In re Citizens' State Bank

218 N.W. 630, 52 S.D. 466, 1928 S.D. LEXIS 216
CourtSouth Dakota Supreme Court
DecidedMarch 24, 1928
DocketFile No. 6520, 6521
StatusPublished
Cited by2 cases

This text of 218 N.W. 630 (In re Citizens' State Bank) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Citizens' State Bank, 218 N.W. 630, 52 S.D. 466, 1928 S.D. LEXIS 216 (S.D. 1928).

Opinion

MISER, C.

On June 23, 1923, F. Spratt, respondent, obtained a judgment in the circuit court of Beadle county in the Ninth judicial circuit, against the Citizens’ State Bank of Newark and one Peterson, president of said bank. The town of Newark, in which said bank was located, is in Marshall county, in the Fifth judicial circuit. On July 22, 1924, execution on the judgment was issued at Spratt’s request directed to the sheriff of Marshall county. On August 14, 1924, a purported levy was made by said sheriff on the contents of the bank, including the contents of the bank vault. This vault was built into, and was an integral part of, the bank building. At the time of the levy and for many days thereafter, this vault was so locked as to prevent the sheriff from entering it and making- an inventory of its contents. Peterson refused to opén the vault and made default to an order to show cause why he should not disclose its contents. On September 18, 1924, Spratt, on a showing that the superintendent of banks had' purported to take possession of said bank on August 20, 1924, obtained an order from the circuit court of the Ninth circuit requiring said superintendent to show cause why he should not be compelled to disclose to the sheriff of Marshall county and deliver to his possession the property in the vault, in order that the sheriff might make an inventory thereof and sell the property to satisfy said execution. In Spratt v. Citizens’ State Bank, 50 S. D. 472, 210 N. W. 676, an order of the circuit court of the Ninth judicial circuit granting to plaintiff the relief prayed for was set aside without prejudice to the right of plaintiff to apply for relief in the proper forum.

On February 17, 1927, the circuit court of Marshall couhty, upon application and affidavits made in Spratt’s behalf showing the [468]*468foregoing facts as well as his claim as to 'the levy and the possession of the property both prior and subsequent to the levy, issued an order to show cause requiring the superintendent of banks, appellant herein, to show cause “why the plaintiff should not be authorized, by order of said court, to proceed with the enforcement of the levy made on the property ón the 14th day of August, 1924.” To this order, the superintendent filed a motion to quash and also a demurrer. On April 13, 1927, the court made and entered its orders denying the motion to quash and overruling the -demurrer, and further reciting that “said motion of the said Spratt be granted, with leave, however, to said superintendent of banks to file and serve answering affidavits to said motion.” This appeal by the superintendent of banks is, by stipulation, a consolidated appeal from the orders of April 13, 1927.

Appellant contends: (1) That the court had no jurisdiction of the person of the superintendent of banks, whose acts are sought to be controlled- by the court’s order; (2) that the court had no jurisdiction of the subject-matter of these proceedings, the same being in the possession of the superintendent of banks for the purpose of liquidation; and (3) that the court erred in making its orders for the reason that the showing presented by the moving party was, on its face, insufficient to warrant the relief sought, in that (A) the proof offered in respondent’s affidavits establishes that, if any valid levy was made, it has been abandoned, and (B) that the sheriff never had any possession of any specific property by virtue of any legal levy or otherwise.

Consider, first, appellant’s third contention. Whether the court would have granted- or denied to respondent the right to proceed had appellant presented a counter-showing is conjectural. Instead of attempting to- determine on mere affidavits — of which appellant complains — the question as to there being a valid subsisting levy, the court might have required oral testimony or proceeded otherwise. Jackson v. First State Bank of Clark, 21 S. D. 484, 488, 113 N. W. 876; 42 C. J. 470. The fact that, upon a full hearing, there may be presented to the court grave and difficult questions of fact is no reason for quashing the motion. We are therefore of the opinion that respondent’s showing was sufficient, under the circumstances, to warrant the court in making the order which it actually did make.

[469]*469Appellant’s first and second contentions may be considered together. Appellant argues that this order to show cause was not issued in any action to which he was a party, and that he is entitled to be summoned in an action before being met with orders to show cause. This underlies his challenge to the jurisdiction of the court over his person and the property of the insolvent bank in his possession.

A question to some extent similar was answered by this court in Smith, Supt., v. Smith, 50 S. D. 639, 211 N. W. 460, in the following language:

‘‘Appellant’s first contention is that the court was without jurisdiction because no action was pending ,in court. His point is that no summons-was issued in the insolvency proceeding and also that no summons was issued in the direct proceeding against him. Of course, no summons was needed- to- give the court jurisdiction of the affairs of the insolvent bank. The banking statutes' under which the superintendent and the court acquired jurisdiction over the affairs of the insolvent bank do not contemplate such a step. In so far as matters of procedure are concerned in the handling of the estate, the banking statutes, supplemented by chapter 156, Laws 1923, and the rules prescribed thereunder (46 S. D. 9), where applicable, define the power and duty of the court; and, the property of the failed bank being virtually in custodia legis (Hanson v. Sogn, 50 S. D. 44, 208 N. W. 228), the court, by order to show cause, had full jurisdiction to determine the fees of the attorney employed by the banking department. Rev. Code 1919, § 8930, as amended by chapter 93, Laws 1925.”

In that case, there was specific statutory authority for the circuit court of that county approving the fees of the attorney. There is no such specific statutory basis for the authority exercised in the case at bar. Respondent contends, however, that the property covered by his levy was in the custody of the -court from the time appellant took physical possession on August 20, 1924; that appellant became a statutory receiver of the assets of the closed -bank; that, as such statutory receiver, he was an officer and agent of the circuit court of Marshall county, and subject as such officer and agent of the circuit court of Marshall county, and subject as such officer and agent to its orders and directions in the control that the law gave it of this trust; in other wo-rds, that the court already [470]*470had jurisdiction of the person of appellant and jurisdiction of the subject-matter without the .necessity of service of summons in an independent action. Respondent relies upon Smith, Supt., v. Smith, supra, Hanson v. Sogn, supra, and Dockstader v. Hirning, 50 S. D. 264, 209 N. W. 542, and upon Spratt v. Bank, supra, which, he contends, states the law of this case.

We are of the opinion that the circuit' court of Marshall county did have jurisdiction of the person of appellant and of the subject of the action sufficient to try and determine the issues of law and fact arising on the motion, leaving to the sound discretion of that court the question whether it could fairly and adequately try the issues in that summary manner. We are also' of the opinion that, if a valid levy had been made prior to appellant’s taking charge of the bank, and if that levy has not since been abandoned, appellant holds possession subject to respondent’s lien.

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Bluebook (online)
218 N.W. 630, 52 S.D. 466, 1928 S.D. LEXIS 216, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-citizens-state-bank-sd-1928.