Allender v. Ghingher

• Decision Date: 19 February 1936
• Docket Number: 19,20.
• Parties: ALLENDER ET AL. v. GHINGHER. GERWIG ET AL. v. GHINGHER.
• Court: Maryland Court of Appeals

183 A. 610

170 Md. 156

ALLENDER ET AL. v. GHINGHER.

GERWIG ET AL. v. GHINGHER.

Nos. 19, 20.

Court of Appeals of Maryland

February 19, 1936

Appeals from Circuit Court, Frederick County; Hammond Urner and Arthur D. Willard, Judges.

Two suits by John J. Ghingher, receiver of the Central Trust Company of Maryland, against James H. Allender, Herbert H Cross, Louis L. Brown and Charles H. Cook and Elizabeth W Cook, his wife, and others, and Ethel H. Gerwig and C. Joseph Gerwig, her husband, Evers C. Hoffman and Sarah E. Jones and others. From orders overruling their demurrers to the complaint, the named defendants appeal.

Orders reversed.

BOND C.J., dissenting.

Argued before BOND, C.J., and OFFUTT, PARKE, SLOAN, MITCHELL, and JOHNSON, JJ.

Jerome A. Loughran and James Clark, both of Ellicott City (John Wood, Jr., of Westminster, on the brief), for appellants.

John S. Newman and Parsons Newman, both of Frederick, for appellee.

JOHNSON Judge.

Since these appeals present identical questions of law, they may be conveniently considered together. Broadly stated, their solution depends upon (a) whether or not a receiver can maintain a suit in equity against stockholders of a banking institution of this state to enforce their statutory liability under section 72 of article 11 of the Code, the assessment being 100 per cent. of the par value of the stock held by them; and (b) if such suit is sustainable in equity, whether it is permissible to divide the stockholders into various groups and at different times bring separate suits against them for the enforcement of such liability.

Appellee, Ghingher, by decree of the circuit court for Frederick county, in equity, was appointed to succeed George W. Page as receiver of Central Trust Company of Maryland for the purpose of liquidating its assets in accordance with section 9, article 11 of the Code (as amended by Laws 1933, c. 529, § 1). A petition having previously been filed by the former receiver, showing the necessity of collecting from the stockholders their full statutory liability in order to meet the obligations of the insolvent institution, the equity court passed an order authorizing him to proceed to enforce such liability by suit, either at law or in equity, and in such jurisdictions as he might be advised. Thereafter, in pursuance of such authority, the present receiver filed two separate suits in the circuit court for Frederick county, in equity, against certain stockholders of the trust company to enforce such statutory liability, having at the time of filing each obtained authority from the equity court to file the same in the form of separate suits. In the first of these (No. 19 on this record) the defendants consist of 95 stockholders of the trust company, while the second suit (No. 20) was filed against 65 stockholders of the same company. In each of the suits the addresses of the defendant stockholders are given, and while a number of them are residents of Frederick county, some reside in Howard county, others are residents of Carroll county, still others reside in Montgomery county, while the remainder have residences in Washington county. Demurrers to each bill were filed by appellants, all of whom resided beyond the confines of Frederick county, and in each case the principal reason assigned in support of them was that the plaintiff had an adequate and complete remedy at law, and the equity court for Frederick county was, therefore, without jurisdiction. By overruling these demurrers, the chancellors below rejected appellants' contentions, and in effect ruled that the jurisdictional question thus raised by them was without merit. From such orders, these appeals are taken.

Obviously, at the outset it is necessary to consider the statute under which such liability arises and is here sought to be enforced (chapter 219, § 68, Acts of 1910, now section 72 of article 11 of the Code), concerning which the following observation was made by Judge Offutt, speaking for this court, in Robinson v. Hospelhorn, 179 A. 515, 521: "The cases in which the nature of such a liability have been considered have necessarily turned upon the language of particular statutes which the courts were called upon to construe. The liability is wholly statutory, its definition must be found in the words of the statute creating it, and there is no room for the application of general principles, or of precedents except those which deal with this particular statute or with others substantially similar to it, although where its language is ambiguous the ordinary canons of statutory construction may be invoked to aid in its interpretation, Morse on Banking, § 675. It is in derogation of the common law and its meaning cannot be extended beyond the words used. Id., n. 3, 4; Brunswick Terminal Co. v. National Bank, 192 U.S. 386, 24 S.Ct. 314, 48 L.Ed. 491."

