Gaiser v. Buck

Decision Date11 December 1930
Docket Number25,701
PartiesGaiser v. Buck. [*]
CourtIndiana Supreme Court

Modified opinion filed and rehearing denied November 20 1931.

1. BANKS AND BANKING---Double Liability of Stockholders---Action May be Brought by one Creditor for Benefit of All.---Under the provisions of 277 Burns 1926, an action by a creditor of a bank against the stockholders thereof to enforce the double liability of the stockholders as created by Art. 11, 6, of the Constitution, is properly brought by one creditor on behalf of himself and other creditors of the bank. p. 13.

2. BANKS AND BANKING---Double Liability of Stockholders---When Action may be Brought before Claims are Reduced to Judgment.---In an action to enforce the double liability of the stockholders of a bank (6, Art. 11, Constitution), where facts are alleged showing that the entire 100 per cent liability of the stockholders, if collected, will be insufficient to make the assets equal to the liabilities, a recovery may be had without reducing all claims against the bank to judgment. p. 13.

3. BANKS AND BANKING---Double Liability of Stockholders---Proper Plaintiff in Action to Recover.---In 1927, an action against the stockholders of a bank to recover the double liability of such stockholders imposed by the Constitution (6, Art. 11 212 Burns 1926) was properly prosecuted by a creditor of the bank on behalf of all the creditors, notwithstanding the fact that it might have been brought by the receiver for the bank under 4952 Burns 1926, as the statute did not make the method provided therein exclusive (and see Acts 1929, ch. 215, 73 p. 796, 4856.38 Burns Supp. 1929, where the statute is expressly repealed). p. 13.

4. BANKS AND BANKING---Double Liability of Stockholders---Constitutional Provision Self-Executing---Ancillary Legislation Unnecessary.---The constitutional provision imposing double liability on bank stockholders (6, Art. 11, Constitution, 212 Burns 1926) is self-executing and no ancillary legislation was necessary to put it into force. p. 14.

5. BANKS AND BANKING---Double Liability of Stockholders---Provision of Constitution Applicable to Banks of Discount and Deposit.---The terms "bank" and "banking company" as used in the section of the Constitution imposing a double liability on bank stockholders (6, Art. 11, Constitution, 212 Burns 1926) include banks of discount and deposit. p. 15.

6. CONSTITUTIONAL LAW---Construction of Constitution---General and Ordinary Meaning Should be Adopted.---In construing a provision of the Constitution, the language should be taken in its general and ordinary sense. p. 15.

7. CONSTITUTIONAL LAW---Construction of Constitution---Words which have Restrictive and General Meaning---General must Usually Prevail.---When words are used in a constitution which have both a restricted and general meaning, the general meaning should prevail over the restricted unless the subject-matter clearly indicates that the limited sense was intended. p. 15.

8. BANKS AND BANKING---Double Liability of Stockholders---Constitutional Provision Applicable to Banks Subsequently Organized.---The constitutional provision imposing double liability on the stockholders in "every bank and banking company" (6, Art. 11, Constitution, 212 Burns 1926) was not limited to the two classes of banks which were the subject of preceding 3 and 4, but applied to banks thereafter coming into existence, including banks of discount and deposit. p. 17.

9. CONSTITUTIONAL LAW---Construction of Constitutions---As to New Things and Conditions.---The language of a constitution is generally extended to include new things and new conditions of the same class as those specified which were not known or contemplated when it was adopted. p. 17.

10. BANKS AND BANKING---Statute Authorizing Proceeding in Rem Against Bank Stock---Held Applicable to Insolvent Banks in Custody of Court or in Process of Liquidation.---The statute authorizing a bank of discount and deposit to proceed in rem against the stock which has been issued whenever necessary to pay the debts or liabilities of such bank or to restore its capital to the amount required by law (3858 Burns 1926) is applicable to insolvent banks in the custody of the court and in process of liquidation. p. 21.

From Wells Circuit Court; A. W. Hamilton, Judge.

Action by Dona Gaiser, on behalf of herself and all other creditors of the insolvent Studabaker (state) bank, against Caroline Buck, a stockholder, and the other stockholders thereof, to recover the double stockholders' liability provided by law. From an order sustaining defendant's demurrer to the complaint and judgment against the plaintiff on her refusal to plead further, plaintiff appealed.

Reversed.

Charles E. Sturgis, Robert W. Stine and Elmore D. Sturgis, for appellant.

E. C. Vaughn, Simmons, Daily & Simmons, Eichhorn, Gordon & Edris and Fred A. Wiecking, for appellee.

Jones, Hammond & Bushmann, Williams & Murphy and Frank G. Davidson, for amicus curiae, The Indiana Bankers Association, supporting appellant.

