Hansen v. Harris

• Decision Date: 19 December 1933
• Citation: 145 Or. 487,28 P.2d 649
• Parties: HANSEN, Supervisor of Banking, v. HARRIS.
• Court: Oregon Supreme Court

28 P.2d 649

145 Or. 487

HANSEN, Supervisor of Banking, v. HARRIS.

Supreme Court of Oregon

December 19, 1933

Department 1.

Appeal from Circuit Court, Umatilla County; Calvin L. Sweek, Judge.

Action by Howard E. Hansen, Supervisor of Banking of the State of Washington, liquidating People's State Bank of Walla Walla, against Laura Harris. From a judgment for plaintiff defendant appeals.

Affirmed.

This is an appeal from a judgment in the sum of $1,000 in favor of the plaintiff, who is the supervisor and examiner of banking for the state of Washington (section 10809, Remington's Compiled Statutes of Washington), entered in an action instituted by him against the defendant who is the owner of ten shares of the capital stock of the People's State Bank of Walla Walla, Wash. (a Washington corporation) of the total par value of $1,000. The People's State Bank according to the plaintiff, was insolvent September 14, 1932 when he, in his above-mentioned capacity, assumed charge of its assets upon its request. Subsequently he levied an assessment of 100 per cent. upon all of its capital stock pursuant to section 3242, Remington's Compiled Statutes of Washington, and still later instituted this action to enforce payment of the assessment levied upon the shares owned by the defendant.

Herbert C. Bryson, of Walla Walla, Wash., for appellant.

John F Kilkenny, of Pendleton (Raley, Raley & Warner and Alfred F. Cunha, all of Pendleton, and Arthur G. Cohen, of Seattle, Wash., on The brief), for respondent.

The People's State Bank of Walla Walla, Wash., is a Washington corporation authorized to conduct a banking business. One Higby Harris, on and prior to the 3d day of January, 1928, that being the time of his death, was the owner of fifty shares of the capital stock of that bank of the par value of $100 each. By the terms of his will, Harris bequeathed ten shares of this stock to the defendant, his widow, which she accepted. She subsequently received and accepted three dividends declared upon the stock, and through a proxy, exercised her right to vote the stock at the annual stockholders' meetings. September 14, 1932, the bank by a resolution of its board of directors surrendered control of its affairs to the plaintiff, who is the supervisor and examiner of banking for the state of Washington, having been appointed to his office pursuant to the provisions of section 10809, Remington's Compiled Statutes of the State of Washington. The plaintiff, upon investigating the condition of the bank's affairs, found it to be insolvent and determined that it was necessary for the stockholders to make payment of the double liability attached to their ownership of stock by the Washington statutes which we shall later mention.

Since the defendant contends that the legislative enactments which authorized the supervisor of banking to levy the assessments in question are invalid, we shall now review these enactments, together with the provisions of the Washington Constitution applicable to them. Article 12, § 11, Washington Constitution, provides: "*** Each stockholder of any banking or insurance corporation or joint stock association shall be individually and personally liable equally and ratably, and not one for another, for all contracts, debts, and engagements of such corporation or association accruing while they remain such stockholders, to the extent of the amount of their stock therein at the par value thereof, in addition to the amount invested in such shares."

The provisions of the Washington Banking Law applicable to this controversy are 1917 Session Laws, chapter 80, p. 271, and the amendments thereto. Section 35 of that act, which is section 3242, Remington's Compiled Statutes of Washington, provides: "The stockholders of every bank and trust company shall be individually and personally liable, equably and ratably, and not one for another, for all contracts, debts and engagements of such corporation accruing while they remain as stockholders, to the extent of the amount of their stock therein at the par value thereof, in addition to the amount invested in such shares. Persons holding stock as executors, administrators, guardians or trustees, if such relation of trust shall appear in the stock certificate and on the books of the corporation, or as collateral security or in pledge, shall not be personally liable as stockholders, but the assets and funds in the hands of such trustees constituting the trust shall be liable to the same extent as the testator, intestate, ward, or person interested in such funds would be, if living or competent to act, and the person pledging such stock shall be deemed a stockholder and liable under this section. Such liability may be enforced by the examiner as soon after taking possession of any bank or trust company as in his judgment the same may be necessary. The failure of the stockholders of any bank or trust company immediately upon possession being taken by the examiner to make good all impairment of its assets shall be conclusive evidence that the enforcement of double liability is necessary."

