Ellis v. Little

1. Receiver oe National Bank, Functions of. The receiver of a national bank, appointed by the comptroller of the currency, is the agent of the United States, and is limited as to his functions by the object of the receivership, and the duties which it involves. 2. Receiver, Powers of. Such a receiver, upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts, and on a like order may sell all the real and personal property on such terms as the court shall direct; but he cannot sell the property of the bank in the absence of such an order, or upon terms in conflict with the directions of the order. ' . ■ 3. --Ultra Vires. Such a receiver cannot charge the estate of the bank by his executory contract unless authorized so to do under the provisions of the national-banking act, and the order of a court of record of competent jurisdiction obtained under the terms of said act. 4. --Limit of Power. Where a receiver is directed by a court of competent jurisdiction to sell the assets of the bank “on such terms and in such manner as in his judgment shall be for the best interest of the creditors and all interested in the bank and its assets,” he is not empowered thereby to exchange, barter or trade the property of the bank for other and different property. 5. Receiver’s Authority, Knowledge of. Persons dealing with the receiver of a national bank in his official capacity are bound in law to take knowledge of his authority to act; and if contracts are entered into by persons with the receiver, which are in excess of the receiver’s authority, such persons contract at their peril, and the estate of the bank cannot be charged for the default or inability of the receiver to perform the contracts.

Error from Sedgwich District Court. Before the 18th day of September, 1876, one J. C. Fraker was tfye owner of the undivided one-third of the south half of the northwest quarter of section twenty-two, township twenty-seven, south, of range one, east, in Sedgwick county, together with the flouring mill, machinery and fixtures thereon, and the water-rights and easements thereunto belonging. On the 18th day of September, 1876, said J. C. Fraker was largely indebted to the First National bank of Wichita, Kansas, which bank was then insolvent, and its assets and property were in the hands of an officer awaiting the appointment of a receiver by the comptroller of the currency of the United States. At the date aforesaid, Fraker and wife conveyed his one-third interest in said lands and tenements, mill and easements to J. R. Mead, in trust, however, that when a receiver should be appointed for said bank, that said J. R. Mead should convey the same to said receiver in part payment of the said J. C. Fraker’s indebtedness to said bank. On the 19th day of October, 1876, H. B. Cullum was duly appointed receiver of said bank by the comptroller of the currency of the United States, and afterward said J. R. Mead by deed duly conveyed said property to said H. B. Cullum as the receiver of said bank. Cullum continued to act and perform the duties of such receiver until about the 1st day of March, 1878, when he resigned the receivership, and on the 9th day of March, 1878, the defendant, W. C. Little, was duly appointed receiver of the bank, and took charge of the assets thereof, and is still such receiver. On the 31st day of December, 1877, said H. B. Cullum, as receiver of the First National bank of Wichita, Kansas, executed a contract to sell to the plaintiff, N. W. Ellis, said one-third of said land, mill and water-rights and easements, and three different judgments that said bank claimed to own, amounting in the aggregate to something over three thousand dollars, for the sum of five thousand and five hundred dollars, to be paid as follows: $2,000 on the execution of said contract, and $3,500 on the 1st day of May, 1878. Before this contract was entered into, Samantha ■ B. Thomas and Emma A. Ellis, daughters of said N. W. Ellis, were the owners of a balance of a judgment rendered in the district or circuit court of Union county, Iowa, against William Groesbeck in favor of J. C. Eraker, but which had been assigned to said Mrs. Thomas and Miss Ellis; and said judgment was the second lien on a large tract of land in the county aforesaid. By the terms of the contract, N. W. Ellis was to procure his two daughters to assign. to said H. B. Cullum, receiver of the bank, two thousand dollars of this Iowa judgment, which was to be the two-thousand-dollar payment to be made on the execution of this contract. When Mrs. Thomas and Miss Ellis came to assign their interest in the Iowa judgment, it turned out that they owned $3,462.63, and Cullum was desirous of obtaining all of their interest in said judgment as a payment on this contract; and on the 2d day of January, 1878, they assigned all of their interest in the judgment to Cullum as receiver of the bank, and the same was receipted on the contract as follows: “Received, January 2d, 1878, of N. W. Ellis, an assignment of Iowa judgment by W. A. Thomas and Samantha B. Thomas and Emma A. Ellis, amounting to thirty-four' hundred and sixty-two and sixty-three one-hundredths dollars, it being in full of the $2,000 payment mentioned within, and the balance, $1,462.63, to apply in part payment due May 1, 1878. H. B. Cullum, Receiver of