building and loan conservatorship proceedingSummary of this case from Morris, Supt. of Ins. v. Investment Life Ins. Co.
Decided October 23, 1931.
Building and loan associations — Dissolution and liquidation — Authority conferred by legislature upon state superintendent of building and loan associations — Method prescribed is exclusive — Writ of prohibition against common pleas court appointing receiver.
1. The legislature, recognizing the quasi-public character of building and loan associations, has enacted laws not only providing for their inspection, supervision and control but also prescribing the method of their dissolution and the liquidation of their assets, and has conferred upon the Superintendent of Building and Loan Associations, the authority essential to accomplish that result expeditiously and economically.
2. The method prescribed by the legislature for the regulation, supervision and control of the affairs of building and loan associations and the method of procedure prescribed for their dissolution and liquidation conserve and secure an equitable distribution of the assets of such company to those entitled thereto; it is specific, adequate, complete and exclusive; and action of a court of common pleas in contravention thereof will be restrained by a writ of prohibition.
This is an original action in this court and was instituted by the attorney general of the state to procure the issuance of a writ of prohibition restraining the common pleas court of Franklin county and Dana F. Reynolds, a judge of that court, from appointing a receiver for the Columbian Building Loan Company in an action now pending in that court, wherein Florence Dressel is plaintiff and the Columbian Building Loan Company is a defendant.
In the case in the common pleas court the plaintiff brought her action as a creditor on behalf of herself and all persons similarly situated. That suit is one for an accounting and the appointment of a receiver. The action is based on the claim asserted in the petition that plaintiff on December 9, 1930, deposited with the defendant, the National Savings Loan Company, which was organized and doing business under the building and loan laws of the state of Ohio, the sum of $500, evidenced by entry in a passbook issued to her by said company, which sum and no part thereof has been repaid to her; she avers that on January 31, 1931, without notice or knowledge to the plaintiff the National Savings Loan Company, acting through its board of directors, pretended to sell all its assets, exceeding $2,500,000 to the defendant the Columbian Building Loan Company, which company was also organized and is doing business under the building and loan laws of Ohio, and thereafter filed its certificate of dissolution with the secretary of state, and thereby dispossessed itself of all property, real and personal, out of which the indebtedness to plaintiff could be paid, and that all of the assets of the National have been taken possession of by the Columbian and mingled with its own assets. Plaintiff charges that at that time the controlling majority of the board of directors of the National Savings Loan Company were also the controlling officers and members of the board of directors of the Columbian Building Loan Company, and that the members of the board of directors of the former, by reason of the ownership of stock, were able to control the board of directors of the latter; that the Columbian undertook to and did pay to the National the sum of $100,000, which sum was distributed to the stockholders of the National, who were also directors of that company.
It was asserted that by the ownership and control of the stock of the Columbian, its directors and officers are able to and will perpetuate themselves in office in said company, and will prevent a proper accounting of the assets of the National; that the Columbian has many creditors which it is unable to pay, and that it is preferring creditors of the Columbian over and to the exclusion of the creditors of the National. The plaintiff in her petition further alleges that the Columbian Building Loan Company is insolvent, and that the substitution of that company as the debtor of plaintiff and those similarly situated works a fraud upon them. Plaintiff prayed for an accounting between said two companies; that the assets of the National, so far as they could be traced, should be found to be the property of that company, and a trust declared in favor of the creditors of the National on all the available property of the Columbian. She also sought therein the appointment of a receiver for each of said companies.
