The opinion of the court was delivered by
Johnston, J.:
This proceeding brings up for review a ruling of the district court of Douglas county refusing to appoint a receiver for the National Bank of Lawrence, which was in process of voluntary liquidation. The appointment of a receiver to wind up the business of the corporation seems to have been the sole purpose of the action. It was brought by J. B. Watkins, a stockholder of the bank, on November 15, 1889, against the board of directors, who were duly elected in May, 1889, and who had been in control of the bank since that time. In his petition, he says that the bank was organized in 1866, with a capital stock of 1,000 shares of the par value of $100 each, and that for several years prior to the commencement of the action he was the owner of 261 shares of the stock. He further alleges, that on June 17, 1889, at a meeting of the stockholders, a resolution was adopted by the necessary two-thirds of the capital stock to place the bank in [258]*258the process of voluntary liquidation, to take effect on the 29th day of June, 1889. He adds that the directors are not acting in good faith, nor endeavoring with due diligence to wind up the affairs of the bank for the benefit of the stockholders, and that his interest as a stockholder will suffer great loss and injury if the assets of the bank are left in the possession and under the control of the board of directors.' In his petition are allegations that the directors were formerly interested in another bank, and that they had purchased the controlling interest in the defendant bank in order to obtain possession of its business and good will, and to deprive the plaintiff and other minor stockholders of the value of their stock i.n the defendant bank; that, while the purchase of the stock was in the names of individuals, it was really intended to be for the rival bank and for its benefit and advantage, but that they were not the owners of the stock when the bank was placed in liquidation, and therefore it is argued that they had no lawful right or authority to act as the directors of the bank or otherwise. The defendants denied the charges of bad faith, and alleged that they were fairly and honestly administering the affairs of the bank, and were closing up its business with diligence, discretion, and honesty. A large volume of testimony was taken with reference to their conduct, in which there is considerable conflict, and upon which the court declined to take the property from the management of the directors and place it in the hands of a receiver.
[259]*259
1. Facts, wRen taken as true. 2. National bank —liquidation.
[258]*258There is some testimony, and the arguments of counsel are largely directed to the claim, that the placing of the bank in liquidation was without authority, because the persons voting for the resolutions were not the owners of the stocks voted; that the stocks so voted belonged to the rival bank, called the Douglas County National Bank; that the defendant directors in whose names the stock was taken really purchased the same in the interest of the Douglas County National Bank; and that, as the stock was owned by the bank and not by the directors, they were ineligible to the office of directors of the defendant bank, and that all their acts in reia[259]*259tion to the defendant bank and its business were unlawful and void. These questions were not in issue in the court below, and are not open for consideration now. In his petition, the plaintiff distinctly avers that the defendants were duly elected as directors, and “are still the duly-qualified and acting directors of said national bank.” The truth of these averments is admitted in the answer, and hence the jegajjty an(] qualification of these directors were not subjects for investigation in the district court, and cannot be inquired into here. Nor is the action of the stockholders in voting to place the bank in liquidation open to attack by the plaintiff. It is alleged in the petition and answer that the bank is in process of liquidation, and the plaintiff states that the resolution was adopted by the votes of persons “then holding in their names the necessary two-thirds of the capital stock of said bank.” It appears that notice of this meeting had been given, and the plaintiff participated in the meeting, and his stock was voted in opposition to the resolution. It was the right of these stockholders to place the bank in voluntary liquidation. The act of congress provides that any state bank may become a national association when the necessary two-thirds of the capital stock authorize the change to be made; and it further provides, that “any association may go into liquidation and be closed by the vote of its shareholders owning two-thirds of its stock.” (Rev. Stat. U. S., §5220.) Parties who purchase stock in a national bank take it knowing that two-thirds of the stock of the bank may at any time vote it into liquidation. This right may be ex-ercjge(j aqhough it may be contrary to the wishes, and against the interests, of the owners of the minority of the stock.
[260]*260
3. Estoppel.
[259]*259Besides this right of the majority to place the bank in liquidation, and the concession of the pleadings that it had been accomplished, there is another reason why plaintiff is precluded from questioning the right of the defendants in voting the bank into liquidation or the validity of their action. It appears that, since the liquidation began, the directors in [260]*260control have reduced some of the assets to money and paid a dividend of 25 per cent, to each stockholder upon the stock held by him, and that the plaintiff, with full knowledge of all the facts relating to the putting of the bank into liquidation and to the acts of the defendants in its management and control since that time, accepted the dividend. By the receipt and the retention of the dividend under these circumstances, the plaintiff recognized the validity of the liquiNation and the competency of the officers declaring it. He cannot be permitted to occupy the inconsistent position of repudiating the liquidation and at the same time accepting the fruits of it.
