Andrew v. Sanford

• Decision Date: 13 December 1930
• Docket Number: 40379
• Citation: 233 N.W. 529,212 Iowa 300
• Parties: L. A. ANDREW, State Superintendent of Banking, Appellant, v. G. L. SANFORD, Appellee
• Court: Iowa Supreme Court

233 N.W. 529

212 Iowa 300

L. A. ANDREW, State Superintendent of Banking, Appellant, v. G. L. SANFORD, Appellee

No. 40379

Supreme Court of Iowa, Des Moines

December 13, 1930

REHEARING DENIED APRIL 14, 1931.

Appeal from Van Buren District Court.--E. S. WELLS, Judge.

Action to recover superadded liability against the defendant as an alleged stockholder in an insolvent bank. The district court held that the defendant was not liable and the plaintiff appeals.

Affirmed.

John Fletcher, Attorney-general, and Calhoun & Calhoun, for appellant.

McBeth & Stong, for appellee.

ALBERT J. EVANS, STEVENS, FAVILLE, and DE GRAFF, JJ., WAGNER and KINDIG, JJ., concurring.

OPINION

ALBERT, J.

The facts in this case, as shown by the record, are that the Iowa Savings Bank of Douds was duly incorporated under the laws of the State of Iowa and doing a general banking business. The defendant, Grover L. Sanford, was originally the owner of one share of stock in said bank of the par value of $ 100, and his name so appeared on the books of the bank. On or about the 14th day of July, 1924, he sold this share of stock, in good faith, to R. C. Cramlet, receiving a valuable consideration therefor. Sanford went to the bank, advised the officers of the bank of the sale, and directed them to make a transfer of the same to Cramlet. Carson, the officer with whom the conversation was had, said he would make the transfer on the books. With reference to this matter, Sanford testified that Carson "did not ask me to sign any written transfer of any kind at the time, nor at any time did he ever ask me to execute a written assignment of the stock."

After this transaction, all dividends on this share of stock were paid to Cramlet and the bank filed with the county auditor of its county a list of stockholders in which it did not list Sanford, but listed Cramlet as the owner of this one share of stock. The matter rested in this condition until November 15, 1928, when the bank went into liquidation and the receiver finding Sanford's name on the books of the bank as the owner of one share of stock, brought this action to recover the super-added liability.

Some other facts may be stated as throwing some light on the fact situation:

A. S. Sanford, father of the defendant, was originally the owner of this share of stock. He transferred it on the books of the bank July 17, 1911, to Grover L. Sanford, the defendant, and a new certificate was issued to the latter which was entered on the books of the bank. The bank seems to have kept no regular book showing the ownership of stock, but noted the same on the stubs of the stock certificate book.

Defendant testified that when this certificate of stock was issued to him, it was left with the bank and never, at any time, came into his possession and he never saw the same. The evidence shows that when the certificate was issued, the father receipted for the same and left it at the bank. Some officer of the bank testifies that he made search for the certificate, but it could not be found. The bank examiner urged the officers to make this transfer on the books, and in 1927 one of the officers prepared a duplicate certificate for this share of stock, wrote an assignment on the back thereof, with power of attorney to transfer the stock on the books of the bank, and presented the same to the defendant, at the same time demanding that he (defendant) execute a bond for $ 100. Sanford refused to do this, but did not refuse to sign any other papers. It is apparent from the testimony of this officer as a witness that he would not accept an assignment unless the bonds were issued.

The relief sought here is bottomed on the liability provided in Sections 9251 and 9252, Code, 1924, which read as follows:

"All stockholders of savings and state banks shall be individually liable to the creditors of such corporation of which they are stockholders over and above the amount of stock by them held therein and any amount paid thereon, to an amount equal to their respective shares, for all its liabilities accruing while they remained such stockholders.

"Section 9252. Should any such association or corporation become insolvent, its stockholders may be severally compelled to pay such deficiency in proportion to the amount of stock owned by each, not to exceed the extent of the additional liability hereby created."

