MURRAY tI. AMERICAN SURETY CO.
345
the· person making the same, if the latter knew them to be false. The same doctrine has been held in some' of the states where Lord Tenterden's act has been adopted. Kimball v. Comstock, 14 Gray, 508; Mann v. Blanchard, 2 Allen, 386; McKinney v. Whiting, 8 Allen, 207; Whitten v. Wright, 34 Mich. 92. These decisions, and others in general harmony with them, while all declaring that there must h,ave beell a fraudulent intent, are not uniform in their definition of that intent. In Allen v. Addington it is held that the fraudulent intent may consist either in an interested design on defendant's part to benefit himself, or a malicious design to injure the plaintiff. In other cases it is held that any representation known at the time to be untrue is deemed fraudulent. InLord v. Goddard, 13 How. 211, it is said fraud means "an intention to deceive. If there was no intention; if the party honestly stated his own opinion, believing at the same time that he stated the truth,he is not liable in this form of action, although the representation turned out entirely untrue." But by the weight of modern authority it is held that the law imputes an intention to deceive in every case where one recklessly asserts that to be true which is untrue, and concerning which he pretends to have a knowledge which he has nat. 1 Cooley, Torts, 501; Brooks v. Hamilton, 15 Minn. 31, (Gil. 10;) Lynch v. Trust Co., 18 Fed. 486; Caldwell v. Henry, 76 Mo. 254; Cooper v. Schlesinger, 111 U. S. 148, 4 Sup. Ct. 360. Of this class is the cause of action contained in the second count of the complaint. It is there alleged that the representations were false; that they were made for the purpose of gaining credit for the Ainslie Lumber Company; that they were negligently and carelessly made, without examination or investig,ation; that, if investigation had been made, the untruth of the facts represented would have been made apparent. These allegations sufficiently state a cause of action, and both the demurrers are overruled. MURRAY v. AMERICAN SURETY CO. OF NEW YORK. (Circuit Court, S. D. California. January 2, 1894.) No. 557.
1.
BANKS-RECEiVERS-AuTHORITY TO ApPOINT-STATE STATliTES.
The California statute authorizing the attorney general, on the recommendation of the bank commissioners, to institute suit to enjoin any bank guilty of violating the banking laws from doing further business, and, if it is found insolvent, to cause its business to be wound up under the direction of such commissioners, (Stat. 1877-78, p. 740, as amended by Stat. 1887, p. 90,) does not authorize the court to appoint a receiver for the bank; and a receiver thus appointed without authority cannot maintain a suit to collect claims of the bank.
2. SAME.
A statute providing that upon the "dissolution of any corporation" a receiver may be appointed on the application of creditors or stockholders, (Code Civil Proc. Cal. § 565,) does not apply' to the case of an insolvent bank which the state is proceeding against for violating its charter.
At Law. Action by Eli H. Murray, as receiver of the California "Savings Bank of San Diego, a corporation, against the American
FSDERAL REPORTER, ,vol.
59. ' On demurrer
.sul'Gty:Oompany ofNe'W ¥ork,to recover damages. DemurrersustaiheiL' ' , ,'Aften& Flint, tor defendant, perior
Judge. This was commenced ,in the suof San Diego countY, on motion of the defendant, to this court. c:':n1e action is ,for damages for the alleged, · breaeh of, the, of ,two certain bonds, executed by to Bank of ,San Diego, a corto "indemnify th,at againsf any p(jcuniary loss by by fraud or/dIshonesty of one, J. W. Collins, its and one Frederiqk Hill, its cashier. filed by the ,among other questions, ;therigb,t'Qf the plaintMf to bdpg< the suit. That right is thus complaipJi' , , "Thllit on ,the 12th day ,of 18,91, the said 9alifornia Savings Bal;1k' Recl/.me and was, insolvent ,and suspended business, apd thereafter, to wit" on 4tliday of March, 1892,an action was commenced in the superior 'of the County of San: Diego, state of California, in the name of the people,' of, the state of OalIfornia, against said California" Savings Bank, in whicb." among other reUef, demanded by the plaintiff, it, was prayed that a teIllpor!1ryreceiver be apIlOlnted to ta];;e possession of all the assets of said savings bank, and to make,collection of all claims held by it; and that, upon the final:t:tial of said action, said savings bank be adjudged insolvent, and a permaneDt ,receiver appointed to take charge of and collect, preserve, diatribute its assets, and ,that corporation be closed and liquidated in the mapner prQvlded py section 11 an act [of the state ot California] . entitled. 'A:il ,act creating a board of bank commissioners, and prescribing their duties. and powers,' approved March 30, 1878, and as amended by an act approved March 10, 1887; and that such proceedings were thereafter dUly ha(l;insaid action, that, by an order of said superior court on that behalf duly made and entered of record, this plaintiff was, on the-- day of March, 1892, appointed temporary receiver· of said savings bank, and authorized and directed to take possession of all its assets of every kind and character, and to collect and· preserve the same pending said action. That 2d day of Augv.st, 1892, action came regularly on for trial, and judgment was duly recovered by the plaintiff therein, and entered, 'that the defendant corporatiQD, the said California Savings Bank of San Diego, and all its managers, officers, counselors, attorneys, agents, and others acting in aid or assistance of it or them, be, each and everyone of them, and are, each and every one of them, enjoined and prohibited from the transaction ofllnyfurther business as said corporation,' And it was further in and by said judgment and decree 'ordered and adjudged that Eli H. Murray, of the city (If San Diego, .1shereby appointed receiver of all the assets and properties' of the said defendant corporation, and that he is hereby empowered to s\le for imd'proSecnte to determination all indebtedness due said defendant, and to collect; adjust, aM settle"all claims in favor of said defendant, and that he shall hllve the right to defend all suits instituted against ,said corporation, and that he shall allow and adjust, under the control of this court, all the claims against said bank, and, when determined, shall pay to the creditors of said bank such' dividends as may from time to time be declared by this court, and to do perform auch further acts as may be provided by law or the further order' of this court;' and that thereupon this plaintiff duly qualified as such receiver; and entered upon the discharge of his duties as such; and that said ju4gment has never been set aside or modified, but still remains intulltorce 'and effect; and this plaintiff ever since has been, and now Is, the duly-qualified and acting receiver"of said savings bank,"
MUR,RAYV., AMERICAN SURETY 00.
