Gaiser v. Buck

Citation179 N.E. 1,203 Ind. 9
Decision Date20 November 1931
Docket NumberNo. 25701.,25701.
PartiesGAISER v. BUCK.
CourtSupreme Court of Indiana

OPINION TEXT STARTS HERE

Appeal 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 her on her refusal to plead further, plaintiff appeals.

Reversed.

Superseding former opinion in 174 N. E. 83.

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

E. C. Vaughn, Simmons, Dailey & Simmons, Eichhorn, Gordon & Edris, and Fred A. Wiecking, all of Bluffton, for appellee.

Jones, Hammond & Buschmann, of Indianapolis, and Williams & Murphy and Frank G. Davidson, all of Crawfordsville, for amicus curiæ the Indiana Bankers' Association, supporting appellant.

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

James M. Ogden, Atty. Gen., V. Ed. Funk, Deputy Atty. Gen., for amicus curiæ, Luther F. Symons, Bank Commissioner of Indiana, on petition for rehearing, supporting the decision.

William J. Whinery, of Hammond, amicus curiæ, pro se, on petition for rehearing, supporting appellee.

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 one thousand 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 section 6, art. 11, Const., section 212, Burns' Ann. St. 1926, and section 13, c. 8, Acts 1873, as amended by section 1, c. 230, Acts 1919, section 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 section 3849 et seq., Burns, Ann. 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, to this complaint, a demurrer 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.

[1] This action by a depositing creditor of the bank is properly brought on behalf of herself and others similarly situated. Section 277, Burns' Ann. St. 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.”

[2] 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 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. Rep. 197, 51 N. Y. S. 1109.

[3] The appellee contends that this action is improperly brought by a creditor-that under section 4952 Burns' Ann. St. 1926 it should be brought by the receiver. In the recent case of Wheeler v. Greene (1929) 280 U. S. 49, 50 S. Ct. 21, 74 L. Ed. 160, it was held that a suit to enforce liability of stockholders of a joint-stock land bank under the Federal Farm Loan Act was improperly brought by a receiver who was not authorized by statute to enforce individual liability of stockholders and that it should be brought by a creditor's bill in equity. In Runner, Assignee, v. Dwiggins (1897) 147 Ind. 238, 46 N. E. 580, 581, 36 L. R. A. 645, in an action to enforce a double stockholder's liability under a statute (Acts 1895, c. 98, p. 202) it was held that such double liability is for the benefit of the creditors of the bank, that the creditors only were authorized to maintain the action, and that “in the absence of some statutory provision conferring the right, neither the corporation nor its assignee nor receiver can enforce such a liability as that in question.” Subsequent to the decision of that case, section 1, c. 189, Acts 1915, section 4952 Burns' Ann. St. 1926, was enacted, providing that, “where the stockholders of any corporation becoming insolvent are, by any law of this state, made individually liable in any sum, in addition to their capital stock,” such liability may be enforced by any “receiver or trustee in bankruptcy or in assignment under the insolvency laws,” etc.1 Section 4952, Burns' Ann. St. 1926, however, does not provide that the method of collection of stockholders' liability therein provided shall be exclusive, and it was proper for such a suit to be brought either by a creditor or by the receiver. See Rogers v. Selleck (1928) 117 Neb. 569, 221 N. W. 702.

[4] Section 6, art. 11, Const., section 212, Burns 1926, is as follows: “The stockholders in every bank or banking company shall be individually responsible to an amount, over and above their stock, equal to their respective shares of stock, for all debts or liabilities of said bank or banking company.” This section of the Constitution creates a definitely limited liability on the part of the appellee for the benefit of the appellant and it is self-executing, there being a manifest intention that it should go into immediate effect and no ancillary legislation being necessary to the enjoyment of the right given or the enforcement of the duty imposed. 12 C. J. 729; State v. Woodward (1882) 89 Ind. 110, 46 Am. Rep. 160;Carroll v. Green (1897) 148 Ind. 362, 364, 47 N. E. 223;Tinkle v. Wallace (1906) 167 Ind. 382, 389, 79 N. E. 355. It is uniformly held that a constitutional provision imposing double liability on bank stockholders is self-executing. Smith v. Olson (1926) 50 S. D. 81, 88, 208 N. W. 585;Lynch v. Jacobsen (1919) 55 Utah, 129, 184 P. 929;Willis v. Mabon (1892) 48 Minn. 140, 50 N. W. 1110, 16 L. R. A. 281, 31 Am. St. Rep. 626;State v. Citizens State Bank (1929) 117 Neb. 860, 233 N. W. 282;Id. (1929) 118 Neb. 337, 224 N. W. 868;Wood v. Hamaguchi (1929) 207 Cal. 79, 277 P. 113, 63 A. L. R. 861;Fredericks v. Hammons (1928) 33 Ariz. 310, 264 P. 687;Western P. R. Co. v. Godfrey (1913) 166 Cal. 346, 136 P. 284, Ann. Cas. 1915B, 825.2

[5][6][7] It is the contention of the appellee, supporting the action of the court below, that section 6, art. 11, Const., does not impose any superadded liability upon her or upon the other stockholders of the Studabaker Bank for the reason that the term “bank or banking company,” as used in such section, does not relate to banks of discount and deposit, but that such term is restricted in its meaning and relates only to banks of issue and circulation and to state banks with branches, which are the only banks mentioned in the preceding sections 3 and 4 of article 11 of the Constitution. The subject of article 11 is corporations. It concerns not only banks in existence in 1851, but also banks and corporations thereafter created. The language of section 6 regarding its objects is simple and understandable. The words “every bank or banking company” in their general and ordinary sense certainly include the bank in question here. In construing the meaning of the Constitution its language should be taken in its general and ordinary sense, for the framers of the Constitution, and the people who adopted it, must be understood to have employed words in their natural sense, and to have intended what they have said.” Gibbons v. Ogden (1824) 9 Wheat. 188, 6 L. Ed. 23. “If ...

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