignment, or the second receivership; and as the inability of .the court now to find out what was the true interest of these non-assenting creditors in reference to the fund is due to the fault of those who are now clamoring for equitable relief, they will be allowed whatever equitable relief they may be entitled to as against those who have wronged them, provided they are willing to do full equity under the circumstances to those whom they have wronged. Under all of the circumstances of the case the only proper judgment that could have been rendered was that which required these non-assenting creditors who are now complaining to be paid in full their demands, allowing the court to distribute the balance of the fund for the benefit of those who [302] were tbe victims of the unfortunate scheme which was made possible by a misrepresentation of a material fact at the time their representatives took charge of the assets of the bank. The additional record which the judge caused to be transmitted to this court was necessary in order to put the court in full possession of the case in all of its details; and therefore the motion to tax the costs of this additional record against the defendant in error will not be granted. Judgment affirmed. All the Justices concur, except Simmons, G. J., absent.