Davis v. Moore

• Citation: 197 S.W. 295,130 Ark. 128
• Decision Date: 09 July 1917
• Docket Number: 97
• Parties: DAVIS, STATE BANK COMMISSIONER, v. MOORE. GRAHAM v. DAVIS, STATE BANK COMMISSIONER
• Court: Supreme Court of Arkansas

197 S.W. 295

130 Ark. 128

DAVIS, STATE BANK COMMISSIONER, v. MOORE.

GRAHAM v. DAVIS, STATE BANK COMMISSIONER

No. 97

Supreme Court of Arkansas

July 9, 1917

Appeal from Grant Circuit Court; W. H. Evans, Judge; reversed.

Appeal from Jefferson Chancery Court; John M. Elliott, Chancellor affirmed.

Decree affirmed.

Moore Smith, Moore & Trieber, for appellant in Davis v. Moore.

1. The act is not unconstitutional. Art. 12, § 6, Constitution Ark.; 4 Wheat 518. The Legislature has power to impose the double liability upon stockholders of corporations. 21 N.Y 9; 98 Mich. 472; 26 Me. 196; 9 R. I. 194; 70 Minn. 538; 5 Wis. 577; 108 Ky. 21; 111 Cal. 57; 1 Black. 587; 179 U.S. 46; 15 Wall. 478.

2. It is not against the Fifth Amendment to the Constitution of the United States. 104 U.S. 155; 123 Id. 131; 147 Id. 490. Nor against the Fourteenth Amendment, Constitution of the United States. 164 U.S. 684; 8 Wall. 498; 94 U.S. 673; 99 Id. 628; 201 Id. 216.

3. Nor is it unconstitutional as violative of article 2, section 8, or article 2, section 1, State Constitution. Section 53 of the act is identical with the National Banking statutes. See cases supra. The Bank Commissioner has authority to determine the necessity of an assessment and his determination is conclusive. Supra.

4. No injustice is done to the corporators. Art. 12, § 6, Const.; 64 Ark. 83; 69 Id. 521, 530; 87 Id. 587; 94 Id. 27.

5. Defendant is estopped under sections 4 and 20 of the act to attack the constitutionality of the act. 21 S.W. 39; 65 Id. 312; 16 N.Y. 116; 94 U.S. 673.

6. An order of the chancery court was not a prerequisite to this suit. § 53 act; Rev. Stat. U.S., § 5234; 164 U.S. 684; 107 Id. 251. The decision of the Bank Commissioner is conclusive. 8 Wall. 498; 94 U.S. 763; 99 Id. 628; 201 Id. 216. It is not necessary to prove that the bank is solvent. Nor was it material to prove that the money and debts due the bank had been collected, or exhausted. 92 U.S. 156; 25 Col. 551; 104 Me. 141; 120 Mich. 1.

7. The stockholders were liable for all debts, etc., outstanding January 15, 1915, whether incurred before or after January 1, 1914. 116 Ark. 472. By continuing business after the new act became effective, it is conclusively presumed to have continued under Act 113. See 118 Ark. 176; 124 Id. 531; 120 Mich. 1; 149 F. 305; 12 Ark. 769; 81 N.W. 1059.

8. Interest should be allowed. 94 U.S. 437; Ib. 673; 56 Neb. 288.

Mehaffy, Reid & Mehaffy, for appellee.

1. The act is unconstitutional as an impairment of the stockholders' contract. Art. 1, § 1, Constitution, U.S. No additional burden can be imposed. 54 Ark. 111; 69 Id. 407; 69 Id. 521; 85 Id. 346; 89 Id. 418; 94 Id. 27; 19 Oh. St. 369; 5 Dill. 348.

2. It is contrary to article 12, section 6, Constitution of Arkansas. Supra.

3. Appellees not estopped. 31 Ark. 701.

4. Stockholders are not liable for debts, etc., made before January 1, 1914. The act is not and can not be retroactive. 116 Ark. 472; 38 Conn. 408; 4 Denio (N.Y.) 374; 33 Vt. 84; 15 Wis. 548; 47 S.E. 893.

5. It was not shown that the bank was insolvent when it closed. 129 N.Y.S. 993.

6. Appellant can not maintain this suit. No order of a chancery court was obtained. It was material to allege and prove when the debts, etc., were incurred. 1 Michie on Banks, etc., 238; 70 P. 454.

Taylor, Jones & Taylor, for Graham.

1. The act is unconstitutional. Const., art. 12, § 6; 54 Ark. 111; 58 Id. 407; 69 Id. 521; 85 Id. 346; 89 Id. 418; 94 Id. 27. Especially if the act is retroactive. Cook on Corp. (5 ed.), § 501; Morawetz on Corp., § 1098, p. 1098; Beach on Private Corp., § 40; Thompson, Law of Corp., § 5417; Black on Const. Law, 535; Spelling on Private Corp., § 1028; 1 Rose, Notes U. S. Rep., p. 942; 64 N.J.L. 217; 43 A. 435; 58 N.J.Eq. 97; 68 N.J.L. 588; 90 Am. Dec. 617; 83 Ga. 61; 47 S.E. 893; 57 N.W. 595; 54 Ark. Law Rep. 338.

