Gossett v. Hamilton

• Decision Date: 06 October 1939
• Docket Number: No. 14016.,14016.
• Citation: 133 S.W.2d 297
• Parties: GOSSETT, Banking Com'r, et al. v. HAMILTON.
• Court: Texas Court of Appeals

133 S.W.2d 297

GOSSETT, Banking Com'r, et al. v. HAMILTON.

No. 14016.

Court of Civil Appeals of Texas. Fort Worth.

October 6, 1939.

Rehearing Denied November 24, 1939.

Appeal from District Court, Montague County; Earl P. Hall, Judge.

Suit by Z. Gossett, Banking Commissioner of Texas, in his right as such official, and for the benefit of all creditors of the Ringgold State Bank, against Roy D. Hamilton, to recover a stock assessment, wherein the Federal Deposit Insurance Corporation filed a plea of intervention. Judgment for defendant, and plaintiff and intervener appeal.

Affirmed.

Ocie Speer, of Austin, for appellant Z. Gossett, Banking Com'r.

J. W. Chancellor, of Bowie, for appellant Federal Deposit Ins. Corporation.

Benson & Benson, of Bowie, for appellee.

DUNKLIN, Chief Justice.

The Ringgold State Bank, of Ringgold, Texas, was duly incorporated under the laws of the State, with banking and discounting privileges. On October 1st, 1937, because of its insolvent condition, it was closed by order of the Board of Directors, and placed into the hands of Z. Gossett, Banking Commissioner of the State, for the purpose of liquidation, by virtue of the laws of the State in such cases made and provided. After a careful investigation of its affairs, the Banking Commissioner determined that, in order to pay all the debts of the bank, it was necessary that the individual liabilities of the stockholders of the bank, as provided by Art. 535 of the Revised Civil Statutes of 1925, Vernon's Ann.Civ.St. art. 535, be enforced to the full amount of such liabilities, and thereupon assessed each stockholder of the bank and every stockholder who with bona fide intent transferred his stock within 12 months previous to the 1st day of October, 1937, an amount equal to the probable value of such shares so owned or transferred, and directed that the same be paid over to the banking commissioner, at Austin, Texas, or to the special agent appointed by the commissioner in charge of the liquidation of the bank, at his office in Ringgold, Texas.

On the 7th day of September, 1937, which was some 23 days before said assessment was made, the bank was indebted to divers depositors in the aggregate sum of $41,019.36. On October 1st, 1937, when it was taken over by the banking commissioner, it was indebted to its divers depositors in the sum of $66,000. The indebtedness at that time included $16,000 of deposit liabilities existing on September 7th, 1937, which had not been discharged by the bank in regular course of business between September 7th, and October 1st, 1937.

The Federal Deposit Insurance Corporation issued its policy of insurance covering deposits in the bank, as authorized by the laws of the United States, and during the liquidation of the business of the bank by the Banking Commissioner, it paid to him the full amount of all the deposits then outstanding and unpaid, which included the $16,000 deposits, as of date September 7, 1937. Thereafter, the intervener took an assignment from the depositors of their respective deposits, including the $16,000 deposits due and unpaid on September 7th, 1937.

In the process of liquidating the bank, the banking commissioner has paid a dividend to its creditors of 45 per cent of the amount of their respective claims. After crediting said dividend, there was left unpaid 55 per cent of the $16,000 of deposit liabilities of the bank, on September 7th, 1937.

Roy D. Hamilton was a shareholder in the bank, owning ten shares of its capital stock, of the par value of $100 per share, on September 7th, 1937, and likewise on October 1st, 1937.

This suit was instituted by Z. Gossett, banking commissioner of Texas, in his right as such official, and also for the benefit of all creditors of the bank, against Roy D. Hamilton, to recover $1,000, the full face value of the ten shares of stock so owned by him, upon allegations of the foregoing facts, and basing his right of recovery on one of the provisions of Art. 16, sect. 16, of the State Constitution, hereinafter noted, and Art. 535, Revised Civil Statutes of Texas, enacted in pursuance thereof, both of which were in full force and effect on September 7th, 1937, but both of which were repealed by virtue of the amendment of Art. 16, sect. 16, of the Constitution, Vernon's Ann.St., which became effective on September 8th, 1937.

The Federal Deposit Insurance Corporation, by leave of court, filed a plea of intervention in which it adopted the allegations of plaintiff's petition and sought a recovery against Roy D. Hamilton, under and by virtue of the provisions of Art. 16, sect. 16, of the Constitution, before its amendment, and Art. 535, Rev.Civ.St., and also as assignee of the holders of the deposits, as shown above. But with the express allegation that it neither admitted nor denied the rights of the banking commissioner to recover the same.

