A chancery receiver has no authority to sue in the courts of a
foreign jurisdiction to recover demands or property therein
situated. Booth v.
17 How. 322. P. 248 U. S.
Certain Alabama laws, relating to the administration of the
assets of insolvent banking and other corporations (Code, 1907, §
3509, 3511, 3512, 3560), held
not to vest title in the
receiver so as to enable him to sue in the district court in
another state without an ancillary appointment. P. 248 U.S. 77
246 F. 753 affirmed.
The case is stated in the opinion.
Page 248 U. S. 74
MR. JUSTICE DAY delivered the opinion of the court.
The plaintiff, as receiver of the Alabama Trust & Savings
Company, a banking corporation organized under the laws of the
State of Alabama, filed his bill in the United States District
Court for the Southern District of Ohio against the Second National
Bank of Cincinnati to recover sums of money for which he alleged
the Second National Bank was liable on account of certain
transactions which had taken place between the National Bank and
the Savings Company and its officers, the details of which it is
unnecessary to set forth. Upon final hearing, the district court
found the defendant liable for the application of a balance of the
Savings Company's deposit in the National Bank, upon paper held by
it on which the Savings Company appeared as principal maker, but
which was found to have been given for the benefit of certain of
the Savings Company's officers. Plaintiff's remaining claims were
rejected. Both parties appealed to the Circuit Court of Appeals for
the Sixth Circuit, which reversed the decree of the district court
upon the ground that the receiver had no authority to bring the
suit (246 F. 753), and the case is here on writ of certiorari to
the circuit court of appeals.
In the year 1911, certain creditors of the Savings Company, an
Alabama corporation, filed a bill against it in a chancery court of
Alabama alleging its insolvency.
The chancery court, on April 27, 1911, rendered a final
administration decree wherein it found that the defendant Savings
Company was insolvent, that its assets constituted a trust fund for
the payment of its creditors, and the same should be marshaled and
administered in that court, that the defendant was a corporation
organized under the general laws of Alabama, that, upon final
Page 248 U. S. 75
settlement, it should be dissolved, that it had suspended
business and was not about to resume the same, and could not do so
with safety to the public, that therefore W. C. Sterrett be
appointed receiver of defendant and empowered and directed to
demand and take into his possession all of the defendant's assets
and property to which it was entitled and to recover the same and
reduce it to money, and administer the same under the further order
of the court. And the court further authorized the receiver to
employ counsel and to bring such actions at law or in equity as he
might be advised and to incur such expenses as might be necessary.
Later, on March 8, 1912, the Alabama chancery court specifically
directed the receiver, plaintiff herein, to bring this suit in the
District Court of the United States for the Southern District of
Ohio, Western Division.
The material parts of the sections of the Code of Alabama (1907,
vol. II, pp. 430, 433) pertinent to this case provide as
"3509. . . . The assets of insolvent corporations constitute a
trust fund for the payment of the creditors of such corporations,
which may be marshaled and administered in courts of equity in this
Section 3511 provides for the dissolution of corporations by
action of the stockholders, and enacts that the court
". . . shall appoint a receiver of all the books, property, and
assets of the corporation . . . [who] shall, under the direction of
the court, collect all debts due the corporation, and sell all the
property, real and personal, of the corporation, pay the debts
thereof ratably or in full as the funds realized may admit, and
divide the residue after the debts and costs are paid, among the
several classes of stockholders, according to the amount owned by
each, and according to the preferences, if any, of the several
classes as provided in the certificates of incorporation. "
Page 248 U. S. 76
Section 3512 covers the application for receivership and
dissolution of insolvent corporations upon bill of creditors or
stockholders in the chancery court, and provides:
". . . The court . . . may appoint a receiver of all the
property and assets of the corporation . . . [who], under the
direction of the court, must exercise the same powers and perform
the same duties as are required of receivers in the next preceding
section, and otherwise manage the affairs of the corporation
pending final settlement thereof as the court shall direct. . .