Moreover, in the recent case of Ghingher v. Stockholders of People's Banking Co. of Smithsburg (Md.) 182 A. 558, 561, Judge Mitchell, in a well-considered opinion, reviewed all legislative enactments leading up to the passage of this particular statute and reached the conclusion that it was passed in amplification of the Constitution, and when invoked, attached to those holding stock at the time of such invocation; that an absolute contract between the stockholders and the bank arose from the constitutional provision. It was there said: "By virtue of this coalescence of statutes, the receiver of a bank, for the first time, was empowered to enforce the liability of its stockholders, collecting their contribution to the common fund, from which he would make distribution to the bank's creditors.

"In view of the inauguration of this new system of liability enforcement, involving a change in the theories of recovery and a corresponding modification of the rules of evidence, the cases which had been decided during the existence of the old practice were no longer controlling."

This act (section 72, art. 11), to which these quotations from the cited opinions have reference, is for all practical purposes so nearly identical with section 63, title 12, U.S.C.A. (the National Banking Act) as to leave no reasonable doubt that in its enactment the language of the former act was adopted, and it may be inferred that it was done for producing uniformity in liability of the two classes of stockholders. In the absence of any construction of such statute by this court, decisions of the federal courts, construing it over a period of many years, are entitled to great weight and should be given effect, unless they contravene some established policy of the state. Robinson v. Hospelhorn, supra.

From a consideration of the adjudicated cases under the federal act, of which section 72 of article 11 is the counterpart, these principles have been definitely established:

The liability of the stockholders is several and not joint; and where the assessment is for less than the full amount of such liability the suit may be either at law or in equity, but when the order or assessment is for the full amount of the par value of the stock, the suit against the stockholders must be at law, unless there are special facts existing requiring the interposition of a court of equity. Kennedy v. Gibson (Md.1869) 8 Wall. 498, 19 L.Ed. 476; Bundy v. Cocke (Ky.1888) 128 U.S. 185, 9 S.Ct. 242, 32 L.Ed. 396; Stanton v. Wilkeson (D.C.N.Y.1876) 22 Fed.Cas. page 1074, No. 13,299, 8 Ben. 357; Young v. Wempe (C.C.Cal.1891) 46 F. 354; Bailey v. Tillinghast (Ohio 1900) 99 F. 801, 40 C.C.A. 93, affirming (C.C.1997) 86 F. 46; Parker v. Robinson (Mass.1895) 71 F. 256, 18 C.C.A. 36; Casey v. Galli (1876) 94 U.S. 673, 24 L.Ed. 168; Zimmerman v. Carpenter (C.C.S.D.1898) 84 F. 747; Rankin v. Miller (D.C.Del.1913) 207 F. 602; Bailey v. Sawyer (C.C.Minn.1877) Fed. Cas.No. 744; Hale v. Allinson, 188 U.S. 56, 23 S.Ct. 244, 47 L.Ed. 380. See, also, Vol. 3, R.C.L. 415; 7 C.J. 512; United States v. Knox, 102 U.S. 422, 26 L.Ed. 216; Studebaker v. Perry, 184 U.S. 258, 22 S.Ct. 463, 466, 46 L.Ed. 528.

We quote from the opinion in the case last cited: "These observations clearly imply that the Comptroller, in the exercise of his discretion, may levy successive assessments as they may appear to be necessary. If the power can be exercised only once no reason is apparent why equity should have jurisdiction for the collection of an assessment less than 100 per cent. If the stockholders' liability is fixed once for all by the first assessment of the Comptroller, the legal remedy for the collection of a 10 per cent assessment is as full, adequate, and complete as it is for the collection of the 100 per cent assessment. The reason why, when the assessment is for the 100 per cent, the proceedings must be at law, and when for a less amount it may be in equity, is obvious. When the full amount is assessed there can be but one suit against each stockholder. He is suable for his full liability at once, and there is no reason for equitable jurisdiction. If a partial assessment is made, there may be other assessments, when the receiver has liberty to sue at law for even a partial assessment, though equity has concurrent jurisdiction to prevent a multiplicity of suits."

Concerning the construction thus placed upon the statute, Mr. France, in his work on Corporation Law (2d Ed.), observes: "The decisions of the Supreme Court on the statutes have, as a whole, displayed practical good sense; and they have worked out a method which is simple, economical and efficient. The result is that in many states the older methods have been superceded by legislation substantially like that governing national banks."

It will be further observed that according to these authorities a distinction is made in the method of enforcement when...