Brownell v. Adams, No. 27682.

CourtNebraska Supreme Court
Writing for the CourtDAY
PartiesBROWNELL v. ADAMS ET AL.
Docket NumberNo. 27682.
Decision Date29 May 1931

121 Neb. 304
236 N.W. 750

BROWNELL
v.
ADAMS ET AL.

No. 27682.

Supreme Court of Nebraska.

May 29, 1931.


[236 N.W. 750]


Syllabus by the Court.

“The remedy for the enforcement of the entire double liability imposed by the Constitution upon stockholders of a state bank in the event of insolvency is a suit in equity by a creditor for the benefit of all the creditors, or by the receiver.” Rogers v. Selleck, 117 Neb. 569, 221 N. W. 702.



Syllabus by the Court.

Jurisdiction of equity to enforce constitutional liability of stockholders of an insolvent banking corporation is based upon the rule obtaining in this state that equity has jurisdiction of an action by a receiver against all the stockholders of a corporation jointly to enforce their contractual or statutory liability.



Syllabus by the Court.

Where an action is rightly brought in one county against a number of defendants properly joined, and a bona fide defendant served in that county, a summons may be issued to other counties for service upon proper defendants.



Syllabus by the Court.

When a court of competent jurisdiction has appointed a receiver of an insolvent banking corporation pursuant to notice to the corporation, and the receiver has qualified and performed the legal duties devolving upon him, the regularity and validity of the order of his appointment cannot be questioned in a collateral proceeding.



Syllabus by the Court.

The stock book of a banking corporation is competent evidence, when properly identified, of the ownership of the corporate stock.



Syllabus by the Court.

In this, a case to establish the constitutional stockholder's double liability, the stock book of the corporation, properly identified by the president who issued and signed all the certificates of stock and under whose direction the book was kept, and the quarterly report required by law to be made to the department of trade and commerce, are sufficient evidence to sustain a finding that one was a stockholder.



Syllabus by the Court.

“The trust of an administrator or executor is an enduring one, and a decree of final accounting does not destroy the relation of such officer, but only discharges him from liability for the past.” Hazlett v. Estate of Blakely, 70 Neb. 613, 97 N. W. 808, 810.



Syllabus by the Court.

Where an infant has received some benefit during infancy, he must repudiate the

[236 N.W. 751]

contract within a reasonable time after attaining majority. But not having received any benefit and not having ratified the contract after his arrival at majority, he is not bound by same.


Appeal from District Court, Douglas County; Hastings, Judge.

Suit by R. O. Brownell, receiver of the Pioneer State Bank of Omaha, against T. G. Adams, real name unknown, L. B. Fuller, real name unknown, and others. Judgment for plaintiff, and defendant last named and certain other defendants appeal.

Affirmed, except as to defendant Henry Lemke, as to whom judgment is reversed and case dismissed.

Perry, Van Pelt & Marti, C. J. Campbell and Littrell & Patz, all of Lincoln, C. E. Sandall, of Omaha, and Stiner & Boslaugh, of Hastings, for appellants.

C. M. Skiles and I. D. Beynon, both of Lincoln, for appellee.


Heard before GOSS, C. J., and ROSE, DEAN, GOOD, EBERLY, DAY, and PAINE, JJ.

DAY, J.

The receiver of the Pioneer State Bank of Omaha brings this as a suit in equity in the district court for Douglas county, for the benefit of all the unpaid creditors of the bank, to recover from the stockholders the double liability imposed upon them by the Constitution. Some of the defendant stockholders resided in Douglas county where they were served with process and others resided in various other counties of the state where they were served with summons sent from the Douglas county court. The defendants prosecuting this appeal from a judgment in favor of the receiver are those who were not served in Douglas county.

The appellants present the following general propositions for our consideration: 1. Did the court have jurisdiction over the defendants who were served in the various counties of the state with process issued out of the district court for Douglas county? 2. Were the original receivership proceedings null and void? 3. Does the evidence sustain the findings of the trial court that the defendants were stockholders of said bank?

