Bethea v. Allen
| Decision Date | 21 May 1935 |
| Docket Number | 14068. |
| Parties | BETHEA et al. v. ALLEN et al. |
| Court | South Carolina Supreme Court |
Appeal from Common Pleas Circuit Court of Dillon County; E. C Dennis and W. H. Townsend, Judges.
Suit by John C. Bethea and others against Annie S. Allen and others. From an adverse decree, defendants appeal.
Affirmed.
L. D Lide, of Marion, and Joe P. Lane, W. C. Moore, and N. B Hargrove, all of Dillon, for appellants.
Gibson & Muller, of Dillon, for respondents.
The above-entitled action, commenced in the court of common pleas for Dillon county in the early part of 1929, is a suit on stockholders' liability of the stockholders of the Bank of Dillon, which was a consolidation of the First National Bank of Dillon, the Bank of Dillon, and the Peoples Bank. The complaint alleged the names and the amount of stock owned by each of the stockholders in the three banks; that the stockholders had authorized and approved a consolidation as might be agreed to by the directors; that the directors had agreed upon a consolidation; that an actual consolidation of the assets of the three banks had taken place; that the formalities of law had not been complied with; that the consolidated bank had operated from January to November, 1928, doing a general banking business; that it became insolvent and closed on November 6, 1928; that its assets were not sufficient to pay the depositors and other indebtedness, and it was necessary to collect stockholders' liability, and prayed judgment against the stockholders for the amount of stock owned by each in the several banks.
To this complaint the stockholders of the First National Bank demurred on the ground that the comptroller of the currency alone had jurisdiction to determine their liability in the First National Bank, and they, together with the stockholders of the Peoples Bank, demurred on the ground of a misjoinder of causes of action; that the plaintiff had not capacity to sue; and that it appeared upon the face of the complaint that the original Bank of Dillon had assumed the liability of the banks of which they were stockholders, and hence there was no stock liability on their part. This demurrer was overruled by F. L. Willcox, Esquire, special referee, whose ruling was sustained by Judge E. C. Dennis of the Fourth Circuit.
The stockholders of the Bank of Dillon had answered, and upon the overruling of the demurrer the stockholders in the other two banks answered, setting up practically the same defenses as set up by demurrer. Testimony was taken by the special referee and upon argument he found as facts that more than 90 per cent. of the stockholders in each bank had signed an agreement authorizing the directors to consolidate the three banks; that the directors, on the 17th day of January, 1928, agreed to such consolidation; that an appraisal committee was appointed who had appraised the notes; that it was not necessary to appraise money; that the bonds and real estate in the several banks were on a parity, so far as valuations were concerned; that it had been agreed that the capital stock of the new bank should be $100,000; and that while there had not been a legal consolidation and that the stockholders in the several old banks might not be technically liable for stock held in the new bank, yet they were still liable on their liability in the original banks, and as the depositors had impliedly consented to the consolidation, the stockholders would be estopped to deny liability to the extent of $100,000. He, there fore, found that stockholders in the Bank of Dillon would have received 60 per cent. of the face value of the stock held by them in the old bank in the new; that those in the Peoples Bank would have received 38.8 per cent. of their old stock, and those in the First National Bank would have received 29.9 per cent. of such stock, and recommended that the plaintiff, liquidating committee, have judgment against the stockholders in the several banks for the percentages mentioned of their original stock. From this finding an appeal was taken which was heard by Judge W. H. Townsend of the Fifth circuit, who affirmed the finding of the referee; however, stating that the liability was not based upon the statute, but upon contract. This appeal questions the correctness of the holdings on demurrer and the findings of fact and conclusions of law on the merits. The exceptions are numerous, but counsel agree that they raise five main issues.
It is first contended that the court had no jurisdiction to pass on the liability of the stockholders of the First National Bank of Dillon, because federal authorities and courts alone have jurisdiction thereof. As a general proposition, this is unquestionably true. Section 65, title 12, United States Code (12 USCA § 65); Rankin v. Barton, 199 U.S. 228, 26 S.Ct. 29, 50 L.Ed. 163; Easton v. Iowa, 188 U.S. 220, 23 S.Ct. 288, 47 L.Ed. 452; Chase v. Hall (C. C. A.) 30 F. (2d) 195; Liberty National Bank v. McIntosh (C. C. A.) 16 F. (2d) 906.
However, in this case, the stockholders of the First National Bank have placed themselves in a position where this contention cannot avail them. They, through the directors, agreed to take part in forming a new state corporation, and to all intents and purposes did form a de facto corporation under the laws of the state, and, having done so, they will not be heard to say the state court has no jurisdiction to compel them to respond upon their liability.
The second issue is that the liability of the appealing stockholders cannot be passed on in this action because there is a misjoinder of causes of action in the complaint, the attempt being made to enforce the liability of the stockholders of the three separate banks in the same suit. It cannot be questioned that if the premises were correct, the position would have to be sustained.
It is true the complaint sets out the holdings of the stockholders in the original banks as separate institutions, but it also alleges the consolidation and the formation of a new corporation; not legally formed, but to all intents and purposes performing the functions of a de jure institution. To say that the suit cannot be maintained in its present form would be practically to say that the stockholders were relieved from all liability. It may be true that some of the certificates of deposit were not renewed, but all of the assets, which were primarily liable for the payment of them as liabilities of the original institution, were mingled as a result of the acts of the stockholders acting through the directors, and it would be impossible to fix stockholders' liability in a separate suit for the liquidation of the individual banks. A court of equity, considering the facts as a whole, is the only forum that can work out a rightful determination of the issues involved, and this can be done only in one suit involving the rights of the stockholders and depositors growing out of the conditions as they actually exist. It must, therefore, be held that there is no misjoinder of causes of action; the pleader, in bringing the suit, rightfully set forth all of the facts, circumstances, and conditions surrounding the transactions, and upon the issues so made the court must, as far as possible, protect the interest of all parties concerned.
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