Dunn v. Bank of Union
| Decision Date | 30 June 1914 |
| Docket Number | 2275. |
| Citation | 82 S.E. 758,74 W.Va. 594 |
| Parties | DUNN ET AL. v. BANK OF UNION ET AL. |
| Court | West Virginia Supreme Court |
Rehearing Denied Sept. 15, 1914.
Syllabus by the Court.
Under section 6, art. 11, Constitution (Code 1913, p. cxxii), and section 78a III, c. 54, Code 1913 (sec. 3034), an assignor of bank stock remains liable, after transfer thereof, to the extent prescribed by said sections, for an indebtedness incurred by the bank while he was owner of such shares.
The renewal of bank deposit certificates does not operate as a novation of the original indebtedness.
A decree is ineffectual for any purpose as against defendants who are not served with process and who do not appear to the cause.
Appeal from Circuit Court, Monroe County.
Bill by H. D. Dunn and others against the Bank of Union and others. Decree for defendants, and S. S. Steele and others appeal. Reversed and remanded.
Ross & Kahle, of Bluefield, and R. Kemp Morton, of Charleston, for appellants.
R. L Clark, of Union, T. N. Read, of Hinton, and J. L. Rowan, of Union, for appellees.
Being then insolvent, the Bank of Union, pursuant to a resolution of its stockholders, on February 29, 1908, conveyed its property to R. L. Clark in trust for the benefit of its creditors, among whom were the plaintiffs in this suit. Promptly thereafter Clark, by bill in equity, convened the creditors and stockholders of the corporation. The object of the suit instituted by him was the ascertainment of the corporate assets, including the liability of the stockholders arising under the provisions of section 78a III, c. 54, Code 1913 (sec. 3034), usually denominated the stockholder's double liability to the creditors of an insolvent state banking institution. John Osborne and other stockholders, by answers in the nature of cross-bills, charged mismanagement and spoliation by the directors, officers, and agents of the bank, and sought relief against them. But, by its decree sustaining demurrers to the bill and cross-bill answers, the court denied relief against the stockholders, including the directors.
Thereupon the plaintiffs in this suit, they not having theretofore appeared for any purpose to the bill by Clark, though named defendants therein, brought their bill on behalf of themselves and all other creditors of the bank who should join therein. The suit by the Dunns had for its purpose also the ascertainment of the corporate assets, the collection of the statutory double liability, and the application of both to the liquidation of the bank's indebtedness. To this suit Osborne and other defendants tendered four pleas in abatement; the first and fourth of which aver separate and distinct, and not a joint or joint and several, liability due from the bank to plaintiffs; and the second and third of which aver the pendency and purpose of the Clark suit.
Upon appeal, the decree in the proceeding by Clark was reversed this court holding that the stockholders' liability by virtue of the statute was an asset of the bank, and as such collectible by the trustee. Clark v. Bank, 78 S.E 785.
But, before entry of the decree thus reversed, the circuit court heard both causes conjointly, referred them under the double caption to a master commissioner, who made three reports under the court's direction and pursuant to its several orders for this purpose, and sustained the motion of the Dunns to strike the pleas in abatement from the file. Though of this ruling upon the pleas complaint is now made, we do not deem it sufficiently prejudicial to warrant reversal. No one is thereby injured, except in respect of costs, the taxation of which is subject to adjustment under the court's direction at the close of the litigation. As heretofore observed, the Dunn suit was not instituted until after the circuit court had held, though erroneously, that Clark could not as trustee collect the liability imposed by statute. But, had the court held otherwise, as indeed it should have done, and consolidated the causes instead of hearing them as one, its action would not have been erroneous; for two causes between the same parties and involving the same subject-matter may properly proceed together to final determination as one suit. Mosby v. Withers, 80 Va. 82.
While it appears that plaintiffs are not jointly, but are separately, interested in the several items of indebtedness against the bank, they do have a sufficient interest in common to warrant the maintenance of this proceeding. Having such interest in the questions at issue and the relief sought, they did not improperly join as plaintiffs. To the extent of the individual indebtedness severally claimed, they had the right alone, or jointly with other creditors, to demand payment out of the assets, the collection and appropriation thereof to the liquidation of the insolvent bank's debts, as sought by the two causes so heard together. Pom. Eq. Jur. § 269; Bosher v. Land Co., 89 Va. 455, 16 S.E. 360, 37 Am. St. Rep. 879; Snyder v. Cabell, 29 W.Va. 48, 1 A. 241.
The bill charges, and the report of the commissioner shows, that on March 4, 1902, H. B. Dunn loaned the Bank of Union $5,000, for which it then issued to him a certificate of deposit, which it renewed March 18, 1903, February 26, 1904, April 18, 1905, and April 18, 1906, and on each date, by indorsement thereon, canceled the old and issued a new certificate therefor, to which time it paid the interest then due thereon; that on April 15, 1903, he also loaned the bank an additional $2,000, for which it then issued to him a certificate, which in like manner it renewed April 15, 1905 and 1906; that on October 22, 1903, L. B. Dunn loaned the bank $3,660, for which it issued to him a certificate of deposit; but by payment on April 3, 1905, it reduced his loan to $2,000, for which it then issued a new certificate, and again renewed it October 19, 1905 and April 14, 1905. The loans thus made to each plaintiff remain wholly unpaid, except as heretofore noted, and to enforce payment thereof they instituted these proceedings.
The plaintiff H. B. Dunn unites as appellant, solely, as he says, because the court erred in decreeing against certain of the stockholders who, though parties defendant to both bills, were not served with process and did not appear for any purpose in either cause, and demands the correction of the decree in this respect. Of course, to the extent it fixes liability and decrees against defendants not served and not appearing, the decree as to them is manifestly erroneous. Those who are thus prejudiced, so far as ascertained, are Isabelle C. Hereford, Willie Mae McDonald, Clara Buck, Allen Caperton, Francis G. Hereford, Katharine H. Stoddert and Guy H. Bissett. They are, however, not complaining; and he cannot here complain, because through his efforts, and without previous protest on his part, the decree was thus procured.
The inquiries of first importance relate to two propositions advanced by appellants, as to both of which the circuit court held, as appears from its decree, adversely to appellants. To the reports of the commissioner exceptions were taken in so far as he found that the reissuance of the deposit certificates operated as a novation of plaintiffs' indebtedness, and that those liable therefor were the owners of shares of the bank's capital stock on the date of the last renewal certificates. These exceptions were overruled, and the report was confirmed. In both respects the decree is erroneous.
Except as noted, the loans remain unpaid. Liability therefor accrued when each plaintiff deposited his money with the bank, upon the understanding, if not upon an express agreement, that they were to be treated and deemed actual loans to the bank upon interest. The certificates originally issued therefor were mere evidences of indebtedness then contracted. In other words, the certificates were, in effect, the notes of the bank, payable to each plaintiff. Although renewed by the subsequent issuance of other certificates, as previously observed, the original liability was not extinguished and a new liability created, any more than a new note pays an antecedent debt, though reduced to judgment, unless the parties so intended or agreed, the burden of showing such intention and agreement resting always upon him who claims the benefit of the discharge. Where these conditions are left in a...
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