Bicknell v. Garrett

• Decision Date: 04 December 1939
• Docket Number: 27544.
• Parties: BICKNELL v. GARRETT et al.
• Court: Washington Supreme Court

96 P.2d 592

1 Wn.2d 564

BICKNELL v. GARRETT et al.

No. 27544.

Supreme Court of Washington

December 4, 1939

Department 1.

Superadded liability action by Donald Bicknell, receiver of the Bank of Saginaw, a Michigan banking corporation of Saginaw, Michigan against Jessie Ring Garrett and her husband. From and adverse judgment, plaintiff appeals.

Affirmed.

BLAKE C.J., dissenting.

Appeal from Superior Court, King County; Roger J. Meakim, judge.

Bausman Oldham, Jarvis & Wampold, of Seattle, for appellant.

Jones &amp Bronson and George Kinnear, all of Seattle, for respondents.

ROBINSON Justice.

This is a superadded liability action brought by the receiver of an insolvent Michigan bank, hereinafter called the bank, against the defendants, Jessie Ring Garrett and her husband. Relief, however, is sought against Mrs. Garrett only, as the owner of fifty shares of the stock of the bank, and she will be referred to throughout as the defendant or respondent.

The assessment was made on September 5, 1934, and the suit was commenced in October, 1937, more than three, but less than six, years thereafter. The defendant relied upon the statute of limitations as a defense to the action. The facts are stipulated, and, as they relate to the acquisition of the fifty shares of stock by the defendant, are as follows:

In June, 1907, Clark Ring, father of the defendant, transferred twenty-five shares of the bank stock to Jessie Ring (who is now Jessie Ring Garrett and the defendant here), for which a stock certificate was issued and a receipt therefor given.

On November 6, 1911, Jessie Ring, having married Garrett, signed a written assignment whereby the shares were transferred to the name of Jessie Ring Garrett. A new certificate was thereupon issued by the bank for the twenty-five shares in the name of Jessie Ring Garrett, for which a receipt was given.

The certificates referred to were all on standard stock certificate forms. The receipts vary slightly, but are all substantially in the following form: 'Received of Bank of Saginaw Certificate No. _____, representing _____ shares of the capital stock of said Bank. _____ Signature.'

In 1920, the bank increased its capitalization and issued two shares for each share held. Defendant thereby was entitled to an additional twenty-five shares of stock, and the bank thereupon issued to her a new certificate representing fifty shares, for which the defendant gave a signed receipt to the bank.

In 1928, the bank again increased its capitalization, and each shareholder was given the privilege of purchasing one share for each four held. Defendant, by written instrument, on May 12, 1928, applied for the additional thirteen shares to which she was thereby entitled, thereafter sent a check to the bank in payment of the thirteen shares, and asked that a certificate be issued therefor. The bank thereupon issued to her a certificate covering the thirteen shares, for which she gave a signed receipt.

After the issuance of this certificate for thirteen shares, the defendant thus held two certificates, one for fifty shares and the other for thirteen shares. Subsequently, a new certificate was issued by the bank to the defendant covering her entire stock ownership of sixty-three shares, for which she gave a signed receipt to the bank.

Subsequently, in October, 1929, defendant sold the thirteen shares which she last acquired in 1928, thus leaving her the owner of fifty shares. The bank thereupon issued to her a new certificate covering her fifty shares, for which she gave to the bank a signed receipt. This stock certificate for the fifty shares is in the possession of the defendant and represents the stock ownership on which the suit is based.

At the opening of their brief, appellant's attorneys accurately state the question presented by the appeal as follows:

'In this case, wherein more than three but less than six years have expired from the date of a superadded liability assessment against an insolvent bank's stockholder (the defendant), the question presented is whether the six year statute is applicable to a suit upon such liability.'