There is also a provision for proceedings by the attorney
general (p. 444):
"3560. Proceedings when bank found not solvent. -- Whenever the
treasurer finds that a bank or corporation chartered by the laws of
this state and doing a banking business is not in a solvent
condition, he shall immediately report the condition of the bank to
the governor, and the governor shall direct the attorney general to
institute proceedings in a court having jurisdiction in the county
where the bank or parent bank is located, to put the bank in the
hands of some competent person, who shall give bond in an amount to
be fixed by the judge for the faithful discharge of his duties, and
said person so appointed shall immediately take charge of the
business of said bank, collecting its assets and paying off its
liabilities under the law and rules of such court."
The question presented for our consideration is whether the
receiver appointed in the chancery court is authorized to sue in
the federal court for the recovery of such property.
Since the decision of this Court in Booth v.
17 How. 322, it is the settled doctrine in
federal jurisprudence that a chancery receiver has no authority to
sue in the courts of a foreign jurisdiction to recover demands or
property therein situated. The functions and authority of such
receiver are confined to the jurisdiction in which
Page 248 U. S. 77
he was appointed. The reasons for this rule were fully discussed
in Booth v. Clark,
and have been reiterated in later
decisions of this Court. Hale v. Allinson, 188 U. S.
; Great Western Mining Co. v. Harris,
198 U. S. 561
198 U. S.
-577; Keatley v. Furey, 226 U.
, 226 U. S. 403
This practice has become general in the courts of the United
States, and is a system well understood and followed. It permits an
application for an ancillary receivership in a foreign jurisdiction
where the local assets may be recovered and, if necessary,
administered. The system established in Booth v. Clark
become the settled law of the federal courts, and, if the powers of
chancery receivers are to be enlarged in such wise as to give them
authority to sue beyond the jurisdiction of the appointing court,
such extension of authority must come from legislation, and not
from judicial action. Great Western Mining & Manufacturing
Co. v. Harris, supra,
p. 198 U. S.
Counsel for petitioner insists that the case is not ruled by the
doctrine of Booth v. Clark,
and that, under the Alabama
statutes and the decisions of the supreme court of that state, the
title to the property of the Trust Company is vested in the
receiver in such wise that he is authorized to sue for its recovery
in the courts of a foreign jurisdiction. If this contention is well
founded, there is no question of the authority of the receiver to
prosecute the action. Relfe v. Rundle, 103 U.
; Hawkins v. Glenn, 131 U.
; Bernheimer v. Converse, 206 U.
, 206 U. S. 534
Converse v. Hamilton, 224 U. S. 243
224 U. S. 257
Keatley v. Furey, 226 U. S. 399
226 U. S.
The Alabama cases, Oates v. Smith,
176 Ala. 39;
Montgomery Bank & Trust Co. v. Walker,
181 Ala. 368;
Cobbs v. Vizard Investment Co.,
182 Ala. 372; Coffey
191 Ala. 137; Hundley v. Hewitt,
195 Ala. 647
-- are fully reviewed in the opinion of the circuit court of
appeals. To rehearse them now would be but a repetition of what is
said in that opinion.
Page 248 U. S. 78
An examination of the sections of the statutes here involved in
the light of the decisions of the Supreme Court of Alabama does not
in our opinion warrant the conclusion that title is vested in the
receiver as assignee or as statutory successor of the insolvent
corporation in such wise as to authorize the action to recover in a
foreign jurisdiction. Collectively, these sections provide for a
receivership to administer the property and assets of the insolvent
corporation under the authority and direction of the appointing
court. The statutes do not undertake to vest in the receiver an
estate in the property to be administered for the benefit of
creditors, as was the case in Bernheimer v. Converse,
and Converse v. Hamilton, supra,
in which the
right to sue in the courts of a foreign jurisdiction was
The circuit court of appeals left open the question of the right
to apply for an ancillary receivership in the district court, and
the effect of such appointment, if made, upon the pending suit. We
pursue the like course, and as such an application could only
originate in the district court, we express no opinion concerning
The decree of the circuit court of appeals is