Two statutes of Mississippi, one passed in 1843 and the other in
1846, provide that where the charter of a bank shall be declared
forfeited, a trustee shall be appointed to take possession of its
effects and commissioners appointed to audit accounts against
it.
Where these steps had been taken and the commissioners had
refused to allow a certain account, the circuit court of the United
States had no right to entertain a bill filed by the creditors to
compel the trustee to pay the rejected account. There was a want of
jurisdiction.
The cases upon this point examined.
A claim by the trustee in reconvention was not a waiver of the
exception to the jurisdiction.
It will be seen, by reference to
45 U. S. 4 How.
225, that Charles Rice and Mary, his wife, and Martha Phipps
recovered, in an action of ejectment against the Agricultural Bank
of Mississippi, two undivided third parts of a lot of ground in the
city of Natchez.
Page 55 U. S. 369
In May, 1847, they sued out a writ of
habere facias
possessionem and entered into possession of the property.
Under the laws of Mississippi, the charter of the bank became
forfeited, and Elijah Peale was appointed trustee.
In April, 1848, Martha Phipps and Mary Bowers, wife of Charles
Rice, filed their petition in the Circuit Court of the United
States for the Eastern District of Louisiana against Peale. They
claimed rent of the property from 1839 to 1847, damages for
injuries done to the property whilst in possession of the bank, and
the costs to which they had been put by the ejectment. Peale filed
exceptions and an answer. The second exception, upon which the
judgment of this Court turned, was as follows.
"2. Because the charter of Agricultural Bank was declared
forfeited and the said bank put in a course of liquidation as an
insolvent corporation, and this defendant appointed trustee for the
purpose of collecting the assets thereof by the Circuit Court of
Adams County in the State of Mississippi, and said trustee is not
amenable to any other court than the one that appointed him and of
which he is the officer, and this Court has no jurisdiction
whatever of him in his said capacity."
The following agreement of counsel was filed in the case:
"It is agreed between the parties in the above-named suit, by
Prentiss and Finney, attorneys for the plaintiffs, and Robert Mott,
attorney for the defendant, that the following facts shall be
admitted upon the trial of the cause, and the same are hereby
admitted: "
"1. That the President, Directors, and Company of the
Agricultural Bank of Mississippi were in possession of the City
Hotel, being the premises, the mesne profits of which are sued for
on the 1st day of December, 1839."
"2. It is admitted that the said hotel and furniture rented,
from said 1st day of December, 1839, until 1st November, 1842, for
the sum of six thousand dollars per annum, and from said 1st
November, 1842, until plaintiffs took possession at the rate of
four thousand dollars per annum, and that said rates shall be
considered as the fair annual rent of said property during said
periods."
"3. It is admitted that the charter of the Agricultural Bank has
been adjudged forfeited under the laws of Mississippi, and that the
defendant, Elijah Peale, is the trustee appointed under and by
virtue of said laws to represent the said corporation."
"4. It is admitted that the claim sued on was, before the
commencement of this suit, presented to the commissioners appointed
in Mississippi to audit and allow claims against said bank, to-wit,
to J. A. Van Dalsen and C. L. Dubuisson, and they were
Page 55 U. S. 370
requested to audit and allow the same, but that they refused to
audit, allow, or in any way recognize the same."
"5. It is admitted that the claim sued on was, before the
commencement of this suit, presented to the defendant, as trustee
of said Agricultural Bank, and he was requested to allow the same
as a just and valid claim against said bank; but that said
defendant, as trustee as aforesaid, refused to admit, recognize, or
allow said claim or any part thereof."
"6. It is admitted that the fees of counsel employed by the
plaintiffs in the prosecution of the suit of ejectment against the
Agricultural Bank, for the recovery of said City Hotel in the
circuit court and Supreme Court of the United States exceeded in
value the sum of two thousand dollars, and that said sum of $2,000
dollars would be a reasonable fee for the conduct of said suit from
its commencement to its termination."
"It is admitted that the furniture of house &c. on the
premises formed part of the rent in the proportion of one-fourth to
three-fourths thereof."
"It is admitted that the charter of the bank was declared
forfeited by law, and the assets of the bank put in the possession
of the defendant, who still holds the same as trustee or
representative."
"RO. MOTT,
Attorney"
"PRENTISS & FINNEY,
For Plaintiffs"
"It is further admitted that the Agricultural Bank had stopped
specie payments previous to the time of the forfeiture of the
charter, and did not afterwards resume."
"PRENTISS & FINNEY,
Plaintiffs' Attorneys"
In January, 1849, the cause came on to be heard, when the
circuit court decreed that the plaintiffs do recover from Peale the
sum of $20,058, with interest at 5 percent until paid, and that
they should have execution upon the assets of the bank, which were
then, or might be thereafter, in the hands of the trustee.