The relator in the action now before us, after setting out in his petition in this cause the essential averments of the petition in the action pending in the court of common pleas, substantially as above stated, alleged that the sole purpose and intent of the plaintiff and her counsel in filing said petition and motion for the appointment of a receiver were to procure the liquidation of the business, property and affairs of the Columbian Building Loan Company by securing and obtaining the appointment of a receiver for said company by the consideration, order and decree of said common pleas court. Relator further alleged that for some time prior to the institution of that suit, the superintendent of building and loan associations of Ohio, through his duly appointed and qualified examiners, was fully investigating the affairs of the Columbian Building Loan Company for the purpose of ascertaining its true condition and determining the course to be pursued by him under the law, and that he is still engaged in an examination of the business, property and affairs of said company, and relator directs attention to the fact that in the case pending in the court of common pleas there is no charge of any failure or dereliction of duty of the superintendent of building and loan associations or any refusal, present or prospective, of that officer or the attorney general to perform any duty required of them by law.
The answer of the respondent admits the essential and material facts stated in the petition and then avers that the superintendent of building and loan associations of the state had been made a party in said action in the court of common pleas at his own instance, and that continuances of said cause have been granted upon his application. He denies that the appointment of a receiver in said case will, as a matter of law, in effect, inevitably operate as a dissolution of said company. The other averments of the answer are mere assertions of the jurisdiction and authority of the court of common pleas in the premises.
The relator filed a general demurrer to respondent's answer.
Mr. Gilbert Bettman, attorney general, and Mr. William J. Ford, for relator.
Mr. Charles S. Druggan, for respondents.
The relator challenges the jurisdiction of the court of common pleas to hear the issue or matter with respect to the appointment of a receiver for the Columbian Building Loan Company in the case now pending in that court. He does not seek to restrain or limit the hearing and determination of any other issue presented in that case.
The jurisdiction of the court of common pleas is prescribed by statute, and it is conceded that court has authority generally in the matter of appointment of receivers, but it is contended that such power is limited by statutes providing for the control and regulation of building and loan associations, and that the proposed action of the common pleas court, which is here challenged, is not within, but is in excess of, its authorized power and jurisdiction; and that is the sole question presented by the pleadings for our consideration and decision in this case.
We are not so much concerned in the object and purpose of those who instigated or instituted the action asking the appointment of a receiver for the Columbian Building Loan Company as we are in what seems to be not only the probable, but the necessary and certain result of that proceeding. If the allegations of the petition in that case are true, that proceeding is in fact one for the dissolution of the building and loan company under a receiver appointed by that court upon the application of a depositor. It is predicated upon the express and definite assertion of the insolvency of the building and loan company. True, in this instance, the applicant claims as a depositor in a building and loan company whose assets she alleges are now improperly in the possession and under the control of another building and loan company, and she seeks to recover same from the latter company; but we regard the principle involved with reference to the issue now presented to be the same as though the plaintiff in that case were a depositor of the Columbian Building Loan Company, and, as such, seeking the appointment of a receiver and a dissolution of that company.
The report of the superintendent of building and loan associations of Ohio for the fiscal year ending December 31, 1930, shows that seven hundred and ninety-one associations filed annual reports, a compilation of which discloses total assets of $1,246,864,413, of which loans on mortgage security constitute $1,108,681,799. These reports also show the total number of stockholders to be 1,815,005; the number of borrowers, 419,846; and the number of depositors, 1,142,017.
It would be unfortunate if any single dissatisfied or offended depositor or shareholder of one of these institutions could institute extended and expensive litigation for its dissolution to the great detriment of the many identified with such association, whose interests, and incidentally those of the general public, would be thus seriously jeopardized. The success or failure of such institutions affects the stability of business and the financial interests of the entire community, and it became necessary that they be strictly supervised and controlled for the protection of depositors and the welfare of the public. The intimate relation of building and loan associations to the welfare of the public has heretofore been quite generally recognized, but never has it been so clearly demonstrated as it has within the past few months. Recognizing the character of such institutions, and the purpose they seek to serve, the Legislature of this state has enacted statutes governing, controlling and regulating them, and, in language that cannot be misunderstood, has wisely made provision for their supervision at all times and under all circumstances and conditions, including those disclosed by the conceded facts before us in this case. These statutes have created the office of superintendent of building and loan associations, with broad powers and duties, making provision for deputies, assistants, clerks, and examiners to assist in the performance of such duties. Specific requirement is made as to the filing of detailed reports annually of the business transacted by each of such associations and of the condition of its affairs, and also for an examination of each at least once a year by the superintendent, or an examiner designated by him.
