Hardesty v. Corrothers

Citation31 F. Supp. 365
PartiesHARDESTY v. CORROTHERS et al.
Decision Date20 January 1940
CourtUnited States District Courts. 4th Circuit. Northern District of West Virginia

COPYRIGHT MATERIAL OMITTED

H. H. Rose, of Fairmont, W. Va., for receiver.

C. Brooks Deveny, of Fairmont, W. Va., for defendants.

HARRY E. WATKINS, District Judge.

This is an action brought by the plaintiff as receiver of the insolvent National Bank of Fairmont under 12 U.S.C.A. §§ 63, 64, to recover an assessment duly levied upon the shares of stock of that institution, of which the defendants are claimed to have been the owners on the day upon which the bank closed. All the defendants say that the action is barred by the statute of limitations. The defendants Mary E. Wilson, John W. Corrothers and Audra E. Cross deny ownership of the stock. A jury was waived and the action was submitted to the court upon an agreed statement of facts and evidence.

A. J. Corrothers, a resident of Monongalia County, West Virginia, died in 1898, being survived by a wife and four children, Audra, age 3, John, age 4, Mary, age 7, and Edna, age about 9. By will he gave the income upon ten shares of stock in the Bank of Fairmont, a state banking corporation, of the par value of $100 each, to his wife, and provided that at her death the stock should go to and be shared equally among his then living children. The wife lived until 1903, being survived by a second husband, Orin C. Bradley, and her four children. Prior to her death, the stepfather was appointed guardian for the four infant children. In 1909 the Bank of Fairmont was converted into a national bank under the name of the National Bank of Fairmont. On January 12, 1910, the National Bank of Fairmont, at the request and demand in writing of the guardian, and Edna L. Corrothers, who had then become of age, issued and delivered to Orin C. Bradley as guardian for the other three children, and to Edna L. Corrothers, ten shares of stock of the par value of $100 each in lieu of the ten shares in the Bank of Fairmont. On November 14, 1933, the National Bank of Fairmont was closed, and subsequently the plaintiff was appointed as receiver. Dividends were paid regularly upon the stock to the step-father and guardian, who has made no settlement or accounting to the infants, although more than 37 years have elapsed since his appointment.

On March 19, 1934, an assessment was made against the stockholders for the par value of their stock "to be paid by them on or before the 26th day of April, 1934". Notice of such assessment was sent to the guardian only. This action was instituted April 24, 1939. The statute of limitations in West Virginia in such matters is five years. Code W.Va.1931, 55-2-12. Defendants say that the right of action set forth in the complaint did not "accrue" within five years next before the commencement of this action.

The statute of limitations in effect in the state where the cause of action arises, controls in an action brought to recover a stock assessment in a national bank. McClaine v. Rankin, 197 U.S. 154, 25 S.Ct. 410, 49 L.Ed. 702, 3 Ann.Cas. 500; Bernheimer v. Converse, 206 U.S. 516, 27 S.Ct. 755, 51 L.Ed. 1163; Rankin v. Miller, D.C., 207 F. 602; King v. Pomeroy, 8 Cir., 121 F. 287; De Weese v. Smith, 8 Cir., 106 F. 438, 66 L.R.A. 971; Strasburger v. Schram, 68 App.D.C. 87, 93 F.2d 246; Anderson v. Abbott, D.C., 23 F.Supp. 265. Liability upon a national bank stock assessment does not "accrue" within the meaning of the West Virginia statute of limitations at date of assessment, but at date when assessment was made payable. McDonald v. Thompson, 184 U.S. 71, 22 S. Ct. 297, 46 L.Ed. 437; McClaine v. Rankin, 197 U.S. 154, 25 S.Ct. 410, 49 L.Ed. 702, 3 Ann.Cas. 500; Bernheimer v. Converse, 206 U.S. 516, 27 S.Ct. 755, 51 L.Ed. 1163; Rankin v. Miller, 207 F. 602; King v. Pomeroy, 8 Cir., 121 F. 287; De Weese v. Smith, 8 Cir., 106 F. 438, 66 L.R.A. 971; Strasburger v. Schram, 68 App.D.C. 87, 93 F.2d 246; Anderson v. Abbott, D.C., 23 F.Supp. 265. Consequently the cause of action in this case did not accrue until April 26, 1934, and the West Virginia limitations of five years did not expire until April 26, 1939, two days after suit was instituted.

