Bank Of Marlinton v. King

• Decision Date: 14 May 1935
• Docket Number: (CC 526)
• Citation: 116 W.Va. 259
• Parties: Bank of Marlinton, A Corporation, v. F. P. King,Executor, etc., et al.
• Court: West Virginia Supreme Court

116 W.Va. 259

Bank of Marlinton, A Corporation,

v. F. P. King, Executor, etc., et al.

(CC 526)

Supreme Court of Appeals of West Virginia.

Submitted May 1, 1935.

Decided May 14, 1935.

1. Banks and Banking

Under Code 1931, 31-8-32, the receiver of an insolvent bank appointed by the state banking commissioner shall, at the direction of the commissioner, proceed at once to enforce the liability of the stockholders of such bank, without waiting to collect and apply other assets.

2. Banks and Banking

Where, with the approval of the state banking commissioner, a person (corporate or individual), by express agreement, takes over the assets (stockholders' liability included) of an insolvent bank and assumes its liabilities, such person acquires the rights of creditors with respect to the enforcement of the constitutional liability of the stockholders of such bank, and may proceed at once to enforce it unless precluded by the instrument under which the liquidation is being effected.

3. Banks and Banking

The enforcement of the constitutional liability of stockholders of an insolvent bank should not be deferred pending determination of liability of the officials of the bank for al- leged malfeasance. Benedum v. Citizens Bank, 72 W. Va. 124, 78 S. E. 656, and Clark v. Bank of Union, 72 W. Va. 491, 78 S. E. 785, distinguished herefrom.

Case certified from Circuit Court, Pocahontas County.

Suit by the Bank of Marlinton against F. P. King, executor, and others, wherein the defendants filed cross-bill. Plaintiff's demurrer to the cross-bill was overruled, and the ruling certified for review.

Reversed and remanded.

A. P. Edgar, for plaintiff.

S. P. Bell and P. T. Ward, for defendants.

Maxwell, Judge.

On this certification, there is involved the action of the circuit court of Pocahontas County in overruling the plaintiff's demurrer to the cross-bill.

With the approval of the state banking commissioner, the plaintiff, Bank of Marlinton, by contract of February 19, 1931, between it and the Bank of Hillsboro, took over the assets (stockholders' liability included) and assumed the liabilities of the latter bank, insolvent and closed.

The assets, other than liabilities of stockholders and officials, being insufficient to discharge the indebtedness, the plaintiff instituted this suit to enforce payment of the "double liability" imposed by law on bank stockholders. Constitution, Article XI, Section 6; Code, 31-8-32, An assessment of one hundred per centum of stock liability was laid by the banking commissioner after the Bank of Ilillsboro closed its doors but before the execution of the contract mentioned. Some of the stockholders, not here involved, paid the demand.

Certain of the defendants to the original bill filed the crossbill on behalf of themselves and all other stockholders and the creditors of the Bank of Ilillsboro. They assert that the officers and directors of the defunct bank are indebted to it on account of losses incurred through their malfeasance. The prayer of the cross-bill is that the principal suit be stayed until the alleged liabilities of the officials be reduced to cash and applied on the insolvent bank's indebtedness, thereby re- ducing the liability of the stockholders who have not already responded to the assessment.

In support of their position, the cross-bill plaintiffs rely mainly on the cases of Benedum v. Citizens Bank, 72 W. Va. 124, 78 S. E. 656, and Clark v. Bank of Union, 72 W. Va. 491, 78 S. E. 785, wherein it is held that the liability of bank officials for misconduct in office is an asset of a liquidating bank, and that the extent of their liability should be ascertained before enforcing payment by the stockholders of any portion of their double liability. Those decisions, based on the then existing statute,...