Full power of regulation, supervision and control is conferred upon the superintendent of building and loan associations by these provisions, for the evident purpose of protecting and safeguarding the interests of all who may be concerned therein. Among these provisions are the following:
Section 686, General Code. "If upon examination the inspector of building and loan associations finds any domestic association conducting its business in whole or part contrary to law, or failing to comply therewith, he shall notify the board of directors of such association of such fact in writing. If, after thirty days, such illegal practices or failure continues, he shall communicate the facts to the attorney general, who shall cause proceedings to be instituted in the proper court to revoke the charter of such association."
Section 687, General Code. "If, upon examination, the inspector of building and loan associations finds that the affairs of a domestic building and loan association are in an unsound condition, and that the interests of the public demand its dissolution and the winding up of its business, he shall so report to the attorney general, who shall institute the proper proceedings for that purpose."
We cannot disregard the clear and manifest purpose of the legislative branch of the government to fully protect and safeguard the interests of depositors and others in these quasi-public institutions. Confidence is essential to their stability and maintenance, and that has been encouraged and promoted by supervision and control under state authority. Insolvency of a building and loan association results necessarily in its dissolution and liquidation. This proposition is supported by uniform and undivided authority. The legislature has by statute provided the method for the dissolution of building and loan associations. At the time of the institution of the action in the common pleas court, and for many days prior thereto, the superintendent of building and loan associations of Ohio in person, and by and through a number of duly appointed and qualified examiners, had been making an examination of the business, property, assets and affairs of the Columbian Building Loan Company, pursuant to the authority vested in him by law, for the purpose of determining whether or not said company was conducting its business in accordance with law, and whether its affairs were in a sound or unsound condition, and for the further purpose of ascertaining whether the interests of the public required the dissolution and liquidation of such company, and said superintendent and examiners under his direction are continuing their examination of the business, property and affairs of that company for the purposes stated.
These facts are uncontroverted, and there being no charge of failure, neglect, or delay of the superintendent of building and loan associations, or of the attorney general, in the performance of their duties prescribed by law, the presumption, of course, obtains that they have been and will continue to be diligent in the performance of all the duties, and faithful in meeting all the responsibilities of their respective offices relative to the affairs of said company.
The statutes to which attention has been directed provide the specific and adequate remedy which serves to protect, conserve and secure an equitable distribution of the assets of such company to those entitled thereto. The adequacy of the remedy provided to protect and preserve the interests of all concerned argues convincingly for its exclusiveness. The application of familiar rules of statutory construction warrants the conclusion that the special provisions of Section 687, General Code, constitute an exception to the general statutory provisions relating to receiverships. We are of the opinion that by these provisions the legislature has provided not only an exclusive method for the supervision and control of the affairs of building and loan associations, but also an exclusive method of procedure for the dissolution of such associations and the liquidation of their assets, and has thereby limited the jurisdiction of the common pleas court.