d Ppppi ver— appointment - discretion ofcourt. The liquidation not being open to inquiry, there remains ' the inquiry whether the defendant directors were acting in good faith and with reasonable care and diligence in administering the assets and winding up the business of the bank. The court below, after a full inquiry and upon some conflicting testimony, determined this question in the affirmative, and, upon an examination of the testimony, we see no good reason to disturb its findings and judgment. The O O O appointment of a receiver rests largely within the discretion of the court, and, in a case of this kind, the mismanagement of the defendants and the danger of loss or injury to the rights of the plaintiff should be clearly proved in order to warrant the appointment. It is a power which should never be doubtingly exercised, and the court should hesitate to take the property and business of a corporation from the control of the directors into its own hands, unless the danger of loss or injury is clear, and the right and necessity for appointment free from reasonable doubt. (Beach, Rec., §5.)
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The opinion of the court was delivered by
Johnston, J.:
This proceeding brings up for review a ruling of the district court of Douglas county refusing to appoint a receiver for the National Bank of Lawrence, which was in process of voluntary liquidation. The appointment of a receiver to wind up the business of the corporation seems to have been the sole purpose of the action. It was brought by J. B. Watkins, a stockholder of the bank, on November 15, 1889, against the board of directors, who were duly elected in May, 1889, and who had been in control of the bank since that time. In his petition, he says that the bank was organized in 1866, with a capital stock of 1,000 shares of the par value of $100 each, and that for several years prior to the commencement of the action he was the owner of 261 shares of the stock. He further alleges, that on June 17, 1889, at a meeting of the stockholders, a resolution was adopted by the necessary two-thirds of the capital stock to place the bank in [258]*258the process of voluntary liquidation, to take effect on the 29th day of June, 1889. He adds that the directors are not acting in good faith, nor endeavoring with due diligence to wind up the affairs of the bank for the benefit of the stockholders, and that his interest as a stockholder will suffer great loss and injury if the assets of the bank are left in the possession and under the control of the board of directors.' In his petition are allegations that the directors were formerly interested in another bank, and that they had purchased the controlling interest in the defendant bank in order to obtain possession of its business and good will, and to deprive the plaintiff and other minor stockholders of the value of their stock i.n the defendant bank; that, while the purchase of the stock was in the names of individuals, it was really intended to be for the rival bank and for its benefit and advantage, but that they were not the owners of the stock when the bank was placed in liquidation, and therefore it is argued that they had no lawful right or authority to act as the directors of the bank or otherwise. The defendants denied the charges of bad faith, and alleged that they were fairly and honestly administering the affairs of the bank, and were closing up its business with diligence, discretion, and honesty. A large volume of testimony was taken with reference to their conduct, in which there is considerable conflict, and upon which the court declined to take the property from the management of the directors and place it in the hands of a receiver.
[259]*259
1. Facts, wRen taken as true. 2. National bank —liquidation.
[258]*258There is some testimony, and the arguments of counsel are largely directed to the claim, that the placing of the bank in liquidation was without authority, because the persons voting for the resolutions were not the owners of the stocks voted; that the stocks so voted belonged to the rival bank, called the Douglas County National Bank; that the defendant directors in whose names the stock was taken really purchased the same in the interest of the Douglas County National Bank; and that, as the stock was owned by the bank and not by the directors, they were ineligible to the office of directors of the defendant bank, and that all their acts in reia[259]*259tion to the defendant bank and its business were unlawful and void. These questions were not in issue in the court below, and are not open for consideration now. In his petition, the plaintiff distinctly avers that the defendants were duly elected as directors, and “are still the duly-qualified and acting directors of said national bank.” The truth of these averments is admitted in the answer, and hence the jegajjty an(] qualification of these directors were not subjects for investigation in the district court, and cannot be inquired into here. Nor is the action of the stockholders in voting to place the bank in liquidation open to attack by the plaintiff. It is alleged in the petition and answer that the bank is in process of liquidation, and the plaintiff states that the resolution was adopted by the votes of persons “then holding in their names the necessary two-thirds of the capital stock of said bank.” It appears that notice of this meeting had been given, and the plaintiff participated in the meeting, and his stock was voted in opposition to the resolution. It was the right of these stockholders to place the bank in voluntary liquidation. The act of congress provides that any state bank may become a national association when the necessary two-thirds of the capital stock authorize the change to be made; and it further provides, that “any association may go into liquidation and be closed by the vote of its shareholders owning two-thirds of its stock.” (Rev. Stat. U. S., §5220.) Parties who purchase stock in a national bank take it knowing that two-thirds of the stock of the bank may at any time vote it into liquidation. This right may be ex-ercjge(j aqhough it may be contrary to the wishes, and against the interests, of the owners of the minority of the stock.