the First National Bank of Wichita, Kansas.” When J. C. Fraker conveyed his one-third interest in said land, mill, machinery and easements, W. A. Thomas and E. L. Wheeler owned the other two-thirds of the same, and the same had been operated as a flouring mill by Fraker, Wheeler and Thomas, as partners under the style of Thomas, Wheeler & Co. When Fraker conveyed his interest' therein to the bank, the firm of Thomas, Wheeler & Co. was insolvent, and H. B. Cullum as such receiver claimed to hold Fraker’s one-third of the property discharged from all liability for any of the debts of the above firm. On November, 1876, Wheeler and Thomas commenced this suit in the district court of Sedgwick county, to have said copartnership closed up, and for an accounting of the liabilities and assets of the firm of Thomas, Wheeler & Co., and to have the one-third interest of J. C. Fraker conveyed to Cullum as such receiver, held liable for the debts of the firm, and to have all of said property sold and the proceeds of the sale applied in payment of the liabilities of the firm; In said case a receiver was appointed by the district court tó take charge of the property of the said firm. At the May Term, 1877, of said district court, all the issues of law and fact were referred to'a referee, which case was duly heard by the referee, who found that the firm was largely indebted, and also found that the one-third interest in the property conveyed to the receiver by said J. C. Fraker, was, with the other two-thirds of said property, liable for the debts of the firm, and made his report accordingly. At the December Term, 1877, of the court, the report of the referee was confirmed, and the receiver appointed by the district court was ordered to sell all of said property to pay the debts of the firm of Thomas, Wheeler & Co. Before H. B. Cullum sold the property to Ellis, he had petitioned to the district court of the United States for the district of Kansas for authority to. sell certain personal and real estate, and the court by its order had authorized the receiver to sell the property described in his petition. On the 1st day of May, 1878, N. W. Ellis offered to tender to W. C. Little, who was then the receiver of said bank, the balance due upon the contract, and demanded a deed for the one-third interest in the property sold to him, and also an assignment to him of the three judgments mentioned in the contract. The receiver refused and failed to make such conveyance to the plaintiff and assign him said judgments. On the 1st day of May, 1878,‘all of said property was advertised for sale by the receiver appointed by the district court on the 25th day of May, 1878, and on which day the receiver of the district court, with the knowledge and consent of the defendant, sold all of said property, including the one-third sold to plaintiff, to H. W. Lewis, and the plaintiff, which sale was afterward confirmed by said court, and the property conveyed to Lewis and the plaintiff by the receiver. On the 19th day of July, 1878, the plaintiff commenced a suit in the district court of Sedgwick county against the receiver of the bank to recover the amount he had paid on said contract, to wit, $3,462.62, and for other damages, amounting in all to $5,000. At the May Term, 1881, of the court, this cause was tried, and the court rendered a judgment in favor of the plaintiff against the defendant for the sum of $587.50. The plaintiff filed a motion for a new trial, which was overruled by the court, and the plaintiff brings the case to this court for review. The following are the assignments of error presented on the hearing of this case in this court: 1. That the court erred in the amount for which it rendered judgment. 2. In overruling the motion of the plaintiff for a new trial. The contract set forth in the petition is in words and figures as follows: “This agreement, made and entered into on this 31st day of December, 1877, by and between H. B. Cullum, receiver of the First National bank of Wichita, Kansas, party of the first part, and N. W. Ellis, of the county of Brown, in the state of Ohio, party of the second part, witnesseth: “That the said H. B. Cullum, as receiver of the First National bank of Wichita, Kansas, party of the first part, in •consideration of the covenants and agreements hereinafter stipulated and agreed to be performed on the part of said N. W. Ellis, party of the second part, hereby agrees to sell and convey unto the said N. W. Ellis, hi's administrators, executors, heirs and assigns, the following real and personal property, rights and easements, to wit: “The undivided one-third of the south half of the northwest quarter of section number twenty-two (22), in township number twenty-seven (27), south, of range one (1), east, in the county of Sedgwick, in the state of Kansas, together with the mill and all of the machinery and fixtures on the same; also the right to build, erect and maintain a dam across the stream known as the Little Arkansas river, at a point at or about eight rods up said Little Arkansas river from the point-where said stream crosses the west line of the southeast quarter of the southwest quarter of section number twenty-nine-(29), in township number twenty-six (26), south, of range number one (1), east, in Sedgwick county, in the state of