Carothers v. Love, 30963

CourtUnited States State Supreme Court of Mississippi
Citation169 Miss. 250,152 So. 483
Decision Date05 February 1934
Docket Number30963
PartiesCarothers v. Love, Superintendent Of Banks.


Double liability of voluntary stockholder in bank remains unenforceable until bank goes into liquidation and it reasonably appears that assets will be insufficient to pay depositors.


Probating demand for stockholder's liability held not necessary where stockholder died before closing of bank, since liability had not then ripened into claim.


(Division B. March 19, 1934.)

[153 So. 389. No. 30963.]


Claim against estate of deceased stockholder in insolvent bank, for personal liability filed and marked "probated" by clerk, held not void because lost or mislaid by clerk (Code 1930, section 1671).

HON JAS. A. FINLEY, Chancellor.

Action by J. S. Love, Superintendent of Banks, against V. M Carothers and others. From an adverse decree, certain defendants appeal. Affirmed in part, and in part reversed and remanded.

Suggestion of error overruled March 19, 1934.

E. C Sharp, of Jackson, for appellants.

The only material difference between our statutes pertaining to stockholders' liability and that of the national law on the same subject is that, under the Mississippi statutes the proceeds collected from stockholders' liability is a trust fund for the benefit of the depositors, while under the national law it is for the benefit of the creditors. Therefore, we contend that the same procedure should be followed in the enforcement of the stockholders' liability in state banks in Mississippi as is required by national banks.

In the case of Kennedy v. Gibson, 8 Wall. 498, 19 L.Ed. 476, the Supreme Court of the United States held that the determination of the comptroller as to the necessity of instituting proceedings against the stockholders to enforce their personal liability and as to the amount to be collected is indispensable, and must precede the institution of the suit by the receiver.

Gerner v. Thompson, 74 F. 125; Page v. Jones, 7 F.2d 541, 46 S.Ct 203, 269 U.S. 587; King v. Pomeroy, 121 F. 287, 58 C. C. A. 209.

The bill in this case does not allege, and the proof does not show, that either Mr. or Mrs. Whitesides ever received from the estate of A. W. Whitesides, assets in the amount of one thousand five hundred dollars each, or any other substantial amount, but, on the contrary, it does show that each of them refused to permit this stock to be transferred to them, and that they received little, if anything, of value from this estate.

Austin v. Strong, 117 Texas 263, 1 S.W.2d 872, 79 A. L. R. 1528; In re Bingham, 27 N.E. 1055.

Appellants contend that no evidence should have been permitted as to the liability of Mrs. W. R. Whitesides because of the failure to strictly follow the statute in regard to probation of claim, and because the proof fails to disclose that said claim was probated and allowed as required by law.

Section 1671, Code of 1930; Stevens v. Dunlap & Co., 108 Miss. 690, 67 So. 160; Walker v. Nelson, 87 Miss. 268, 39 So. 809; Horne v. McAlpine, 101 Miss. 129, 57 So. 420; Jennings v. Lowry, 147 Miss. 673, 112 So. 692; McWhorter v. Donald, 39 Miss. 779; Cheairs v. Cheairs, 81 Miss. 662, 33 So. 414; Lehman v. Powe, 95 Miss. 446, 49 So. 622.

This claim not having been probated in the manner provided by law, or if probated, not permitted to remain with the clerk, and there being no proof in the record to show that it was properly sworn to before an officer authorized to administer oaths and filed with the papers in the case as required by law, should have been disallowed, and no decree entered against the estate of Mrs. Whitesides for any part of the claim so attempted to be probated.

Persons v. Griffin, 112 Miss. 643, 73 So. 624; Jennings et al. v. Lowry & Berry, 147 Miss. 673, 1.12 So. 692; Merchants & Mfg. Bank of Ellisville v. Fox, 147 So. 789.

The exact question as to when the liability in cases of this character accrues has never, so far as we have been able to ascertain, been definitely passed upon by this court.

Board of Bank Examiners v. Grenada Bank, 135 Miss. 242, 99 So. 903; Pate v. Bank of Newton, 116 Miss. 666, 77 So. 601; Gift v. Love, 144 So. 562, 164 Miss. 442.

In the present case, as to the Sanders estate, if the liability accrued "when the bank became insolvent and closed," as stated in the Gift case, then the claim was properly probatable, and the questions to be decided, as we view the record, are, whether or not a judgment can be rendered against the administrator of this estate for the full amount of stock liability without the complainant having first shown that there was in his hands a sufficient amount to satisfy the decree, and we contend that under the statute a decree could only be rendered against him as administrator of this estate for the amount proven to be in his hands at the time of the rendition of the decree, and inasmuch as there is no proof to show this amount, or any other amount, in his hands at that time, the decree should be reversed. Carothers is entitled to be subrogated to the other assets of the bank for the payment of the money which he has advanced.

Love, Superintendent of Banks v. Robinson, 137 So. 499. Flowers, Brown & Hester, of Jackson, and C. R. Bolton, of Tupelo, for appellee.

Section 3815, Code of 1930', imposes the double liability on stockholders. There is nothing in this statute that provides that the superintendent of banks must first have adjudicated the insolvency of the bank before bringing suit to collect double liability. The only prerequisite is that the bank must be in process of liquidation.

Pate v. Bank of Newton, 77 So. 601.

While the registered stockholders may be held liable to creditors regardless of the true ownership of the stock, and the pledgee of the stock, not appearing otherwise, is not liable, although the registered stockholder may be an irresponsible person of his choice, yet, where the real ownership of the stock is in one, his liability may be established, notwithstanding the registered ownership is in the name of a person, fictitious or otherwise, who holds for him.

Ohio Valley National Bank v. Hulitt, 51 L.Ed. 423; 3 R. C. L. 401; Pauley v. Los Angeles State Loan & Trust Co., 41 L.Ed. 844.

The widow and heirs of a shareholder in a national bank, to whom the probate court allotted the shares of stock in division, in proportion to their interest in the estate, but who let the stock stand in the name of the deceased, without any notice of their title to it are liable, under U.S. Revised Statutes, secs. 5139, 5151, 5152, to assessments on the stock in case the bank subsequently becomes insolvent.

Matterson v. Dent, 176 U.S. 521, 44 L.Ed. 571; Christopher v. Norvell, 201 U.S. 216, 50 L.Ed. 733.

In Gift et al. v. Love, Superintendent of Banks, 144 So. 562, the court held the Estate of J. E. Gift, deceased, liable for the par value of his stock, although the bank did not fail until long after his death.

Davis v. Weed, 44 Conn. 569, Fed. case No. 3658; Bailey v. Hollister, 26 N.Y. 112.

It ought to be assumed that the claim as probated was regular; that the clerk did all that was required to be done by him; that the clerk allowed the claim for the amount for which it was probated, and that his name was signed thereto showing this fact, because it is always presumed in the absence of a contrary showing that an official does his duty in the manner required by law. Argued orally by E. C. Sharp, for appellants, and by Clyde Hester and C. R. Bolton, for appellee.

Griffith J., delivered the opinion of the court.

Appellee instituted suit against a number of stockholders of the Booneville Banking Company, a state bank in liquidation, and from the decree in his favor, five of them or their personal representatives have appealed. The record is involved in such a multitude of facts that we have concluded that to attempt to make an accurate and detailed statement thereof and to discuss the many points of law raised by the parties would produce an opinion too lengthy to be of practical value. Therefore, except as to the law point covered in the last paragraph of this opinion, we shall confine...

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