Harris v. Briggs

• Decision Date: 08 April 1920
• Docket Number: 5480.
• Citation: 264 F. 726
• Parties: HARRIS v. BRIGGS, State Com'r of Insurance and Banking.
• Court: U.S. Court of Appeals — Eighth Circuit

264 F. 726

HARRIS v. BRIGGS, State Com'r of Insurance and Banking.

No. 5480.

United States Court of Appeals, Eighth Circuit.

April 8, 1920

Frank P. Sebree and John Kennish, both of Kansas City, Mo. (Sam B Sebree, of Kansas City, Mo., on the brief), for plaintiff in error.

Ed. J Hamner, of Sweetwater, Tex. (I. P. Ryland and R. E. Ball both of Kansas City, Mo., on the brief), for defendant in error.

Before HOOK and CARLAND, Circuit Judges.

CARLAND Circuit Judge.

This action was brought by the commissioner of insurance and banking of the state of Texas, hereafter called plaintiff against Overton Harris, hereafter called defendant, to recover an amount equal to the par value of the shares of stock owned by said defendant in the Farmers' & Merchants' State Bank & Trust Company of Sweetwater, Tex., hereafter called Farmers' Bank, for the benefit of the creditors of said bank.At the trial of the action, counsel on each side at the close of all the evidence, without more, requested a directed verdict.The request of counsel for plaintiff was granted; that of the defendant, denied.The defendant brings the case here, assigning the above ruling of the court as error.The record presents but one question: Is there substantial evidence to sustain the verdict?Lehnen v. Dickson,148 U.S. 71, 13 Sup.Ct. 481, 37 L.Ed. 373;Runkle v. Burnham,153 U.S. 216, 14 Sup.Ct. 837, 38 L.Ed. 694;Buetell v. Magone,157 U.S. 155, 15 Sup.Ct. 566, 39 L.Ed. 654;La Crosse Plow Co. v. Pagenstecher,253 F. 46, 165 C.C.A. 644.

The material facts as shown by the record are substantially as follows:

On November 17, 1913, the Farmers' Bank of Sweetwater, Tex., found itself unable to continue business because its assets were nonliquid and uncollectible.It could not meet its obligations, and was in fact insolvent.Pursuant to a call made by letters written to all the stockholders by the president and cashier thereof, and notices issued by the commissioner of banking to the various stockholders, one of which was received by defendant, there was held at the office of the bank, on the above-mentioned date, a meeting of its stockholders.At this meeting there were present and voting eight of the stockholders, representing 122 2/3 shares of stock.There were represented by proxy 370 2/3 shares of stock, leaving but 6 2/3 shares of stock not represented, of the total capital stock of the bank.Of the total capital stock of 500 shares issued by the bank, 493 1/3 shares voted to authorize the directors to make the contract hereafter mentioned.The defendant received notice of the meeting and of the intention of making the contract.He took no action to prevent the contract being made, and made no protest against the making of the same.No point is made, however, that the officers who signed the contract were without authority so to do, so far as authority from the stockholders and directors is concerned.The contract was made by the Farmers' Bank with the knowledge and consent of the commissioner of banking of the state of Texas, whose agent Mr. Roberts was in Sweetwater on the date in question, and the evidence shows that it was at the solicitation of the commissioner of banking that the contract was made.The contract itself is too lengthy to be set forth in this opinion.It is sufficient to say that it was executed on the date above mentioned by the Continental State Bank of Sweetwater, Tex., hereafter Continental Bank, as party of the first part, and the Farmers' Bank, as party of the second part.