[1] It is the well-established rule in this state that “the remedy for the enforcement of the entire double liability imposed by the Constitution upon stockholders of a state bank in the event of insolvency is a suit in equity by a creditor for the benefit of all the creditors, or by the receiver.” Rogers v. Selleck, 117 Neb. 569, 221 N. W. 702. See, also, German Nat. Bank v. Farmers' & Merchants' Bank, 54 Neb. 593, 74 N. W. 1086;Farmers' Loan & Trust Co. v. Funk, 49 Neb. 353, 68 N. W. 520;Pickering v. Hastings, 56 Neb. 201, 76 N. W. 587;Hastings v. Barnd, 55 Neb. 93, 75 N. W. 49;Brown v. Brink, 57 Neb. 606, 78 N. W. 280;Brownell v. Anderson, 117 Neb. 652, 222 N. W. 55.

[2] Jurisdiction of equity to enforce constitutional liability of stockholders of an insolvent banking corporation is based upon the rule obtaining in this state that equity has jurisdiction of an action by a receiver against all the stockholders of a corporation jointly to enforce their contractual or statutory liability. In order to recover upon the statutory liability of stockholders of an insolvent corporation, a suit in equity should be brought, by the receiver, or by a creditor on his own behalf and for all other creditors against all the stockholders of the corporation. Emanuel v. Barnard, 71 Neb. 756, 99 N. W. 666. In McCall v. Bowen, 91 Neb. 241, 135 N. W. 1014, 40 L. R. A. (N. S.) 781, the court announced this rule as applicable to a suit brought by the receiver of a mutual insurance company to collect an assessment. To the same effect is the holding in Randall v. McClain, 94 Neb. 487, 143 N. W. 478. We content ourselves with a brief restatement of the rule, for a discussion of which we refer to Rogers v. Selleck, 117 Neb. 569, 221 N. W. 702, and McCall v. Bowen, 91 Neb. 241, 135 N. W. 1014, 40 L. R. A. (N. S.) 781. Suffice it to state that there can now be no question but that in this jurisdiction it was proper for the receiver to bring this suit in equity against the stockholders of the insolvent Pioneer State Bank in Douglas county to recover their constitutional liability.

[3] Since this suit was rightly commenced in Douglas county against defendants who were served with process within the county, summons could be issued for other defendants in other counties. Section 20-504, Comp. St. 1929, provides: “When the action is rightly brought in any county, according to the provisions of this code a summons shall be issued to any other county, against any one or more of the defendants at the plaintiff's request.” The receiver brought this suit and requested, under the authority of this provision of the statute, that summons be issued to other counties for certain defendants. In McCall v. Bowen, 91 Neb. 241, 135 N. W. 1014, 40 L. R. A. (N. S.) 781, which was a suit by a receiver of a mutual insurance company to recover from the stockholders an assessment made by the court to pay the liabilities of an insolvent corporation, it was held that it was properly brought in equity against all the stockholders and that a summons might be issued out of the county in which the action was brought to any other county in the state in which a defendant resided or could be summoned.

[236 N.W. 752]

The appellants contend that the liability of a stockholder is several and not joint, and that a summons may not be issued from one county to another unless the obligation is joint. In Rogers v. Selleck, supra, we said: “The stockholders united in a common purpose to procure from the state a charter to conduct a commercial bank with permission to deal with the public in an enterprise affected with a public interest. It required the joint action of all subscribers for stock to accomplish that purpose. * * * The rights of the creditors and the liabilities of the stockholders had a common source in the conditions imposed by the Constitution and in the contractual obligations assumed thereunder. Except in amount the claims of the different creditors in the present suit in equity are alike, requiring the same proofs. The law and the facts essential to defenses are also of a similar nature in some respects at least and may be the same.”

Equity is invoked, not only to prevent a multiplicity of suits, but also because of the trust nature of the fund created for the benefit of creditors. There is a common liability on the part of the stockholders, contractual in its nature, which requires them to contribute to this fund for the benefit of creditors an amount equal to the amount of stock held by each individual. There is no joint liability on the part of stockholders of an insolvent corporation in the sense that, if one does not pay, another stockholder must pay for him. The limit of the liability is the amount of stock each holds. 6 Thompson, Corporations (3d Ed.) § 4802; Hanson v. Davison, 73 Minn. 454, 76 N. W. 254; Crease v. Babcock, 10 Metc. (Mass.) 525; Vick v. Lane, Hazlehurst & Co., 56 Miss. 681;Mitchell v. Banking Corporation of Montana, 81 Mont. 459, 264 P. 127. We have held that where two defendants are jointly liable, summons for one may be sent to another county from the one in which the suit is instituted. Nebraska Nat. Bank v. Parsons, 115 Neb. 770, 215 N. W. 102;First State Bank v. Ingrum, 107 Neb. 468, 186 N. W. 334;Barry v. Wachosky, 57 Neb. 534, 77 N. W. 1080;Farmers' & Merchants' Bank v. Tate, 96 Neb. 142, 147 N. W. 213;Wiley v. National Surety Co., 103 Neb. 68, 170 N. W. 349.

