Bell v. Brady
| Decision Date | 19 April 1943 |
| Docket Number | 47 |
| Citation | 346 Pa. 666,31 A.2d 547 |
| Parties | Bell, Secretary of Banking, Appellant, v. Brady et al |
| Court | Pennsylvania Supreme Court |
March 22, 1943, Argued
Appeal, No. 47, March T., 1943, from decree of C.P. Fayette Co., No. 1754, in equity, in case of John C. Bell, Jr. Secretary of Banking, Receiver of Title and Trust Company of Western Pennsylvania, v. Adrienne Brady et al. Decree reversed.
Bill in equity.
Preliminary objections sustained and decree entered dismissing bill before DUMBAULD, P.J., CARR and MORROW, JJ., opinion by CARR J. Plaintiff appealed
The decree is reversed with a procedendo. Costs to abide the event.
Joseph J. Baer, with him John W. Lord, Jr., Special Deputy Attorney General, Orville Brown, Deputy Attorney General, and James H. Duff, Attorney General, for appellant.
Dean D. Sturgis, with him Lewis M. D'Auria, J. Kirk Renner, M. B. McDonald, Henderson, Parshall & Crow, Shelby, Ray & Coldren, and Samuel D. Braemer, for appellees.
Before MAXEY, C.J.; DREW, LINN, STERN, PATTERSON, PARKER and STEARNE, JJ.
This appeal is concerned with the proper application of the statute of limitations to a proceeding by the Secretary of Banking, as receiver of an insolvent bank, to recover an assessment against the stockholders for unpaid stock subscriptions.
The Secretary took possession of Title & Trust Company of Western Pennsylvania, Connellsville, Pa., on July 1, 1930. The par value of the stock of this company, which was incorporated under the Act of April 29, 1874, P.L. 73, was $100 per share, of which only $50 a share had been called and paid in. As it appeared that its assets would be insufficient to pay the depositors and other creditors in full and that the entire amount remaining unpaid on the stock would be required for that purpose, the Secretary, on June 15, 1936, made a call for payment of the balance of $50 per share. He notified the stockholders on June 20, 1936, to pay this amount "at once", and on June 29, 1936, began suits against those stockholders who had defaulted. It was held by this Court, however, (Harr, Secretary of Banking, v. Mikalarias, 328 Pa. 49, 195 A. 86) that the notice which had been given by him was defective inasmuch as section 723 of the Department of Banking Code of May 15, 1933, P.L. 565, required that the demand should designate a period for payment of not less than thirty days after the sending of the notice; accordingly the actions were abated without prejudice. On July 21, 1941, the Secretary sent the stockholders a new notice, this time a correct one, calling for payment on or before September 1, 1941, and on March 30, 1942, he filed the present bill in equity against forty-eight stockholders to recover the amounts due from them respectively. Some of the defendants filed preliminary objections to the bill on the ground that it disclosed laches and that the cause of action was barred by the statute of limitations. The Court sustained the objections, dismissed the bill, and refused the prayer of a petition which the Secretary filed for a rehearing and an opportunity to explain the reasons for the delay. The Secretary appeals.
While the present proceedings are in equity, the liability of the stockholders arises out of contract and under such circumstances it is especially appropriate to apply the principle that, on the question of lapse of time, a court of equity, although not bound by the statute of limitations, will frequently adopt and apply it to corresponding rights and remedies by way of analogy to actions at law: Todd's Appeal, 24 Pa. 429, 431; Neely's Appeal, 85 Pa. 387, 390; Dalzell v. Lewis, 252 Pa. 283, 287, 97 A. 407, 408; Bailey v. Jacobs, 325 Pa. 187, 195 n., 189 A. 320, 325 n. The problem here resolves itself, therefore, into the inquiry: When did the statute of limitations begin to run in the present case?
It is well settled that where an assessment is made by the receiver in order to enforce the additional statutory liability of stockholders, the statute runs only from the time when it is determined to what extent such liability will have to be enforced and an assessment or demand is actually made. This was the law both before the Banking Acts of 1919, P.L. 209; 1923, P.L. 809; and 1933, P.L. 565 (Kirschler v. Wainwright, 255 Pa. 525, 100 A. 484), and since the enactment of that legislation (Bell, Secretary of Banking, v. Abraham, 343 Pa. 169, 174, 22 A.2d 753, 756; Bell, Secretary of Banking, v. Cabalik, 346 Pa. 115, 116, 29 A.2d 678, 679). Prior to those acts the rule was otherwise when the proceedings by the receiver were to recover the unpaid balances of stock subscriptions; there the statute was held to run immediately from the date when the insolvency of the corporation appeared, as by an adjudication in bankruptcy, the making of an assignment for the benefit of creditors, or the appointment of a receiver on that ground: Franklin Savings Bank v. Bridges, 20 W.N.C. 43; Swearingen v. Sewickley Dairy Co., 198 Pa. 68, 47 A. 941; Harrigan, Trustee, v. Bergdoll, 281 Pa. 186, 126 A. 269; Newton's Estate, 46 Pa.Super. 40. [1] The reason, however, for the distinction between the two classes of cases no longer exists, for it was held in Harr, Secretary of Banking, v. Mikalarias, 328 Pa. 49, 195 A. 86, that section 723 of the Department of Banking Code of May 15, 1933, P.L. 565, applies to both classes, and that the Secretary, as receiver, must make a demand in the one instance as in the other as a prerequisite to the right to sue the stockholders. Since a cause of action accrues only when one has the right to institute a suit (Philadelphia, Baltimore & Washington R.R. Co. v. Quaker City Flour Mills Co., 282 Pa. 362, 367, 127 A. 845, 847; New York & Pennsylvania Co. v. New York Central R.R. Co., 300 Pa. 242, 245, 246, 150 A. 480, 481; MacDonald v. Leverington Construction Co., 331 Pa. 381, 382, 383, 200 A. 8, 9), it would seem at first blush to follow that the statute of limitations in the present case began to run against the receiver only from the date when, by proper notice to the stockholders, he demanded that payment should be made, namely, September 1, 1941.
But the question here presented is not as simple as thus indicated, because, while the statute ordinarily runs from the making of a demand where such demand is necessary to furnish a cause of action, there is a further rule which prescribes that where the time of demand is within the control of the plaintiff the demand must be made within a reasonable time. [2] The statute cannot be extended by the plaintiff's act or failure to act; he cannot arrest the running of the statute by his own negligence or for his own convenience. This principle has been established in Pennsylvania by a great current of authorities which have applied it under various circumstances. [3]
Our inquiry, then, must be: What constitutes a reasonable time in which the Secretary of Banking, as receiver of an insolvent bank, should be able to ascertain that an assessment will be required for the balance, or some specific part of the balance, of the stock subscriptions? Obviously the answer depends upon the circumstances of the particular case. If there are no unusual or complicated conditions, and it is clear from the beginning that the bank is so hopelessly insolvent that a call upon the stockholders for the full balance of their unpaid stock subscriptions will be inevitable,...
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