Defendants cite cases holding that the statute begins to run, not on the date the assessment is made payable, but on the day when the assessment was laid. These cases are not in point, because they arise under state statutes providing that action must be brought within a specified time after the liability was "created". Johnson v. Greene, 9 Cir., 88 F.2d 683; Richardson v. Craig, 11 Cal.2d 131, 77 P.2d 1077. The West Virginia statute requires this suit to be brought within five years "next after the right to bring the same shall have accrued". The case of Rinehart v. Wilfong, W.Va., 1 S.E.2d 174, cited by defendants, is not in point for the reason that the assessment was made November 2, 1931, and fixes no future date when the assessment becomes payable, thus making it due on the date of assessment and action thereon accruing at once. Opinions of courts are not authoritative beyond questions they were considering when they decided them. Furthermore the West Virginia court was giving consideration to a state statute wherein the state banking commissioner has no authority to delay "payable" date. In other cases cited by defendant it does not appear that assessment was made payable at some future date, but was payable when made.

Were the defendants Mary E. Wilson, John W. Corrothers and Audra E. Cross owners of this stock when the bank closed? The actual owner of national bank stock may be held for the assessment although his name does not appear upon the transfer book of the bank. Early v. Richardson, 280 U.S. 496, 499, 50 S.Ct. 176, 177, 74 L.Ed. 575, 69 A.L.R. 658; Forrest v. Jack, 294 U.S. 158, 162, 55 S.Ct. 370, 372, 79 L.Ed. 829, 96 A.L.R. 1457. The step-father and the four children have lived together on the farm on friendly terms. The step-father educated the children in good schools and gave them money as they asked for it. While the father left a large estate, evidence shows that the children knew nothing of the father's will, of the bequest in question, or what the father owned. It does not even appear that the children knew their father left a will. The children were amply cared for, made no claim to any part of their father's estate, and asked no questions. I find that these defendants did not know, or have any reason to believe, that they had any interest in, or that there had been issued to or held by Orin C. Bradley as their guardian, and the defendant Edna L. Corrothers, the ten shares of stock in the National Bank of Fairmont dated January 12, 1910, until at or about the time this suit was instituted. Immediately thereafter they repudiated such transfer and stock ownership by filing written answers to the complaint wherein they allege that "they are not now or never have been the owners of said stock." Since becoming 21 years of age, the evidence shows that such defendants have never acquiesced, accepted, recognized, consented to or approved of such transfer of stock, and have never received any part of the dividends paid to their guardian. There is nothing in the evidence to show that these three defendants had any knowledge that their guardian had signed an agreement authorizing the cancellation of the...

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  • Bank of Am., N.A. v. Arun Veluchamy, Anu Veluchamy, Sonia Veluchamy, Oakbrook Fin., Inc. (In re Veluchamy)
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois
    • December 18, 2014
    ...some special statutory liability imposed on shareholders, not with return of a fraudulent transfer. See, e.g., Hardesty v. Corrothers, 31 F.Supp. 365, 368 (N.D.W.Va.1940) (“[A]cceptance of a beneficial legacy or transfer is presumed ... [b]ut such presumption does not go to the extent of cr......
  • Bank of Am., N.A. v. Veluchamy (In re Veluchamy)
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois
    • December 18, 2014
    ...some special statutory liability imposed on shareholders, not with return of a fraudulent transfer. See, e.g., Hardesty v. Corrothers, 31 F.Supp. 365, 368 (N.D.W.Va.1940) (“[A]cceptance of a beneficial legacy or transfer is presumed ... [b]ut such presumption does not go to the extent of cr......
  • Bank of Am., N.A. v. Arun Veluchamy, Anu Veluchamy, Sonia Veluchamy, Oakbrook Fin., Inc. (In re Veluchamy), Bankruptcy No. 11 B 33413.
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois
    • December 18, 2014
    ...some special statutory liability imposed on shareholders, not with return of a fraudulent transfer. See, e.g., Hardesty v. Corrothers, 31 F.Supp. 365, 368 (N.D.W.Va.1940) (“[A]cceptance of a beneficial legacy or transfer is presumed ... [b]ut such presumption does not go to the extent of cr......
  • Bank of Am., N.A. v. Arun Veluchamy, Anu Veluchamy, Sonia Veluchamy, Oakbrook Fin., Inc. (In re Veluchamy), Case No. 11 B 33413
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois
    • December 17, 2014
    ...some special statutory liability imposed on shareholders, not with return of a fraudulent transfer. See, e.g., Hardesty v. Corrothers, 31 F. Supp. 365, 368 (N.D.W. Va. 1940) ("[A]cceptance of a beneficial legacy or transfer is presumed . . . [b]ut such presumption does not go to the extent ......
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