Bennett v. Thorne

• Decision Date: 20 December 1904
• Citation: 36 Wash. 253,78 P. 936
• Parties: BENNETT v. THORNE et al.
• Court: Washington Supreme Court

78 P. 936

36 Wash. 253

BENNETT v. THORNE et al.

Supreme Court of Washington

December 20, 1904

Appeal from Superior Court, Whatcom County; Jeremiah Neterer, Judge.

Suit by J. B. Bennett, as receiver of the Puget Sound Loan, Trust &amp Banking Company, against Chester Thorne and others. From a decree for the complainant, defendants appeal. Reversed.

T. O Abbott, F. S. Blattner, and Harvey L. Johnson, for appellants.

Brown &amp Rose, for respondent.

FULLERTON C.J.

This is a proceeding to assess stockholders of an insolvent bank upon their superadded liability to creditors as imposed by the state Constitution, instituted by a petition of the receiver filed in the receivership action. The Puget Sound Loan, Trust & Banking Company was incorporated under the laws of this state in 1890 to do a banking business at Whatcom, and was engaged in such business in 1895, at which time it became insolvent. In November, 1895, Charles W. Roberts commenced an action against the bank in the superior court for Whatcom county for the purpose of having a receiver appointed, and on December 7, 1895, the respondent, J. B. Bennett, was appointed receiver, and ever since has acted as such under the orders of the court in that action. On the 7th day of November, 1902, the respondent filed, in the receivership action, his duly verified petition, alleging that he was, on the 7th day of December, 1895, duly appointed receiver of the bank and of all its property and assets of every kind and character; that by the order appointing him he was authorized and empowered, in his own name as such receiver, or in the name of the corporation, to commence and prosecute all suits, actions, and proceedings that to him might seem necessary or proper for the enforcement of any and all rights, claims, or demands of the corporation or its creditors; that the capital stock of the bank was $125,000, divided into 1,250 shares of the par value of $100 each; that the same was held by divers persons, some of whom were residents and some nonresidents of the state; that the stock was all duly subscribed and paid for, as he was informed and believed; that the debts of the corporation were in excess of $55,000, all of which (except $1,000) had been duly allowed as claims against the corporation; that the amount of debts of a strictly banking character then remaining unpaid was $32,102.97, with interest thereon at the rate of 6 per cent. per annum from the date of the receivership. The petition further alleged that all the assets of the corporation had been reduced to cash, the last assets being sold February 15, 1902; that during the receivership dividends for the creditors had been declared by the court and paid, amounting to 32 per cent. of the claims, and that most of the creditors had received such dividends, and receipted therefor. The petition concludes with the allegation that the corporation is insolvent, and that, aside from the superadded liability of stockholders prescribed by the Constitution, it is unable to satisfy or discharge the debts or claims of its creditors; that no proceedings had as yet been had in any court for the enforcement of this superadded liability, and that it was necessary, in order to pay the debts of the corporation, to enforce such liability. The prayer of the petition was that the amount of the debts of the corporation be ascertained; that the court ascertain the amount necessary to be collected from each stockholder in order to satisfy and discharge such debts; that the court make an order in the action assessing such stockholders upon such liability; and that they each be adjudged to be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of the corporation accruing while they remained such stockholders. Upon the filing of this petition, November 7, 1902, the court made an order fixing the 8th of December, 1902. as the time for hearing the same, and requiring the receiver to cause a copy of the order to be served personally upon all stockholders residing in the state of Washington at least 20 days prior to the time set, and also requiring a copy to be served by mail upon all nonresident stockholders.