Numerous reported decisions have been cited touching the question involved in this case, but because of the difference in the provisions of the various statutes upon which they are based few of them are directly applicable. In the main those which are at all applicable fully support and sustain the conclusions above indicated. Union Savings Investment Co. v. District Court of Salt Lake County, 44 Utah 397, 140 P. 221, 225, Ann. Cas., 1917A, 821; Koch v. Missouri-Lincoln Trust Co., (Mo.Sup.), 181 S.W. 44; Huntington County Loan Savings Assn. v. Fulk, 158 Ind. 113, 63 N.E. 123; Farmers Deposit Bank v. State, ex rel. Symons, State Bank Commr., 201 Ind. 117, 166 N.E. 285; Cartmell v. Commercial Bank Trust Co., 153 Ky. 798, 156 S.W. 1048; Grimes v. Central Life Ins. Co., 172 Ky. 18, 188 S.W. 901; Abbott v. Morris, Judge, 101 W. Va. 127, 132 S.E. 372, 374; Ulmer v. Falmouth Loan Building Assn., 93 Me. 302, 45 A. 32, 34; Craughwell v. Mousam River Trust Co., 113 Me. 531, 95 A. 221; State, ex rel. Meyer-Kiser Bank, v. Superior Court of Marion County, (Ind.Sup.), 177 N.E. 322; State, ex rel. Dade County Security Co., v. Barns, 99 Fla. 1258, 128 So. 860; Hill v. Webb, 127 Okl., 249, 260 P. 450; Stone v. Schiller Bldg. Loan Assn., 302 Pa. 544, 153 A. 758; North v. Union Sav. Loan Assn., 59 Or. 483, 117 P. 822.
The language of the court in Ulmer v. Falmouth Loan Building Assn., supra, which is reiterated in the Craughwell case, supra, is so pertinent that it is here set forth:
"The foregoing summary of statute provisions makes it apparent that the legislature has intended to throw around institutions of this character all possible safeguards for the protection, not only of those who are financially interested in them, but of the public itself; and it is made the duty of the bank examiner to see that the safeguards established by law are maintained, and that the associations conduct their business according to law. For failure in either respect he may apply to the court for the proper remedy.
"The statute points out the conditions under which the intervention of the court may be obtained, and the officer by whom the machinery of litigation may be set in motion. It suggests no other way. And it is the opinion of the court that it was the intention of the legislature, as expressed in the statute, that the power of invoking the interference of the court should be vested in the bank examiner alone, and that he only may pray for an injunction and a receiver. It is to be observed that these institutions possess a public character, and it is for the interest of the public, not only that they shall be subjected to judicial investigation when they ought to be, but also that they shall not be so subjected when they ought not to be. Unusual means are placed in the hands of the bank examiner to ascertain their condition, and it cannot be presumed that he will fail to act in a proper case. If one shareholder may maintain a bill, so may every other. There is no limit. To subject loan and building associations to vexatious, harassing and expensive litigation caused by the suits of possibly multitudinous shareholders who may be dissatisfied, with or without reason, would greatly impair their usefulness, if not imperil their existence."
The situation presented by the case before us is quite similar to that before the court in the Union Savings Investment Co. case, supra, and that court, in announcing a similar conclusion, made the following statement, which is clearly applicable here:
"The question we must decide is whether every dissatisfied shareholder may go into a court at any time and ask that court to wind up the affairs of a building and loan association so that he may at once, or as soon as the business affairs of the association can be wound up, obtain the withdrawal value of his shares, and in so doing arrest and frustrate the entire scheme and purpose of the association and, as we have seen, dissolve all of the existing contractual relations between the association and its members except for the purpose of liquidation, without giving the association the opportunity contemplated by the statute to correct any evils or wrongs that may exist in managing its affairs. If this may be done, then any shareholder may jeopardize the welfare of the association and its members at any time and without adequate cause. We cannot escape the responsibility of determining the meaning of the statute, and whether it is intended to protect the rights of all such associations and their members rather than, without complying with the statute, to vindicate the alleged rights of a few members of but one association."
Likewise the Supreme Court of West Virginia, in the case of Abbott, Commr. of Banking, v. Morris, Judge, supra, which was an original action for prohibition in that court spoke pointedly upon the proposition involved in the case before us, as follows: "The method of winding up the affairs of the bank for the payment of debts and collection of assets is full and complete and should be liberally construed so as to effect the purposes designed. The commissioner of banking is peculiarly fitted by training and experience to effectuate the remedy thus prescribed for the benefit of all concerned. Before enactment of this law, the process of liquidation of insolvent banks through the instrumentalities of the courts had been extended over many years, engendering public complaint and criticism. An expeditious, inexpensive and efficient method was needed, and the Legislature met the need, following the footsteps of other states and the federal government. We are of the opinion that the intent was to make the jurisdiction of the commissioner and the receiver appointed by him (in some decisions denominated a 'statutory receiver') exclusive and may not be defeated or subverted by any party in interest by resort to the courts, unless he has refused to act or is acting in such a way as to jeopardize the rights of the complainant. There is no claim of that character in the bill."
