Geisler v. Benken

• Decision Date: 07 May 1946
• Docket Number: Gen. No. 9463.
• Citation: 328 Ill.App. 357,66 N.E.2d 313
• Parties: GEISLER v. BENKEN et al.
• Court: United States Appellate Court of Illinois

328 Ill.App. 357

66 N.E.2d 313

GEISLER

v.BENKEN et al.

Gen. No. 9463.

Appellate Court of Illinois, Third District.

Feb. 28, 1946.

Rehearing Denied May 7, 1946.

Appeal from Circuit Court, Calhoun County; A. Clay Williams, Judge.

Equity action by George Geisler against B. B. Benken and others to enforce an alleged liability of defendants as stockholders and directors of the Bank of Brussels. Judgment for defendants, and plaintiff appeals.

Affirmed.

C. C. Worthy, of Hardin, for appellant.

Sam L. Miller and William M. Cox, both of Hardin, for appellees.

WHEAT, Justice.

This is an equity action to enforce an alleged liability of the defendants as stockholders and directors of the Bank of Brussels, an Illinois banking corporation. The Circuit Court found the issues in favor of the defendants and plaintiff appeals.

The original complaint was filed in the Circuit Court, April 10, 1943, and was followed by several amended complaints, the last of which charged, in substance, that on October 11, 1941, the plaintiff recovered a judgment against the Bank of Brussels in the Circuit Court of Calhoun County for the sum of $1,247.50 and costs, which judgment was affirmed by the Appellate Court of the Third District, October 29, 1942; that execution was issued out of the Circuit Court, December 28, 1942, and returned unsatisfied, March 29, 1943; that such bank, on April 13, 1939, found business unprofitable and had become financially embarrassed, at which time it disposed of its assets and discontinued business, being then insolvent; that at the time of the rendition of the judgment and at the time of the disposition of the assets, certain of the defendants were directors of such bank and had notice of such judgment, and certain of the defendants were stockholders of such bank, and prays judgment.

Defendants filed answers and documents designated as pleas, which, in substance, denied liability; charged that the judgment of October 11, 1941, in favor of plaintiff and against the bank was based upon a conveyance of real estate by the plaintiff to such bank, on February 25, 1937, and upon the refusal of the bank, on a date approximately two weeks thereafter, to reconvey such property to the plaintiff; that any right of action which plaintiff had against defendants as stockholders or directors accrued at that time and not later than about March 12, 1937; that more than five years elapsed between March 12, 1937, and the commencing of the suit on April 10, 1943, by reason of which, said action was barred by the five year statute of limitations; that any such right against the defendants as stockholders was also barred by an Act providing for a one year statute of limitations in favor of bank stockholders, approved April 22, 1941, in force July 1, 1941.

The cause was heard upon stipulations and proof in open court, from which no serious disagreement as to the facts appears between the parties. We do not have the benefit of the opinion of the Trial Court, and the briefs of the parties might have been made more helpful.

As to whether the action against the stockholders is barred by either statute of limitations, it is necessary to determine the date when such limitations began to run, i.e., whether such date was March 12, 1937, when the bank refused plaintiff's demand to reconvey certain real estate, or on October 11, 1941, being the date the Circuit Court entered judgment against the bank, or on October 29, 1942, being the date such judgment was affirmed by the Appellate Court.

The general rule seems to be that the right of action against a stockholder of a banking corporation arises at the same time as his right of action against the corporation. Burnett v. West Madison State Bank, 375 Ill. 402, 31 N.E.2d 776. However, in this and other cases therein discussed, the right of action was based upon a contract, express or implied, and did not grow out of a tort.

We find only one Illinois case seeming to hold that the same rule is applicable to tort actions, that of Boor v. Tolman, 113 Ill.App. 322. A careful reading of the opinion in this case, however, discloses that the Court decided the case upon the invalidity of proceedings in 1872 to consolidate the banks there involved. Said attempt to consolidate was prior to the time when plaintiff's claim accrued and prior to the entry of any judgment thereon. After considering the invalidity of the consolidation proceeding, the Court went on to say that the holding in favor of the stockholder could also be supported on the ground that the liability sought to be enforced accrued ‘when the cause of action arose upon which the judgment was founded’ and not when the judgment was entered. No cases were cited in support of this latter statement and the only case in which this opinion has been cited on this point appears to be Anderson v. Hillmer, D.C., 15 F.Supp. 457, 459, which involved a contractual creditor who had not yet reduced his claim to judgment.

We consider the better rule to be that stated in Cohen v. Toy Gun Mfg. Co., 172 Ill.App. 330, wherein the Court stated that a tort claim prior to judgment was not enforceable against stockholders and that a tort claim was not a ‘debt’ prior to judgment. Although that case did not involve stockholders of a banking corporation, the statute under which liability was sought to be imposed was similar to the liability created by the Constitution and Banking Act, and we believe the rule applicable to the instant case. This being true, it follows that no cause of action on a tort claim can arise as to stockholders prior to judgment against the corporation, and that the limitation period in such cases begins to run upon the entry of...