Benjamin v. Staples

Calhoon, J., delivered the opinion of the court. On July 25,1906, pending the operation of the Code of 1892, the Scranton State Bank was hopelessly insolvent, and sus [513] pended its business, and closed its doors, and was, until tbe beginning of the proceedings about to be mentioned, in the hands-of its directors and managers. It is charged that the fraudulent, conduct of these persons had put it in that condition. At 11:30 o’clock of the morning of the 27th of that month certain depositors and creditors of that bank filed their bill against the bank, averring its insolvency and charging the fraud and mismanagement which caused it, and praying for a receiver. This bill remained filed in the chancery clerk’s office for about two hours, when one of the attorneys for the complainants took it from the-clerk’s office and carried it to Gulfport, in order to present it-to the chancellor, and at about 3:55 in the afternoon of that day the chancellor appointed the appellee as receiver, who at or.ce made the required bond of $10,000, and at once on that day, the 27th, took possession and control of the property of the bank as receiver. Process on this bill was issued in the afternoon of the 27th, about 4:00 o’clock, and about the time Staples was being, appointed receiver by the chancellor. The prayer of the bill is for the appointment of a receiver, with authority to take immediate possession of the property and effects of the bank, and to collect all outstanding obligations to the bank, and to sell and convert into money the same, and that the amount due by the ’bank to its several creditors, be ascertained, and the net proceeds-distributed among the creditors of said bank. It will be noted that this prayer is for general distribution, and not for any special lien on behalf of the complainants in the bill, and it will be noted that, while there is a prayer for general relief, there-is no prayer specially for process to issue under the bill. The proper process was in fact issued about 4:00 o’clock on the afternoon of the 27th, as we have said, and delivered to the sheriff on that day; but this process was not executed upon the-president of the bank until the morning of the 28th, on which, day, at 7:30 o’clock in the morning, the directors of the bank made an assignment to the receiver for the benefit of all the-creditors. After the appointment of the receiver, and after this-, service of process upon the bank, and at 10:00 o’clock in the [514] morning of the 28th, the appellant) Mrs. Benjamin, as one of the depositors of the bank, caused an attachment to be executed on the property of the bank, at which time the receiver, Staples, was in the actual possession of the property. On this state of facts, Mrs. Benjamin claims a lien under her attachment against the property of the bank, and she appeals from a decree adverse to her in the court below. In her action at law she got her judgment in her attachment suit, but it was agreed by counsel on both sides that this judgment should be without prejudice to any claim of the receiver, and would not be attempted to be enforced by sale of the property until the chancery court should make a decree in the premises. Under this state of facts it is urged, by a very forceful and skillful argument on the part of the appellant, first, that the appointment of a receiver was void, because the creditors asking his appointment had not obtained a judgment nor acquired any specific lien op the property; second, because the bill was a mere ex parte pétition, because it contained no prayer for process, and the chancery court had no authority to appoint a receiver in an ex parte proceeding; third, because when the receiver was appointed there was no suit pending, as had to 'be in order to empower a chancery court to appoint a receiver, and because the bill had not been legally filed, and no summons had been issued or served at the time when the chancellor appoinetd the receiver. In order to sustain these positions, it would have to be held that all the proceedings against the bank were absolutely null and void. To this we cannot subscribe. The bill of the creditors and depositors sets forth a condition of things which justified the instant appointment of a receiver under Annotated Code of 1892, § 674, which authorizes immediate appointment of a receiver without notice, where it appears “that an immediate appointment is necessary, or good cause-be shown for not giving notice.” The failure to ask for process in that bill may or may not have been good ground of demurrer on the [515] part of the bank, which was the defendant The bill shows perv fectly plainly who the defendants really were, and, if there had been a demurrer, it .may be that the court would have .sustained it, whereupon an amendment might immediately have been made. But the present proceeding is not on behalf of the defendant to that bill, but on the application of a third party, collaterally. The cases holding that the failure to pray for process made the bill demurrable were based on Code 1871, § 1015, requiring it. This requirement does not appear in the Code of 1892. See section 527. But, if it did, our ruling would not be changed, where the attack is by third parties. Even though it is said in Whitney v. Bank, 71 Miss. 1009, 15 South. 33, 23 L. R. A. 531, that the appointment of a receiver for a bank on its own ex parte application is void and subject to collateral attack, still that case holds that where, under the void appointment, the court has taken control of the assets, an independent creditors’ bill, without any liens on the part of the creditors, for the preservation of the assets, a decree appointing a new receiver, even if erroneous, cannot be collaterally attacked. We think this ease covers the one before us. The emergency here required immediate action. It was taken, and the property was in the hands of the court, through its receiver, when the attachment was issued and levied. This case is wholly different from Bank v. Hoyt, 74 Miss. 221, 21 South. 12, 36 L. R. A. 796, 60 Am. St. Rep. 504, where the creditors’ lien attached in the interim, while the bill had not only been taken out of the office by the attorney, but the clerk had been instructed not to issue process on it. Without the statute, on the emergency, we think the court might appoint a receiver. The appointment was not void, and is not subject to this collateral attack. The suit was a pending suit when the attachment was issued. Bank v. Hoyt, 74 Miss. 229, 21 South. 12, 36 L. R. A. 796, 60 Am. St. Rep. 504. The appointment of a receiver may be made on the filing of the bill, or at any [516] time afterwards, during the pendency of the suit, and niusfr prevail, certainly, as against a third party whose attachment was Hied after the receiver was in charge under process issued on the bill.. Affirmed.