Austin v. Campbell

• Decision Date: 28 February 1919
• Docket Number: (No. 2042.)
• Citation: 210 S.W. 277
• Parties: AUSTIN, Com'r of Insurance and Banking, v. CAMPBELL et al.
• Court: Texas Court of Appeals

210 S.W. 277

AUSTIN, Com'r of Insurance and Banking, v. CAMPBELL et al.

(No. 2042.)

Court of Civil Appeals of Texas. Texarkana.

February 28, 1919.

On Motion for Rehearing, March 21, 1919.

Appeal from District Court, Gregg County; Daniel Walker, Judge.

Suit by C. O. Austin, Commissioner of Insurance and Banking, against T. D. Campbell and another. From that part of the judgment denying relief against defendant named, plaintiff appeals. Judgment in favor of named defendant set aside, and judgment rendered for plaintiff.

F. H. Prendergast, of Marshall, and Edwin Lacy, of Longview, for appellant.

Marsh & McIlwaine, of Tyler, and F. J. McCord and Young & Stinchcomb, all of Longview, for appellees.

HODGES, J.

On June 29, 1917, C. O. Austin, commissioner of insurance and banking, filed this suit against G. A. Bodenheim, as a stockholder of the People's State Bank of Longview, and T. D. Campbell, as a former stockholder of the same institution. The purpose of the suit was to enforce the liability of Bodenheim and Campbell for the unpaid debts of the People's State Bank, whose affairs had been taken over by the commissioner of insurance and banking as provided by law in case of insolvency. In a trial before the court a judgment was rendered in favor of the commissioner against Bodenheim for the full amount sued for, but denying relief against Campbell upon grounds that will be hereinafter stated. The appeal is from that portion of the judgment in favor of Campbell.

The following are, in substance, the findings of fact filed by the trial judge and which appear to be the only record of what was proven in the court below: The People's State Bank of Longview was a banking corporation incorporated under the laws of Texas, and prior to the dates hereinafter mentioned was doing a general banking business. Its capital stock amounted to $60,000, divided into 600 shares of the par value of $100 each. On August 18, 1916, the bank became insolvent and was placed in the hands of the commissioner of insurance and banking in accordance with the provisions of the statute. On December 20, 1915, Campbell owned shares of stock in the bank of the face value of $6,000. On that date he sold and transferred his stock to Bodenheim, who continued to own and hold it till the bank was placed in the hands of the commissioner on August 18, 1916. At the time of the transfer from Campbell to Bodenheim, the bank owed debts to the amount of $12,000, which remained unpaid when its affairs were taken over by the commissioner on the date above mentioned. On October 17, 1916, the commissioner levied an assessment against the stockholders of the insolvent bank and sent out to each of them the following notice:

"Department of Insurance and Banking, State of Texas, Austin.

                                       "October 17th, 1916
                

"Notice to Stockholders of the People's State Bank of Longview, of Record on August 18th, 1916, and to Stockholders Who Transferred Their Stock within Twelve Months Previous to August 18th, 1916.

"Article 552, Revised Statutes, State of Texas (section 186, State Banking Law, Digest of 1913), provides as follows:

"`If default shall be made in the payment of any debt or liability contracted by any bank, trust company, surety and guaranty company, or savings bank, each stockholder of such corporation, as long as he owns shares therein, and for twelve months after the date of a transfer thereof, shall be personally liable for all debts of such corporation existing at the date of such transfer, or at the date of such default, to an amount additional to the par value of such shares so owned and transferred.'

"You are further advised that article 459, Revised Statutes, State of Texas, read as follows:

"`The commissioner may, if necessary, to pay the debts of such state bank, enforce the individual liability of the stockholders.'

"The general rule is that the stockholders' liability continues up to the time of the transfer on the books of the corporation and a transfer of stock is not released from statutory liability until one year after the transfer is entered on the books of the corporation. The stockholders of the above bank will note, by reading article 552, Revised Statutes, quoted above, that their liability for an amount equal to the stock owned begins to run immediately when default has been made by the bank in the payment of any debt or liability contracted by it.

"The stockholders are further advised that on August 18, 1916, the People's State Bank of Longview was found unable to meet its debts and liabilities, and therefore, acting under the authority vested in me by law, notice is hereby given that a 100 per cent. assessment is levied upon the stockholders of the above bank, and the stockholders are instructed to send to Jno. L. Douglas, special agent, Longview, Texas, the amount of the assessment thus levied.

                     "Respectfully,     Chas. O. Austin
                     "Commissioner of Insurance and Banking of
                         the State of Texas."
                

In addition to the general conclusion that Campbell was not liable, the court, at the request of the parties, stated his reasons for so holding, which are as follows: (1) That the notice sent out by the commissioner to the stockholders was not sufficient as an assessment against Campbell as a former stockholder; (2) there being no evidence that Bodenheim was insolvent, either on the 20th of December, 1915, or the 18th of August, 1916, or on the date when this suit was instituted, or at the time of the trial, and there being no evidence that the commissioner cannot recover from him the full amount sued for with interest, the plaintiff was not entitled to recover from Campbell, even though the assessment made by the commissioner might otherwise be binding upon him; (3) there being no evidence that the commissioner, by exhausting the 100 per cent. liability against the stockholders of the bank as it existed on August 18, 1916, cannot realize an amount sufficient to satisfy the claims against the bank existing on the 20th of December, 1915, the plaintiff could not recover from Campbell, even though the assessment and notice were sufficient. These are the reasons assigned by the honorable trial judge for holding that Campbell, a former stockholder, was not liable in a proceeding where both the pleadings and the evidence were considered sufficient to justify a judgment against Bodenheim, a present stockholder. In this appeal the attack is made only upon the conclusions of law announced by the court.

The question before us is: Were the pleadings and the facts sufficient to require a judgment against Campbell, who had transferred his stock within less than one year prior to the date on which the bank made default in the payment of its debts? Section 16 of article 16 of the Constitution contains this provision:

"The Legislature shall, by general laws, authorize the incorporation of corporate bodies with banking and discounting privileges, and shall provide for a system of state supervision, regulation and control of such bodies which will adequately protect and secure the depositors and creditors thereof. Each shareholder of such corporate body incorporated in this state, so long as he owns shares therein, and for twelve months after the date of any bona fide transfer thereof, shall be personally liable for all debts of such corporate body existing at the date of such transfer, to an amount additional to the par value of such shares so owned or transferred, equal to the par value of such shares so owned or transferred."

The statute, which seems to be a substantial repetition of the foregoing, will be found quoted in the findings of the court. While it is worded differently, it does, not, in our opinion, extend the liability of former stockholders beyond the limits fixed in the Constitution. The phrase, "each stockholder of such corporation," which occurs in the first sentence of the article of the statute, should be construed to mean stock holders owning and holding shares at the time the default is made. When thus construed, there is no material difference between the language of the statute and that of the Constitution; but even if it were otherwise, we think that provision of the Constitution which defines the liability incident to the ownership of shares of stock in banking corporations is self-executing and sufficiently broad to cover this case. The terms of the constitutional provision are very specific:

"Each shareholder, so long as he owns shares, and for twelve months after" he transfers them, "shall be personally liable for all the debts of such corporate body existing at the date of such transfer to an amount," etc.

Section 5151 of the federal statute (Rev. St.), which deals with the liability of stockholders in national banks, is worded somewhat differently. It provides that the shareholders of national banking associations shall be held "individually responsible, equally and ratably, and not one for another, for all contracts, debts," etc. At the time our constitutional amendment was formulated, its authors must have been familiar with this...