It is contended that the legislature in Section 710-101, General Code, relating to the supervision of banks, and Section 9487, General Code, relating to the supervision of fraternal insurance companies, having expressly made the procedure therein prescribed as to those companies exclusive, and not having embodied similar language in the statute governing the procedure relative to building and loan associations, clearly manifested the intent that the procedure prescribed as to building and loan associations should not be exclusive. This argument would be quite convincing, possibly controlling, if these various provisions had been incorporated in the same act, and thus passed by the legislature, and the argument would be persuasive if the building and loan statutes had been enacted subsequent, instead of prior, to the bank and insurance statutes containing the specific provisions referred to.
Our conclusion is that the court of common pleas is without authority to appoint a receiver in the case now pending in that court, as proposed and contemplated; that such action would be in excess of the jurisdiction conferred upon that court; and the plaintiff has no adequate remedy at law. In response to the assertion that such courts have heretofore appointed receivers of building and loan associations in similar cases, both prior and subsequent to the enactment of Section 687, General Code, it need only be said that it does not appear that the question of authority to so proceed has heretofore been raised or presented.
What rights would arise on behalf of a depositor, or others, in the event of failure of the superintendent of building and loan associations or of the attorney general to promptly, fully and faithfully perform their duties with respect to such institutions need not be discussed at this time, for no such question is presented in this case.
It follows from the foregoing that the writ of prohibition should issue as prayed for.
JONES, DAY and ROBINSON, JJ., concur.
MARSHALL, C.J., and ALLEN, J., dissent.
The facts are so fully stated in the majority opinion that they need not be repeated, except in so far as is necessary to present the minority view. The facts which must be stressed are that Florence Dressel is not and never was a depositor in the Columbian Building Loan Company. She has never voluntarily had any contractual relations with that company. She was a depositor in the National Savings Loan Company, which company, by taking the necessary legal steps, sold and transferred all of its assets amounting to approximately two and one-half million dollars to the Columbian Company, which company had assets of approximately ten times that amount. Whereas by her voluntary action she became a creditor of the National Company, it has been sought by involuntary processes to make her a creditor of the Columbian Company. This situation has never been accepted by her. The doctrine of voluntary novation is well established in our jurisprudence, but this is believed to be the first time that it has ever been made to assume the phase of an involuntary and compulsory process. The doctrine of novation is based upon the theory that a new contract has been made, in which there has been a complete meeting of the minds. To make our dilemma more hopeless, the National Company has been dissolved, and its charter surrendered. To make the situation more distressing from a legal standpoint, Florence Dressel makes serious allegations of fraud in the sale and transfer of the assets of the National Company to the Columbian Company. These facts and circumstances are the basis of her application for an accounting and a determination of the question whether the assets of the National Company may be applied to the payment of the debts of the National Company. She has filed a suit in the court of common pleas of Franklin county for this purpose. No principle of law has been pointed out, and we know of none, which denies her right to an accounting, or which denies that the court of common pleas of Franklin county does have jurisdiction of such a cause. Unfortunately for her, in an excess of zeal she has asked for a receiver of all of the assets of the Columbian Company, reputed to be in excess of twenty-five million dollars, in order that she may have an accounting of assets which do not exceed two and one-half million. The opening statement of the majority opinion is significant:
"The relator challenges the jurisdiction of the court of common pleas to hear the issue or matter with respect to the appointment of a receiver for the Columbian Building and Loan Company in the case now pending in that court. He does not seek to restrain or limit the hearing and determination of any other issue presented in that case."