In Ayres v. West, 86 Neb. 297, 125 N. W. 583, 584, this court said: “The law is well settled that, in an action for a money judgment, a summons cannot be lawfully sent to a county other than the one wherein the litigation is pending, unless there is a...

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22 practice notes
  • Application of Cochran
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Nebraska
    • August 12, 1977
    ...State Savings Bank of St. Joseph, Mo. v. Scott, supra. 9 Philpot v. Sandwich Mfg. Co., 18 Neb. 54, 24 N.W. 428 (1885); Brownell v. Adams, 121 Neb. 304, 236 N.W. 750 (1931); Englebert v. Troxell, 40 Neb. 195, 58 N.W. 852 (1894); Smith v. Wade, 169 Neb. 710, 100 N.W.2d 770 10 Several deal wit......
  • Parker v. Luehrmann, No. 28731.
    • United States
    • Supreme Court of Nebraska
    • January 26, 1934
    ...officer but only discharges him from liability for the past.” Hazlett v. Estate of Blakely, 70 Neb. 613, 97 N. W. 808;Brownell v. Adams, 121 Neb. 304, 236 N. W. 750. 4. Sections 4 and 7, art. 12 of the Constitution, must be construed together. They are self-operating and self-executing. Bef......
  • Luikhart v. Spurck, No. 1092.
    • United States
    • U.S. District Court — Southern District of Illinois
    • July 26, 1932
    ...necessary action, whatever its nature." Apparently the most recent decision in Nebraska on this point is that of Brownell v. Adams (1931) 121 Neb. 304, 236 N. W. 750, 751. This was a suit for the benefit of all unpaid creditors of a bank brought by the general receiver of the bank against t......
  • In re Estate of Duran, No. 27,399.
    • United States
    • New Mexico Supreme Court of New Mexico
    • March 7, 2003
    ...benefit, and not having ratified the contract after his arrival at majority, he is not bound by the same.'" (quoting Brownell v. Adams, 121 Neb. 304, 236 N.W. 750, 757 (1931))). After all, there would be no reason to repudiate a contract when the party would be in the same position, whether......
  • Request a trial to view additional results
22 cases
  • Application of Cochran
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Nebraska
    • August 12, 1977
    ...State Savings Bank of St. Joseph, Mo. v. Scott, supra. 9 Philpot v. Sandwich Mfg. Co., 18 Neb. 54, 24 N.W. 428 (1885); Brownell v. Adams, 121 Neb. 304, 236 N.W. 750 (1931); Englebert v. Troxell, 40 Neb. 195, 58 N.W. 852 (1894); Smith v. Wade, 169 Neb. 710, 100 N.W.2d 770 10 Several deal wit......
  • Parker v. Luehrmann, No. 28731.
    • United States
    • Supreme Court of Nebraska
    • January 26, 1934
    ...officer but only discharges him from liability for the past.” Hazlett v. Estate of Blakely, 70 Neb. 613, 97 N. W. 808;Brownell v. Adams, 121 Neb. 304, 236 N. W. 750. 4. Sections 4 and 7, art. 12 of the Constitution, must be construed together. They are self-operating and self-executing. Bef......
  • Luikhart v. Spurck, No. 1092.
    • United States
    • U.S. District Court — Southern District of Illinois
    • July 26, 1932
    ...necessary action, whatever its nature." Apparently the most recent decision in Nebraska on this point is that of Brownell v. Adams (1931) 121 Neb. 304, 236 N. W. 750, 751. This was a suit for the benefit of all unpaid creditors of a bank brought by the general receiver of the bank against t......
  • In re Estate of Duran, No. 27,399.
    • United States
    • New Mexico Supreme Court of New Mexico
    • March 7, 2003
    ...benefit, and not having ratified the contract after his arrival at majority, he is not bound by the same.'" (quoting Brownell v. Adams, 121 Neb. 304, 236 N.W. 750, 757 (1931))). After all, there would be no reason to repudiate a contract when the party would be in the same position, whether......
  • Request a trial to view additional results

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