State v. Farmers State Bank

Letton, J. Although many matters not relevant to the real issues in the case, nor within, the record, were presented at the oral argument, and are contained in the briefs, the determining questions presented by the record are few. In the first place the contention of the appellee that a. statutory petition in intervention must be filed before trial must be conceded. But there are two kinds of intervention — that provided by section 7609, Rev. St. 1913, which, we have decided in common with the courts, of other states having like provisions, is a matter of right, and which requires no leave to be granted by the court. In such a case the intervener can only file as a matter of right before the trial, and the authorities cited by the appellee on this point are applicable. The other kind of intervention is that which pre-. vailed in this state before the enactment of the statute mentioned, and which, while not an ancient procedure in courts of equity (note at page 281, 123 Am. St. Rep.), has been adopted by many courts as essentially equitable in its nature, and which may be allowed by a court [198] of equity in its. discretion in a proper case. Van Zile, Equity Pleading and Practice, sec. 294 et seq. The petition for this relief may be filed at any time during the pendency of the action. It is not governed by the statute, but falls under the general principles of practice in courts of chancery. In a petition in intervention, under the statute, it is unnecessary to set forth any reasons why it is not filed sooner. The allegations in the petition excusing the delay virtually admitted that the petition came too late as a statutory intervention, and were for the purpose of showing why a court of equity should permit the petition to be .filed under its general equity powers. Even though the petition presented does not in literal terms request that leave to intervene be granted, it prays “that this petition of intervention be allowed.” It appears to us that the object of the pleading was to present matter for the consideration of a chancellor, that the petition should have been treated as being a request for leave to intervene, and that the omission by the pleader of a formal request ought not to defeat his right to have the petition considered. We know of no rule of procedure in a court of equity which denies an interested party, who has been compelled by circumstances beyond his control to be placed in a position in which it was impossible for him to assert his rights at an earlier time, the right to call the attention of the court to the circumstances, and the right to intervene, if the facts set forth in his petition warrant his being made a party, and the more especially if made at the same term and before the entering of judgment in the case. United States Trust Co. v. Chicago T. T. R. Co., 110 C. C. A. 270. Does the petition set forth a sufficient excuse for not being filed before the trial? Where public officers are engaged in litigation to protect public rights, and their pleadings maintain the public interest, no private [199] person is entitled to intervene. Buffalo County v. Kearney County, 83 Neb. 550. The bank had no right to appear as long as the state was denying the right of lams to recover. Court was not in session in Burt county, and no proceedings were had in that county at the time that the form of judgment was signed by Judge Troup in Douglas county. The statute allows a judgment to be entered by a judge of the district in an equity case in any county in his district upon notice and by agreement of parties. The - agreement was made, not in open. court where the intervener might have had information of it and an opportunity to object or protest, but in another county than the one where the ease was pending. It is alleged that, as soon as the intervener discovered the facts, it filed its petition. At that time the judgment was incomplete in that it could not be enforced or be used as a basis for appeal until duly made a matter of record in the district court for Burt county. If the allegations are admitted or sustained by proof, they afford sufficient excuse for the delay, and good ground for allowing the intervention. We conclude, therefore, that, if the petition upon its face sets forth an interest in the _ subject-matter adverse to lams and a prima facie defense to his claim, the intervener is entitled to be heard. The right of the Oakland State Bank to intervene at all in this matter is challenged on the ground that it has no interest in the controversy. It is true that its interest is not direct, but neither the statute nor the rules of equity procedure make a direct interest a condition to the right to intervene. Has the bank shown prima facie an interest in the subject-matter? It prays for itself and for all other banks contributing to the state depositors’ guaranty fund. This fund is created by assessments made upon all state banks in proportion to the amount of their average deposits. Any depletion of the funds must be made up by these banks. The [200] banks occupy to the fund a similar position that taxpayers bear to the public funds. While the interest of a taxpayer in such funds m.ay be small, he has’ the right to apply to a court of equity to enjoin any wrongful diversion of the public moneys. Under the statute, when the guaranty fund reaches 1% per cent, of the average daily deposits of the banks, assessments cease until it falls below 1 per cent, of such deposits, so that the depletion of the fund requires a new assessment, just as the diversion of public funds requires additional taxation to restore the money thus diverted. Section 332, Rev. St. 1913, provides, in substance, that, if the money in the hands of the receiver of an insolvent bank is insufficient to pay the claims of depositors, the court in which the receivership is pending, or the judge thereof, shall determine the amount necessary to supply the deficiency, and that the state banking board, when this amount is certified, shall draw the amount from the guaranty fund and transmit the same to the receiver. By section 333, Rev. St. 1913, the state banking board, for the use and benefit of the guaranty fund, is subrogated to the rights of the creditors paid from the fund to participate in the assets. After the payment of the depositors, 'the state banking board, for the use of the guaranty fund, became a general creditor of the insolvent bank to the extent of' the contribution from that fund. The claim of lams, the claim of the guaranty fund, and the claim of all other creditors not preferred by the statute are entitled to share pro rata in the net assets after paying the costs and expenses of the receivership. The effect of the judgment agreed upon and rendered in this case is to make the claim of lams a preferred claim, and give it precedence in payment over that of the guaranty fund and other creditors. This is in direct contravention of the statute. Where the direct provisions of the statute with reference to the disposition of a trust fund ar.e [201] ignored to the injury of a contributor to the fund, it occupies a like position to that of a stockholder in a corporation whose directors are diverting the property of the corporation to its damage. In such case he has a property right which a court of equity will protect if the proper officers of the corporation refuse or neglect to protect his interest. An analogous situation is presented here if the proof bears out the charges made, and the contributors to the fund are entitled to apply to a court of equity to protect their interests if they are not taken care of by the officers of the state. It is a general principle that,- where a person has an interest in a fund which is in control of a court of •equity, but which is in danger of being dissipated or diverted from its purpose, and he desires to secure its proper administration and distribution, he is entitled to intervene -for that purpose. To sum up, if this had been an ordinary petition in intervention under the statute, its filing would, as the district court held, have come too late, but since it set forth sufficient reasons for the delay in filing, and showed prima facie sufficient interest in the subject-matter, it was in substance and effect an application to the equity powers of the court for leave to intervene, and should have been so considered, and the motion to strike overruled. While there may be scandalous and redundant matter in the pleading subject to be stricken, if attacked, we think it was prejudicial error to strike it as a whole. For the foregoing reasons, the judgment of the district court is reversed, and the cause remanded, with directions to set aside the judgment in favor of lams, to allow the petition in intervention to be filed, and for such further proceedings as may he necessary. Reversed. Sedgwick and Cornish, JJ., not sitting.