It must be borne in mind, and this court has emphatically so stated, that there can be no suit for a receiver alone. A receiver is only and always an incident to a suit in which some other and major relief is sought. The attorney general now invokes the extraordinary writ of prohibition to prevent the court of common pleas from granting incidental relief in a cause where he does not even claim that the court may not hear and determine the major issues. It is apparently assumed that the court of common pleas would appoint a receiver unless prevented from doing so by the decree of this court. This is a violent presumption. The prayer of the petition is that a receiver be appointed for each of the defendant companies, and that the plaintiff have such relief as she may be entitled to in the premises. It would seem that there is no occasion for having a receiver in any case, and that the probable action of the court would be to appoint a master to determine what assets were applicable to the debts of the National Company. A receiver can only be appointed in accordance with the rules and principles of equity, and it is not easy to perceive any rules or principles which would justify the appointment of a receiver, and it may therefore be fairly assumed that the common pleas court would so decide. Any error of judgment on the part of the court could be quickly reviewed. So far as we are advised, no answer has been filed in the original suit of Mrs. Dressel, but this court has been asked to determine, and has in fact determined, upon the allegations of her petition, that the common pleas court is without jurisdiction to proceed to determine her right to incidental relief. The effect of this decision is, that the extraordinary writ of prohibition may be employed to halt proceedings in a cause over which the
court has unquestioned jurisdiction in its essential facts, and to enjoin the court from granting certain incidental relief. We are of the opinion that the prohibition suit never should have been brought.
The attorney general had already entered his appearance in the accounting suit. He should have demanded a hearing of the question of the receivership the same day the suit was filed, and should have pressed that demand with all vigor. He should have had confidence that within a few hours the court would have reached a conclusion refusing to appoint a receiver, and that that conclusion would have been supported by facts and reason which would have given confidence to those who now lack confidence, and which would have been a factor in re-establishing economic stability. It may be assumed that tile officers of the Columbian Company were honestly administering their trust, and a showing of that fact could easily have been made within a few hours. There could be no better way of voicing those facts to the public than by an open hearing in a court of justice, so that creditors and stockholders alike could have had a demonstration of the futility of the receivership. If, on the other hand, there were good grounds for a receivership, it is a shortsighted policy which would deny a receivership in the face of a clear right thereto. The present social and economic upheaval is due to lack of faith. The majority opinion states that there are 1,815,005 stockholders and 1,142,017 depositors in building and loan associations in Ohio. Their fears could be allayed by a hearing and decision supported by facts and reasons. Those fears will be enormously augmented by denying access to courts. The majority opinion discusses social and economic conditions, and this is in every sense proper. An opinion which deals in nothing except cold logic, and which fails to take into consideration human welfare and social well being, and which loses sight of the economic interest to be affected, would deservedly meet with condemnation. But has not the majority opinion "strained at a gnat and swallowed a camel?" The doors of the courts have been closed in the face of the depositors and stockholders, and they have been told to go to the superintendent of building and loan associations for relief. A judicial officer, well trained for his task, responsible directly to the people, his title to his office dependent upon their suffrage, is not likely to yield to the persuasions of a single depositor or stockholder to the detriment of the multitude who are of a different opinion. His judgment must be as sound and his oath of office as sacred as the appointee of the political department of the government. It is assumed that the present superintendent of building and loan associations is an honest capable official, but I deny that he is more trustworthy or his administration more sound than that of a common pleas judge. If it is the personnel of the judgeship that is under attack, that situation can be remedied by an affidavit of bias. If it is the office itself, it constitutes a terrific indictment of our judicial system. It ill becomes the highest court of this state to prohibit the trial courts from the discharge of duties which have belonged to those courts from time immemorial.
Let us look at the matter from another angle.
Must there be a restraint imposed upon the millions of depositors and stockholders of building and loan associations in this state? Are they to have no voice in the use of their money or the recovery of it after it has once been deposited in such an institution?
