B. P. O'Connor, Receiver v. Vermont Peoples National Bank
| Decision Date | 04 May 1937 |
| Citation | 192 A. 9,109 Vt. 1 |
| Parties | B. P. O'CONNOR, RECEIVER v. VERMONT PEOPLES NATIONAL BANK |
| Court | Vermont Supreme Court |
February Term, 1937.
Bank Stock Assessments---Liability of Pledgee---Basis of Liability of Listed Shareholder---Liability of Pledgor---Purpose of Stockholders' List---Pledgee Held Liable---Grounds of Liability.
1. Liability for assessments on national bank stock for the benefit of creditors may be established by allowing one's name to appear and continue upon the books of such bank as owner, though in fact he is only a pledgee.
2. The creditors of a national bank are entitled to know who, as shareholders, have pledged their individual liability as security for its debts, engagements and contracts; if a person permits his name to appear and remain on its outstanding certificates of stock and on its register as a shareholder, he is estopped, as between himself and the creditors of the bank, to deny that he is a shareholder, and his liability continues until there is a transfer of the stock on the books of the bank, even where he has, in good faith, previously sold it and delivered the certificate to the buyer, with a power of attorney in such form as to enable the transfer to be made.
3. Where one holds national bank stock as pledgee merely, and the bank's register shows this fact, the pledger and not the pledgee is liable for an assessment for the benefit of creditors.
4. It is the purpose of the statutory requirement that a national bank shall keep a list of its stockholders that those who deal with the bank may know to what extent those whose names appear thereon can be relied upon as security to the bank's patrons.
5. Where bank had certificate of stock in another national bank deposited as collateral security, issued in its own name without anything to indicate its status as pledgee, and its name appeared as owner on the stock register of such other bank, it was liable for an assessment levied by the receiver for the benefit of creditors of such other bank and the mere fact that it had notified the other bank, before the latter was declared insolvent, that it held as pledgee, without taking any steps to have the certificate or the register changed, did not affect the situation.
6. Bank which had stock of another national bank issued in its name so that neither the stock certificate nor the stock register indicated that it held the stock as pledgee, was liable for an assessment on the stock for the benefit of creditors because it was estopped from denying its liability by voluntarily holding itself out to the public as owner of the stock, because by taking and completing the legal title, it released the former owner from such liability, and because having put itself in a position to be entitled to the dividends, to vote in stockholders' meetings, and to have and enjoy all the privileges of ownership, it would be inequitable and unjust to allow it to refuse the responsibilities of a stockholder.
ACTION OF CONTRACT by receiver of insolvent national bank to recover assessment on stock of said bank standing in the name of the defendant bank. Plea, general denial and special pleas denying liability upon the grounds that the stock in question came into the hands of the defendant as collateral for a loan, that it was always held and carried as collateral only and that the defendant's status with regard to the stock was solely that of pledgee. A special plea alleging the solvency of the bank was expressly waived in open court. Trial by court at the April Term, 1936, Windham County, Jeffords, J., presiding. Judgment for the plaintiff. The defendant excepted. The opinion states the case.
Judgment affirmed.
Frank E. Barber (C. Menzies Miller on the brief) for the defendant.
Arthur P. Carpenter and Neil D. Clawson for the plaintiff.
Present: POWERS, C. J., SLACK, MOULTON, SHERBURNE and BUTTLES, JJ.
The plaintiff as receiver of the National Bank of Bellows Falls brings this suit to recover an assessment on twenty-one shares of the capital stock of that bank standing on its books in the name of the defendant on January 15 1934, the day on which the Bellows Falls bank was declared insolvent. These shares of stock came into the defendant's possession as security for a loan. The certificates were then in the name of Emma M. Childs, and the stock represented thereby stood in her name on the books of the bank. The certificates were duly endorsed by her in blank at the time when they were pledged to the defendant, but a transfer on the books of the Bellows Falls bank was not made until June, 1931. At that time the defendant, to enable it to have the dividends thereon paid directly to it, caused the stock to be transferred to its name on the stock register of the Bellows Falls bank, and on June 26, 1931, it received in exchange for the Childs certificates a certificate for twenty-one shares made out in its name. From that time to this, the stock has stood on the books of the Bellows Falls bank in the name of the defendant with nothing to indicate that the latter was not the absolute owner of it. During that time, the dividends were paid directly to the defendant, as long as any dividends were paid. The defendant, by proxy attended and participated in at least one stockholders' meeting. Under date of August 1, 1933, the officers of the Bellows Falls bank sent the defendant as a stockholder, a printed letter explaining its financial difficulties and setting forth a plan for saving as much as possible from its assets, and soliciting a subscription for stock in a new bank to be organized. The defendant replied to this communication by a letter dated August 4, 1933, and...
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