From this decree, Peale appealed and brought the case up to this
Court.
Page 55 U. S. 372
MR. CHIEF JUSTICE TANEY delivered the opinion of the Court.
The proceeding was by petition in the usual form of Louisiana
practice. It states that the plaintiff in error, in the capacity of
trustee and assignee of the President, Directors, and Company of
the Agricultural Bank of Mississippi, which was located, until the
term of its dissolution at Natchez, in the said state, is indebted
to the petitioners in the sum of $34,000, upon the grounds set
forth in the petition.
They state that they were the owners of two undivided third
parts of a certain lot in Natchez, in the County of Adams, in the
State of Mississippi, upon which stands the City Hotel, that they
were unlawfully expelled from it by the Agricultural Bank, that
they afterwards recovered back the possession by an action of
ejectment in the Circuit Court of the United States for the
Southern District of Mississippi, and that they are entitled to the
sum above mentioned, against the bank for damages and mesne profits
while the bank held them out of possession together with the costs
they incurred in the suit to recover it.
They further state that by the decree of the Circuit Court of
Adams County, a court of competent jurisdiction in the premises,
the charter of the Agricultural Bank was declared forfeited and the
corporation dissolved, and that Peale, the plaintiff in error, was
appointed trustee and assignee of the bank, and is the sole legal
representative of the corporation, and they aver that by operation
of law, all the assets of the corporation are vested in him as
assignee and that he became legally liable to the creditors to the
extent of the assets which may come to his
Page 55 U. S. 373
hands, and that he has assets in his possession sufficient to
pay all the debts of the corporation.
The plaintiff in error filed sundry exceptions and an answer to
this petition. His 2d exception denies the jurisdiction of the
court upon the ground that, as trustee for the bank, he is not
amenable to any other court than the one that appointed him. As we
think this exception decisive against the jurisdiction of the
circuit court of Louisiana, it is not necessary in this opinion to
set out the other exceptions or to notice the claims he set up by
the way of answer and reconvention if his exceptions were
overruled.
There is an agreement between the counsel of the respective
parties, which admits substantially the facts stated in the
petition as respects the possession and recovery of the hotel in
the suit in ejectment and the appointment of plaintiff in error as
trustee upon the forfeiture of the charter of the bank, and also
that the defendants had presented this claim to the commissioners
appointed in Mississippi to audit claims against the bank, and that
they had refused to allow it. There are other admissions in
relation to the annual value of the lot and hotel and the costs and
expenses of the suit in ejectment, and also in relation to other
things which are not material to this decision and need not
therefore be particularly stated. The case proceeded, and at the
hearing of the exceptions they were all overruled and a decree was
finally passed against Peale as trustee and representative of the
President, Directors, and Company of the Agricultural Bank
directing him to pay to the petitioners the sum of $20,058, with
interest thereon at the rate of five percent until paid -- and that
the petitioners have execution therefor, upon the property, assets,
goods and chattels, rights and credits of the said President,
Directors, and Company of the Agricultural Bank of Mississippi then
in the hands of the said Peale, as trustee, or which might
thereafter come to his hands.
It is to revise this judgment that the present writ of error is
brought.
The power, duties, and responsibilities of the plaintiff in
error, as trustee, are regulated by the laws of Mississippi.
The act of 1843 makes it the duty of every district attorney in
the state, whenever he has good reason to believe that any
incorporated bank, located in his district, has done anything that
would work a forfeiture of its charter, to file an information
against the bank in the circuit court of the county in which it is
situated, and if, upon the trial, the charter is adjudged to be
forfeited, it is made the duty of the court to appoint one or more
trustees to take charge of its books and
Page 55 U. S. 374
assets and to collect the debts and sell the property of the
bank and apply the proceeds in the manner which may be directed by
law to the payment of the debts due from the corporation. And the
trustee is required to give bond and security, to be approved by
the court, for the faithful discharge of this duty.
The act of 1846 contains more detailed provisions on this
subject. Among others, it directs the trustee to return, under
oath, to the court by which he is appointed an inventory of all the
property and evidences of debt which shall have come into his
possession, and is afterwards, under the direction of the court, to
sell the same at public auction and render an account of the sale
so made to the court.
The act of 1846 also directs that at the term at which judgment
of forfeiture is rendered, the court shall appoint three
commissioners to audit claims against the corporation, and it is
made their duty to report their proceedings to the court at the
first term after the expiration of twelve months allowed for the
presentation of claims, at which time all exceptions to the report
are to be heard and determined, and the court thereupon required to
direct the distribution of the money in the hands of the trustee,
to be made in the order prescribed by the law.
It was under these acts of the Legislature of Mississippi that
the charter of the Agricultural Bank was declared forfeited and the
plaintiff in error appointed trustee. Commissioners also, it
appears, were at the same time appointed to audit the accounts, who
rejected this claim. Upon their refusal to allow it, the defendants
in error instituted these proceedings in the Circuit Court of the
United States for the Eastern District of Louisiana.
