Bodie v. Pollock
| Decision Date | 20 October 1923 |
| Docket Number | 23299 |
| Citation | 195 N.W. 457,110 Neb. 844 |
| Parties | FRED E. BODIE, RECEIVER, APPELLANT, v. T. H. POLLOCK, APPELLEE |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Cass county: JAMES T. BEGLEY JUDGE. Affirmed.
AFFIRMED.
Gaines Van Orsdel & Gaines, for appellant.
Crossman Munger & Barton, contra.
Heard before MORRISSEY, C. J., LETTON, DEAN, DAY and GOOD, JJ., REDICK and SHEPHERD, District Judges.
Plaintiff was receiver of the Bank of Cass County, which was insolvent. Before the assets of the bank were exhausted and without any judicial determination that said assets were insufficient to pay the creditors, he brought an action against the defendant Pollock, a stockholder, for a sum equal to the face value of the latter's stock, alleging in his petition that it was necessary to enforce the double liability of the stockholders in order to pay out. The defendant demurred to the petition upon the ground that it did not state facts sufficient to constitute a cause of action, and because it showed on its face that the action was prematurely brought. The demurrer was sustained and plaintiff brings the case here for review.
It is conceded in the briefs and upon argument that the petition was sufficient except that it was not alleged therein that the bank assets had been exhausted and that the proper judicial determination as to the amount due had been made. The question is, therefore, may a receiver bring his action against the stockholders when the bank is adjudged insolvent, as the appellant receiver contends, or must he wait until the assets are exhausted and a judicial determination has been made of the exact amount justly due, as the trial court found?
The law of double liability is found in section 7, art. XII of the Constitution, and is as follows:
"Every stockholder in a banking corporation or institution shall be individually responsible and liable to its creditors over and above the amount of stock by him held to an amount equal to his respective stock or shares so held, for all its liabilities accruing while he remains such stockholder."
It is the contention of the appellant that this provision is not self-executing and must be construed in connection with the legislative enactment of 1919 to give it effect. The following is the legislative enactment in question, found in section 8015, Comp. St. 1922:
But, though the doctrine so contended for--that the constitutional provision is not self-executing--is supported in a way by much respectable authority, this court has held to the contrary. In a case involving the liability of a stockholder in a banking corporation, it was expressly declared that the provisions of said section 7 of the Constitution are enforceable without supplementary statutory enactments. Farmers Loan & Trust Co. v. Funk, 49 Neb. 353, 68 N.W. 520. It is true that the provision standing alone may lack the completeness necessary to make it self-operating. This is the point upon which a number of courts have held somewhat similar constitutional provisions inoperative of themselves. But construing the section with another section of the Constitution, section 4 of the same article, any lack of this kind is supplied and the section becomes of itself fully operative in so far as to provide for the enforcement of the double liability referred to therein. The language of said section 4 is:
"In all cases of claims against corporations and joint stock associations, the exact amount justly due shall be first ascertained, and after the corporate property shall have been exhausted the original subscribers thereof shall be individually liable to the extent of their unpaid subscription, and the liability for the unpaid subscription shall follow the stock."
By this it will be seen that the time and conditions of the enforcement of the liability are made sufficiently definite.
Prior to 1897 the legislature passed a law (Laws 1895, ch. 8, sec 35) expressly providing that, whenever any bank receiver should report to the court that in his opinion the assets of the bank would not be sufficient to pay out within a reasonable time, the court might direct him to at once collect from the stockholders. Proceeding under this statute, the receiver of the German Savings Bank made such a report to the court and prayed the court for an order permitting and directing him to sue the stockholders on their double liability. The stockholders, or one of them, intervened and opposed the application. Their objections were overruled, and the order made. This order was reviewed upon the merits in this court in the case of State v. German Savings Bank, 50 Neb. 734, 70 N.W. 221, and the doctrine announced by the court in that case has become the settled law of the state through a long course of years and by a line of cases in which said doctrine has been consistently upheld. The case referred to was considered with unusual care because of the legislative enactment referred to, which, it will be observed, is similar in language and purpose to the enactment of 1919 hereinbefore quoted. In other words, the legislature in that case, as in this, had attempted to supplement the Constitution by providing that the stockholders might be sued before the assets were exhausted. The opinion in that case completely answers the contention of the appellant receiver in this. And the reasons for sustaining the objections of the stockholders in that case apply with equal force to sustaining the decision of the district court in this. It was there again announced that the two constitutional provisions, sections 4 and 7, art. XII, were to be construed together, and that, so construed, they were completely self-operating and self-executing, to the effect that the double liability existed, but that it could not be enforced until the assets were exhausted and until the court judicially determined the exact amount to be recovered. It...
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