[260]*260
3. Estoppel.
[259]*259Besides this right of the majority to place the bank in liquidation, and the concession of the pleadings that it had been accomplished, there is another reason why plaintiff is precluded from questioning the right of the defendants in voting the bank into liquidation or the validity of their action. It appears that, since the liquidation began, the directors in [260]*260control have reduced some of the assets to money and paid a dividend of 25 per cent, to each stockholder upon the stock held by him, and that the plaintiff, with full knowledge of all the facts relating to the putting of the bank into liquidation and to the acts of the defendants in its management and control since that time, accepted the dividend. By the receipt and the retention of the dividend under these circumstances, the plaintiff recognized the validity of the liquiNation and the competency of the officers declaring it. He cannot be permitted to occupy the inconsistent position of repudiating the liquidation and at the same time accepting the fruits of it.
d Ppppi ver— appointment - discretion ofcourt. The liquidation not being open to inquiry, there remains ' the inquiry whether the defendant directors were acting in good faith and with reasonable care and diligence in administering the assets and winding up the business of the bank. The court below, after a full inquiry and upon some conflicting testimony, determined this question in the affirmative, and, upon an examination of the testimony, we see no good reason to disturb its findings and judgment. The O O O appointment of a receiver rests largely within the discretion of the court, and, in a case of this kind, the mismanagement of the defendants and the danger of loss or injury to the rights of the plaintiff should be clearly proved in order to warrant the appointment. It is a power which should never be doubtingly exercised, and the court should hesitate to take the property and business of a corporation from the control of the directors into its own hands, unless the danger of loss or injury is clear, and the right and necessity for appointment free from reasonable doubt. (Beach, Rec., §5.)
Testimony has been offered tending to show that the defendants were conducting the business in such a way as to obtain the business for the Douglas County National Bank which was formerly transacted by the defendant bank. The name of the Douglas County National Bank was changed to the Lawrence National Bank, and that bank removed its [261]*261place of business to that which was formerly occupied by the defendant bank. On the other hand, it is shown that the change of name was made in April, long prior to the liquidation of the defendant bank; and further, that they were paying the full rental value of the premises which they occupied. It is shown that the defendants offered plaintiff $150 per share for the stock which had cost him $70 per share. The liquidation was begun on the 29th day of June, 1889, and it bad only proceeded about four months when this and other actions were begun by plaintiff, which, to some extent, have interrupted the process and delayed the completion of the adjustment. During the time that the directors have been administering the assets of the bank, they have declared a dividend of 25 per cent, on the capital stock. There is proof that they are acting with diligence and economy in winding up the affairs of the bank. Expenses of the management were reduced, unnecessary help was dispensed with, and, so far as appears, the full value of the assets disposed of, including the government bonds formerly owned by the bank, has been realized. There is nothing substantial with reference to the change of name. This was permitted by the comptroller, and can hardly be considered as a matter of consequence.
[262]*262
, judgment, not disturbed.
All the Justices concurring.
[261]*261Much is said that the defendants permitted the other bank to appropriate the good will of the defendant bank without compensation, but there is little that is substantial in the good will of a liquidating bank. The plaintiff has a right to complain if by any unlawful combination the assets were not sold for their fair market value; but if the defendants were honestly administering the estate, and had obtained the fair value of the assets disposed of, including the rental of the building occupied by the defendant bank, the plaintiff has no reason to complain. After the bank is put into liquidation, the duty of the officers in charge consists in the collection and reduction to money of the assets of the bank, and the equal and ratable payment of this money among the creditors and stockholders as their rights may appear. When it went into liquidation, [262]*262it ceased to exist as a .baling institution, and could no longer continue the ordinary banking business. It had no good will to transfer to another bank beyond the benefits which might result from the leasing of the premises which it formerly occupied, and in which its business was being closed up. This might enhance the rental value of the building leased to the Lawrence National Bank, but manifestly the court below has found that $100 per month, the rent received, was a fair charge for the use of the building. (National Bank v. Marshall, 26 Ill. App. 440.) Plaintiff made an offer for the bank building, but it was coupled with a condition which made it unavailable. He proposed to give $55,0(flD for the building, and complains that it was not accepted. His offer contemplated the giving of immediate possession, but existing contracts with parties who were occupying portions of the building precluded an acceptance. The defendants endeavored to sell the building to the plaintiff and to arrange the terms of sale so as to protect the rights of parties under these contracts, but plaintiff declined to accede to the conditions proposed. The charge of mismanagement, will hardly lie against the defendants for their action in respect to either the sale or the lease of the building, nor in their refusal to accept any of the propositions of the plaintiff. Neither can we say, after a review of all the evidence, that a case was made out which required the appointment of a receiver. The judgment of the court will therefore be affirmed.