If only the superintendent of building and loan associations in this state may determine whether the stockholders and depositors are entitled to assert their rights, or, more accurately speaking, whether they have any rights at all, then it must follow as a corollary to that proposition that whenever the superintendent makes his determination the courts must do his bidding without question. The superintendent becomes a real dictator. Due process becomes an empty and meaningless phrase. The alleged right of judicial determination of controversies in this state is lost. The judicial branch of the government has been submerged and swallowed up by the executive branch. Stockholders and depositors are not in the class to be restrained by force; on the other hand, they are the thrifty portion of our people who have laid aside each week a portion of their earnings against a rainy day, and they are not likely to waste their savings by a foolish resort to wrecking the institutions which have protected those savings and paid them a high rate of interest. They are sane and law-abiding citizens, who will be responsive to facts and arguments, but rebellious against the exercise of arbitrary power. No better evidence of their stability should be needed than the experience of the past year. Building and loan associations everywhere in Ohio have been compelled to suspend payments to depositors, and to apply the so-called 60-day rule of withdrawals. And yet the depositors have accepted the situation, and resort to the courts has been almost unknown.
The petition for the writ of prohibition alleges that, unless prohibited by this court, the court of common pleas will appoint a receiver. The common pleas judge in an answer denies that he will appoint a receiver unless the facts and the law warrant the appointment under the rules and principles of equity.
I concur in the first proposition of the syllabus, stating the quasi-public character of building and loan associations and the propriety of placing them under state inspection, supervision and regulation, but let us have no misconceptions of the character of that regulation. It is the regulation of the association for the benefit of its creditors. It is not regulation of creditors for the benefit of the corporation.
The majority opinion cites numerous cases in support of its conclusions, and quotes from three of them. At least two of those three are pertinent, and their arguments strongly set forth that side of the case. On the other hand, there are numerous decisions of other states which set forth the contrary view. People, ex rel. Chicago Title Tr. Co., v. Kowalski, 307 Ill. 378, 138 N.E. 634; Amer v. Union Bldg. Loan Assn., 50 N.J. Eq. 170, 24 A. 552; Universal Savings Tr. Co. v. Stoneburner, (C.C.A.), 113 F., 251; Gumby v. Armstrong, (C. C. A.), 133 F., 417; Andrews v. Roanoke Bldg. Assn. Investment Co., 98 Va. 445, 36 S.E. 531, 49 L.R.A., 659; Frostburg Bldg. Assn. of Allegany County v. Stark, 47 Md. 338; Wehrs v. Sullivan, 217 Mo., 167, 116 S.W. 1104; Continental Natl. Bldg. Loan Assn. v. Miller, 44 Fla. 757, 33 So. 404; Lamp v. Homestead Bldg. Assn., 62 W. Va. 56, 57 S.E. 249; Sjoberg v. Security Savings Loan Assn., 73 Minn. 203, 75 N.W. 1116, 72 Am. St. Rep., 616; Boyd v. Robinson, 104 Ga. 793, 31 S.E. 29; In re Natl. Bldg., Loan Provident Assn., 12 Del. Ch. 93, 107 A. 453.
We are of the opinion that if it can be said there is any weight of authority, that weight is contrary to the conclusions of the majority opinion.
The majority opinion rests largely upon an interpretation of Section 687, General Code, which reads as follows:
"If, upon examination, the inspector of building and loan associations finds that the affairs of a domestic building and loan association are in an unsound condition, and that the interests of the public demand its dissolution and the winding up of its business, he shall so report to the attorney general, who shall institute the proper proceedings for that purpose."