Kansas; and also the right to dig, excavate and maintain an aqueduct or mill-race not more than sixty feet wide, running from the above-described point of the location of said dam on-said river in a southeasterly direction to the section line running east and west between said section twenty-nine (29) and section thirty-two (32) of said township, so that said race shall strike said section line not further east than the quarter-section corner between said sections, and running thence east on said section line to the stream known as Chisholm creek, in said county, together with the right to enter upon said premises to erect, construct, operate or repair said dam and mill-race as fully and to the same extent as the same was conveyed-on the 14th day of November, 1873, by Arthur Sullivan and Aggie L. Sullivan his wife, to E. L. Wheeler and L. G. Sheets, to which deed reference is here made; also the rights,.privilege and easements now belonging to and appurtenant to said mill to flow the water to run said water mill from said dam in said Little Arkansas river to said mill, and to enter upon said race where the same runs to said Chisholm creek, and make all needed and necessary repairs; and also the right to erect and maintain a suitable dam at said mill to raise the water to a suitable height to afford sufficient water to operate said mill to the same extent that the same is now built and maintained. The said H. B. Cullum, receiver of the First National bank of Wichita, Kansas, also hereby agrees to sell, asssign, set over and transfer to said N. W. Ellis the following claims, judgments and accounts, which he holds as receiver of said First National bank of Wichita, Kansas, and due from Thomas, Wheeler & Co., and are liens against said mill property, to wit: A claim of Ruggles and Sterry, for attorneys’ fees performed for said Thomas, Wheeler & Co., and now owned by said Cullum, in the sum of one hundred dollars; one judgment rendered against Thomas, Wheeler & Co. in the district court of the United States for the district of Kansas, in favor of the said H. B. Cullum, receiver of said First National bank of Wichita, Kansas, for the sum of nine hundred and eighty-three dollars and sixty-three cents ($983.63), with 12 per cent, interest; one judgment rendered in the district court of Sedgwick county, Kansas, May 29, 1877, on A. W. L. Fraker’s note, in the sum of nine hundred and sixty-five dollars and ninety cents ($965.90), with interest at 12 per cent.; one judgment rendered in the district court of the United States for the district of Kansas, on the 23d day of October, 1877, on J. Henson’s note, in the sum of nine hundred and nine dollars and twenty-five cents ($909.25), with interest at 12 per cent.;, and an account of over-drafts from said Thomas, Wheeler & Co., to said First National bank of Wichita, Kansas, in the sum of fifty-six dollars and forty-four cents ($56.44), including all accrued interest on said judgment and claims. “In consideration whereof, the said N. W. Ellis promises and agrees to pay to the said H. B. Cullum, receiver of said First National bank of Wichita, Kansas, the sum of five thousand and-five hundred dollars ($5,500), at the time and in the manner following, that is to say: two'thousand dollars to be paid upon the execution of this contract, which said-sum of two thousand dollars is to be paid and satisfied as follows: “The said N. W. Ellis is to procure an assignment from ' Mrs. Samantha B. Thomas and Emma A. Ellis to said H. B. Cullum of two thousand dollars in a certain judgment rendered in the district (or circuit) court in Union county, in the state of Iowa, against William Groesbeck in favor of J. C. Fraker, for the sum of $5,960, and rendered in- the month of November, 1876, which assignment of two thousand dollars in said judgment, when procured in due form and delivered to said H. B. Cullum, he, the said Cullum, is to receive the same as the two-thousand-dollar payment to be made upon the execution of this contract, and the sum of thirty-five hundred dollars ($3,500) on the 1st day of May, 1878. “The said H. B. Cullum, as receiver of said The First National bank of Wichita, Kansas, agrees on or before the-1st day of May, 1878, to execute and deliver to said N. W-Ellis a deed for said property, conveying unto the said N. W. Ellis, his heirs and assigns, all the right, title, privileges and easements of the said H. B. Cullum as the receiver of the First National bank of Wichita, Kansas, in and to all the real estate, mill machinery and fixtures thereunto belonging, and all the water-rights, privileges and easements appurtenant thereto, hereinbefore described and set out. “It is agreed that the said H. B. Cullum, receiver as aforesaid, shall deliver to said N. W. Ellis, or his heirs or assigus, the undivided one-third interest in said mill and machinery in as good condition as the same now is, excepting the ordinary wear and tear in the use of the same; and that none of the machinery now in said mill shall be removed from said mill before said N. W. Ellis takes possession of the interest in said mill and machinery that he is hereby purchasing. “It is further agreed on the part of said H. B. Cullum, that he will consent and order to be issued by the district court within and for the county of Sedgwick, in the state of