Elkin v. Diversey Trust & Sav. Bank

• Decision Date: 17 April 1936
• Docket Number: No. 23218.,23218.
• Citation: 363 Ill. 160,1 N.E.2d 844
• Parties: ELKIN et al. v. DIVERSEY TRUST & SAVINGS BANK et al.
• Court: Illinois Supreme Court

363 Ill. 160

1 N.E.2d 844

ELKIN et al.

v.DIVERSEY TRUST & SAVINGS BANK et al.

No. 23218.

Supreme Court of Illinois.

April 17, 1936.

Suit by C. E. Elkin and others against the Diversey Trust & Savings Bank and others. From a decree dismissing the suit, plaintiffs appeal.

Reversed and remanded with directions.Appeal from Superior Court, Cook County; Harry A. Lewis, judge.

Aaron Soble, Shaffer & Freedman and Charles H. Kaplan, all of Chicago (William Feldman, of Chicago, of counsel), for appellants.

C. E. Stenning and Chester D. Kern, both of Chicago, for appellees.

FARTHING, Justice.

On June 13, 1931, the appellant C. E. Elkin, on behalf of himself and all other creditors of the Diversey Trust & Savings Bank, an Illinois banking corporation, filed a bill in equity to enforce the constitutional liability of the stockholders in that bank. He alleged in the bill that before the commencement of business on June 13, 1931, the auditor of public accounts of the state of Illinois made an examination of the bank to determine its financial condition and to ascertain whether it was being conducted in an illegal, fraudulent, and unsafe manner; that as a result, the auditor closed the bank and took control of its property and affairs and prohibited the further carrying on by it of the business for which it was organized. He also alleged that numerous creditors of the bank were threatening and intended to institute suits at law against its stockholders to recover from them, severally, the amounts due such creditors. The bill prayed that the court ascertain who were the bank's creditors, the amounts due each of them, when their respective claims accrued, the total amount of unsatisfied liabilities of the bank, who were the stockholders at the times the various liabilities accrued, and the extent of the liabilities of the various stockholders under section 6, article 11, of our Constitution. It asked that a receiver be appointed to receive and disburse, under the court's direction, the amounts collected from the stockholders, and that all other suits at law and in equity against stockholders be enjoined.

Pursuant to leave granted, in amended and supplemental bill was filed on September 1, 1931. It alleged, among other things, that the bank was indebted to various creditors in excess of $700,000; that after an examination, the auditor of public accounts had closed the bank, and had, on July 22, 1931, appointed Glen C. Hodges receiver, and that this appointment was confirmed by the superior court of Cook county on July 30, 1931. This bill set forth the names of the stockholders, the number of their shares, and the periods of ownership from the organization of the bank up to and including June 13, 1931. The purpose of the amended and supplemental bill was, like that of the original bill, to determine the liabilities of the bank, who were its creditors, the stockholders of the bank, the number of shares owned and periods of ownership, and the consequent liability of the respective stockholders under section 6, article 11, of our Constitution. It alleged that the bank was indebted to the appellant Elkin, on June 12, 1931, in the amount of $2,931; that this indebtedness accrued to him, from time to time, while the persons named as stockholders in the amended and supplemental bill were stockholders in the bank. It alleged that other creditors threatended to sue individual stockholders and that, if permitted to do so, they would thereby obtain an unfair advantage over said appellant and other creditors of the bank. The prayer for relief is similar to that contained in the original bill.

On October 24, 1931, the appellees filed their joint and several, general and special demurrer to the amended and supplemental bill of complaint. The grounds of demurrer were that the amended and supplemental bill was multifarious; that complainants, and each of them, had an adequate remedy at law; that the indebtedness to the appellant Elkin did not accrue while some of the persons named as such were stockholders in the bank; and that the bank and its receiver were improperly joined as parties defendant.

On July 10, 1935, the superior court of Cook county sustained the demurrer, and dismissed the original and amended and supplemental bills of complaint for want of equity. The chancellor certified that the validity of section 11 of the Banking Act, and the construction of section 6, article 11, of the Constitution of 1870 were involved, and this appeal followed.

The appellees insist the original bill was prematurely filed. They say that section 11 of the Banking Act, as amended in 1929 (Laws of 1929, p. 182 [Smith-Hurd Ann.St. c. 16 1/2, § 11]), restricted the filing of a representative suit by a creditor of a state bank to the time, facts, and circumstances described in that section, and that the subject-matter of the amendment is purely procedural and, for that reason, a proper matter for legislative action.

Section 11 of the Banking Act, as amended, reads, in part, as follows:

When any banking association, organized under this Act shall have gone into liquidation under the provisions of this section of the Act, the individual liability of the shareholders provided for by section six (6) of this Act may be enforced by any creditor of such association, by bill in equity, in the nature of a creditors bill, brought by such creditor on behalf of himself and all other creditors of the association against the shareholders thereof, in any court having jurisdiction in equity for the county in which such bank or banking association may have been located or established.'

It is the contention of the appellant that if the section, as amended, were construed to restrict the filing of such a bill as that filed by him...