Bates v. Atlantic Nat. Bank of Jacksonville

• Decision Date: 23 January 1939
• Docket Number: No. 8820.,8820.
• Citation: 101 F.2d 278
• Parties: BATES, Superintendent of Banking, v. ATLANTIC NAT. BANK OF JACKSONVILLE.
• Court: U.S. Court of Appeals — Fifth Circuit

101 F.2d 278 (1939)

BATES, Superintendent of Banking, v. ATLANTIC NAT. BANK OF JACKSONVILLE.

No. 8820.

Circuit Court of Appeals, Fifth Circuit.

January 23, 1939.

Wm. H. Rogers and Paul Ritter, both of Jacksonville, Fla., for appellant.

E. J. L'Engle, J. W. Shands, Edward W. Lane, Jr., and Edward McCarthy, Jr., all of Jacksonville, Fla., for appellee.

Before SIBLEY, HUTCHESON, and HOLMES, Circuit Judges.

SIBLEY, Circuit Judge.

A demurrer was sustained to a declaration at law, filed under the common law practice prevailing in Florida, whereby D. W. Bates, Superintendent of Banking of the State of Iowa, as Receiver of an Iowa State bank, sought to enforce against Atlantic National Bank of Jacksonville a statutory double liability for $3,100 because of stock to that par value held in the failed Iowa bank. The declaration asserts that the National Bank became the owner of twenty-seven shares each of par value $100 on Oct. 23, 1929, and four more shares in May, 1931, and continued to own them until Dec. 28, 1932, when the Iowa bank became insolvent. Thereafter an action in equity was brought in a State court in Iowa and written notice thereof served on the National Bank in Jacksonville, and, the National Bank not appearing, a decree was rendered making an assessment of 100% on the stock held by the National Bank and directing its enforcement by the Receiver. A copy of the decree was exhibited. In one count it was alleged simply that the National Bank owned and held the stock. In the other it was alleged that on Oct. 23, 1929, the National Bank had made an agreement with one B. F. Tillinghast which created a trust in certain property which the National Bank was to hold in trust for the purpose of investment and reinvestment for the use of Tillinghast and others, and that as such trustee it became the owner and holder of the stock.

The exhibited decree which was made a part of each count purports to be a supplementary decree in a suit by Bates, Superintendent of Banking, as Receiver of the Iowa bank against J. H. Abbott and others. It decrees that the National Bank "as trustee under that certain agreement dated Oct. 23, 1929, with B. F. Tillinghast" had been duly served with notice according to Section 9253 of the laws of Iowa and had made default, that the Iowa bank was insolvent, having stated debts and assets and stated outstanding stock of which latter the National Bank "as trustee under that certain agreement dated Oct. 23, 1929, with B. F. Tillinghast" owned and held thirty-one shares; that a 100% assessment against all stockholders on their statutory liability was necessary, and that the National Bank "as trustee under that certain agreement dated Oct. 23, 1929, with B. F. Tillinghast" was assessed 100%, to-wit $3,100, which the Receiver was directed to collect according to law.

The main points of the demurrer are: 1. The assessment is against the National Bank as trustee in a definite trust, and will not support a suit for a personal liability. 2. There is no allegation of facts showing the necessity of assessment or the proper amount of it. 3. The decree of assessment appears not to have been rendered after lawful service. 4. A national bank cannot be held so liable as the holder of stock in a State bank.

The case as presented to us in behalf of the appellant is that the stock was acquired by the National Bank as trustee in this investment trust, the records of the State bank so showing it, but that the law takes no notice of the trust but holds the trustee to a personal liability for his obligations to third persons in respect of the trust, unless in their creation there is a particular exclusion of personal liability; that mere notice of the trust is not enough to exclude personal liability, nor is it enough that the trustee is described or signs as trustee. The first count of the declaration which ignores the trust is therefore put forward as pleading the facts according to their legal effect; the second count, stating the trust among the facts, maintains the same result in law, that the trustee is personally liable. There is no effort to charge the trust property, nor could there be in this common law suit. Much authority is cited to the effect that while courts of equity recognize a trust estate as a sort of entity, and a trustee as its representative, that courts of law disregard trusts and treat the trustee as personally responsible for his acts and contracts as trustee, his designation as such being either descriptio personae or surplusage, leaving him to reimburse himself in proper cases out of the trust property. Although such is the general attitude of law courts, yet in respect to a liability created by a statute we think the law courts are as much bound by the statute as other courts, and cannot enforce the liability against any save those on whom the statute imposes it, and the District Court in Florida must take the Iowa statute which imposes and regulates this stockholder's liability as the courts of Iowa have interpreted and applied it.

The statute, passed in 1880 and now contained in three Sections of the Code, Sections 9251, 9252 and 9253, is copied in the margin.¹ It declares: "All stockholders of savings and state banks shall be individually liable to the creditors of such corporation of which they are stockholders over and above the amount of stock by them held," etc. The question here is whether when stock is held in trust for another and it so appears on the bank records, the trustee is the stockholder meant or is the trust estate or its beneficiary? The Iowa statute does not in words answer the question. We are told by appellant that by the statutes of thirty-two States and the United States it has been expressly provided that the trustee is not the stockholder who is to be liable, but the trust property is liable. Perhaps these legislatures thought it necessary, as is argued, so to specify. It is certain they thought it right that the trustee should not be made personally liable. The Iowa legislature did not deal expressly with trustees, but it did provide that the determination of the liability of the stockholders should be in an action in equity, and this is held the proper method of fixing it under this statute. Elson v. Wright, 134 Iowa 634, 112 N.W. 105. This provision is fair evidence that the liability is to...