Surely the language of that statute does not expressly or even impliedly give the attorney general the exclusive right to institute proceedings for the dissolution and winding up of the business of such associations. It will be conceded from a practical standpoint that the appointment of a receiver does sound the death knell of such an association. But there is nothing in that section even referring to a receivership. By the common law, from time immemorial, courts have had the right to appoint receivers on equitable grounds. This statute must therefore be held to be in derogation of the common law, and by the well-settled rules of interpretation, its provisions must be strictly construed. We are of the opinion that even by the most liberal interpretation it cannot fairly be said that that statute gives exclusive authority to the attorney general.
The majority opinion interprets that section in the light of the decisions of other states. We think it must be interpreted in the light of Section 16 of the Ohio Bill of Rights:
"All courts shall be open, and every person, for an injury done him in his land, goods, person, or reputation, shall have remedy by due course of law, and shall have justice administered without denial or delay."
The true interpretation of Section 687 is that the remedy thereby provided is cumulative only, and is a definition of one of the powers, and a prescription of one of the duties, of the attorney general.
It has been claimed by counsel that Section 710-101, General Code, gives to the superintendent of banks exclusive power over applications for receivership of banks. We deny that that section makes any such provision. It only provides that the superintendent of banks must have notice of an application, and he is given the right to take possession of a bank within five days after such application, in which event the application must be denied; or, if a receiver has already been appointed, the appointment must be vacated. This only gives the superintendent of banks the power to supersede a receiver appointed by the courts by actually taking possession of the institution. It in no sense denies the right of a creditor, or a stockholder, to invoke the jurisdiction of the court. It is true that Section 9487, General Code, does expressly give that power in the case of insurance companies; the power being reposed in the attorney general. But it does not follow that that statute is constitutional. And, if so, it only shows that the legislature has in one instance expressly given the power, and in the case of the superintendent of building and loan associations, has refrained from giving it.
Section 687, General Code, formerly Section 3836-18, Revised Statutes, originally appeared in the act of May 1, 1891 (88 Ohio Laws, 469, 474, Section 18). It has therefore been in existence 40 years, and during all of that time the jurisdiction of the courts to appoint receivers of building and loan associations in proper cases has not been questioned. On the other hand, in numerous cases, receivers have been so appointed. At least six cases decided by courts of inferior jurisdiction have been reported, and two cases have been decided and reported by this court. Bayless v. Baird, Recr., 110 Ohio St. 305, 143 N.E. 703; Eversmann, Recr., v. Schmitt, 53 Ohio St. 174, 41 N.E. 139, 29 L.R.A., 184, 53 Am. St. Rep., 632. If the appointment of a receiver by a court at the suit of a creditor or stockholder is beyond the jurisdiction of the court, then every order made in those cases was a nullity. We cannot accept that doctrine.
There is no appeal from the action of the superintendent of building and loan associations, and no method by which an arbitrary decision on his part could be reversed. There is no opportunity for a judicial determination of an issue which is clearly justiciable. We cannot escape the conviction that even from a policy standpoint it is better to repose this tremendous power in the one hundred and forty-four common pleas judges of the state, to whose decision there would be in each instance a ready review.
More important than all of the considerations hereinbefore stated is the fact that this surrender of democracy to centralization detracts from the self-reliance, the initiative, and the independence of the individual citizen. It is one more step in the growing tendency to turn to the government for relief from all the economic and social ills that the individual citizen is heir to.
I dissent from the judgment of the majority. If Section 687, General Code, expressly took from the courts their jurisdiction in accounting sought by a creditor, and their power to appoint receivers in such actions in accordance with the ordinary rules of equity, it would, in my judgment, be invalid upon the ground that it deprived the litigant of his constitutional right to resort to the courts. But the statute contains no such provision.
Abuses in the appointment of receivers may have grown up in recent years. Such abuses, if they exist, are not to be corrected by confiding the exclusive power to apply for such a remedy to a non-elective official. Whatever errors may be committed in the trial court, there is always in such a court proceeding opportunity for record and review. In the long run, this opportunity protects the litigant infinitely more than a concentration of power in the executive, which may, at a particular time of depression, have its convenient aspects.