On the day of the hearing the appellants, Chester Thorne, A. F. McClaine, and Alfred Coolidge, appeared and filed, as stockholders in the corporation, written demurrers to the petition of the receiver, upon the grounds (1) that the petition does not state facts sufficient to authorize an assessment to be levied against them, and (2) that the proceeding was not commenced within the time limited by law. Various other stockholders also appeared and contested the assessment, and, together with the appellants, objected to the introduction of any evidence upon the grounds stated in the demurrers. These objections were overruled, and the court proceeded to examine witnesses and hear the evidence in support of the allegations of the petition, and thereafter made and entered its findings of fact substantially as the same were stated in the petition, and as a conclusion of law therefrom found that the assessment should be levied against the stockholders. The court further found that all of the assets of the corporation were exhausted, 'the last of which were disposed of on or about the 15th day of February, 1902'; that the debts of a strictly banking character then due amounted to $32,102.97, with interest on the principal sum at 6 per cent. from November 22, 1895, amounting to $13,804.27, making a total of principal and interest for such debts of $45,907.24; that, in order to pay the same, an assessment of 36.72 per cent. was necessary to be made on all who were stockholders at the time the debts were incurred, making $36.72 per share; and that all of the debts were incurred prior to the 22d day of November, 1895, the time of the receivership. A decree was entered accordingly as follows: 'Now, therefore, by reason of the law and the premises aforesaid, it is hereby ordered, adjudged, and decreed that each, all, and every of the stockholders of the Puget Sound Loan, Trust & Banking Company who were such at the time the debts found by the court in its findings of fact accrued be, and they are hereby, equally and ratably, and not one for another, assessed on their statutory liability as such stockholders to the amount of 36.72 per cent. of the par value of the capital stock of said Puget Sound Loan, Trust & Banking Company held by each of said stockholders, as shown by the books of said company. And it is further ordered that written or printed notice of this assessment be given to each of said stockholders, which notice shall be sent by mail to the place of residence of said stockholders as shown by the books of said bank, or as known to the receiver, and that said assessment be, and is hereby, made payable to J. B. Bennett, as receiver of the Puget Sound Loan, Trust & Banking Company, on or before the 12th day of March, A. D. 1903. Done in open court this the 9th day of February, A. D. 1903.'

The respondent moves to dismiss the appeal upon the ground that the amount in controversy was not shown to exceed the sum of $200 in the case of any one stockholder, and several cases are cited to the point that the record must affirmatively show, where parties, whose interests are several, separately appeal, that the amount in controversy exceeds $200 in the case of each appellant. The appellants seem to concede that the amount in controversy should exceed $200, but claim that it is the total amount in controversy which controls the jurisdiction. But neither contention is material here. It is only in civil actions of law for the recovery of money in which the jurisdiction of this court on appeal is limited by the amount in controversy. This is clearly an equitable proceeding, and the appeal lies to this court irrespective of the amount in controversy. Fox v. Nachtsheim, 3 Wash. St. 684, 29 P. 140; Blake v. State Savings Bank, 12 Wash. 619, 41 P. 909; Fenton v. Morgan, 16 Wash. 30, 47 P. 214; Campbell v. Simpkins, 10 Wash. 160, 38 P. 1039; Griffith v. Maxwell, 22 Wash. 403, 55 P. 571.

The respondent moves to dismiss the appeal on the further ground that the appellants are not parties to the action or proceeding; the contention being that the corporation is the only defendant; that the stockholders are not named in the petition; and that there is nothing in the case to show that the appellants are stockholders, no proof having been taken on that point. The petition in this proceeding certainly relates to the rights of stockholders, and they were, by order of the court, duly served with notice requiring them to appear at the hearing, and the order finally entered recites the names of the stockholders who were so served, and it further appears that the appellants appeared as stockholders, and contested the proceeding instituted by the petition. We think that this makes them parties to the special proceeding instituted by such petition. If the order or judgment is of conclusive effect for any purpose, it must be because it is binding upon the stockholders, and, if the stockholders are bound by the final conclusion, they are certainly parties to the proceeding.

The respondent also moves to dismiss the appeal on the ground that the order appealed from is not a final order or judgment. No cases are cited upon this proposition, but the appellants in reply cite the case of Shuey v. Adair, 24 Wash. 385, 64 P. 536, as holding that such an assessment order as was made in this case would not be held void in a collateral attack, and as intimating that a direct appeal might lie therefrom. This raises the most serious question on the motion to dismiss. The order is not appealable unless it is a final order or...