Kansas, ordering and directing the receiver of said property to turn over to said N. W. Ellis the undivided one-third of said property on the 1st day of May, 1878, on condition that the said N. W. Ellis shall, on or before that day, pay to said H. B. Cullum, receiver as aforesaid, said sum of $3,500, and also that a like order be rendered by said court directing the lessees of said property and mill to surrender possession of the same at the expiration of their present lease. “This agreement is not to be construed as an agreement by said Cullum to convey any items of mill fixtures or machinery put into said mill, or building put upon said land by John Rauche & Co., the present lessees of said property. “ It is further agreed on the part of said H. B. Cullum, that in case it shall be decided by the supreme court of the state of Kansas, or the district court within and for the county of Sedgwick, in the state of Kansas, that the said H. B. Cullum was not entitled to receive the money on the judgment rendered on the Fraker note, for the sum of nine hundred and sixty-five dollars and ninety cents ($965.90), with interest from May 29, 1877, at 12 per cent., but that said Fraker is entitled to receive the sum from the said Thomas, Wheeler & Co., the amount of said judgment and interest is to be refunded to said N. W. Ellis by said H. B. Cullum. In case it should be decided, before the 1st day of May, 1878, that said Cullum was not entitled to receive the money on said Fraker note, then and in that case the amount of said judgment and interest is to be applied as so much of .a part payment on the payment of $3,500, to be made by said N. W. Ellis to said H. B. Cullum on the 1st day of May, 1878; and if it be so decided after said payment is made, and said Thomas, Wheeler & Co. have to pay said judgment, then the said H. B. Cullum is to refund to said N. W. Ellis said ■sum of $965.90, with interest from May 29, 1878, at 12 per •cent, per annum. “In witness whereof, said parties have hereunto set their hands and seals, the day and year first above written. N. W. Ellis. (Seal.) H. B. Cullum, (Seal.) Receiver of the First National Bank of Wichita, Kansas.” The receiver testified, among other things, as follows: “That about the first of May, 1878, Mr. Ellis and W. A. Thomas came into his office; Mr. Thomas told him that he had the money to pay what was due to him on the contract, and wanted a deed for the land and mill property, and an assignment of the three judgments and other claims mentioned in the ■contract. I told him I was ready to fix up the matter. Mr. Thomas then asked me if I could assign the Fraker judgment, and asked if I had an assignment of that judgment. I told him that I did not know whether I had an assignment •of the Fraker judgment or not, or whether I could assign that judgment to Mr. Ellis. But I told him that the, deed for the land and mill property was placed in escrow in the Wichita Savings bank, in Wichita, and that I was ready to go with them and deliver the deed, and assign such of the judgments as I could. As a matter of fact, I could not assign the Fraker judgment, as the bank never owned or had an assignment to it; neither had the receiver any assignment of this judgment. I don’t know just what I said about that judgment. I know that I said to them that I was ready to deliver the deed and two of the judgments, and demanded the money that was due to the bank from Mr. Ellis on the contract. I don’t think anything was said about my assigning to Ellis the claim against Thomas & Wheeler in favor of Ruggles & Sterry, and by them assigned to the bank. Thomas said something about the dam on the Little Arkansas river being washed out, and that the mill was not in as good condition as it was when the contract was entered into. I told ■them that I didn’t know anything about that matter. Ellis and Thomas refused to receive the deed for the land and mill property, unless I also-assigned and transferred all of the three judgments. This I could not do, and they went away and didn’t pay me the money. I didn’t deliver to Ellis the ■deed or any of the assignments at that time or since. As I said before, I understood that a deed for the land and mill property had been made and placed in escrow in the Wichita Savings bank, but I never saw it, and don’t know of my own knowledge that such a deed was made out and placed in escrow; but if it was, it has never been delivered to the plaintiff. I have never obtained an assignment to myself as receiver, or to Mr. Ellis, of the Fraker judgment, nor paid him for the judgment, and have never delivered him a deed for the land or mill property. The bank still owns, or did own up to a short time ago, the other two judgments mentioned in the contract. A short time ago, these two judgments were sold to other parties by me, as receiver. The Iowa judgment, assigned to the receiver by Mrs. Thomas and Miss Ellis, has never been reassigned to Mr. Ellis. ... I sold the Groesbeck land in Iowa for the best price I could get, and the bank realized $500 from the sale. I have been at all times ready and willing to convey the land to Mr. Ellis, and at the time they came to my office on the 1st of May, I offered to deduct the amount of the Fraker judgment from the consideration expressed in the contract to be paid by Ellis.”