Godfrey v. Terry

• Decision Date: 01 October 1877
• Citation: 97 U.S. 171,24 L.Ed. 944
• Parties: GODFREY v. TERRY
• Court: U.S. Supreme Court

97 U.S. 171

24 L.Ed. 944

GODFREY v. TERRY.

October Term, 1877

APPEAL from the Circuit Court of the United States for the District of South Carolina.

The facts are stated in the opinion of the court.

Mr. Theodore G. Barker and Mr. James Lowndes for the appellants.

Mr. D. H. Chamberlain and Mr. Harvey Terry, contra.

MR. JUSTICE MILLER delivered the opinion of the court.

The Merchants' Bank of South Carolina, at Cheraw, was chartered in 1833, and the charter was renewed for twenty years in 1852. Both statutes provided that, 'in case of the failure of the said bank, each stockholder, copartnership, or body politic, having a share or shares in the said bank at the time of such failure, or who shall have been interested therein at any time within twelve months previous to such failure, shall be liable and held bound individually for any sum not exceeding twice the amount of his, her, or their share or shares.'

In December, 1870, Harvey Terry filed a bill in equity, in the Circuit Court of the United States for the District of South Carolina, to enforce this provision as to certain bills of the bank, of which he claimed to be the holder and owner. He alleges himself to be a citizen of the State of Virginia; and he prays for subpoena against William Godfrey, receiver of the bank, John Mattison, cashier, and five others, as directors of the bank, and some sixty others, as stockholders. The bank is not made a party, and no allegation is found in the bill, or anywhere else in the record, of the citizenship of any of the defendants. Of the persons made defendants by the bill, service was only obtained upon twenty, and no appearance was made for any one else.

The bill charges, among other matters, 'that on the first day of March, A.D. 1865, and, indeed, at an earlier date, the said bank had failed, being then indebted to an amount far exceeding its assets; and that, in consequence of such failure, in accordance with the provisions of the said act, the stockholders, copartnerships, and bodies politic, holding shares in said bank, or who had been interested therein within twelve months previous to such failure, became liable for the debts of the said bank for sums not exceeding twice the amount of the shares held by them respectively.'

And it was alleged that, under statutes of the State of South Carolina enacted for that purpose, the bank and all its property were, by the proper State court, placed in the hands of William Godfrey as receiver, who was then in charge of the same. It then prays for an account of the assets, furnishes a schedule of the stockholders, which plaintiff says is the best he can obtain, and calls for a discovery of the names of all who were stockholders at the date of the failure, and for twelve months next preceding that date, and that, when ascertained, they may be made defendants, and charged with liability for his debt against the bank.

Answers were filed for all, or nearly all, who were served; but no replications to any of these answers are found in the record.

The answers generally set up a plea of the four years' stat ute of limitation. Several of the answers aver that the fail ure of the bank took place Nov. 13, 1860, when this bank, in common with all the banks of South Carolina, suspended specie payment of their obligations, and never afterwards resumed.

The only answers which admit the ownership of shares in the bank, and fix the time of said ownership, are the separate answers of A. Baxter Springs and R. A. Springs, each of whom admits that he held sixty shares of the bank in 1854, and has held the same ever since.

In December, 1872, the court made an order of reference to a master, with instructions to ascertain and report who were stockholders in the bank on the first day of March, 1865, and for twelve months previous thereto, and how many shares they held; also, to ascertain and report who were the creditors and bill-holders of the bank, and the amount due to them respectively.

This order, it will be seen, fixed the day of the failure of the bank at March 1, 1865. What evidence was before the court, or whether there was any, of the date of failure, the record does not show, except the following agreed statement of facts, which, as far as they show any thing on that subject, support the allegations of the answers, that the failure occurred in November, 1860:——

'In this case, the following facts are agreed to by counsel in the cause, and to be considered as testimony in the same before the court:——

'1. The Merchants' Bank of South Carolina, at Cheraw, suspended specie payments at the same time with the other banks in the State; was so suspended in November, 1860, and never after resumed specie payments.

'2. The said bank ceased to pay out its bills as soon as the Confederate currency began to circulate. The last time at which any of its bills were paid out was on the 6th of August, 1861.

'3. In his regular business as banker and broker, the complainant, Harvey Terry, bought the notes and bills of the said Merchants' Bank of South Carolina, as proved by him in this case, amounting to over $20,000, at prices ranging from twenty cents to five cents on the dollar of their face value. Most of these purchases were made in 1868 and 1869, at about fifteen cents on the dollar.

'4. That the Circuit Court of the United States for the District of South Carolina was held in Charleston, on the twelfth day of June, A.D. 1866.'

The order, however, was binding on the master, and the date fixed by it controlled his action and all subsequent proceedings in the case. The master reported that there were sixty-four shareholders liable for various sums, taking the date of the failure mentioned in the order, and giving their names; that Harvey Terry, the plaintiff, was a creditor of the bank, on account of its circulating notes held by him, to the amount of $28,040.36, and Simonton and Barker to the amount of $26,760, and four other persons, whose claims in the aggregate were about $500.

The court made a final decree, which, reciting the names of the stockholders and the sums for which each of them was liable, says, 'It is further ordered, adjudged, and decreed that the clerk of this court do enter up judgment for complainants to the amounts of their respective bills proven in this cause, as hereinafter stated.' The names of the creditors and the sums due each of them is then stated, and the decree closes as follows: 'And it is ordered that said bill-holders respectively have execution against said defendants, stockholders above named, for the several amounts above stated, and costs. It is further ordered that as to the defendant, Richard Lathers, the bill be dismissed with costs.'

This whole proceeding is a very extraordinary one. It is a case in which, if the Circuit Court of the United States had any jurisdiction at all, it must have been on the ground of the citizenship of the parties. But the only allegation or evidence in the whole record on that subject is that plaintiff, Terry, is a citizen of the State of Virginia. What is the citizenship of five or six other parties, who by the decree are called complainants and bill-holders, and who are awarded execution for their debts against sixty-four defendants, we are not informed. Nor is there a word said about the citizenship of any of the defendants. Upon what principle the court could entertain jurisdiction, and proceed to decree in the case, we are utterly at a loss to understand. If the bank had been a party, its citizenship might possibly have been inferred. But it was not made a party; and a decree was rendered against the defendants, by reason of an obligation which the statute imposes upon them. The court clearly had no jurisdiction of the case.

But suppose it had jurisdiction of the case as to the defendants who were served with process or who appeared. There were only twenty out of the sixty-four individuals against whom the decree was rendered who were served with process, or who appeared in any stage of the proceeding. As to the other forty-four persons against whom this decree is rendered, they have had no day in court, and were served with no process.

The master seems to have called before him a cashier or clerk of the bank, and obtained from him a list of the stockholders, whose names and the number of shares held by each he reported to the court; and on this the court rendered a decree against them. It is impossible to sustain such a decree, if it was shown they were all citizens of the State of South Carolina. The liability of each one of these stockholders, if liable at all, is his several liability. It is a liability depending upon the statutory contract. It depends on the fact of the failure of the bank, and on his holding shares in the bank when it failed, or within twelve months before its failure. His liability depends in every instance on facts peculiar to his own case; for, if the failure of the bank and the date of the failure may be common to all parties charged, it still remains that the ownership of shares, the number of shares, and the time when they were owned, are facts to be established against each man charged, and with which no other defendant has any connection. And in regard to which, if a prima facie case is made, each man may have a distinct defence...