Beckman v. Buckwalter

• Court: Pennsylvania Supreme Court
• Writing for the Court: PER CURIAM:
• Citation: Beckman v. Buckwalter, 341 Pa. 561, 20 A.2d 198 (Pa. 1941)
• Decision Date: 12 May 1941
• Docket Number: 189,190,191,192
• Parties: Beckman, Secretary of Banking, Appellant, v. Buckwalter et al

20 A.2d 198

341 Pa. 561

Beckman, Secretary of Banking, Appellant, v. Buckwalter et al

Nos. 189, 190, 191, 192

Supreme Court of Pennsylvania

May 12, 1941

Argued April 21, 1941.

Appeals, Nos. 189-192, Jan. T., 1941, from decree of C.P Montgomery Co., June T., 1938, No. 2, in equity, in case of Irland McK. Beckman, Secretary of Banking, Receiver, v. A. L Buckwalter et al. Decree reversed.

Bill in equity.

The opinion of the Supreme Court states the facts.

Preliminary objections sustained upon reconsideration and bill certified to law side of the court, opinion by DANNEHOWER, J Plaintiff, Secretary of Banking, appealed.

Error assigned was order certifying bill to law side of the court.

The decree of the court below, in so far as it certified the bill to the law side of the court, is reversed, and the record is remitted for further proceedings. Costs to abide the event.

Morris Gerber, with him John W. Lord, Jr., Special Deputy Attorney General, Orville Brown, Deputy Attorney General, and Claude T. Reno, Attorney General, for appellant.

No appearance was made nor brief filed for appellee.

Before SCHAFFER, C.J., MAXEY, DREW, LINN, STERN, PATTERSON and PARKER, JJ.

OPINION

PER CURIAM:

In 1934 the then Secretary of Banking brought an action in assumpsit against E. Earl Nelson, a shareholder of The Royersford Trust Company, to recover the unpaid balance of his stock subscription. A verdict was rendered against the defendant, but this court reversed (328 Pa. 56, 195 A. 416) on the ground that the Secretary had failed to comply with section 723 of the Department of Banking Code of 1933, P.L. 565, in that he had made demand for payment of the stock assessment "at once" instead of allowing a period of not less than thirty days. The reversal was stated to be "without prejudice to plaintiff's right to discontinue and, after compliance with the requirements of section 723 . . ., to institute a new action."

The Secretary discontinued that suit and similar ones which he had instituted against other shareholders, and, having now made proper demand, he brought the present bill in equity against Nelson and twenty-eight other shareholders to recover the amount of the assessment due from each. A preliminary objection was filed by the four defendants who are the present appellees, challenging the jurisdiction of equity on the ground that there was an adequate remedy at law. This objection was overruled by the court. Three other defendants filed answers to the bill of complaint and went to trial on the merits, at the conclusion of which the chancellor reconsidered the question in regard to jurisdiction. As to the defendants who had gone to trial, he decided that they had waived their right to contest the jurisdiction of equity, and entered a decree holding them liable for the amounts due on their stock subscriptions. As to the four defendants who had raised the question preliminarily, he certified the bill to the law side of the court, having come to the conclusion that the plaintiff had an adequate remedy at law. The Secretary of Banking appeals from the decree ordering such certification.

The bill of complaint set forth that the Secretary of Banking took possession of The Royersford Trust Company under the provisions of the Banking Act of June 15, 1923, P.L. 809, and proceeded to liquidate its affairs; that he ascertained that the reasonable value of its assets was not sufficient to pay its creditors in full; that the par value of its capital stock was $100 per share, of which only $50 per share had been paid in; and that he had given notice to the shareholders of an assessment of the balance due on each share. The bill prayed for a decree directing defendants to pay the amounts due from them respectively. Certainly such a cause of action has always been cognizable in equity. Where the proceeding is to enforce an added statutory liability of shareholders, the remedy is limited to that, if any, prescribed by the act creating such liability, ^[*] but where the proceeding is to enforce liability for a balance due on stock subscriptions, and where, therefore, the cause of action rests upon a contractual obligation of the shareholders and not upon legislation, equity, because of a variety of reasons, entertains jurisdiction: Lane's Appeal, 105 Pa. 49, 59, 60; Bell's Appeal, 115 Pa. 88, 92, 8 A. 177, 179; W.F. Bailey v. Pittsburgh Coal R.R. Co., 139 Pa. 213, 21 A. 72; Cook v. Carpenter (No. 1), 212 Pa. 165, 167, 168, 169, 61 A. 799, 800, 801.

Appellees rely on the decision in Gordon v....