Bailey v. Tillinghast
Citation | 99 F. 801 |
Decision Date | 12 February 1900 |
Docket Number | 614. |
Parties | BAILEY et al. v. TILLINGHAST. |
Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
This is a suit in equity, brought by Philip Tillinghast, as receiver of the Columbia National Bank of Tacoma, in the state of Washington, an association organized under the national banking act, against 46 defendants, sued as stockholders, for the purpose of recovering an assessment of $61 per share of the stock held by them, levied by the comptroller of the currency upon their personal liability on account thereof imposed by section 5151 of the Revised Statutes of the United States. The material facts as developed by the pleadings and proofs are as follows:
The Columbia National Bank of Tacoma, Wash., was organized on the 2d day of September, 1891, with a capital stock of $200,000 and thereupon engaged in the banking business at that place. On the 12th day of January, 1892, at the regular annual meeting of the shareholders, by a two-thirds vote, the said shareholders resolved to increase the capital stock of the association in the sum of $300,000. The resolution passed for that purpose was as follows: Thereupon notice was given to each shareholder of the association, granting the privilege to each of them of subscribing for such number of shares of the proposed increase of the capital stock as such shareholder was entitled to, according to the number of shares owned by him before the stock was voted to be increased. ' The shareholders having failed to subscribe for such increase, the books of the association were opened for subscription, and, among others, the defendants subscribed for certain shares of the increased stock, and paid for their subscriptions. Certificates of stock for the amount subscribed by them, respectively, were issued, and received by them, and their names were entered as shareholders in the stock book and ledger of the association. The whole amount of stock so subscribed by the defendants and others, and paid for, amounted to the sum of $150,000. The bank included this stock in its statements published, in accordance with the banking act, as 'capital stock paid in not certified'; and dividends were paid by the association in the same manner and to the same extent as dividends upon the original capital stock of the said association, to the defendants among the rest. This $150,000 of stock had all been taken and paid for by the last day of July, 1892, but was not certified to the comptroller as fast as $50,000 thereof was subscribed and paid for; nor was any certificate of the increased stock certified to the comptroller until the 9th day of September, 1895, when two-thirds of the shareholders of the said association, acting with the approval of the comptroller of the currency, and at a meeting called for the purpose, voted to modify the said increase of stock of $300,000 by just one-half, making it only $150,000, and the total amount of capital stock, original and increased, $350,000, instead of $500,000. Soon after this the officers of the association certified to the comptroller the fact of said increase of $150,000, and that it had been fully paid. On the 23d day of October, 1895, the comptroller certified in due form that the capital stock of the association had been increased in the sum of $150,000, that that sum had been paid in, and that he approved of such increase. With this certificate the comptroller transmitted the following explanatory letter:
'Mr. W. G. Peters, Cashier, Columbia National Bank, Tacoma, Wash.-- Sir: Inclosed herewith you will find my certificate, approving the increase of the capital stock of your association from $200,000 to $350,000, with letter to that effect. In connection with these papers, I desire to inform you of my reasons for approving this increase of capital stock. On investigation it appears that a meeting of the shareholders of the Columbia National Bank was held January 12, 1892, at which 1,429 of the 2,000 shares of stock were represented, 1,394 of which were voted in favor of increasing the capital stock. Subsequently, subscriptions to the increased stock were taken to the amount of $150,000, and this amount has been certified by the officers of the bank as having been paid in as permanent capital, their certificates to this effect being dated July 25, 1895. In the meantime it appears that the subscribers to the increased stock have received the same dividends as the other shareholders since the time their money was paid into the bank as capital stock and that no effort appears to have been made by them to have the increase of capital stock certified to this office in order that the comptroller's certificate of approval might be obtained, and no complaints appear to have been made by them because of this delay, so long as the bank remained in fairly good condition. The published reports of condition of the bank have advertised the amount paid in for increased capital stock as 'uncertified capita,' holding out to the public that the certified capital of the bank, namely, $200,000, had been increased by the amount so published, to which the new shareholders tacitly consented. It must necessarily follow that the patrons of the bank have considered this 'uncertified capital' as a part of the permanent capital of the bank, and have made their deposits with faith in this belief; hence, if the bank should at any time in the future become unable to continue business, it would not appear in any way equitable that the subscribers to the increased capital stock should be put upon the same footing with the innocent depositors, who have relied upon the credit of the bank as maintained by its published reports of condition. For these reasons I have determined that it is my duty to approve the increase of capital stock in the amount certified by the officers of the bank as having been paid.
'(Signed) Very respectfully, James H. Eckels, Comptroller.'
When, on September 9, 1895, the above-mentioned modification was resolved upon by the shareholders, the affairs of the ban had become critically involved, and in fact the institution was insolvent. On August 27, 1895, the defendant Bailey, in behalf of himself and the other defendants, addressed a letter to the comptroller, protesting against any increase in the sum of $150,000, which had been subscribed, to which letter the comptroller replied as follows: 'You are respectfully informed that on August 5th the representative of the bank referred to was advised that, in view of the fact that the whole amount applied for had not been paid in, my certificate authorizing increase of the capital stock of the bank would not be issued, as per shareholders' resolution of January, 1892. meeting of September 9, 1895, was held, at which the modification of the increase of capital stock was determined upon by the shareholders. On the 24th day of October-- which was the day after the comptroller had approved the increase of the capital stock of the bank in the sum of $150,000, he (the comptroller) directed a national bank examiner to close the doors of said bank, presumably on account of its insolvency, and a receiver was appointed.
Certain other incidental facts are referred to in the course of the opinion which follows, in connection with the questions therein discussed. All the defendants demurred to the bill upon the ground that no sufficient basis for equitable relief was therein shown against defendants, or any of them; and some of them, more specifically, upon the ground 'that the relief sought is not of equitable cognizance, because it appears upon the face of the bill that complainant had a plain and adequate remedy at law. ' The defendants filed a cross bill, wherein, upon the ground of matters already stated, and certain other facts hereinafter referred to, they prayed that the comptroller's certificate authorizing the increase of capital stock by $150,000, of September 9, 1895 should be decreed to be 'wholly null and void, as made without jurisdiction or authority, and that complainant be enjoined from asserting any claim against the respondents under or by virtue thereof. ' The demurrers to the original bill were overruled, Judge Taft presiding. The defendants answered, and a replication was filed. Complainant in the original bill answered the cross bill, and complainants therein filed a replication, and proofs were taken. Judge Clark, who presided in the circuit court on the final hearing, passed a decree for the complainant. His opinion is reported in 86 F. 46. ...
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