The Merchants and Planters National Bank et al. vs. The Trustees of Masonic Hall

Supreme Court of Georgia1879-09

63 Ga. 549

Summary · law.co

Holding. The judgment of the lower court granting an injunction and appointing a receiver was affirmed, as the circumstances—including the bank's insolvency as to levyable assets, the president's refusal to cooperate with execution, and the rapid dissipation of remaining assets—justified equitable intervention to preserve the fund for satisfaction of the judgment.

A bank in liquidation had been subject to execution on a judgment held by Masonic Hall, but the sheriff's return showed no property available to levy upon. The judgment creditor then sought equitable relief by filing a bill requesting an injunction to halt the bank's distribution of remaining assets to creditors and stockholders, and requesting appointment of a receiver to preserve those assets for satisfaction of the judgment. The bank's president had refused to identify any property subject to execution and had publicly stated his opposition to paying the judgment, while the bank's assets were being rapidly depleted through distributions to stockholders.

The court upheld the lower court's grant of the injunction and appointment of a receiver. The court reasoned that because the bank was insolvent in terms of property available under ordinary execution procedures, and because the remaining assets were in danger of disappearing through continued distributions, equity required the appointment of a receiver as the only realistic means for the judgment creditor to recover. The court rejected the argument that a state court must defer to a federal court's jurisdiction over the same subject matter, holding that when a federal court has taken no action despite a stockholders' bill pending for an extended period, a state equity court need not await that federal court's intervention to protect the judgment creditor's interests.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether a state equity court may appoint a receiver over a liquidating bank's assets when ordinary execution proves unavailing
Whether deference to federal court jurisdiction requires a state court to refrain from protecting a judgment creditor when the federal proceeding has taken no protective action
Whether the appointment of a receiver is warranted when a bank is insolvent as to levyable assets but retains funds being distributed to stockholders

Procedural posture

The case reached the state court on error assigned to an interlocutory order and judgment of the lower court granting an injunction and appointing a receiver in a bill filed by the judgment creditor against the liquidating bank.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Jackson, Justice.

The return of nulla bona was made by the sheriff upon the execution issued in favor of the Masonic Hall against the Merchants’ and Planters’ National Bank, and thereupon the plaintiffs in execution filed a bill invoking the grant of injunction to restrain the further distribution of the assets of this bank among the creditors and stockholders, and the ■appointment of a receiver to take possession of the assets ■and keep them in safety to answer a decree to subject them to the payment of the judgment. The chancellor granted the injunction and appointed the receiver, and error is assigned upon his judgment and interlocutory order therein.

We are unable to discover the error. The bank is no longer an agent of the United States. It has gone into liquidation. It has no ostensible property on which a levy can be made; its president declines and refuses to point out any property whereon the common law fi.fa. can be levied; he openly proclaims that the judgment shall not be paid while it can be, resisted; the stockholders have been paid large sums of money so that ■ the assets are reduced from $225,000.00 to $40,000.00, and how soon the remaining .assets may in like manner be scattered amongst the stockholders, many of them non-resident, no man can foresee. The only fund, therefore, out of which this judgment debt •can ever be paid is in danger, and in such case a receiver will be appointed unless other good reasons be exhibited ■against it. Eor the bank is insolvent so far as available legal assets within the reach of levy and sale under the ■common law fi.fa. is concerned, and the only hope of the creditor is in the assets not capable of being levied on and rapidly disappearing..

Code, §§3098, 3149, 274, 1946; Thompson’s National Bank Cases, 406, 321, 912, 203, 792, 77, 559, 774, 786; Rev. Stat. U. S., 5597 — cited by defendants in error.

But it is said that a Georgia state court will not interfere with a court of the United States first obtaining jurisdiction, and that such a court has jurisdiction and in contemplation of law is in possession of the res when the bill is brought to dispose of that, so soon as the bill is filed, and is not postponed to the time that a receiver is actually appointed. That is so, we hold, in cases where the receiver is appointed. Such appointment will date back to the time of filing the bill; and tbe state receiver will yield to tbe federal receiver, especially when by collusion tbe former was appointed on purpose to be ahead of the latter in point of time. This was ruled substantially by this court in May et al. vs. Printup, receiver, et al., 59 Ga., 128. But it would seem here that the stockholders’ bill has been pending a long time in the circuit court of the United States and no receiver is yet appointed. Perhaps none ever will be. Is the judgment creditor to wait until one is appointed? He is not even, in this case, or rather the Masonic Hall is not, made a party to the bill in the United States court. If it were, and if the bill filed there were similar to this in review here, and could accomplish the same end, to-wit, the collection of this debt by this judgment creditor having the final process of a state court in its hands, even then we should rule that neither law nor equity nor comity would require the state equity court to wait upon the United States court in a case like this. When that court does act, if it ever should, then will be the time to ask the state court to force its receiver to turn over the assets to the federal receiver, unless, indeed, the good sense of the two officers should harmonize in their management of the trust fund, by securing the judgment, and then turning over the balance of the fund to the United States receiver.

Judgment affirmed.