Banking Comm'n of Wis. v. Purves

• Decision Date: 17 May 1938
• Citation: 279 N.W. 634,228 Wis. 21
• Parties: BANKING COMMISSION OF WISCONSIN v. PURVES.
• Court: Wisconsin Supreme Court

228 Wis. 21

279 N.W. 634

BANKING COMMISSION OF WISCONSIN

v.PURVES.

Supreme Court of Wisconsin.

May 17, 1938.

Appeal from a judgment of the Circuit Court for Adams County; C. F. Van Pelt, Judge.

Reversed.

Action in aid of liquidation proceedings by the Banking Commission of Wisconsin against John W. Purves, commenced August 20, 1936, to recover the statutory liability of a stockholder of a state bank under section 221.42 Stats. From a judgment entered November 1, 1937, dismissing the complaint and awarding recovery of a bank deposit existing at the time the bank was taken over for liquidation, the plaintiff appeals. The facts are stated in the opinion.Fulton Collipp, of Friendship, for appellant.

Goggins, Brazeau & Graves, of Wisconsin Rapids, for respondent.

FOWLER, Justice.

The defendant formerly held thirty-four shares of stock in the Friendship State Bank. The bank is in the hands of the Banking Commission for liquidation. The plaintiff imposed an assessment of $3,400 on the defendant under section 221.42 Stats., which imposes superadded liability on stockholders of state banks.

The defendant paid a hundred per cent. assessment against the stock which was imposed under an agreement made in proceedings under the statute governing stabilization of state banks, and claims that this payment exonerates him from his superadded liability. The circuit court sustained his contention and dismissed the complaint. The defendant counterclaimed for the amount of his deposit in the bank at the time the Banking Commission took over the bank, and judgment was rendered upon this counterclaim.

The statute under which the defendant claims exemption from liability for the double liability assessment is section 220.07 (20) Stats. 1933, repealed by chapter 245, Laws of 1935, which became effective July 16, 1935. The section provides for imposition and collection of the superadded liability in stabilization proceedings, but provides that “any stockholder who has fully paid a voluntary assessment levied against him under any such [stabilization] agreement shall, upon the unconditional surrender of his stock to said bank, be relieved from all further liability.”

A hundred per cent. assessment against all stockholders was made in the stabilization proceedings. Purves paid the assessment in cash on one share, and kept the share in his possession to enable him to continue to act as an officer of the bank. An agreement, approved by the court, was made between the trustees of the segregated trust and certain stockholders, including the defendant, that the stockholders should meet the assessment by giving their notes to the trustees for the amount thereof, bearing interest and payable on or before one year, and delivering their stock to the trustees as security for the notes. Purves gave his note for $3,300 and turned over the thirty-three shares of stock as security. On November 29, 1935, Purves paid the full amount of his note to the trustees and received back the thirty-three shares of stock. The bank closed December 7, 1935. On December 20, 1935, a hundred per cent. statutory assessment was made by the Banking Commission. On the same day Purves delivered the stock to the agent of the Banking Commission in charge of the bank as an unconditional surrender of the stock pursuant to the provision of section 220.07 (20), Stats. 1933, above quoted. The agent, being without authority to act for the commission, forwarded the stock to the commission. The commission refused so to accept the stock, and forthwith on December 27 returned it to the defendant.

At the time of the transactions involved, section 220.07 (16), Stats. 1933, provided for the stabilization of state banks, and subsection (20) of the section provided that whenever a stabilization agreement had been entered into and approved the double liability of stockholders imposed by section 221.42, Stats., should forthwith become due and payment thereof might be enforced as provided by section 221.42, Stats., or in such manner as the Commissioner of Banking might deem advisable. This does not imply that an assessment to enforce the liability must immediately be made. The liability is then due, but it may be enforced when and as the Banking Commissioner shall deem advisable. Subsection (20) also provided that all proceeds from enforcement of such liability should be for the benefit of the depositors and unsecured creditors of the bank existing at the time of the approval. Subsection (20) also provided that any stockholder who had fully paid any voluntaryassessment levied against him under the stabilization agreement should upon the unconditional surrender of his stock to the bank be relieved from all further liability thereon, and that a stockholder who had paid an assessment under a stabilization agreement should not be subject to any other assessment for one year. The subsection is printed in full in the margin.¹

In Re Plain State Bank, 217 Wis. 257, 258 N.W. 783, it was held that payment of a voluntary assessment of one hundred per cent. of the par value of stock did not relieve a stockholder from payment of the statutory assessment under section 221.42, Stats., although the Commissioner of Banking had told the stockholders that such payment would so relieve them. The Plain State Bank Case involved the payment of a voluntary hundred per cent. assessment pursuant to a stabilization agreement, but subsection (20) of section 220.07, Stats., had then not been enacted. The respondent's payment was of such an assessment as was involved in the Plain State Bank Case, but respondent contends that the surrender of his stock as stated relieves him from liability for the statutory assessment under the terms of subsection (20).

While subsection (20) declares that payment of an assessment made pursuant to a stabilization agreement accompanied by an unconditional surrender of the stock to the bank shall discharge the stockholder from further liability thereon, it would seem that payment of any such assessment less than a hundred per cent. would not so operate, under the contract provision of...