Bank of Dassel v. March
| Decision Date | 27 March 1931 |
| Docket Number | 28,113 |
| Parties | BANK OF DASSEL, BY A. J. VEIGEL, v. C. H. MARCH |
| Court | Minnesota Supreme Court |
Plaintiff appealed from an order of the district court for Meeker county, Baker, J. overruling its demurrer to the answer, the question involved having been certified as important and doubtful. Affirmed.
Liability of transferor of stock in state bank.
1. The liability of a stockholder in a state bank who transfers his stock is not fixed by Const. art. 9, § 13, par. 3, which relates to banks of issue, though in terms paragraph 3 continues the liability of transferors for a year. There are no banks of issue in the state, and paragraph 3 is without application. Art. 10, § 3, of the constitution imposes liability upon the holders of stock but not upon transferors. Prior to the 1930 amendment to art. 10, § 3, of the constitution, which now determines the liability of stockholders and those who transfer their stock, the transferor's liability was fixed by G.S. 1923 (2 Mason 1927) § 7669; and the liability of the stockholder transferring stock was continued "for one year after the entry of such transfer."
Computation of time covering such liability.
2. By G.S. 1923 (2 Mason, 1927) § 10933(21) it is provided that time shall be computed by excluding the first and including the last day. Under the provisions of § 7669, providing that the liability of a transferor "shall continue for one year after the entry of such transfer," the liability of a stockholder making a transfer on November 23, 1925, continued to and included November 23, 1926.
Debts for which transferor is liable.
3. A bona fide transferor of stock is not liable for the debts of the bank incurred after the transfer. He is liable for those existing at the time of the transfer and not afterwards paid. The complaint alleged that the defendant was the owner of the stock on November 23, 1926. The answer alleged that it was transferred on November 23, 1925. The complaint did not allege debts existing on November 23, 1925. The answer states a transfer prior to insolvency; and, it not appearing that there were debts existing at the time of the transfer and now unpaid, it states a defense.
D. F. Nordstrom, for appellant.
Daly & Barnard and N. D. March, for respondent.
Action by A. J. Veigel, the commissioner of banks, to recover an assessment of 100 per cent levied on stock in the Bank of Dassel alleged to be owned by the defendant. The assessment was made on June 23, 1927, pursuant to L. 1927, p. 376, c. 254, 2 Mason, 1927, § 7699-20, in enforcement of the superadded stockholders' liability. The defendant answered alleging a transfer of his stock on November 23, 1925. The insolvency of the bank was on November 23, 1926. The plaintiff demurred. The demurrer was overruled, and the questions involved are here on plaintiff's appeal from the order overruling the demurrer.
The ultimate question is whether the insolvency of the bank was within a year after the transfer of the defendant's stock on November 23, 1925. The bank was insolvent and was taken in possession by the commissioner for liquidation on November 23, 1926.
1. The controversy arises upon this state of facts. The defendant on November 23, 1925, owned $5,000 in the stock of the Bank of Dassel. On that day he transferred the stock, and the transfer was entered on the books of the bank. The bank became insolvent on November 23, 1926, and on that day the commissioner of banks took possession for liquidation.
It is conceded that the liability of the defendant as stockholder continued for one year after the transfer. It is considered of some importance in computing the year whether the statutory rule of computation excluding the first day and including the last applies. G.S. 1923 (2 Mason, 1927) § 10933(21). The defendant urges that it does not; for if it does the statute construes the constitution in the computation of time, which of course it cannot do; and as a part of his contention the defendant claims that his liability as transferor, if any, is based on the constitution.
The following is art. 9, § 13, par. 3, of the constitution:
"The stockholders in any corporation and joint association for banking purposes, issuing bank notes, shall be individually liable in an amount equal to double the amount of stock owned by them for all the debts of such corporation or association; and such individual liability shall continue for one year after any transfer or sale of stock by any stockholder or stockholders."
The defendant is not a bank of issue. There are no such banks.N.W. Trust Co. v. Bradbury, 112 Minn. 76, 127 N.W. 386, citing Seymour v. Bank of Minnesota, 79 Minn. 211, 81 N.W. 1059.Therefore art. 9 of the constitution imposes no liability upon the defendant as a transferor of the stock.
Art. 10, §§ 1 and 3, of the constitution, before the amendment of 1930, was as follows:
In Allen v. Walsh, 25 Minn. 543, the court referred to the limitation in art. 10, § 1, limiting the terms as used in the article so as to "except such as embrace banking privileges"; and it suggested that if it could be held to include incorporated banks not of issue, still the legislature might impose a greater liability than that fixed by the constitution, and this seems not to be questioned. But in International Tr. Co. v. American L. & T. Co. 62 Minn. 501, 504, 65 N.W. 78, 80, 632, it was held that corporations embracing banking privileges within the meaning of art. 10, § 1, referred only to the banks of issue to which reference was had in art. 9, § 13; and in the course of its opinion said that "under article 10, section 3, the stockholders are liable for corporate debts to the amount of stock held or owned by them." This is the direct holding of N.W. Trust Co. v. Bradbury, 112 Minn. 76, 127 N.W. 386. Section 3 imposes no liability upon the transferor of stock. Prior to the constitutional amendment of 1930 such liability was imposed and is now by G.S. 1923 (2 Mason, 1927) § 7669, and the statute relative to the computation of time applies. The statute, § 7669, is as follows:
From what is said it is apparent that § 10933(21) does not construe the constitution and that the transferor's liability in the case before us is to be determined by § 7669. The various provisions of the statute have involved confusion. 1 Dunnell, Minn. Dig. (2 ed.) §§ 797-803. It is well to note that the quoted language of art. 9, § 13, of the constitution and of § 7669 of the statute as to the continuance of the transferor's liability is substantially that of the constitutional amendment of 1930 to art. 10, § 3, of the constitution, voted upon at the November 4, 1930, election, canvassed and the result declared on November 18, 1930, and proclaimed on November 20, 1930, by the governor as adopted and ratified, which beyond sensible doubt is now the controlling law of liability of bank stockholders and the transferors of bank stock. Art. 10, § 3, is now as follows:
2. The statute, G.S. 1923 (2 Mason, 1927) § 10933(21) prescribes this rule for the computation of time:
"In computing the time within which an act is required or permitted to be done, the first day shall be excluded and the last included, unless the last shall fall on Sunday or on a holiday, in which case the prescribed time shall be extended so as to include the first business day thereafter."
Our decisions upon the computation of time and upon the construction of the statute are gathered in 6 Dunnell, Minn Dig. (2 ed. & Supp.) §§ 9625-9630a.It is unnecessary to cite all the cases or to review many. The controlling words in § 7669 in which we are now interested are that "the liability of the latter [transferor] shall continue for one year after the entry of such transfer." The lien of a judgment continues "for the period of 10 years, and no longer." The day of the entry is excluded in computing the ten years. Spencer v. Haug...
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