347
It is, cle-ar that the proceeding in the name of the people of the state of Califor.nia, of which the superior, court, at the instance of the attorney general of the state, took jurisdiction, was by virtue of section 11 of the act of the state creating the board of bank commissioners, and prescribing their duties and powers, of March 30, 1878, (Stat. 1877-·78, p. 740,) as amended by an act approved March 10, 1887, (Stat. 1887, p. 90.) As so amended, the section reads: "Sec. 11. It such commissioners, on examination of the a1fairs of any corporation mentioned in this act,shall find that any such corporation has been guilty of violating its charter or law, or the provisions of this act, or is conducting business in an unsafe manner, they shall, by an order addressed to the corporation so offending, direct discontinuance of such illegal and unsafe practices, and a conformity with the requirements of its charter and of law under this act; and, if such corporation shall refuse or neglect to comply with such order, or whenever it shall appear to said commissioners that it is unsafe for any such corporation as in this act mentioned to continue to transact business, they shall notify the attorney general of such fact, who, after examination, in his discretion, may commence suit in the proper court against such corporation, to enjoin and prohibit the transaction of any f,urther business by such corporation; and upon the hearing of the case, if the judge of the court where the case is tried shall be of the opinion that it is unsafe for the parties interested, or for such corporation, to continue to transact business, and that such corporation or institution is insolvent, he shall issue the injunction applied for by said commissioners and attorney general, who shall cause said injunction to be served according to law; and said judge shall further direct said commissioners to take such proceedings against such corporation as may be decided upon by its creditors. If any corporation mentioned in this act, which is now insolvent, or which may hereafter become insolvent, or be thrown into liquidation by process of law, or by the order or consent of its stockholders, directors, managing officers, managers, or creditors, the affairs of such corporation shall be closed, and the business thereof settled within four years from the time it shall be declared to be insolvent, or be thrown into liquidation, as the case may be, unless at the expiration of such time it shall obtain the consent, in writing, from a majority of the board of bank commissioners, to continue in llquidation for a longer period. The bank commissioners shall, however, have no power to grant a continuance for such purpose for a longer period than one year at each time. Any corporation mentioned herein, now in liquidation, or that may be hereafter thrown into liquidation, shall make semi-annual reports of the condition of its affairs to the bank commissioners, in the same manner as the solvent banl{S mentioned in this act, and in addition thereto shall state the amount of dividends paid, debts collected, and the amount realized on property sold, if any, since the previous report. The bank commissioners shall have the power and it is hereby made their duty, to 'examine the condition of every such corporation in liquidation, in the same manner as in the case of solvent banks; and shall have a general supervisory control of any such corporation. They shall have the power to designate the number of officers and employes necessary to close up the business of any such corporation, and to fix the salaries of the same; and shall do all in their power to make such liquidation economical and as expeditious as the interests of the depositors and stockholders will admit. The bank commissioners are' hereby empowered to examine into the affairs of all banks in process of liquidation, at the time of the passage of this act. When any such bank shall have been for two years next preceding the passage of this act, in process of liquidation, or when any such bank shall have been in liquidation for two years from the time it was declared insolvent, or thrown into liquidation, the bank commissioners shall have the power to direct that the business of the bank shall be closed, and may designate a time when such closing shall be effected, and may limit the number of officers aIJd employes, fiX their salaries, and make such other orders as are necessary for the economical and expeditious administration of the
348
FEDERAL REPORTER,
vol. 59.
tPe bank., It any: qfiicer or empl6ye ot any, insolvent this act, shall refuse to comply with the provisions of this section;<!rdlilregard or refuse to obey the directions of said bank commissioners" in accordance with the provisions ot this act, such ofiicer or employe shall be punished by a ll.neof not less than five hundred dollars, or bylmppsonment in the county jail tor not less than one year, or by both such fine,and imprisonment, as a court of competent jurisdiction may deter. , , mine."
