substantial evidence rule not controlling when question of law, rather than fact, is at issue
How later courts described this case
- substantial evidence rule not controlling when question of law, rather than fact, is at issue
Written by the judges who cited it.
The opinion
LINDLEY, District Judge
(dissenting).
I cannot escape the conviction that the receiver of a closed bank, appointed by the auditor of the State of Illinois, is nothing other than an agent of the auditor and, as such, an administrative agent or officer of the state and, therefore, not competent to qualify under the federal legislation here involved.
The Illinois Statute, Smith-Hurd Illinois Annot.Stats., Chap. 16%, Sec. 11, provides that the auditor may take possession and control of the assets of an Insolvent bank, to complete its liquidation, and appoint a receiver to act “under the direction of the auditor”. Only in certain specified instances must appeal be made to a court for direction; in general, it is wholly within the power of the auditor to direct, supervise and control the receivership’s activities.
There is no jurisdiction in an Illinois court to appoint a receiver for a closed bank. People v. Shurtleff, 353 Ill. 248 , 187 N.E. 271 . Where the State Director of Insurance appoints a receiver for an insolvent insurance company, the appointee is an executive or administrative official of the state. People, ex rel. Palmer v. Niehaus, 356 Ill. 104 , 190 N.E. 349 . In People ex rel. Barrett v. West Side Trust & Savings Bank of Chicago, 280 Ill.App. 308 , the court referred to the fact that the procedure for liquidation of a state bank under the local statute is quite similar to that for liquidation of a national bank under the federal law. U.S.C.A. Title 12, § 192. The court adopted the reasoning of decisions of the Supreme and lower federal courts to the effect that the receiver of a national bank appointed by the comptroller is an officer or agent °of the United States even though he must apply to court for authority to compound debts or sell property; that the receiver is part of the executive branch of the government and that his custody is that of the official whose agent he is. United States v. Weitzel, 246 U.S. 533 , 38 S.Ct. 381 , 62 L.Ed. 872 ; Kennedy v. Gibson, 8 Wall. 498 , 19 L.Ed. 476 ; Ex parte Chetwood, 165 U.S. 443 , 17 S.Ct. 385 , 41 L.Ed. 782 ; Auten v. United States Nat. Bank of New York, 174 U.S. 125 , 19 S.Ct. 628 , 43 L.Ed. 920 ; Fifer v. Williams, 9 Cir., 5 F.2d 286 ; Port Newark Bank v. Waldron, 3 Cir., 46 F.2d 296 ; Liberty Bank v. McIntosh, 4 Cir., 16 F.2d 906 , certiorari denied 273 U.S. 769 , 783, 47 S.Ct. 571 , 71 L.Ed. 890 ; McDonald v. State of Nebraska, 8 Cir., 101 F. 171 ; Jackson v. McIntosh, 5 Cir., 12 F.2d 676 ; Hulse v. Argetsinger, 2 Cir., 18 F.2d 944 ; Ex parte Moore, 4 Cir., 6 F.2d 905 ; Steele v. Randall, 8 Cir., 19 F.2d 40 ; Lehman v. Spurway, 5 Cir., 58 F.2d 227 , certiorari denied 287 U.S. 621 , 53 S.Ct. 20 , 77 L.Ed. 539 . The court quoted extensively also from the decisions in other states construing statutes similar to that of Illinois, including Bennett v. Duke, 38 Ga.App. 598 , 144 S.E. 686 ; Cochran v. Bennett, 37 Ga.App. 202 , 139 S.E. 428 ; State ex rel. Richmond v. District Court, 45 Wyo. 29 , 14 P.2d 673 ; Riches v. Hadlock, 80 Utah 265 , 15 P.2d 283 ; Miracle v. Dixon, *882 121 Okl. 180 , 249 P. 153 ; In re Union Bank of Brooklyn, 176 App.Div. 477 , 163 N.Y.S. 485 ; Therrell v. Rinaman, 107 Fla. 110 , 144 So. 327 , in all of which the receiver is defined as an executive creature of the state or as an administrative agent or officer of the state, and concluded that the Illinois law should be .similarly interpreted. The decision turned upon another point upon appeal in People ex rel. Barrett v. West Side Trust & Savings Bank, 362 Ill. 607 , on page 617, 1 N.E.2d 81 , on page 85, but the State Supreme Court did not disagree with the Appellate Court’s, classification of the receiver and referred in its opinion to the personan charge, that is, the receiver as the “auditor and his agent.”
It seems to me, therefore, that a receiver appointed by the national comptroller and one appointed by a state auditor are both officers or agents of executive officials appointing them; that the receiver here is an administrative agent of the state auditor charged with carrying out statutory duties under the direction of the auditor.
I think he can not be classified as an employee of the bank. He is.rather successor to the Board of Directors, as a new statutory entity. By commencement of liquidation proceedings, the corporation is not dissolved; it retains its legal existence created by the state, but the commonwealth steps in, says that, in the interest of the public, the bank shall be liquidated and names the receiver as a quasi-trustee for the benefit of all parties who are to share in liquidation and distribution of the assets.
I do not consider authoritative decisions that compensation of a state agent who is paid from private funds may be subject to federal income tax as militating in any way against this conclusion. The question in such cases is whether the federal government is unconstitutionally levying a tax upon state officials who are engaged in exercise of essential governmental activities. That, to me, is far apart from the question confronting us. It is clear that not all state agencies and instrumentalities are exempt from federal taxation, but our question is, what position does plaintiff occupy in the State of Illinois, and clearly he is its agent or officer.
To my mind it is immaterial that. his compensation is paid from the assets of the receivership estate. The personnel of the payor of compensation may be relevant but it is not always decisive of who is employer and who is employee. The fact that plaintiff’s compensation comes from the bank’s assets does not alter the legal conclusion that he is an agent of the state for administrative purposes.
I think the judgment should be affirmed.