By the terms of the contract the Farmers' Bank sold, transferred, and conveyed all of its property, real and personal, of every kind and character, to the Continental Bank.In consideration whereof the Continental Bank assumed all the indebtedness of the Farmers' Bank and agreed to become liable therefor to its respective creditors; the amount of the indebtedness and the property conveyed being listed and attached to the contract as exhibits.The Farmers' Bank acknowledged itself indebted to the Continental Bank for the amount of the indebtedness assumed by the latter, to wit, the sum of $130,864.80.The contract provided that the sale and delivery of the assets of the Farmers' Bank to the Continental Bank was made for the purpose of securing the latter for the assumption and payment of the indebtedness of the former.The contract further provided that, whenever the Continental Bank should have collected and received a sufficient amount of money out of the assets assigned, pledged, and transferred to it by the Farmers' Bank to pay the indebtedness of the latter to the former, then the Continental Bank was to deliver to the Farmers' Bank all the uncollected assets.It further provided that if, at the expiration of two years from the date of the execution of the contract, the Continental Bank had not collected and realized from the net assets of the Farmers' Bank a sufficient amount of money to pay the indebtedness due it as provided in the contract, together with interest, then the Continental Bank should deliver to the Farmers' Bank all of the uncollected and undisposed-of assets, and thereupon the Continental Bank should be entitled to demand of the Farmers' Bank the payment in cash of all unpaid amounts due it on account of the indebtedness due from the Farmers' Bank to the Continental Bank, and the Farmers' Bank promised to pay said unpaid balance, together with interest, to the Continental Bank.To secure the faithful performance of this contract the Farmers' Bank executed, with sureties, its bond and obligation.The amount of $130,865.80 was used in paying off and discharging all the indebtedness of the Farmers' Bank as shown on its books on November 17, 1913.The contract was duly performed by the Continental Bank, and on March 1, 1916, it brought suit against the Farmers' Bank and its sureties on the obligation above referred to, and recovered a judgment for $76,227.38, which had been reduced by collections and the sale of property at the time of the trial of the present action to $23,000, which sum does not include interest or commissions covered by the contract.On November 17, 1913, the defendant was and still is the owner of 33 1/3 shares of the capital stock of the Farmers' Bank.On July 16, 1917, Charles O. Austin, as commissioner of insurance and banking of the state of Texas, appointed N. B. Bowie, an officer of the Continental Bank, as special agent of the department of insurance and banking by an appointment reading as follows:

'Department of Insurance and Banking, State of Texas, Austin.

'The State of Texas, County of Travis:

'I, Charles O. Austin, commissioner of insurance and banking of the state of Texas, having taken possession of the affairs of the Farmers' & Merchants' State Bank & Trust Company, of Sweetwater, Texas, as provided by law, in conformity with the authority vested in me by law, have this day appointed N. B. Bowie, of Nolan county, Texas, as special agent of the department of insurance and banking, to represent me in all matters pertaining to the liquidation of said Farmers' & Merchants' State Bank & Trust Company of Sweetwater, Texas, and it is hereby made his duty to collect debts due and claims belonging to said bank, and to safely keep all money, notes, accounts, evidence of indebtedness, and other assets of said bank, its books and papers, and duly account to me for same, and to perform such other acts as the commissioner of insurance and banking may direct.

'In testimony whereof, I have hereunto signed my name and affixed my official seal at Austin, Texas, on this the 16th day of July, A.D. 1917.

'Chas. O. Austin,

'Commissioner of Insurance and Banking of the State of Texas.'

On the same date said commissioner gave the stockholders of the Farmers' Bank notice of an assessment levied by him of 100 per cent. on the amount of the capital stock owned by them in said bank on November 17, 1913.Said notice and levy was in the following language: '(Seal of Department of Insurance and Banking.)

'Department of Insurance and Banking, State of Texas.

'Austin, July 16, 1917.

'Notice to stockholders of the Farmers' & Merchants' State Bank & Trust Company of Sweetwater, of record on November 17, 1913, and to stockholders who transferred their stock within twelve months previous to November 17, 1913.* * * The stockholders are further advised that on November 17, 1913, the Farmers' & Merchants' State Bank & Trust Company of Sweetwater, was found unable to meet its debts and liabilities, and therefore, acting under the authority vested in me by law, notice is hereby given that a 100 per cent. assessment is levied upon the stockholders of the above bank, and the stockholders are instructed to send the Continental State Bank of Sweetwater the amount of the assessment levied.

'Respectfully,

Chas. O. Austin,

'Commissioner of Insurance and Banking of the State of Texas.'

We do not stop to consider the claim of the plaintiff that, in order to recover, it was only necessary for him to show that the bank was insolvent, that it was taken in charge by the commissioner of banking, and that said commissioner levied the assessment sought to be recovered.Kennedy v Gibson,75 U.S. (8 Wall.) 505, 19 L.Ed. 476;Casey, Rc'r. v. Galli,94 U.S. 680, 681, 24 L.Ed. 168; Bank»v.Case, 99 U.S. 633, 25 L.Ed. 448;Bushnell v. Leland,164 U.S. 684, 17 Sup.Ct. 209, 41 L.Ed. 598;Collier, Com'r, v. Smith(Tex. Civ. App.)169 S.W. 1111;Morgan v. Davenport,60 Tex. 230;McWhirter v. First State Bank(Tex. Civ. App.)182 S.W. 684;Stringfellow v. Patterson, Com'r(Tex. Civ. App.)192 S.W. 557;Brooks v. Austin, Com'r(Tex. Civ. App.)206 S.W. 725;Austin v. Campbell(Tex. Civ. App.)210 S.W. 278.The trial below proceeded...