Finnell v. Bane

• Decision Date: 08 May 1923
• Docket Number: (C. C. No. 223.)
• Citation: 117 S.E. 549
• Court: West Virginia Supreme Court
• Parties: FINNELL v. BANE et al.

117 S.E. 549

FINNELL

v.BANE et al.

(C. C. No. 223.)

Supreme Court of Appeals of West Virginia.

May 8, 1923.

(Syllabus by the Court.)

A receiver of an insolvent bank appointed by the state banking commissioner, with the advice and consent of the Governor, may maintain a suit in equity against the stockholders of the bank to enforce their individual liability for the benefit of creditors, when ordered to do so by the banking commissioner.

Where a bill in equity, brought by the receiver of an insolvent bank under section 81a (7), c. 54, Barnes' Code, to enforce the individual liability of its stockholders, as fixed by section 78a (3) of said chapter fails to state in positive terms what said liabilities are, and that the assets are insufficient to pay them, a demurrer to same will be sustained.

The liability of the individual stockholder of an insolvent bank under section 78a (3), c. 54, Barnes' Code, is not a primary, but a secondary, liability in the nature of a guaranty, and such liability is unenforceable until the assets and liabilities of the bank are ascertained in some manner provided by law, and it is thereby determined that it is necessary to enforce said liability in order to pay the indebtedness.

(Additional Syllabus by Editorial Staff.)

[Ed. Note.—For other definitions, see Words and Phrases, First and Second Series, Suit.]

Case Certified from Circuit Court, Mineral County.

Suit by Charles N. Finnell, receiver, etc., against Lillie R. Bane and others. The court overruled demurrer to plaintiff's amended bill, and certified the question to the Supreme Court. Reversed, and demurrer sustained.

Chas. N. Finnell and Taylor Morrison, both of Keyser, for plaintiff.

Wm. MacDonald and F. M. Reynolds, both of Keyser, for defendants.

McGINNIS, J. This case is certified here from the circuit court of Mineral county on the question whether or not said court erred in overruling a demurrer to plaintiff's amended bill. This is a chancery cause brought by Charles N. Finnell, receiver of the People's Bank of Keyser, W. Va., against Lillie E. Bane and a number of other resident stockholders of said bank, for the purpose of enforcing their individual liability for double the amount of their stock. The bill alleges that on the 27th day of April, 1922, and for a long time prior thereto, the People's Bank of Keyser, W. Va., was a duly incorporated and organized bank under the laws of the state of West Virginia, and doing a general banking business in the city of Keyser; that its authorized capital stock was $50,000, divided into 500 shares, of the par value of $100 each, all of which authorized capital stock had been issued and was outstanding; that J. S. Hill, the duly appointed and qualified commissioner of banking, in the performance of his duties as such commissioner of banking, on the 27th day of April, 1922, after examination and investigation, found said bank to be in an insolvent condition; that, pursuant to law, plaintiff was appointed receiver of said bank, and qualified and gave bond, as required by law, and entered upon the duties of his position as such receiver on the——day of July, 1922; that

after he had been appointed receiver of said bank, and under the direction of the commissioner of banking, he had collected certain debts due the bank sufficient to enable him to pay a dividend of 20 per cent, to the depositors and other creditors of said bank, whose claims have been proven to his satisfaction; that pursuant to an order of the commissioner of banking this dividend had been paid, and an amount sufficient to pay a like dividend on all claims which had not been so proved has been reserved, by him, with which to pay any of such claims as shall hereafter be proved or adjudicated to be valid claims against said bank; that the commissioner of banking had found it necessary, in order to pay the debts of said bank, to enforce the individual liabilities of its stockholders, and had directed plaintiff to institute this suit; that before he instituted this suit he notified each of said stockholders, by mailing a letter demanding payment of his or her individual liability as such stockholder, on or before October 20, 1922; and that said letter was mailed about the 6th day of said month. Then follow the names of the resident stockholders who have not paid their individual liabilities, also the number of shares held by each, and the parties so named are the defendants in this suit It also alleges thatcertain stockholders have, since the institution of this suit, paid the full amount due from them, and that the suit as to them was dismissed at rules. In the bill are also named the nonresident stockholders, and it further alleges that all the remaining owners of stock in said bank not named in the bill have paid their individual liabilities as such stockholders, and for that reason they are not made parties to this suit.

Then comes the allegation which presents the main point of the demurrer to the bill as it now stands, being the demurrer to the bill as amended:

"That J. S. Hill, commissioner of banking, having ascertained that the People's Bank of Keyser, W. Va., was insolvent, and having further ascertained the value of its assets to be $452,531.13 and the amount of its apparent liabilities to be at least $572,531.13, determined it to be necessary to enforce the total individual liabilities of its stockholders as such under section 78a (3) of chapter 54, Barnes' Code, in order to pay the debts of said bank as far as it is possible for them to be paid."

The prayer of the bill is that a decree be entered requiring each of the defendant stockholders to pay $100 for each share so held by him or her, with interest thereon from the 20th day of October, 1922. To the original bill there was a general demurrer interposed by the defendants Wm. McDonald, W. B. Burke, R. Marsh Dean, Luella J. Johnson, W. J. Koelz, J. M. Martin, J. I. Snider, James M. Stewart, H. Clay Thrush, A. L. Thrush, James A. Thrush, William V. Thrush, W. P. Welschonce, S. W. Whip, L. Wippel, J. W. Wise, and Sallie Wright, assigning four separate grounds of demurrer. The court below sustained the demurrer on the second grounds alleged in the said demurrer. The grounds were:

"The bill fails to aver, as it should, that the stockholders who are made parties to this suit, those who have paid, and those not made parties defendant because of nonresidence are all those who owned stock at the time the losses, and all of them, accrued. The bill should aver that there are no other stockholders who owned stock in the bank at the time the losses accrued."

And the court, upon sustaining the demurrer, allowed the...