The 'remedy pursued by the. attorney general in the name of the the state in the case of the savings bank in question being statutory only, the court that took jurisdiction for its enforcement was limited in its powers by the statute under which it acted. East Tennessee, V. & G. R. 00'. v. Southern Tel. 00., 112 V. S. 306, 5 Sup. ot. 16S;Windsor v. McVeigh, 93,U. s.. 2'74. It will be seen that the suit the, attorney general is by the statute authorized to commence is one enjoin and prohibit the transaction of any further business by such corporation." And the statute proceeds to declare that if, upon the hearing of the case, "the judge of the cG'urt where the case .is tried shall be of the' opinion that it is unsafe for the parties interested or for such corporation to transact business, and that such corporation or institution Js insolvent, he shall issue the injunctiO'tl applied for by said comln1ssioners and attorney general, cause said injunction to be served according to law; and who . said judge shall further direct said commissioners to take such proceedings against such corporation as may be decided upon by its cre(litoj:'s." ThaUs'the extent of the judgment authorized by the statute to be entered:inthe suit authorized by tlie attorney general; that is to say,the enjoining of any further tl'.attsaction of business by the insolvent' corpora:tion, and an order that the commissioners take such against such corporation as may be decided upon by its creditors. The appointment of a receiver in such a judgment was beyond the power of the court, because beyond the scope of the statute under and by virtue ,of which alone the cOQrt was acting. A receiver is an officer of the court, and, when appointed, and his powers put in motion, the property of which he is appoint· ed receiver passes into the custody of the court; the purpose of such proceeding being to preserve the property pending the litiga· tion, so that the relief awarded by the judgment, if any, may be effective. No such purpose is manifested by the provisions of the bank commissioners' act, under which the attorney general proceed· ed in the ca,se in question. This is further shown by the very next clause of the statute, which reads: "If any corporation mentioned in this act, which is now insolvent, or Which may hereafter become insolvent, or be thrown into liqUidation by process of law, or by the order or consent of its stockholders, directors, managing officers, managers; or creditors, the affairs of such corporation shall be closed and the business thereof settled within four years from the time it shall be declared to be insolvent, or be thrown Into liqUidation, as the case may be, unless, at the expiration of such time, it shall obtain the consent, in writing, from a majority of the board of bank commissioners to continue in liquidation for a longer period.. The bank commissioners shan; however, have no power to grant a continuance for such .purpose for' a longer period than one year all each time,"
MORTON V. UNITED STATES.
349 '
It is said for the plaintiff that the superior court had jurisdiction "under either section 11 of said act of 1878, or section 565 of the Code of Civil Procedure, [of California,] to' make the appointment, provided that the creditors of the corporation came in and requested or consented to such appointment; and also upon the application of the stockholders or directors, and that, as the complaint does not show that there was no such application in that adion, this court must presume that there was, if such presumption is neces· sary to uphold the appointment of the receiver." In the first place, no inference can be indulged in favor of the plaintiff that the judgment or order relied on to sustain the suit was based upon a complaint in intervention by the creditors, stockholders, or directors of the corporation. The general rule is that a pleading is taken most strongly against the pleader; and surely, where, a& in this case, the complaint alleges that a certain judgment was entered in an action brooght by the attorney general in the name of the people of the state against a corporation created by it, it cannot be presumed that such judgment was in fact based upon a complaint in intervention, filed in the action by some third party or parties. In the second place, neither creditors, stockholders, nor directors of a corporation could become parties, by intervention or otherwise, to a proceeding the object of which was to enjoin a corporation from -carrying on its business accordance with its charter. That power belongs alone to' the state that grants the franchise. Section 565 Of the Code of Civil Procedure of California provides that, upon the dissolution of any corporation, the superior court of the cO'Unty in which the corporation carried on business or has its principal place of business, ep application of any creditor of the corporation or of any stockholder or member thereof, may appoint one or more persons to be receivers or trustees of the corporatiC'Il, etc. That section is manifestly inappUcable to the facts of the present case. The demurrer must be sustained, upon the ground that the complaint does not show a right in the plaintiff to bring the suit. So ordered. MORTON v. UNITED STATES.
(District Court, D. Indiana. No. 4,808.
January 15, 1894.)
CLERKS OF CIRCUIT COURT OF ApPEALS-FEES AND SALARY.
Under the judiciary act of March 3, 1891, §§ 2, 9, a clerk of the circuit court of appeals is entitled to retain from the fees and emoluments of ihis office, after payment of all other expenses, a sum not exceeding $500, in addition to 'his salary of $3,000.
At Law. Action by Oliver T. Morton against the United States to recover fees as clerk of the circuit court of appeals for the seventh circuit. Heard on demurrer to the petition. Overruled. A. C. Harris, for petitioner. Frank B. Burke, for the United States.,
