Chetwood v. California National Bank

California Supreme Court Aug 7, 1896 No. S. F. No. 266Published

Before: Henshaw

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Holding. The court held that a bank agent appointed under federal law to wind up an insolvent bank's affairs is entitled to receive funds recovered by a stockholder in litigation on behalf of the bank, provided the litigation has concluded.

Issues

Whether the regularity of a bank agent's appointment can be challenged via collateral attack in this action.
Whether a stockholder who recovers funds in litigation on behalf of an insolvent bank must turn those funds over to the bank's agent for distribution.

Disposition. reversed

Quotations verified verbatim against the opinion

“the question of the regularity of his appointment is not one to be raised upon collateral attack in this action.”

“An end to that litigation having been thus reached, the agent was entitled to have the proceeds of it, after reasonable deductions, paid over to him.”

Synopsis

Insolvent National Bank—Agent Appointed Under Act oe Congress —Receiver—Official Position.—An agent of an insolvent national bank, appointed by the stockholders, and commissioned by the'eomptroller under the act of Congress to succeed the receiver in the performance of his duties, stands in place of the receiver, and is, in fact, a receiver under a varied form of appointment and under a different name, and is at least a quasi public officer of the United States.

Id.—Regularity of Appointment of Agent de Facto—Collateral Attack.—Where one who is defacto the agent of an insolvent bank presents his commission from the comptroller reciting his appointment, and the regularity of the proceedings attending it, the question of the regularity of his appointment cannot be collaterally assailed.

Id.—Action by Shareholder—Power of Control—Right of Agent to Receive Final Recovery.—A shareholder of an insolvent national hank who sues the directors in behalf of the corporation to recover damages for moneys alleged to have been lost to the bank by reason of their mismanagement of its affairs, is entitled to conduct, manage, and control the litigation until a final determination thereof; but the appointed agent of the bank is charged with the explicit duty of receiving the assets and distributing them ratably, and is entitled, when the litigation has come to an end, with moneys in the hands of the plaintiff stockholder, under a judgment rendered in his favor in behalf of the corporation, to invoke the aid of the court to order the payment of those moneys to him for the purposes of his trust.

Id.—End of Litigation—Joint Action of Tort against Three Directors—Satisfaction and Retraxit as to Two—Release of Third. In a joint acti'on of tórt by a shareholder against three directors, the litigation is ended when moneys are collected from two of them in full satisfaction of a judgment against them, and a retraxit and dismissal of the action is made as to them, operating in law as a release of the third director.

Henshaw, J. This is an appeal from an order made in the above-entitled case after the entry of final judgment therein.

The following facts are necessary to an understanding of the contention: The California National Bank of San Francisco was insolvent, and its affairs were in the hands of a receiver, appointed by the comptroller of the currency at the time when Chetwood, as a stockholder of the bank, instituted this action on its behalf against certain directors, to recover damages for moneys alleged to have been lost to the bank by reason of their mismanagement of its affairs. The receiver continued in charge of the affairs of the bank, and was made a party defendant in the action. Thereafter, at a stockholders’ meeting, it was determined that the receiver should not be continued in office to wind up the affairs of the association, and that an agent should be elected for that purpose, and the appellant Stateler was elected such agent. The authority for these proceedings is found in the act of Congress, which provides as follows (27 c U. S. Stats, at Large,, c. 360, sec. 3, p. 345): Whenever any association shall have been placed in the hands of a receiver, and when the comptroller of the currency shall have paid to each and every creditor of such association, not including shareholders who are creditors of such association, whose claim or claims as such creditor shall have been proved and allowed as therein prescribed, the full amount of such claim and all expenses of the receivership, and the redemption of the circulating notes of such association shall have been provided for by depositing lawful moneys of the United States with the treasurer of the United States, the comptroller of the currency shall call a meeting of the shareholders of such association by giving notice thereof, etc. At such meeting the shareholders shall [652]determine whether the receiver shall be continued and shall wind up the affairs of such association, or whether an agent shall be elected for that purpose. After the election of the agent, and after the execution by the shareholders of a bond to the satisfaction of the-comptroller of the currency, and filed with him, conditioned for the payment and discharge in full of each and every claim that may thereafter be proved and allowed, and for the faithful performance of all the duties of the agent’s trust, the comptroller and the receiver shall thereupon transfer and deliver to such agent all the undivided, or uncollected, or other assets of such association then remaining in the hands or subject to the order or control of said comptroller and the said receiver, or either of them, and for this purpose the said comptroller and said receiver are hereby severally empowered and directed to execute any deed, assignment, transfer, or other instrument in writing that may be necessary and proper, and upon the execution and delivery of such instrument to the said agent, the said comptroller and the said receiver shall by virtue of this act be discharged from any and all liabilities to such association. Upon receiving such deed, assignment, transfer, or other instrument, the person elected such agent shall hold, control, and dispose of the assets and property of such association which he may receive under the terms thereof for the benefit of the shareholders of such association, and he may, in his own name, or in the name of such association, sue and be sued, and do all other lawful acts and things necessary to finally settle and distribute the assets and property in his hands, and may sell, compromise, or compound the debts due to such association, with the consent and approval of the circuit or district court of the United States, for the district where the business of such association was carried on, and shall, at the conclusion of his trust, render to such district or circuit court a full account of all his proceedings, receipts, and expenditures as such agent, which court shall, upon due notice, settle and adjust such accounts

Chetwood v. California National Bank

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