Brecht v. Hammons

• Decision Date: 19 June 1929
• Docket Number: Civil 2819
• Citation: 278 P. 381,35 Ariz. 383
• Parties: F. G. BRECHT, Appellant, v. A. T. HAMMONS, as Superintendent of Banks for the State of Arizona, and Ex-Officio Receiver of the COMMERCIAL TRUST & SAVINGS BANK, a Corporation, Appellee
• Court: Arizona Supreme Court

278 P. 381

35 Ariz. 383

F. G. BRECHT, Appellant, v. A. T. HAMMONS, as Superintendent of Banks for the State of Arizona, and Ex-Officio Receiver of the COMMERCIAL TRUST & SAVINGS BANK, a Corporation, Appellee

Civil No. 2819

Supreme Court of Arizona

June 19, 1929

APPEAL from a judgment of the Superior Court of the County of Yavapai. C. C. Faires, Judge. Affirmed.

Mr. R B. Westervelt and Mr. J. E. Russell, for Appellant.

Mr John A. Ellis, for Appellee.

OPINION

LOCKWOOD, C. J.

Commercial Trust & Savings Bank, a banking corporation, hereinafter called the bank, was incorporated under the laws of the territory of Arizona in 1902, and conducted a banking business at Prescott, Arizona, from then until November 1925, when it was closed and taken in charge for liquidation by A. T. Hammons, in his official capacity as superintendent of banks, hereinafter called appellee. F. G. Brecht hereinafter called appellant, owned ninety-six and one-half shares of the capital stock of said bank at the time it was closed. Appellee obtained an order from the superior court of Yavapai county adjudging the bank to be insolvent to the extent of more than the entire capital stock outstanding, and then instituted suit No. 10,272 against appellant in said court for the collection of $9,650, alleged to be the latter's liability as a stockholder. Answer was filed and issue joined, and a trial had upon the law questions and facts, and appellee was awarded judgment for the $9,650. Thereafter appellee and appellant tentatively agreed upon a compromise of the judgment, and upon a full hearing before the court an order was made authorizing such compromise, and pursuant thereto appellee was paid by appellant the amount agreed upon, and the judgment aforesaid was duly satisfied of record.

The present action is a suit by appellant to recover back the money so paid to appellee. There was no dispute as to the facts, and the matter being submitted to the court, judgment was rendered in favor of defendant, appellee herein, and the matter was brought before us for review. There are three assignments of error, the vital legal questions raised on the record being whether or not the judgment above referred to is void, and therefore subject to a collateral attack, or merely erroneous and voidable, and if it is void, whether the compromise is valid or not. Appellant's position, briefly stated, is as follows:

Suit No. 10272 referred to above was brought on the theory that there was due from appellant to appellee a certain sum of money by virtue of his stock in the bank, and the provisions of article 14, section 11, Constitution of Arizona, which reads as follows:

"The shareholders or stockholders of every banking or insurance corporation or association shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such corporation or association, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares or stock."

After the judgment and compromise above described, this court held, in the cases of Hammons v. Watkins, 33 Ariz. 76, 262 P. 616, and Herndon v. Hammons, 33 Ariz. 88, 262 P. 620, that stockholders of banks whose capital stock was issued prior to statehood, and whose charters contained a provision exempting them from any liability for the debts of the corporation, were not subject to the double liability set forth in article 14, section 11, supra. It is contended that, since under the law laid down in the decisions just cited no liability existed as against appellant on his stock, the court was without jurisdiction of the subject matter in the suit above described, and that therefore the judgment is absolutely void, and subject to a collateral attack; that a void judgment is no consideration for a compromise, and such being the case, appellee being an officer of the court, and the money therefore constructively, at least, in the possession of the court, in equity and good conscience the money paid him by appellant should be repaid.

We will consider first whether the judgment in question was void or merely erroneous. Three things must concur or a judgment is void upon its face, and may be attacked at any time. The court must have (a) jurisdiction of the subject matter of the case, (b) jurisdiction of the persons involved in the litigation, and (c) jurisdiction to render the particular judgment given. If these three matters concur, even though the judgment be erroneous or wrong, so that it could be reversed on appeal or set aside on direct attack, it is not void as against collateral attack. In the case at bar there can be no question but that the trial court had jurisdiction of the persons of the parties, and jurisdiction to render the particular judgment which it did. The question is as to the jurisdiction of the subject matter. The action was one given, not by a provision of the common law, but, if at all, by the constitutional provision above quoted. If it falls within such provision, the court had jurisdiction of the subject matter -- if not, not. On the one hand, we are met with the contention that if judgments, where there is an honest difference of opinion when they are rendered as to what the law is, may be attacked at a later date as being absolutely void, there is never any certainty or finality to a judgment. On the other hand, it is urged that it would be a travesty on justice to allow a judgment to stand which the highest authority had decided was based upon an alleged right which on the undisputed facts did not and which never could exist.

We think the true rule is as follows: When a question as to the jurisdiction of the subject matter is raised, the court must, of course, primarily determine its own jurisdiction. If its conclusion requires the actual or implied decision of a question of fact, then a determination necessarily based on that fact to the effect that the court has jurisdiction is conclusive as against collateral attack. When, however, the facts are admitted in the pleadings, and the court's determination is based upon an error as to the law arising out of the admitted state of facts, its decision is not conclusive, and the judgment, in case the decision was in error, is subject to collateral attack. Grannis v. Superior Court, 146 Cal. 245, 106 Am. St. Rep. 23, 79 P. 891; Farmers' & Merchants' Bank v. Board of Equalization of Los Angeles, etc., 97 Cal. 318, 32 P. 312; In re Grove Street, 61 Cal. 438; Cahill v. Superior Court, 145 Cal. 42, 78 P. 467; Arroyo D. & W. Co. v. Superior Court, 92 Cal. 47, 27 Am. St. Rep. 91, 28 P. 54. Let us apply this rule to the case at bar.

Under our decisions in Herndon v. Hammons, and Hammons v. Watkins, supra, the Constitution gave an action for the recovery of stockholders' liability when the bank had been incorporated after statehood, but no action was given against the stockholders of banks incorporated before that time with suitable charter exemptions, and no action of the kind existing, no court could have jurisdiction to try one. If the trial court had found as a matter of fact that the...