Commissioner of Banks v. Cosmopolitan Trust Co.
| Decision Date | 04 January 1924 |
| Citation | 247 Mass. 334 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | COMMISSIONER OF BANKS v. COSMOPOLITAN TRUST COMPANY & others. |
December 4, 1923.
Present: RUGG, C.
J., BRALEY, CROSBY & PIERCE, JJ.
Trust Company, In liquidation: stockholders' liability. Commission of Banks. Corporation, Stockholders' liability. Equity Pleading and Practice, Bill, Waiver. Supreme Judicial Court Waiver by failure to argue. Waiver. Equity Jurisdiction.
The commissioner of banks, after he has taken possession of the property and business of a trust company, may bring in his own name as commissioner a suit in equity under G.L.c. 167, Section 24 to enforce the individual liability of the stockholders established by G.L.c. 172,
Section 24, and may join as defendants the trust company and the stockholders against whom he seeks relief.
In a suit of the character above described, it is not necessary that the commissioner allege that he brings the suit "in behalf of himself and all other creditors."
A bill in equity of the character above described is not defective by reason of the fact that it does not allege that it is brought against
"all persons who were stockholders . . . at the time of the commencement of the suit in which" was rendered the judgment, failure to satisfy which, by G.L.c. 172, Section 24; c. 158, Sections 46, 49, is made a prerequisite to the enforcement of the stockholders' liability.
A bill in equity of the character above described sets forth sufficient facts to enforce the liability of the stockholders of the company if after an allegation of the neglect of the trust company for thirty days to satisfy an execution issuing upon a judgment recovered against it in accordance with G.L.c. 158, Sections 46, 49, it also contains an allegation that the commissioner of banks has determined "that it is necessary to enforce the individual liability of the stockholders as described in the fast sentence of Section 24 of Chapter 172 of the
General Laws" to the full amount "in order to pay the liabilities of said trust coutpany," such allegation, fairly construed meaning that the commissioner has determined to enforce the kind of liability established by the statute for the purposes authorized by the statute and for no other purposes, the reference to G.L.c. 172, Section 24, limiting the word "liabilities" as used in the bill to "contracts, debts and engagements of the corporation," which are the words used in G.L.c.
172, Section 24.
The word "debts," appearing in G.L.c. 167, Section 24, is used generically to include every kind of liability of stockholders established by G.L.c.
172, Section 24, and does not restrict the meaning of the words, "contracts, debts and engagements of the corporation," used in c. 172,
In a suit of the character above described, it is not essential to set out in the bill with excessive accuracy of detail every preliminary step taken or conclusion reached by the plaintiff before deciding to bring the suit to enforce the stockholders' liability.
While, in a bill in equity of the character above described, allegations that the trust company was insolvent and that its assets were insufficient to pay its obligations would not have been out of place, such allegations were not essential, an allegation, that the commissioner had determined that it was "necessary to enforce the individual liability of the stockholders as described in the first sentence of Section 24 of Chapter 172 of the General Laws," being sufficient.
The questions of the necessity of enforcing the liability of the stockholders of a trust company established by G.L.c. 172, Section 24, and the extent to which that liability should be enforced are not open further to judicial inquiry in a suit in equity brought by the commissioner under G.L.c. 167, Section 24, for the enforcement of that liability.
The determination by the commissioner of banks of the necessity for the enforcement of the liability of the stockholders of the trust company, and the return unsatisfied of an execution issuing upon a judgment against the trust company, which are prerequisities to the enforcement of stockholders' liability by the commissioner under G.L.c. 172, Section
24, are disassociated and unrelated and neither is made a requisite precedent to the other.
A trust company remains in existence as a corporate entity even after the commissioner of banks under G.L.c. 167, Section 22, has taken possession of its property and business, and allegations by the commissioner in a bill in equity ior the enforcement of stockholders' liability under
G.L.c. 172, Section 24, that, after he had taken possession, an action was brought against the trust company in which a judgment was rendered and an execution was issued, that a demand was made on the execution and that it was returned unsatisfied by reason of failure by the corporation for thirty days to pay it or to exhibit sufficient property subject to be taken on execution to pay it, set forth a sufficient compliance with the requirements of G.L.c. 158, Sections 46, 49.
In a suit of the character above described, it is not necessary for the commissioner to allege that the unsatisfied judgment referred to was recovered upon a cause of action for which a stockholder would be liable.
In a suit of the character above described, it is sufficient to allege that demand was made by virtue of the execution issued upon the judgment referred to, that it remained unsatisfied for thirty days and that it was returned unsatisfied, it not being necessary for the commissioner to delay until the return day of the execution before bringing suit to enforce the stockholders' liability.
G.L.c. 235, Section 23, does not prevent an execution from being returned before sixty days after its date.
It is a sufficient allegation as to demand on the execution issuing upon the judgment above described, that it was made on the trust company and on a person named as its assistant treasurer.
It is no defence to a suit in equity brought by the commissioner of banks to enforce the stockholders' liability of a trust company established by
G.L.c. 172, Section 24, that, at the time of the bringing of the action, in which a judgment was rendered, the execution was issued and demand for its satisfaction was made in accordance with G.L.c. 158, Sections
46, 49, the commissioner of banks was in possession of the property and business of the trust company and under a duty to defend actions against the trust company, so that the corporation was powerless to act as to its property or the action.
Approval by this court is not necessary as a prerequisite to the bringing of a suit by the commissioner of banks in possession of the property and business of the trust company for the enforcement of the stockholders' liability established by G.L.c. 172, Section 24.
In a brief filed in this court by a defendant at the hearing of his demurrer to a suit by the commissioner of banks to enforce the liability of stockholders of a trust company established by G.L.c. 172, Section
24, was the following statement: "These defendants raise the following federal questions; to wit: That the rights and powers contended for by the commissioner under his bill are violative of those articles of the
Constitution of the United States which provide against the impairment of obligations, and against assumption of judicial authority by an administrative officer, and against proceedings and decrees without due process of law; and they pray that their rights to such federal questions be saved." Held, that
(1) The foregoing statement was not an argument; (2) Such a statement is the equivalent of a waiver of points not argued.
BILL IN EQUITY, filed in the Supreme Judicial Court for the county of Suffolk on March 22, 1923, and afterwards amended, by the commissioner of banks in possession of the property and business of the Cosmopolitan Trust Company against that trust company and sundry stockholders or their personal representatives, praying that the stockholders severally be assessed sums in proportion to the amount of stock held by them respectively at the time of taking possession by the commissioner, that "the amount so to be assessed . . . be the amount of their stock in said trust company at par value thereof in addition to the amount invested in said shares;" that the stockholders be severally ordered to pay the amount for which they may be found liable to the plaintiff, and for further relief.
Several defendants demurred. The demurrers came on to be heard before Carroll, J., who, being of the opinion that the questions raised by them so affected the merits of the controversy that the matter ought to be determined by the full court before further proceedings, reported the suit to this court for determination upon the bill as amended and upon the demurrers.
G.L.c. 167, Section 24, reads as follows:
G.L.c. 172, Section 24, reads as follows: ...
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