It will be noted that the above-quoted section, 9251, provides that all stockholders of savings banks shall be liable, etc. The question for our determination therefore is, whether or not the defendant, Sanford, was a "stockholder" of this bank at the time it went into liquidation. To a proper determination of this question, the following sections of the Code of 1924 must be considered:

Section 8386. "The transfer of shares is not valid, except as between the parties thereto, until regularly entered upon the books of the company, showing the name of the person by and to whom transferred, the numbers or other designation of the shares, and the date of the transfer; but such transfer shall not exempt the person making it from any liability of said corporation created prior thereto."

Section 9192. "The capital of savings banks shall be divided into shares of one hundred dollars each, issued or acquired only upon full payment of the sums represented by them, transferable on the books of the corporation in such manner as shall be prescribed by law and in its by-laws. Stock owned by any corporation, association, or society may be transferred by any person authorized to do so by its board of directors or trustees."

Also, Article X, Section 1, of the articles of incorporation of this savings bank provided:

"The shares of stock in the corporation shall be issued only upon the payment of the sum represented by them, and shall be transferable only by assignment on the books of the corporation."

In Matteson v. Dent, 176 U.S. 521, 44 L.Ed. 571, 20 S.Ct. 419, the United States Supreme Court made the following concise statement:

"But the settled doctrine is that, as a general rule, the legal owner of the stock of a national banking association--that is, the one in whose name stock stands on the books of the association--remains liable for an assessment so long as the stock is allowed to stand in his name on the books, and, consequently, that although the registered owner may have made a transfer to another person, unless it has been accompanied by a transfer on the books of registry of the association, such registered owner remains liable. * * * True it is that exceptions have been engrafted upon this doctrine as to national bank stockholders by decisions of this court, but none of them are germane to the matter now considered. Cases enunciating certain of the exceptions referred to are cited in the following summary: * * * 2. Where a transfer of stock is made and delivered to officers of a bank, and such officials fail to make entry of it, the acts referred to will operate a transfer on the books, and extinguish the liability as stockholder of the transferrer", citing Whitney v. Butler, 118 U.S. 655, 30 L.Ed. 266, 7 S.Ct. 61.

The Whitney case, above cited, was a case in which the bylaws of the bank provided that its stock could be assignable only on the books of the bank when the owner of the stock delivered the certificates to the purchaser, accompanied by power of attorney authorizing the transfer; that the stock was never in fact transferred on the books of the bank. In relation thereto the court said:

"Where the seller delivers the stock certificate and power of attorney to the buyer, relying upon the promise of the latter to have the necessary transfer made, or where the certificate and power of attorney are delivered to the bank without communicating to its officers the name of the buyer, the seller may well be held liable as a shareholder until, at least, he shall have done all that he reasonably can do to effect a transfer on the stock register. * * * Through their agents, the brokers, who sold the stock, and through whom they received the money paid for it, they surrendered the certificates and power of attorney to the president of the bank, he receiving them, with knowledge not only that defendants had parted with all title to the stock and had been paid for it, but, also that it had been purchased at public auction by Eager. He knew equally well that the surrender of the certificates and the delivery of the power of attorney and the certificate from the probate court could only have been for the purpose of having it appear, by means of a transfer on the books of the bank, that Whitney's executors were no longer shareholders. The right to have the transfer made, and thereby secure exemption from further responsibility, was secured to the defendants both by the statute and by the by-laws of the bank. They did all that was required by either as preliminary to such transfer. Nothing remained to be done except for some officer of the bank to make the necessary formal entries on its books. * * * No objection was made to the power of attorney, or to the discharge of the defendants from liability. So far as the record shows, nothing was said or done by the bank's officers to raise a doubt in the minds of the defendants' agents that the transfer would be made at once. It was suggested in argument that the defendants should have seen that the transfer was made. But we are not told precisely what ought to have been done to this end that was not done by them and their agents. Had anything occurred that would have justified the defendants in believing, or even in suspecting, that the transfer had not been promptly made on the books of the bank, they would, perhaps, have been wanting in due diligence had they not, by...