The defendant filed a general demurrer and general denial to plaintiff's petition.

By special exception, defendant challenged the legal right of the intervener as a creditor of the Ringgold State Bank to intervene in the suit and recover the judgment prayed for.

The case was tried before a jury and at the conclusion of the evidence introduced, the court granted defendant's motion for an instructed verdict in his favor; and from a judgment rendered upon the verdict returned, in obedience to that instruction, plaintiff and intervener have prosecuted this appeal.

Following is a copy of Art. 16, sect. 16, of the Constitution, in force on September 7th, 1937:

"Sec. 16. The Legislature shall by general laws, authorize the incorporation of corporate bodies with banking and discounting privileges, and shall provide for a system of State supervision, regulation and control of such bodies which will adequately protect and secure the depositors and creditors thereof.

"Each shareholder of such corporate body incorporated in this State, so long as he owns shares therein, and for twelve months after the date of any bona fide transfer thereof shall be personally liable for all debts of such corporate body existing at the date of such transfer, to an amount additional to the par value of such shares so owned or transferred, equal to the par value of such shares so owned or transferred.

"No such corporate body shall be chartered until all of the authorized capital stock has been subscribed and paid for in full in cash. Such body corporate shall not be authorized to engage in business at more than one place which shall be designated in its charter.

"No foreign corporation, other than the national banks of the United States, shall be permitted to exercise banking or discounting privileges in this State."

Art. 535, Rev.Civ. Statutes, Vernon's Ann.Civ.St. art. 535, reads:

"If default shall be made in the payment of any debt or liability contracted by any bank, savings bank or Bank and Trust Company, each stockholder of such corporation, as long as he owns shares therein, and for twelve months after the date of the transfer thereof, shall be personally liable for all debts of such corporation existing at the date of such transfer, or at the date of such default, to an additional amount equal to the par value of such shares. Shares of stock in such a banking corporation shall be transferable only on the books of the corporation, and it shall be the duty of the officers of the corporation to make such transfer upon the books at the request of the transferror or transferee. In any suit to establish a stockholder's liability on any obligation as stockholder, the transferror or transferee of stock may be joined in one action and the liabilities of both parties determined therein."

Said Sect. 16 of Art. 16 of the Constitution was so amended as to eliminate therefrom the provision embodied in its second paragraph fixing liability of stockholders in banks therein referred to; thus repealing that paragraph and rendering Art. 535, Revised Statutes, no longer in force.

At the outset, we conclude that if defendant, as a stockholder, was liable for the debts owing by the bank to its depositors on September 7th, 1937, under the provisions of Art. 16, sect. 16, of the Constitution, and Art. 535, Rev.St., then in force, then such liability was a property right, which was not destroyed by the repeal of the second provision of said sect. 16, which became effective on September 8, 1937, and Art. 535, Rev.Civ.St.

So the only question to be determined by us here is whether or not on the trial of the case in the court below plaintiff made out a prima facie showing of liability of defendant for the deposits owing by the bank on September 7th, 1937, and right of the Banking Commissioner to recover therefor.

From a careful consideration of the authorities, we have reached the conclusion that the liability of defendant as a stockholder in the Ringgold State Bank was contractual. The Constitutional provision making shareholders in the bank liable for its debts, entered into and became a part of defendant's contract of purchase of his stock, as much so as if it had been in his certificate of stock. He could not acquire and enjoy its benefits and escape the burden imposed thereon by the Constitution and statute. Section 182, 10 Tex. Jur. page 316, and numerous authorities there cited, including, among others, Kerr v. Galloway, 94 Tex. 641, 644, 64 S.W. 858; Winder Bros. v. Sterling, 118 Tex. 268, 12 S.W.2d 127; West River Bridge Co. v. Dix, 6 How. 507, 540, 12 L.Ed. 535, 548; City of Abilene v. Sayles, Tex.Com. App., 295 S.W. 578; Globe Indemnity Co. v. Barnes, Tex.Com.App., 288 S.W. 121; Southern Surety Co. v. Klein, Tex.Civ.App., 278 S.W. 527, writ of error refused.

Following is quoted from the majority opinion in Coombes v. Getz, 285 U.S. 434, 52 S.Ct. 435, 76 L.Ed. 866:

"This is a suit brought in a California superior court by petitioner, on behalf of himself and other creditors, to recover from respondent, a director in Getz Bros. &...