Heater v. Lloyd.

• Decision Date: 17 February 1920
• Citation: 85 W.Va. 570
• Parties: Bruce A. Heater v. Homer J. Lloyd et al.
• Court: West Virginia Supreme Court

85 W.Va. 570

Bruce A. Heater

v.Homer J. Lloyd et al.

Supreme Court of Appeals of West Virginia.

Submitted February 3, 1920.

Decided February 17, 1920.

1. Appeal and Error Sustaining Demurrer Without Dismissing Bill May be Reviewed on Certificate but Dismissal of Parties from Suit only on Appeal.

The correctness of the ruling of a trial court sustaining a demurrer to a bill, but not dismissing it, may properly De considered by this court upon certificate, as authorized by section 1, ch. 135, Code; but the court will not consider that, part of the order dismissing from the suit one or more, but not all, of the parties defendant, such action being final as to them, and, if erroneous, correctable only upon appeal, (p. 573).

2. Equity Right to Rescind Purchase of Stock for Fraud Not-

withstanding Concurrent Remedy at Law.

Where a person has by fraud been induced to buy from another stock in a bank which shortly thereafter is adjudged insolvent, he may institute and maintain a suit in equity for rescission of the transaction and repayment of the consideration paid therefor, notwithstanding the existence of a concurrent remedy at law. (p. 574).

3. Same In Suit for Total Rescission of Purchase of Stock In-

duced by Fraud the Court With Acquiescence of the Parties May Decree a Partial Rescission.

Where the worthless bank stock thus acquired by plaintiff was only part of the consideration involved in the transaction, and the bill, read and considered as a whole, shows that a total rescission of the transaction is sought, but. alleges plaintiff's willingness in lieu thereof to rescind only in so far as the stock is concerned, the court, with the acquiescence of the defendant, may enter a decree for such partial rescission instead of one restoring the status quo. (p. 575).

4. Same Bill Seeking Rescission of Purchase of Bank Stock and

to Enjoin Bank's Receiver from Assessing Statutory Liability is Not Multifarious.

Nor will such bill be held multifarious because it seeks, not only a rescission of the transaction involving the bank stock, but also an injunction restraining the receiver of the insolvent bank from assessing the statutory personal liability against plaintiff as owner of the stock, and from collecting the amount so assessed. (p. 576).

5. Injunction Scope of Injunction Against Receiver's Assess-

ment of Statutory Persorial Liability Against Owner of Bank Stock.

But in such a case the court should limit the scope of its injunction, leaving the receiver free to institute a general creditors' suit, and to assess against the stock its relative proportion of the liabilities, if any, incurred by the bank during the period of plaintiff's ownership of the stock, and restraining the receiver only from collecting such assessment from plaintiff until the court shall have determined whether any liabilities accrued against the bank during such period, and if so, whether plaintiff or his fraudulent transferor is liable therefor, (p. 577).

6. Banks and Banking Stockholder's Statutory Double Liability Applies Only to Liabilities Incurred by Bank During Stockholder's Ownership.

A stockholder in a bank is subject to the statutory double liability only with respect to liabilities incurred by the bank during the period of his ownership of the stock, (p. 576).

Certified from Circuit Court, Braxton County.

Bill by Bruce A. Heater against Homer J. Lloyd, the People's Bank of Burnsville, and J. I. Bender, its receiver. Demurrer to bill sustained on each ground assigned, and bill dismissed as to defendant Bank and its receiver, with leave to plaintiff to amend, and the correctness of such ruling certified.

Reversed; demurrer overruled.

Hall Bros., for plaintiff.

James E. Cutlip, Raymond & Fox, and Alex Dulin, for defendants.

Lynch, Judge:

The bill in this suit has for one of its two chief purposes the rescission of an executed agreement of sale, consummated June 18, 1919, whereby plaintiff transferred to defendant a certificate for the shares of stock owned by him in the Delta Coal Company, a corporation, and representing a one-third interest therein, in consideration of the transfer to him by defendant, at par value, or an aggregate valuation of $500, of a certificate calling for five shares of the capital stock of the People's Bank of Burnsville, a state banking institution of which defendant is stockholder and director, the payment of a sum in cash, and the assumption by Lloyd of certain liabilities incurred by and chargeable to plaintiff as part of the unpaid purchase price of the coal company stock. The other object is to obtain an injunction to prohibit the assessment of the statutory personal liability against the bank stock, the certificate of which plaintiff has held as owner since the transfer, and the collection of the amount so assessed, the defendant bank in the meantime having become utterly insolvent, and defendant Bender the receiver of its assets for the purposes of liquidation. The bill joins as defendants Lloyd, the insolvent bank and J. I. Bender, receiver.

The right to maintain the suit for either purpose against any of the defendants for the attainment of these ends is based upon the alleged fraudulent representations of Lloyd regarding the actual market value of the five shares of bank stock at the time of the assignment of the certificate, the date thereof preceding by one month only the official ascertainment of the insolvency of that institution and the appointment of Bender receiver of its assets. To the bill each of the defendants demurred and assigned as grounds of the challenge want of equitable jurisdiction to pronounce the decree prayed for; the availability of an adequate remedy at law for the deception, if any, practiced by Lloyd; and multifariousness of the bill. The demurrer thus interposed the court sustained on each ground assigned, dismissed the bill as to the bank and the receiver, gave leave to plaintiff to amend, and certified here for our opinion the correctness of that ruling.

Viewed in the light of the purposes of the final clause of section 1, chapter 135, Code, and the decisions of this court relative to the right to certify questions finally determined and adjudicated in the trial court, as was done by the order dismissing and discharging the defendants bank and Bender from the suit, manifestly this court cannot consider, discuss or decide anything affecting them otherwise than by writ of error or appeal. The effect of the provisions of that statute is to circumscribe, restrict and limit the right of this court to entertain and decide only questions immediately arising in the preliminary stages of a controversy, that is, mere interlocutory orders, not those fully and completely terminating the action or suit by final judgment or decree. To obtain relief from an erroneous judgment or decree the party aggrieved must resort to the usual writs provided by law for that purpose, and not to those provided for a special purpose. It is true this court has held in Gulland v. Gulland, 81 W. Va. 487, that a decree sustaining a demurrer to part of a bill and dismissing it as to such part may be certified to this court for review, and if found to be erroneous, the bill will be reinstated in so far as it was dismissed. But the court in this case dismissed two of the parties, and not part only of the bill, as in Gulland v. Gulland. The sufficiency of a pleading dismissed in part and the propriety of the dismissal of one or more, but not all, of the parties are two totally different things. The bill was found to be deficient upon demurrer, but no part of it was dismissed, and the questions raised respecting it properly are before this court for consideration upon the certificate.

Since the defendant Lloyd raised the same questions upon his demurrer as did the parties dismissed, it is necessary for us to discuss and indirectly pass upon questions affecting the bank and receiver; but we cannot reinstate them as parties, if they were dismissed improperly, otherwise than on appeal. As to them the decree is final, and appealable, and to correct any error in that order plaintiff must resort to the usual procedure provided for that purpose.

"With respect to the jurisdiction of equity to entertain a suit for rescission we entertain no doubt. A reading together of the allegations of the bill and its prayer discloses plaintiff's willingness and offer to accept either a total or...