Hamilton v. Bergling

• Decision Date: 25 May 1936
• Docket Number: No. 6641.,6641.
• Citation: 85 F.2d 249,66 App. DC 83
• Parties: HAMILTON v. BERGLING.
• Court: U.S. Court of Appeals — District of Columbia Circuit

66 App. DC 83, 85 F.2d 249 (1936)

HAMILTON v. BERGLING.

No. 6641.

United States Court of Appeals for the District of Columbia.

Argued May 4, 1936.

Decided May 25, 1936.

Motion for Construction and Modification Denied June 15, 1936.

Brice Clagett and Charles E. Wainwright, both of Washington, D. C., for appellant.

William E. Richardson and E. Hilton Jackson, both of Washington, D. C., for appellee.

Before MARTIN, Chief Justice and VAN ORSDEL, GRONER, and STEPHENS, Associate Justices.

GRONER, Associate Justice.

Seventh Street Savings Bank was organized in 1912 under the laws of the state of West Virginia. It thereafter conducted a banking business exclusively in the District of Columbia. In December, 1933, the Comptroller of the Currency determined that the bank was insolvent and unable to pay its debts and appointed Hamilton as receiver of the bank. This action was brought by Hamilton against Ida L. Bergling (appellee), as the owner of 20 shares of stock, to recover $2,000, with interest and costs, which amount was claimed to be due by reason of a 100 per cent. assessment levied by the Comptroller of the Currency on July 5, 1934, against the stockholders of the bank. The declaration is in two counts. The liability in the first is asserted under section 298, Title 5, of the 1929 Code of the District of Columbia, and Rev.St. § 5151 (12 U.S.C.A. § 63); in the second count, under the Constitution and laws of the state of West Virginia. The lower court sustained a demurrer to the first count on the strength of our decision in Hamilton v. Offutt, 64 App.D.C. 385, 78 F.(2d) 735. The stockholder thereupon filed a special plea to the second count as follows: "And for further plea to said declaration, this defendant denies that the Comptroller of the Treasury, as alleged in the second count of the plaintiff's declaration, or at any other time or place or in any other manner, made an assessment upon the defendant as a shareholder of the Seventh Street Savings Bank of any liability for or on account of liabilities accruing during the period she was such stockholder." The receiver's demurrer to this plea was overruled and, upon petition to us and the representation that this is a test case in which the decision will control a number of other pending cases, we granted a special appeal.

The single question involved is: Was it necessary for the receiver to prove that the debts and liabilities of the bank, on account of which the stock assessment was levied, accrued during the period of stock ownership, before enforcing the assessment liability against the stockholder?

The stockholder admits that the Comptroller had a right to adjudge the bank insolvent and to close it and has a right to liquidate it and collect its assets, including stockholders' liability. She asserts, however, that he has no right to impose or collect a liability in excess of that authorized by the West Virginia law, and that her liability in this respect is a question of fact on which she is entitled to a trial.

On the other hand, the receiver insists that the stockholder is liable for the full amount of the assessment without apportionment among prior stockholders and without prior judicial determination of the amount of the liability.

In Washington Loan & Trust Co. v. Allman, 63 App.D.C. 1116, 70 F.(2d) 282, we said that section 298, Title 5, of the 1929 Code of the District of Columbia, authorized the Comptroller of the Currency to appoint receivers for insolvent foreign banking corporations doing business in the District of Columbia and that such receivers were entitled to enforce stockholders' double liability imposed by the constitution or laws of the state of the bank's incorporation. And in Harper v. Moran, 64 App.D.C. 210, 76 F.(2d) 980, we held, in the case of a similar insolvent bank, that the determination of the Comptroller as to the necessity for the assessment was conclusive and that his receiver could recover the full amount of the assessment without prior judicial determination of the extent of insolvency or the pro rata amount due by the stockholder — even though such judicial determination is required by the law of the state of incorporation. In short, that in such a case we could not review the conclusion of the Comptroller except for fraud.

Following the two cases to which we have referred, we decided Hamilton v. Offutt, supra. That was the case of a bank incorporated in Virginia, doing a banking business in the District of Columbia. The bank in that case, as in this, did business nowhere else. But neither by the Constitution or laws of Virginia is there any double liability on the holders of shares of stock in banks incorporated in that state. In that respect the case differed from the two we have mentioned, and on this ground we held the assessment invalid. We said in that case, as to section 298, Title 5, of the District of Columbia Code, that under its provisions the Comptroller of the Currency is given power to take possession of any bank doing business in the District of Columbia "for the reasons and in the manner and to the same extent as are provided in the laws of the United States with respect to national banks"; and we said that the words "for the reasons" included insolvency of the bank, impairment of its capital stock, nonmaintenance of its reserve, forfeiture of its franchise, and other grounds which Congress has named as sufficient to authorize taking possession of a national bank. And that the words "in the manner and to the same extent" include the right to appoint a receiver, collect the debts, sell the property, and likewise to take all necessary steps in the liquidation of the affairs of the bank, including the enforcement of the personal liability of shareholders where there is such liability. But we also said that there is nothing in the District statute which expressly creates double liability on shareholders in state banks doing business in the District, and we held that we could not read into the local statute the provisions of Rev.St. § 5151,¹ creating such liability in the case of shareholders in a national bank; and we pointed out that Congress, recognizing this omission, had corrected it by an act passed March 4, 1933 (D.C.Code Supp. I, 1933, T. 5, § 300a), imposing double liability on shareholders (whose shares were acquired after March 4, 1933) of every savings bank and every banking institution organized by the laws of a state and doing a banking business in the District of Columbia.

We think the rule announced in the Hamilton-Offutt Case controls in this, and we must, therefore, have recourse to the laws of West Virginia to determine the liability of the stockholder here.

Section 6 of article 11 of the Constitution of West Virginia provides: "The Legislature may provide, by a general...