In Bennett v. Thorne, 36 Wash. 253, 78 P. 936, 68 L.R.A. 113, the court stated that the six-year statute was applicable to such an action. That holding, however, as appellant frankly points out, was not necessary to the decision of the case. Before a similar question arose in this court, and, in fact, within less than three months after the announcement of the decision in Bennett v. Thorne, supra, the supreme court of the United States handed down the decision in McClaine v. Rankin, 197 U.S. 154, 25 S.Ct. 410, 49 L.Ed. 702, 3 Ann.Cas. 500. This case arose out of the failure, in 1895, of the First National Bank of South Bend, Washington. The assessment upon which the action was based was made on August 17, 1896. Aldrich, the then receiver, later succeeded by Rankin, began the action in the circuit court of the United States for the Western District of Washington on August 15, 1899, less than three, but more than two, years after it accrued. The court upheld defendant's contention that the liability sued upon was not contractual, but a liability created by statute, and, therefore, subject to the two-year limitation imposed by Ballinger's Code, § 4805, now Rem.Rev.Stat. § 165. Aldrich v. McClaine, C.C., 98 F. 378. On appeal, however, the circuit court of appeals held that the liability was contractual and governed by the limitation provided in subdivision 3, § 4800, Ballinger's Code, now Rem.Rev.Stat. § 159, subd. 3. The subdivision reads as follows:

'Within three years: * * * 3. An action upon a contract or liability, express or implied, which is not in writing, and does not arise out of any written instrument; * * *.'

When the matter reached the supreme court of the United States, it held that the liability was not contractual, but one created by statute, and, after discussing our limitation statutes and the cases construing them, held that the two-year statute was applicable.

The question again came Before this court in Bates v. Cooley, 187 Wash. 489, 60 P.2d 23, 27. In that case, a receiver of an insolvent Iowa bank sued a resident of Washington, the action being brought within three years, but more than two years, after it accrued. Upon appeal, as we have determined by examining the briefs, the defendant-appellant contended that the limitation period was two years, relying strongly upon the decision of the supreme court of the United States in McClaine v. Rankin, supra, and other decisions which have followed it. The plaintiff-respondent, while citing Bennett v. Thorne, supra, did not contend that the six-year statute applied, but insisted upon the application of the three-year statute. We quote from the decision:

'Appellant's second contention is that the action in this state was not commenced within the time prescribed by the statute of limitations. The answer to this contention depends upon the nature of a stockholder's liability for an assessment upon his stock as directed by the statute. While the remedy is controlled by the law of the forum, the nature of the right for which the remedy is sought is controlled by the laws of the state wherein the right accrues.

'It is the settled law of Iowa that the double liability of stockholders under constitutional and statutory provisions is contractual in its nature. [Citing five such cases.]

'The liability being a contractual one, the applicable statute of limitations is Rem.Rev.Stat. § 159 [P.C. § 8166], which prescribes a three-year limitation. This action was brought within that period.'

The appellant urges that the last of the three paragraphs above quoted is dictum, because, in order to arrive at the decision, it was only necessary for the court to hold that the two-year statute did not apply. It is at least fair to say that the contest between the parties in the case was wholly concerning whether the two or three-year statute applied, and that the possible applicability of the six-year statute was not urged upon the court. The decision cannot be rightly regarded as being contra to either Bennett v. Thorne, supra, or McClaine v. Rankin, supra, because the result is made to turn on the nature of the right to be enforced, as indicated by the place of its origin. In Bennett v. Thorne, supra, the right sought to be enforced was created by section 11, Article XII of the constitution of Washington. In McClaine v. Rankin, supra, the right sought to be enforced was created by a Federal statute. In Bates v. Cooley, supra, the right was created by the law of Iowa. Obviously, these rights could well be different in nature.

The case of Bates v. Cooley, supra, is clearly authoritative, in that it establishes a method of approach to the question presented, and requires us, as the first step in the inquiry, to examine the statutes and decisions of the state of Michingan, in which state the liability sought to be enforced in the instant case accrued, in order to determine its nature. It is stipulated that the liability was imposed by section 48, Act No. 66, Public Acts of Michigan, 1929. This section reads, in part:

'The stockholders of every bank shall be individually liable, equally and ratably, and not one for another, to satisfy the obligations of said bank to the amount of their stock at the par value thereof, in addition to the said stock; * * *.'

This as is said by the supreme court of Michingan in Fors v. Farrell, 271 Mich. 358, 260 N.W. 886, 888, 'does not differ materially from the corresponding portion of the National Banking Law,' and the reasoning of the supreme court of Michigan respecting the nature of the liability follows the Federal decisions. This is particularly apparent...