Corrington v. Crosby
| Citation | 210 N.W. 342,54 N.D. 614 |
| Decision Date | 29 September 1926 |
| Court | United States State Supreme Court of North Dakota |
Appeal from District Court of Cass County, Sustaining demurrer to the complaint, Cole, J.
Reversed.
John G Pfeffer, for appellant.
The liability of the stockholders, imposed by statute, is not penal, but is contractual in its character. Huntington v Attrill, 146 U.S. 657, 36 L. ed. 1123, 13 S.Ct. 224; Cochran v. Wiechers, 119 N.Y. 399, 7 L.R.A. 553, 23 N.E. 803; Flash v. Conn, 109 U.S. 371, 27 L. ed. 803, 3 S.Ct 803.
By the common law, upon principles of national comity, a contract made in a foreign place, may be the legitimate ground of action in the courts of another state. Baxter, etc. Bank v. Talbot, 154 Mass. 358, 4 Am. Dec. 145; Walsh v. New York, etc. Co., 160 Mass. 374, 28 Am. Rep. 241.
When a foreign law binds a particular case, then it becomes a part of our common law, and the parties are entitled of right to have it applied. Wharton, Confl. L. 2nd ed. § 1a; Dicey, Confl. L. pp. 10, 14.
The stockholders have no vested right in any particular method or procedure or against the adoption of any new method for enforcing their liability. 12 C. J. 977; Moore v. Ripley, 106 Ga. 556, 32 S.E. 647; Persons v. Gardner, 42 A.D. 490, 56 N.Y.S. 463; Henley v. Myers, 215 U.S. 373, 54 L. ed. 240, 30 S.Ct. 148; Springhorn v. Dirks (Mont.) 231 P. 912.
Lawrence, Murphy & Nilles, for respondents.
The liability of a stockholder of an insolvent bank for the debts of the bank does not exceed the amount of his stock, and is for a ratable share of the deficiency, and liability only arises when this sum has been ascertained and liquidated. Amer. Dig. 2d Dec. ed. p. 1321.
Judgment against a corporation with respect to the establishment of insolvency is not binding upon a nonresident upon whom personal service has not been made. Pfaff v. Gruen, 99 Mo.App. 560; Farmers Loan & T. Co. v. Funk, 49 Neb. 353; McLaughlin v. O'Neill, 7 Wyo. 187; Wigton v. Bosler, 102 F. 72.
The claim of the stockholder is not an offset in its technical legal sense, but it is an equitable defense which he is entitled to make. When he becomes a bona fide creditor of the corporation he is clothed with the same equity as contract creditors. Pierce v. Topeka Commercial Secur. Co., 60 Kan. 164, 55 P. 853.
COOLEY, District Judge. BIRDZELL, NUESSLE, BURKE, and JOHNSON, JJ., concur. CHRISTIANSON, Ch. J., did not participate; Honorable CHAS. M. COOLEY, Judge of the First Judicial District, sitting in his stead.
This action is brought by Glenn H. Corrington, for himself, and in behalf of all other creditors of the Farmers' State Bank of Barber, Montana, to recover of certain stockholders of said bank, resident in North Dakota, the added statutory liability of said stockholders, imposed by § 6036, of the 1921 Revised Code of Montana, and by the amendment thereof (chapter 9, of the Montana Session Laws for the year 1923). This law reads as follows: "The stockholders of every bank shall be severally and individually liable equally, ratably, and not one for the other for the contracts, debts and obligations of such corporation to the extent of the amount of their capital stock therein, at the par value thereof, in addition to the amount invested in such shares."
The defendants have demurred to the amended complaint. This appeal is from an order sustaining the demurrer.
