Elson v. Wright
Decision Date | 04 June 1907 |
Citation | 112 N.W. 105,134 Iowa 634 |
Parties | ELSON v. WRIGHT. |
Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Wayne County; H. M. Towner, Judge.
Action by plaintiff as receiver of a bank to recover an assessment of 50 per cent. on stock belonging to the estate of which defendant is administrator; the liability sought to be enforced being the double liability of stockholders in banks as provided by statute. Judgment for plaintiff on a directed verdict, from which defendant appeals. Reversed.Miles & Steele, for appellant.
Freeland & Carter and R. L. Parrish, for appellee.
The Bank of Lineville was incorporated in 1879, under the general banking laws of this state, in accordance with which its charter was to expire in 20 years. At the expiration of this period no steps were taken to reincorporate, but the bank continued to do business as a corporation under its original charter until in June, 1904, when under proceedings properly instituted, to which the bank and many of its stockholders became parties either by service of notice or by voluntary appearance, the plaintiff was appointed receiver. In October following the plaintiff made an application to the court for an assessment of 50 per cent. on the capital stock of the bank under the double liability statute for the purpose of paying its debts, and this assessment was ordered and made. Defendant's intestate had died in 1901, owning 32 shares of capital stock of the bank, of the par value of $100 each, and these shares of stock still belonged to the estate at the time the assessment on stockholders was made; but, so far as appears by this record, neither the defendant administrator nor any other person representing the estate had been notified of the proceedings under which the assessment was made. The contention for appellant is that the assessment on the stock belonging to the estate was invalid, first, because of want of notice to the proper representative of the estate of the proceeding for such assessment; and, second, because the bank had ceased to be a corporation by reason of the expiration of its charter, and no assessment on its stockholders as such could be lawfully made.
1. The double liability of stockholders in banks is provided for in section 9 of article 8 of the state Constitution, but the method of enforcing such liability is left to be determined by statute. There are similar constitutional provisions in other states, and the statutes with reference to the enforcement of the liability have been various. In the absence of any specific provision, the liability of the stockholder under a constitutional or statutory regulation making him liable for the debts of the corporation has sometimes been treated as an individual liability to the creditors to be enforced by a bill in equity brought by one creditor in behalf of all, against one stockholder or any number of them, with the right of the stockholder held liable in such a proceeding to have contribution against other stockholders similarly liable. Erickson v. Nesmith, 46 N. H. 372;Wright v. McCormack, 17 Ohio St. 86; Umsted v. Buskirk, Id. 114; Palmer v. Woods, 149 Ill. 146, 35 N. E. 1122. And under this general theory it was early held in New York cases that an unsatisfied judgment against the corporation was not even prima facie evidence of the liability of the stockholder. 2 Morawetz, Corporations (2d Ed.) § 887. But this view has not been assented to in other jurisdictions, and the validity of a judgment as showing the liability of the corporation as the basis of an action against a stockholder to enforce his individual liability has been held conclusive. 2 Morawetz, Corporations (2d Ed.) § 886. The individual liability of the stockholder under double liability provisions has been treated as analogous to his liability for unpaid assessments; and it is pointed out that, although there is a distinction between these two classes of liability, the one being by way of security to the creditor for the debts of the corporation, and the other a direct liability to the corporation itself, yet as to the methods of enforcement there is no reason for any substantial difference. The indebtedness of the corporation must be established in either case, and can only be established by an action against the corporation itself. When such indebtedness has been established, and the liability of the corporation to satisfy it has been determined, then as to either class of stockholders' liabilities the receiver, representing the creditors as well as the corporation, may proceed against the stockholder, in the case of unpaid subscriptions, for the purpose of collecting a fund due to the corporation which ought to be paid over to satisfy the creditors, and in the case of the stockholders' double liability to collect a trust fund out of which the debts of the corporation are to be satisfied. In either case, in the very nature of things, the enforcement of the stockholders' liability must be predicated upon the ascertainment of the debts of the corporation and the proportionate amount to be levied on each stockholder to satisfy such indebtedness; and it is not necessary that the stockholder be individually a party to the receivership proceedings in which the indebtedness of the corporation is determined, and the amount of assessment to be collected is fixed. Howarth v. Angle, 162 N. Y. 179, 56 N. E. 489, 47 L. R. A. 725;Howarth v. Lombard, 175 Mass. 570, 56 N. E. 888, 49 L. R. A. 301;King v. Cochran, 76 Vt. 141, 56 Atl. 667, 104 Am. St. Rep. 922. In the New York case just cited it is said: In the Massachusetts case the court says: And in the Vermont case, with reference to the enforcement against a stockholder in that state of an assessment made by a court in Washington, this language is used: And, to the same effect, see Glenn v. Liggett, 135 U. S. 533, 10 Sup. Ct. 867, 34 L. Ed. 262;Whitmore v. Oxford National Bank, 176 U. S. 559, 20 Sup. Ct. 477, 44 L. Ed. 587;Irons v. Manufacturers' National Bank (D. C.) 21 Fed. 197;Wilson v. Book, 13 Wash. 676, 43 Pac. 939. These cases all hold that the double liability of the stockholders under constitutional and statutory provisions is a contractual liability, and it is not different in its nature, therefore, from the liability under a stock subscription, although it is secondary rather than primary. Were such liability penal and not contractual, it could not be enforced as against stockholders residing in...
To continue reading
Request your trial-
Reagan v. Midland Packing Co.
...the liability of the subscribers is an asset of the corporation. See Security Sav. Bank v. Sturtz (Iowa) 196 N.W. 3. In Elson v. Wright, 134 Iowa, 634, 112 N.W. 105, court says: 'The individual liability of the stockholder under double liability provisions has been treated as analogous to h......
-
Lynch v. Jacobsen
... ... Civ. App.) 169 S.W ... 1108; Lamar v. Taylor , 141 Ga. 227, 80 S.E ... 1085; Harris v. Taylor , 148 Ga. 663, 98 ... S.E. 86; Elson v. Wright , 134 Iowa 634, 112 ... N.W. 105 ... (e) ... Unless the statute (as is the case in Iowa) provides a ... different rule, the ... ...
- Elson v. Wright
-
Thompson v. Park Sav. Bank
...of power a matter of law as open to the knowledge of plaintiff as of themselves, they were not personally responsible. In Elson v. Wright, 134 Iowa, 634, 112 N. W. 105, the charter of a bank incorporated in 1879 had expired by limitation in 1899. No steps had been taken to extend its charte......