Charles M. McCabe and C. W. Dice, for amici curiae stockholders Farmers-Merchants State Bank, Attica; Stuart, Simms & Stuart, for amici curiae, stockholders, Williamsport State Bank, Williamsport; John C. Chaney, for amici curiae, stockholders, Citizens Trust Company, Sullivan; W. J. Sprow, Clyde H. Jones and Slaymaker, Merrill, Ward & Locke, for amici curiae, stockholders, Crawfordsville State Bank, Crawfordsville; Noel, Hickam, Boyd & Armstrong, and Smith, Remster, Hornbrook & Smith, for amici curiae, stockholders, J. F. Wild & Co. State Bank, Indianapolis, all supporting appellee.

James M. Ogden, Attorney-General, V. Ed Funk, Deputy Attorney-General, for amicus curiae, Luther F. Symons, Bank Commissioner of Indiana, on petition for rehearing, supporting the decision.

William J. Whinery, amicus curiae, pro se, on petition for rehearing, supporting appellee.

Martin, C. J. Gemmill and Willoughby, J. J., did not participate in the decision of this cause on December 11, 1930. Myers, J., still adheres to the result only, reached in the opinion as modified.

OPINION

Martin, C. J.

The appellant, a general creditor (in the sum of $ 323.70) of the Studabaker (state) Bank of Bluffton, brought this action June 24, 1927, on behalf of herself and all other creditors similarly situated (it being alleged that there are more than 1,000 creditors and that it is impracticable to bring them all before the court), against the stockholders of the bank to recover from them the double liability imposed by § 6, Art. 11, Constitution, § 212 Burns 1926, and § 13, ch. 8, Acts 1873, as amended by § 1, ch. 230, Acts 1919, § 3858 Burns 1926, upon stockholders in banks. The complaint alleged that said bank was incorporated as a bank of discount and deposit September 23, 1923 (under § 3849 et seq. Burns 1926), with a capital stock of $ 200,000, all of which was paid for, and continued to do a general banking business until March 26, 1927, at which time it was closed by order of the State Bank Commissioner; that the bank was insolvent, and on May 20, 1927, a receiver was appointed for it, who proceeded with its liquidation; that its liabilities amounted to $ 1,563,315, and its assets to $ 1,348,532 (the assets, plus the full amount of the stockholder's additional or double liability, not being sufficient to equal the liabilities). It is alleged that other creditors are threatening to prosecute separate suits against individual stockholders to enforce such personal liability; that such separate litigation will waste the proceeds of such liability; and that it will be to the best interests of all creditors and stockholders that such creditors be enjoined from prosecuting separate suits, etc. The prayer was for judgment against each defendant in the amount of their liability as set out in the complaint, that the liabilities of the defendants be proportioned among them in proportion to the amount of stock owned by them respectively, that individual creditors be enjoined from prosecuting separate suits against the stockholders, and that a receiver be appointed to collect the amount found due from the defendants.

The appellee, a defendant stockholder, filed a demurrer to this complaint, on the ground that the complaint did not state facts sufficient to constitute a cause of action. This demurrer was sustained by the trial court, and, upon the refusal of appellant, plaintiff, to plead over, the court rendered judgment on the demurrer in appellee's favor for costs. The action of the court in sustaining the demurrer is assigned as error.

This action by a depositing creditor of the bank is properly brought on behalf of herself and others similarly situated. Section 277 Burns 1926, provides that "when the question is one of a common or general interest of many persons, or where the parties are numerous and it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of the whole."

The action is not prematurely brought. When the bank was adjudged insolvent, its liabilities to its creditors were presently due. It was unnecessary to wait until all claims were reduced to judgments before bringing this action. Such facts, regarding the solvency of the bank, are alleged so as to show that the entire 100 per cent liability of the stockholders, if collected, will be insufficient to make the assets equal to liabilities. Barnes v. Arnold (1898), 23 Misc. 197, 51 N.Y.S. 1109.

The appellee contends that this action is improperly brought by a creditor -- that, under § 4952 Burns 1926, it should be brought by the receiver. In the recent case of Wheeler v. Greene, Rec. (1929), 280 U.S. 49, 50 S.Ct. 21, 74 L.Ed. 160, it was held that a suit to...

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11 cases
  • Gaiser v. Buck
    • United States
    • Indiana Supreme Court
    • 20 Noviembre 1931
  • Gaiser v. Buck
    • United States
    • Indiana Supreme Court
    • 12 Diciembre 1930
  • Colt v. Hicks
    • United States
    • Indiana Appellate Court
    • 13 Enero 1932
    ... ... 194; ... Blair v. Shelby (1867), 28 Ind. 175; ... Zuelly v. Casper (1903), 160 Ind. 455, 67 ... N.E. 103, 63 L. R. A. 133; Gaiser v. Buck ... (1931), 203 Ind. 9, 174 N.E. 83. "This section of the ... code (says Pomeroy) is a re-enactment of a rule which had ... prevailed ... ...
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    • United States
    • Indiana Supreme Court
    • 24 Noviembre 1931
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