Harper v. Moran

• Decision Date: 04 March 1935
• Docket Number: No. 6329.,6329.
• Citation: 64 App. DC 210,76 F.2d 980
• Parties: HARPER v. MORAN.
• Court: U.S. Court of Appeals — District of Columbia Circuit

64 App. DC 210, 76 F.2d 980 (1935)

HARPER v. MORAN.

No. 6329.

United States Court of Appeals for the District of Columbia.

Argued February 6, 7, 1935.

Decided March 4, 1935.

Rehearing Denied March 25, 1935.

Reconsideration of Petition for Rehearing Denied April 1, 1935.

Milton D. Campbell, William E. Richardson, Ralph P. Barnard, W. W. Millan, and E. Hilton Jackson, all of Washington, D. C., for appellant.

John Philip Hill and Francis W. Hill, Jr., both of Washington, D. C., for appellee.

Before MARTIN, Chief Justice, and HITZ and GRONER, Associate Justices.

GRONER, Associate Justice.

Appellee is the receiver of the North Capital Savings Bank, duly appointed in that capacity by the Comptroller of the Currency. The bank is an Arizona corporation. Its charter provides that its principal place of business shall be in the city of Washington, District of Columbia. It maintained a banking house in Washington and conducted a banking business there and nowhere else. Appellant is a stockholder owning and holding 200 shares of the capital stock of the bank. Article 14, § 11, of the Constitution of Arizona provides: "The shareholders or stockholders of every banking or insurance corporation or association shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such corporation or association, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares or stock."

In Fredericks v. Hammons, 33 Ariz. 310, 264 P. 687, the Supreme Court of Arizona held that this constitutional provision is self-executing.

On July 14, 1932, the Comptroller of the Currency determined that the bank was insolvent and unable to pay its debts, and immediately took possession of the bank and appointed John S. Bryan as receiver, who, having qualified, thereafter instituted this suit against appellant to recover on account of a stock assessment duly made by the Comptroller. Appellant's demurrer to the declaration was overruled, and appellant then filed four pleas, to which the receiver in turn demurred, and, when the demurrer was sustained, appellant elected to stand upon his pleas. Judgment was then entered against him and this appeal taken.¹

In a recent case in all respects like this and involving, likewise, an Arizona banking corporation doing business exclusively in the District of Columbia, we held the stockholder liable upon a stock assessment made by the Comptroller. Washington Loan & Trust Co. v. Allman, Receiver, 63 App. D. C. 116, 70 F.(2d) 282, 283, certiorari denied, 292 U. S. 649, 54 S. Ct. 859, 78 L. Ed. 1499. We are told, however, that the decisive question raised here was not raised or considered there and hence that case is not, as the trial court thought, controlling in this. The point stressed here is that under the Arizona statute, as construed by the highest court of that state, there is no obligation upon a stockholder to pay anything until the precise amount he is liable to pay under the double liability clause of the Arizona constitution has been determined by a court of competent jurisdiction; and that this is a correct statement of the Arizona law seems to be fairly well established by the decisions of its Supreme Court in Cowden v. Williams, 32 Ariz. 407, 259 P. 670, 55 A. L. R. 1059; Dagg v. Hammons, 34 Ariz. 445, 272 P. 643, 72 A. L. R. 1237, and In re Bank of Winslow, 36 Ariz. 507, 287 P. 444. Based on this, it is insisted we are governed by the law of Arizona as interpreted by the courts of that state. In other words, that no action can be maintained in the District of Columbia by a receiver appointed by the Comptroller to enforce a right of action for stockholder's liability of an Arizona banking corporation, unless the amount is first determined in a proper proceeding for that purpose.

Hence, it is contended the determination of the Comptroller does not, under the Arizona laws, constitute a judicial ascertainment of the extent of insolvency or the pro rata amount due by appellant.

On the other hand, appellee insists that the decision of the Comptroller, that the assessment is necessary, is conclusive.

The answer, as we think, turns upon the provisions of the District of Columbia laws. When the bank obtained a charter of incorporation in Arizona for the express purpose of doing business exclusively in the District of Columbia, it contracted with reference to the laws of the District, and this is true, as well, as to the contracts of the stockholders between themselves. This, as we think, is the rule laid down by the Supreme Court in Pinney v. Nelson, 183 U. S. 144, 22 S. Ct. 52, 55, 46 L. Ed. 125. That was an action to enforce personal liability of stockholders of a Colorado corporation. The charter provided that the principal plant and principal operations of the company should be in California, and there it was insisted that, since under the law of Colorado there was no personal liability of stockholders, the law of California which did create such personal liability was ineffective to impose it. The Supreme Court, answering this contention, said: "When a corporation is formed in one state, and by the express terms of its charter it is created for doing business in another state, and business is done in that state, it must be assumed that the charter contract was made with reference to its laws; and the liabilities...