248 U.S. 73
SECOND NAT. BANK OF CINCINNATI, OHIO.
Argued Nov. 8, 1918.
Decided Dec. 9, 1918.
Messrs. Edmund H. Dryer and Forney, Johnston, both of Birmingham, Ala ., for petitioner. [248 U.S. 73, 74] Mr. Lawrence Maxwell, of Cincinnati, Ohio, for respondent.
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 Fed. 753, 159 C. C. A. 55 ), 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 [248 U.S. 73, 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 empovered 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. 2, pp. 430, 433), pertinent to this case, provide as follows:
Section 3511 provides for the dissolution of corporations by action of the stockholders, and enacts that the court--
There is also a provision for proceedings by the attorney general ( page 444):
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. Clark, 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 [248 U.S. 73, 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. 56 , 23 Sup. Ct. 244; Great Western Mining & Manufacturing Co. v. Harris, 198 U.S. 561, 575 , 577 S., 25 Sup. Ct. 770; Keatley v. Furey, 226 U.S. 399, 403 , 33 S. Sup. Ct. 121. 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 has 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, 198 U. S. page 577, 25 Sup. Ct. 770
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.S. 222 ; Hawkins v. Glenn, 131 U.S. 319 , 9 Sup. Ct. 739; Bernheimer v. Converse, 206 U.S. 516, 534 , 27 S. Sup. Ct. 755; Converse v. Hamilton, 224 U.S. 243, 257 , 32 S. Sup. Ct. 415, Ann. Cas. 1913D, 1292; Keatley v. Furey, 226 U.S. 399, 403 , 33 S. Sup. Ct. 121.
The Alabama cases, Oates v. Smith, 176 Ala. 39, 57 South. 438; Montgomery Bank & Trust Co. v. Walker, 181 Ala. 368, 61 South. 951; Cobbs, Receiver, v. Vizard Investment Co., 182 Ala. 372, 62 South. 730, Ann. Cas. 1915D, 801; Coffey v. Gay, 191 Ala. 137, 67 South. 681, L. R. A. 1915D, 802; Hundley v. Hewitt, 195 Ala. 647, 71 South. 419-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 poinion. [248 U.S. 73, 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, supra, and Converse v. Hamilton, supra, in which the right to sue in the courts of a foreign jurisdiction was sustained.
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 it.
The decree of the Circuit Court of Appeals is affirmed.