Goss v. Carter

• Citation: 156 F. 746
• Decision Date: 28 October 1907
• Docket Number: 1,617.
• Parties: GOSS v. CARTER.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

156 F. 746

GOSS v. CARTER.

No. 1,617.

United States Court of Appeals, Fifth Circuit.

October 28, 1907

This is an action brought by Charles A. Goss, a citizen of the state of Nebraska, against O. M. Carter, a citizen of the state of Texas. The plaintiff sued as receiver and trustee to recover from the defendant the amount of an assessment of 25.9 per cent. levied by the District Court of the Fourth Judicial District of the state of Nebraska upon $101,900 of stock alleged to be owned by the defendant in the American Loan &amp Trust Company, an insolvent bank organized under the Constitution and laws of Nebraska. In the Circuit Court a general demurrer with special exceptions to the petition was sustained, and the case is brought by the plaintiff to this court on writ of error. The general question presented to this court by the assignments of error is: Did the Circuit Court err in sustaining the demurrer to the plaintiff's petition? This involves three inquiries: (1) Has the plaintiff as a receiver appointed in Nebraska the right to sue in Texas? (2) Is the defendant subject to suit on the decree of the Nebraska court? (3) Is the right of action barred by the Texas statute of limitations of four years?

The allegations of the petition bearing upon the questions raised by the general demurrer and special exceptions to it and by the assignments of error necessary to be decided are substantially as follows:

(1) The American Loan & Trust Company was a banking corporation organized under the laws of the state of Nebraska, and having an issued and fully paid capital stock of $400,000, divided into 4,000 shares of $100 each; and of these shares the defendant Carter owned 1,019. Said company became insolvent and on May 10, 1894, a receiver was appointed by the Circuit Court of the United States for the District of Nebraska to liquidate its affairs. Such receivership was closed, and the suit wherein it was pending was terminated, September 28 1898; the assets of the company having been exhausted without paying any portion of its indebtedness. The Circuit Court refused to entertain petitions in intervention offered by some of the five creditors hereinafter mentioned, having for their object the enforcement of the constitutional liability of the shareholders; but they were permitted to prove up their respective claims and to reduce the same to judgments, and they did so.

(2) Immediately upon the termination of the receivership suit in the United States Circuit Court for the District of Nebraska, the five creditors, Hamilton National Bank, Rutland County National Bank, Safety Fund National Bank, Gerard C. Tobey and New York Life Insurance Company, instituted in the District Court of the Fourth Judicial District of Nebraska a suit against American Loan & Trust Company and numerous persons alleged to be the stockholders, including the defendant Carter. By their amended petition filed in the suit October 4, 1898, the plaintiffs prayed that an order be made fixing a time within which other creditors of said American Loan & Trust Company might appear in said suit; that an account be had of the amount due each of said plaintiffs by said American Loan & Trust Company; that the several defendants sued as shareholders of said company be adjudged to be liable to the plaintiffs and to the other creditors of said company, over and above the amount of stock held by them, to a sum equal to the stock so held by them, for all the liabilities of said company accruing while they remained such stockholders; that the dates of the accrual of the debts due the several creditors be ascertained; that the amounts of stock held by the several defendants, and the periods of time during which such amounts were held, be determined; that the entire amount of the indebtedness of said company, in so far as the same might be represented in said suit, and the dates of the accrual thereof, and the names of the several stockholders at such dates, together with the amounts of such holdings, be determined; that the plaintiffs and such other creditors as might join in said suit have judgment against the several defendants to the extent of their liability; that a receiver be appointed to collect from said stockholders, under the authority and direction of the court, by execution or by other proper writ or process or by suit if necessary, or by such other proceedings as might be required fully to realize from said stockholders the amounts so found due said creditors, sufficient funds fully to pay and to satisfy the several amounts due to said creditors, with interest and costs, as well as the amounts due to such other creditors as might join therein; and they prayed for such other and further relief in the premises as might be just and equitable. No other creditors ever joined in said suit, or proved up their claims therein, or in any way became parties thereto.