The allegations of the amended complaint, so far as is necessary for the consideration of the questions involved on this appeal, are substantially as follows:
The creditors of said bank are very numerous, more than ninety-seven in number; that some are unknown to plaintiff; that it is impracticable to bring them all before this court in this action, and that accordingly this suit is brought for the use and benefit of all the creditors of said bank; that the Farmers' State Bank of Barber, Montana, was, at all times mentioned in said complaint, a banking corporation, organized under the laws of the state of Montana, and doing business at Barber, Golden Valley county, Montana; that the authorized capital stock of said bank was $ 20,000, divided into 200 shares of the par value of $ 100.00 each; that the said bank closed and ceased doing business on the 28th day of November, 1923; that on or about the first day of December, 1923, the then state examiner and superintendent of banks in said state, by virtue of the authority vested in him by law, examined into the affairs, business and financial condition of said bank, and from such an examination found and determined said bank to be in an insolvent condition, which fact was reported to the governor of said state, with a request that the governor direct the attorney general of said state to petition the district court of Golden Valley county, Montana, for the appointment of a receiver for said bank; that thereupon and on December 12th, 1923, the governor of said state, did direct the said attorney general, to file such petition, asking for the appointment of a receiver for said bank, as provided by the laws of Montana; that on the 7th day of January, 1924, the said attorney general, in an action wherein the state of Montana was plaintiff, and the Farmers' State Bank of Barber, Montana, was the defendant, filed in said district court a petition, asking that the said bank be declared insolvent, that its business and affairs be wound up, and its assets distributed to those entitled thereto, as ascertained by said court, and that a receiver be appointed to take charge of its assets, books and accounts, and to administer them under the direction of said court, with the powers, duties and liabilities of a receiver in such cases, and that such receiver be appointed without the plaintiff in that action being required to give notice of said application therefor to the defendant therein, and for further and other relief; that on the same 7th day of January, 1924, after the filing of said petition, an order was duly made in said proceedings, by the judge of the district court, of said Golden Valley county, Montana, appointing a receiver for said bank, for the purpose of winding up its affairs, with the usual powers conferred upon receivers in such cases; that on the 13th day of March, 1924, a summons in said action was duly served upon the defendant therein, Farmers' State Bank of Barber, Montana, and thereafter on the 3d day of June, 1924, a judgment was duly entered in said district court, wherein the said court found that said bank was and now is wholly insolvent, and that the liabilities of said bank exceed the assets by more than $ 40,000; that the authorized capital stock of said bank was $ 20,000, and that the holders of said stock on the 7th day of January, 1924, the date of the appointment of the Receiver, were each liable severally, and individually, equally and ratably for the contracts, debts and obligations of said bank to the extent of the amount of the capital stock therein, at the par value thereof, in addition to the amount invested therein, and adjudged and decreed that the said bank "was on the 7th day of January, 1924, and at all times thereafter, and now is wholly insolvent, and that the proven liabilities exceed the value of the assets by the sum of fifty six thousand one hundred and ninety-four and 82/100 dollars." By the terms of said judgment it was further ordered that the Receiver proceed to enforce the liability of the holders of the capital stock, as provided by the laws of Montana, and to take whatever steps are necessary to secure the payment of said liability.
Independently of the judgment and its recitals, which are set forth in full in the complaint, the complaint further alleges that at all times since the appointment of the receiver said Farmers' State Bank of Barber, Montana, has been and is now closed and insolvent; that the total indebtedness of said bank exceeds the value of the assets thereof in an amount of not less than $ 56,194.82; that the difference between the value of the assets of said bank and the amount of the liability is more than two times, and almost three times greater than the total amount of the capital stock of said bank; and that the amount of the liability of each of the stockholders of said bank to the creditors, is the sum of $ 100 per share with interest thereon from the 28th day of November, 1924. The complaint further alleges: that the defendants are stockholders of said bank; that they are all residents of the state of North Dakota, and are all the stockholders of said bank residing in said state; that at the time of the closing of said bank they owned, respectively, shares therein, in certain specified amounts.
The complaint sets out the amended § 6036 of the Revised Code of the state of Montana, quoted above, and alleges, that at and before the time of the closing of said bank one J. E. Corrington had on deposit with said bank the sum of $ 11,000, with interest thereon, evidenced by certain certificates of deposit, issued by said bank to the said J. E. Corrington; that prior to the beginning of this action, the said J. E. Corrington, assigned and transferred to the plaintiff all his right, title and interest, in and to said certificates, and that the plaintiff is still the owner and holder thereof, no part of which has been paid.
In his prayer for judgment, the plaintiff asks that the defendants be adjudged to be stockholders of the Farmers' State Bank of Barber, Montana, and that the number of shares owned by each, and the amount of liability thereon, be determined,...
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