Section 72 of the same act, being section 3279, Remington's Compiled Statutes of Washington, provides: "Any bank or trust company may place itself under the control of the examiner to be liquidated as herein provided by posting a notice on its door as follows: 'This bank (trust company) is in the hands of the state bank examiner.' Immediately upon the posting of such notice, the officers of such corporation shall notify the examiner thereof by telegraph and mail. The posting of such notice or the taking possession of any bank or trust company by the examiner shall be sufficient to place all of its assets and property of every nature in his possession and bar all attachment proceedings."

Nineteen Hundred Twenty-three Session Laws (Washington), chapter 115, p. 310, section 9, amends section 60 of the 1917 act, p. 301 (section 3267, Rem. Comp. Stat.), which had (a) authorized the state bank examiner to direct banks to levy assessments upon their corporate stock whenever (1) the bank had committed any of the offenses mentioned in section 3266, Rem. Comp. Stat., and had hereby rendered its condition unsafe for the further pursuit of banking, (2) whenever the bank's capital or surplus was reduced below the required amount, (3) whenever it had suspended payment of its obligations, and (4) in the event of insolvency; (b) authorized the bank examiner to assume possession of any bank upon the occurrence of any of the above developments. The amendment added the following new provision: "The board of directors of any such bank or trust company, with the consent of the holders of record of two-thirds of the capital stock expressed either in writing or by vote at a stockholders meeting called for that purpose, shall have power and authority to levy such assessment upon the stockholders pro rata and to forfeit the stock upon which any such assessment is not paid, in the manner prescribed in Section 8 of this act."

Section 70 of the 1917 act, being section 3277, Rem. Comp. Stat., provides that if the examiner possesses assets belonging to the insolvent bank after he has discharged all claims of its creditors, he shall submit to a meeting of the stockholders for their choice the following two alternative methods for completing liquidation: (1) The stockholders may authorize the examiner to complete the liquidation; (2) they may themselves complete liquidation through an agent selected by themselves.

Since the enactment of the above statutes the office of bank examiner has been abolished and the authority previously possessed by him has been conferred upon an official known as the supervisor of banking. See sections 10809 and 10893, Rem. Comp. Stat.

Section 69 of the 1917 act, being section 3276, Rem. Comp. Stat., provides: "No receiver shall be appointed by any court for any bank or trust company nor shall any assignment of any bank or trust company for the benefit of creditors be valid, excepting only that a court otherwise having jurisdiction may in case of imminent necessity appoint a temporary receiver to take possession of and preserve the assets of such corporation. Immediately upon any such appointment, the clerk of such court shall notify the state bank examiner by telegraph and mail of such appointment and the examiner shall forthwith take possession of such bank or trust company, as in case of insolvency, and such temporary receiver shall upon demand of the examiner surrender up to him such possession and all assets which shall have come into the hands of such receiver. The examiner shall in due course pay such receiver out of the assets of such corporation such amount as the court shall allow."

Article 4, § 6, Constitution of Washington, provides: "The superior court shall have original jurisdiction *** of proceedings in insolvency. ***"

It will be observed from a reading of the above statutes that they contemplate that the supervisor of banking shall take control of (1) insolvent banks; and (2) any bank upon its request. He may assume control of any bank (1) which has committed any of the offenses mentioned in section 3266, Rem. Comp. Stat., and thereby rendered its condition unsafe; (2) the capitalization or surplus of which is reduced below the required amount; and (3) which has suspended payment of its obligations.

The first contention argued by the defendant is that this statute conflicts with the provision of the Washington Constitution above quoted, which confers upon the superior courts original jurisdiction over "proceedings in insolvency." In State v. Superior Court for King County, 161 Wash 550, 297 P. 774, 776, the court said: "Since time immemorial, courts of equity, under the...