(3) Process was served upon American Loan & Trust Company and upon several of the individual defendants, and the company and several individual defendants appeared and resisted the suit. A protracted litigation ensued, in which the principal subject of dispute was the question whether the company was such a banking corporation as that under the Constitution of Nebraska the shareholders were liable for the debts of the company over and above the amount invested in their respective holdings of stock. The defendant, Carter, was not served, because not found, and he did not appear in the suit.

(4) In pursuance of a prayer of said amended petition, the plaintiff, Charles A. Goss, was appointed by said court by an interlocutory order made October 5, 1898, to be a temporary receiver in said suit, with authority to take such action as might be necessary to preserve the rights of the creditors against the estate of certain deceased shareholders, but without authority to proceed generally to collect the sums for which shareholders might be liable.

(5) On or about December 22, 1900, a decree was entered by said District Court in favor of the defendants, said court adjudging that no liability existed upon the part of the shareholders of said company. The plaintiff appealed from said decree to the Supreme Court of the state of Nebraska, which, on or about October 22, 1902, reversed the same and remanded the cause to the District Court for further proceedings. Thereafter another trial was had in said District Court, and on or about June 10, 1903, a final decree was entered whereby the shareholders of said company were adjudged to be liable to the creditors thereof for such amount, not exceeding sums equal to their respective holdings of stock, as might be necessary to discharge the indebtedness of said company, together with interest and costs.

(6) By said decree it was judicially ascertained, and such were the facts, that the corporate property of said American Loan & Trust Company had been exhausted before the commencement of said suit, and that after the exhaustion of such corporate property, and at the date of said decree, said company was still liable to the plaintiffs in said suit in certain sums whose several amounts and dates of accrual were duly ascertained. The aggregate of these items of indebtedness was $74,283.84, besides the costs of suit. It was further judicially ascertained by said decree, and such was the fact, that at the date thereof the sums due by American Loan & Trust Company to the five original plaintiffs in said suit constituted the entire indebtedness and liability of said company then outstanding and unpaid.

(7) By said decree, it was further adjudged, and such was the fact, that continuously from a date prior to the accrual of any of the claims of the said five plaintiffs certain named parties defendant in this suit had owned and held certain shares of the stock of American Loan & Trust Company, their aggregate holdings being 4,000 fully paid shares. Among the persons found to have been shareholders during the time of the accrual of all of the claims sued upon was the defendant, O. M. Carter, who was found to have owned during all of said time 1,019 shares, amounting to $101,900. By said decree it was further adjudged, and such was the fact, that American Loan & Trust Company was a duly incorporated banking institution, each of whose stockholders was liable individually to its creditors, over and above the amount of stock by him held, to an amount equal to the stock by him held for all the liabilities of said company accruing while he remained such stockholder.

(8) By said decree it was further adjudged that, in order to satisfy the indebtedness of said corporation, with interest and costs, it was necessary to collect from each of the solvent holders of the stock of said company a sum equal to 38.4 per cent. of his total liability. And it was ordered and decreed that each of the defendant shareholders pay to the said Charles A. Goss, as receiver and trustee, for the use and benefit of said five creditors pro rata, an amount equal to the shares of stock found to have been held by him, or so much thereof as might be required to satisfy the claims of said creditors, with interest and costs. A first assessment of 38.4 per cent. was levied by said decree; but, this assessment having been found to be excessive by reason of an error in computation, afterwards, to wit, on December 17, 1904, it was reduced to 25.9 per cent.

(9) By said decree it was further ordered and decreed that Charles A. Goss, the plaintiff herein, who theretofore had been appointed temporary receiver on October 5 1898, should be, and thereby was, continued in office with all the powers and authority wherewith he was clothed by said order of October 5, 1898, and that, in addition to such powers and authority, he was further...