We see no ground upon which the jurisdiction of the court can be
sustained. The plaintiff in error held the assets of the bank as
the agent and receiver of the Court of Adams County, and subject to
its order, and was not authorized to dispose of the assets or to
pay any debts due from the bank, except by the order of the court.
He had given a bond for the performance of this duty, and would be
liable to an action if he paid any claim without the authority of
the court from which he received his appointment and to which he
was accountable. The property, in legal contemplation, was in the
custody of the court of which he was the officer, and had been
placed there by the laws of Mississippi. And while it thus remained
in the custody and possession of that court, awaiting its order and
decision, no other court had a right to interfere with it or to
wrest it from the hands of its agent, and thereby put it out of his
power to perform his duty. The case falls within the principle
decided by this Court in
Vaughn v.
Northrop, 15 Pet. 1, in which it was
Page 55 U. S. 375
held that an administrator could not be sued in another state
for a debt due from his intestate, because he is bound to account
for all the assets he receives to the proper tribunals of the
government from which he derives his authority. And that decision
was made in a case where the assets by reason of which the
administrator was sought to be charged were received in the
jurisdiction of the government in which the suit was brought
against him, but in which he had not taken out letters of
administration.
The case of
Williams v.
Benedict, 8 How. 107, is still more in point. By a
law of Mississippi, if it appeared to the orphans' court that the
estate of a deceased person was insolvent, it was made the duty of
the court to direct the property to be sold by the executor or
administrator and to appoint commissioners to audit the claims of
creditors, and to distribute the proceeds of the property after
deducting the expenses of the last sickness and funeral expenses
among the creditors in proportion to the sum due to them
respectively.
The appellant was the administrator of an intestate whose estate
had been declared to be insolvent by the orphans' court. But the
appellees had obtained a judgment against the administrator in the
District Court of the United States for the Northern District of
Mississippi, before the adjudication of insolvency by the orphans'
court -- and issued an execution and laid it upon property upon
which his judgment was a lien in case the estate was not insolvent.
And upon a bill filed by the appellant to obtain an injunction
staying proceedings upon this execution, the appellees insisted
that the estate was not insolvent, but had been wasted by the
administrator, and that the proceedings in the orphans' court,
under the law of Mississippi, were no bar to his recovery in a
court of the United States. And the district court was of that
opinion, and dismissed the appellant's bill. But the decree was
reversed by this Court upon the ground that the jurisdiction of the
orphans' court had attached to the assets, and that they were
in gremio legis, and could not be seized by process from
another court.
And in the case of
Wiswall v. Sampson's Lessee, decided
at the present term, the Court held that where certain lands were
in the hands of a receiver, appointed by the chancery court of
Alabama in a case pending before it, they could not be sold by the
marshal upon process of execution issuing out of the circuit court
of the United States for that district, although the judgment upon
which the process issued was a lien upon the land, and the
execution was laid before the receiver obtained actual possession
of the property. In the case of
Erwin
v. Lowry, 7 How. 181, referred to in the argument
of the
Page 55 U. S. 376
counsel for the defendants in error, the proceedings in the
court of the United States were merely to enforce a lien created by
the testator in his lifetime, and consequently could not interfere
with the duties of the curator or the authority of the state court
under which he was acting and to which he was bound to account.
It is suggested also in the argument that the claim in
reconvention made in the answer is a waiver of the exception to the
jurisdiction, because the claim in reconvention necessarily admits
the jurisdiction of the court. But the article in the code of
practice and the case referred to do not support the objection. The
claim in reconvention is in express terms made in case the
exception to the jurisdiction is overruled, and not otherwise. It
is made conditionally, the party at the same time denying the
jurisdiction of the court in the matter in controversy.
Moreover, the facts stated in the petition of the defendants in
error show that the Circuit Court of Louisiana had no jurisdiction.
And where that is the case, the general rule in all legal
proceedings is that the defendant may avail himself of the
objection in any stage of the proceedings. We see nothing in the
code of practice that leads us to suppose that a different rule
prevails in the courts of Louisiana. And if it does, yet the
exception to the jurisdiction was in this case pleaded
in
limine when the plaintiff in error appeared to the suit, and
the conditional claim in reconvention cannot by any just
construction of its terms be held to be a waiver of the plea.
The judgment of the circuit court must therefore be
Reversed and a mandate issued directing the judgment to be
entered for the plaintiff in error.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the Eastern
District of Louisiana and was argued by counsel. On consideration
whereof it is now here ordered and adjudged by this Court that the
judgment of the said circuit court in this cause be and the same is
hereby reversed with costs and that this cause be and the same is
hereby remanded to the said circuit court with directions to enter
judgment in favor of the plaintiff in error.
