Board of Bank Examiners v. Grenada Bank.
| Decision Date | 28 April 1924 |
| Docket Number | 24123 |
| Citation | 99 So. 903,135 Miss. 242 |
| Court | Mississippi Supreme Court |
| Parties | BOARD OF BANK EXAMINERS v. GRENADA BANK. [*] |
(Division A.) January 1, 1920
BANKS AND BANKING. Executors and administrators. Law providing for double liability of stockholder construed.
Under section 3619, Hemingway's Code, the double liability of a stockholder accrues and is fixed at the full amount of his stock when the bank is put in course of liquidation and it is reasonably apparent that the assets of the bank will not be sufficient to pay the depositors; and such claim against the estate of a deceased stockholder is barred, under section 2107, Code of 1906, and amendment (Hemingway's Code section 1775), unless probated, where stockholder dies after liability accrues.
HON JAS. G. MCGOWEN, Chancellor.
APPEAL from chancery court of Grenada county, HON. JAS. G. MCGOWEN Chancellor.
Suit by the board of bank examiners against the Grenada Bank, administrator of the estate of W. H. Miers, deceased. Decree for defendant, and plaintiff appeals. Affirmed.
Decree affirmed.
B. D. Newsom, C. L. Hester and Flowers & Brown, for appellants.
This case presents only one question for decision. It is whether the claim for liability on the stock owned by W. M. Miers, deceased, in the Bank of Commerce, of Grenada, Mississippi, accrued before or after his death. If the claim accrued during the life of the deceased, it should have been probated against his estate, and it is now barred for failure to do so. If it did not accrue until after his death it is a valid claim against his administrator and decree therefor should have been rendered against appellee. Section 3619 of Hemingway's Code fixes the liability of stockholders in failed banks.
After sufficient money has been collected from the assets of a failed bank to pay its liabilities, the remaining assets belong to the stockholders. And the stockholders can never be called upon to pay in the amount of their liability under the statute until the losses of the failed bank are such as to make this necessary in order to pay the claims of depositors. The capital stock must consume the first losses. And the losses must equal twice the amount of the capital stock before the stockholders can be made to pay in the full amount of their liability.
W. M. Miers died in June after the failure in February. No time had elapsed between the failure and his death for the collection of the bank's receivables. Most of its creditors were farmers and they were then in the midst of the farming season. They could not then be expected to make any substantial payments on their notes. They could not pay until in the fall, after the harvesting season. And the other creditors were small town merchants who were largely dependent upon the farmers. The farmers owed them for goods and supplies furnished for which they could not pay until their crops were sold in the fall. There was no way for appellants to know at that time what the losses would be. They did not know what amount the creditors would pay in the fall. They could not foresee future financial conditions. And it would have been extremely unfair to the stockholders to have called upon them for their double liability without first having exhausted every reasonable means to collect on the bank's receivables.
We do not contend that all the assets of a failed bank have to be liquidated and administered before demand may be made on the stockholders for their liability. As was held in Pate v. Bank of Newton, 116 Miss. 666, 77 So. 601, the suit can be maintained whenever it is reasonably apparent that the assets of the bank will not pay the depositors. But the assets of a failed bank will always pay the claims of depositors unless the losses thereon exceed the capital stock. And it was not reasonably apparent before the death of W. M. Miers that it was necessary to call upon the stockholders for the amount of their double liability in order to pay the claims of depositors. It was not so apparent until some time after the death of W. M. Miers. Upon the death of W. M. Miers his stock in the Bank of Commerce passed to appellee as his personal representative. The claim for liability had not then accrued and for all that was then known the bank stock was an asset in the hands of the administrator. The liability thereafter accrued and it was proper to sue appellee for the same under the statute hereinbefore quoted and the funds under its charge as such administrator are liable for the payment of this liability.
Double liability on bank stock is contingent. It may become fixed and it may never accrue. And it is not a demandable claim until it does accrue. It is similar to the liability of a surety on a surety bond. It is contingent on the losses of the failed bank's receivables being sufficiently large to make its payment necessary. The case of Savings B. & L. Association v. Tartt, 81 Miss. 276, 32 So. 115, is authority for the view we have here advanced.
The case of Boyd, et al., v. Applewhite, 121 Miss. 879, and the authorities there cited, also support the view that unliquidated and contingent claims are not probatable. Unless the losses of a failed bank are determined within a reasonable degree of certainty and correctness a claim against one of its stockholders for his statutory liability is just as much an unliquidated and contingent claim as a claim for tort. The decree of the chancellor should be reversed and decree entered here granting appellants the relief sought.
W. M. Mitchell, for appellee.
The bill filed by the appellants in this cause is a complete answer. It appears from their own showing that the liquidators could and should have called for the payment of this liability of Miers before his death as it had become reasonably apparent to them that this would be necessary to pay depositors. And this is the test laid down by this court in the case of Pate v. Bank of Newton, 116 Miss. 666.
Under the showing made by the bill of appellants, it certainly should not have taken the liquidators more than four months after the affairs of the bank were taken over by them to discover with a reasonable degree of certainty whether or not the assets were sufficient to pay all obligations...
To continue reading
Request your trial