2. The finding of the Bank Commissioner is not a quasi-judicial determination; but if so, a court of chancery should direct him to give the act its proper construction and then levy such assessments as are reasonably necessary to pay the debts contracted since the statute became effective. Cases supra.

Bridges, Wooldridge & Wooldridge and Moore, Smith, Moore & Trieber, for Davis.

1. The act is not unconstitutional. See cases cited supra.

2. A law is not retrospective when it deals with future maintenance of existing conditions. 166 U.S. 290; 342; 133 N.Y.S. 152; 148 Mass. 368; 19 N.E. 390.

3. There is no estoppel. The action of the commissioner is conclusive. Cases supra. See also 63 S.W. 776. No order of a chancery court was necessary. See authorities cited in brief for appellant, Davis v. Moore.

OPINION

MCCULLOCH, C. J.

In each of the two actions now under review John M. Davis, as Bank Commissioner of the State, was the plaintiff seeking to enforce against one of the stockholders in a bank the liability imposed by the banking law for the debts of the banking corporation to the extent of an amount equal to the par value of the stock held in such corporation. In the Moore case the Bank Commissioner sued the stockholders of the Bank of Leola, a defunct banking corporation, and in the Graham case the Bank Commissioner sued the stockholders of the defunct Bank of Pine Bluff.

The Bank of Leola was incorporated and began business in the year 1907, and was found to be insolvent and was turned over by the board of directors to the Bank Commissioner on January 15, 1915. On April 29, 1915, the Bank Commissioner made a call on the stockholders for the full amount of the double liability prescribed by statute, and upon the defendant's failure to respond he instituted this action on July 23, 1915. The evidence shows beyond substantial dispute that The Bank of Leola was insolvent at the time that its affairs were taken over by the receiver appointed by the Bank Commissioner; that its liabilities, exclusive of the liability to stockholders on their shares of stock, was $ 45,862.82, and that the assets of the bank, according to the appraisement of the fair market value amounted only to the sum of $ 25,306.96, thus showing insolvency to the extent of the sum of $ 20,555.86 of liabilities over the assets. The evidence shows that a considerable portion of the liabilities of the bank existing at the time it was taken over by the Bank Commissioner was incurred prior to January 1, 1914, the date on which the present banking law went into effect. The conclusion reached by the court with respect to the imposed liability under the statute renders unnecessary to inquire how much of the indebtedness was incurred prior, and how much subsequent to the said date on which the banking law went into effect. The case was tried before the court sitting as a jury and there was a finding by the court in favor of the defendant. The Bank Commissioner appealed from the judgment rendered by the court on its finding.

The Graham case was transferred from the circuit court to the chancery court, and was heard by the chancellor upon the pleadings, the decree being in favor of the Bank Commissioner, from which the defendant prosecuted an appeal.

The same questions arise in each case, and may be disposed of in one opinion. The statute under which this litigation arose was an act of the General Assembly of 1913, approved by the Governor March 3, 1913, Acts of 1913, page 462. The last section, however, provides that the act should not take effect until January 1, 1914. The sections of the statute which are necessary to notice in the consideration of these cases read as follows:

"Section 4. The Secretary of State shall turn over to the State Bank Department all papers, books, records, charters, articles of partnership, articles of agreement and amendments thereto, in his office relating to banks, trust companies and savings banks. It shall be the duty of each bank heretofore organized and doing business in this State to report within thirty days after this act goes into effect to the Bank Department, a full and complete list of its stockholders, or members, as the case may be, showing the residence and the amount of stock or interest owned by each, and all such banks as shall make such report and declare its purpose to continue business under this act shall be authorized to do so without the payment of any additional fee, or without the filing of any additional articles of agreement or articles of partnership, providing the legal fees have once been paid for such service. Any bank, trust company or savings bank that shall fail to make report and declare its purpose to continue business, shall not be allowed to do business in this State, and all such as have not paid fees shall pay the same fees as are provided for herein."

"Section 20. Any bank organized under the laws of this State shall be permitted to receive money on deposit, and to pay interest thereon; to buy and sell exchange, gold, silver, coin, bullion, uncurrent money, bonds of the United States, or of this State, or of any city, county, school district, or other municipal corporation or improvement district thereof, and State, county, city, township, school district, or other municipal or improvement district indebtedness; to lend money on chattel and personal security, or on real estate secured by deeds of trust; provided, that all such institutions now organized and doing business in this State are hereby permitted to continue such business; but in all other respects their business, and the manner of conducting same, and the operation thereof shall be carried on subject to the laws of this State, and in accordance therewith."

Section 36 reads in part as follows:

"The stockholders of every bank doing business in this State shall be held individually responsible ...