Beal v. Essex Sav Bank, 129.

• Decision Date: 20 April 1895
• Docket Number: 129.
• Parties: BEAL v. ESSEX SAVINGS BANK.
• Court: U.S. Court of Appeals — First Circuit

67 F. 816

BEAL v. ESSEX SAVINGS BANK.

No. 129.

United States Court of Appeals, First Circuit.

April 20, 1895

In Error to the Circuit Court of the United States for the District of Massachusetts.

This was an action by Thomas P. Beal, receiver of the Maverick National Bank of Boston, against the Essex Savings Bank, to recover its proportionate amount of an assessment made upon the stockholders of the Maverick Bank by the comptroller of the currency, under Rev. St. Sec. 5151. In the circuit court a judgment was rendered for defendant, and plaintiff brings error.

1. CORPORATIONS-- WHO ARE 'SHAREHOLDERS'-- STOCK HELD AS COLLATERAL.

A 'shareholder' in a corporation, within Rev. St. Secs 5139, 5151, is one who has a proportionate interest in its assets, and is entitled to take part in its control and receive its dividends. In all essential particulars, he is distinguishable from one who holds shares of stock as collateral security for a loan.

2. NATIONAL BANKS-- INSOLVENCY-- LIABILITY TO ASSESSMENT ON STOCK.

One who holds stock of an insolvent national bank as collateral security for a loan, which stock is registered upon the books of the bank in his name 'as collateral,' is not liable to assessment upon such shares under the statutory liability of shareholders.

The stock in respect to which the assessment was made was held prior to April 9, 1884, by Asa P. Potter and Jonas H. French. On that day they borrowed from the defendant bank $50,000, and each of them transferred 175 shares of said stock to it, by an assignment in which it was described as collateral. A single certificate for 350 shares was then issued to defendant, in the following form: 'Be it known that Essex Savings Bank, Lawrence, Mass., as collateral, is entitled to 350 shares in the Maverick National Bank, transferable only at the bank by the said bank or its attorney. ' The language of the assignment from Potter and French to the bank was as follows: 'For value received, I hereby sell, assign, and transfer to Essex Savings Bank, as collateral, of Lawrence, Mass., and assigns, 175 shares,' etc.

Edward W. Hutchins and Henry Wheeler, for plaintiff in error.

George O. Shattuck and William A. Munroe, for defendant in error.

Before PUTNAM, Circuit Judge, and NELSON and WEBB, District Judges.

PUTNAM Circuit Judge.

Sections 5139 and 5151 of Revised Statutes, which are relied on by the appellant (complainant below), use throughout the word 'shareholder,' and avoid all such general expressions as 'holder' or 'owner' of stock. A 'shareholder' in a corporation is one who has a proportionate interest in its assets, and is entitled to take part in its control and receive its dividends. In all essential particulars, he is distinguishable from a creditor of a shareholder. By the very root of the word, he is entitled to a present share in the assets of the corporation and receives presently and immediately the benefits of the share, which the creditor does not, even if he holds corporate stock as security, because the creditor's rights in this respect are only contingent and remote. We are all of the opinion that, in the proper sense of the word 'shareholder,' one does not become such by merely making a loan on the security of the stock, no matter what formalities the transaction takes, provided only that it does not come in the form of an absolute transfer, so as to make the creditor the apparent legal and equitable owner. Even in this event, as between the creditor and the debtor, the debtor would remain the shareholder, because...