Hirning v. Forsberg
| Decision Date | 09 December 1925 |
| Docket Number | 5792. |
| Citation | 206 N.W. 471,49 S.D. 46 |
| Parties | HIRNING, Public Examiner and Superintendent of Banks, v. FORSBERG et al. |
| Court | South Dakota Supreme Court |
Appeal from Circuit Court, Grant County; J. J. Batterton, Judge.
Action by John Hirning, Public Examiner and Superintendent of Banks in charge of the Farmers' State Bank of Strandburg against N. Forsberg and N. A. Dahlberg. From order overruling his demurrer, defendant Dahlberg appeals. Affirmed.
Hanten Hanten & Henrikson, of Watertown, for appellant.
Loucks Hasche & Foley, of Watertown, and Buell F. Jones, Atty. Gen., for respondent.
This is an action brought by the superintendent of banks to recover upon the alleged liability of the defendants as stockholders of an insolvent bank.
The complaint alleges that the plaintiff is the superintendent of banks of this state; that the Farmers' State Bank of Strandburg is a banking corporation of the state; that the capital stock of said corporation was issued in the sum of $10,000, consisting of 100 shares of $100 each; that on January 15, 1910, the defendant N. A. Dahlberg became the record owner of five shares of the said capital stock of said bank, and continued to be the owner of record of said stock upon the books of said bank until the 23d day of November, 1922, at which time the certificate of stock so held by said defendant Dahlberg was transferred by him to the defendant N. Forsberg, and a stock certificate for five shares of stock issued in the name of N. Forsberg and so recorded on the books of the bank; and that the said transfer was not made in good faith or for actual value, but was fraudulent and void as to the creditors and stockholders of said bank.
Said complaint further alleges that on said 23d day of November, 1922, the said bank owed debts of more than double its capital stock, in excess of all its assets, and that said bank suspended business on February 9, 1924, and was at that time taken charge of by the department of banking and finance; that said bank is insolvent; and that its liabilities to depositors and creditors exceed its total assets by more than $10,000; and that, after the closing of said bank, demand was made upon the defendants to pay an assessment of 100 per cent. upon the $500 of capital stock held by them as aforesaid; and that said defendants have failed and refused to pay the said assessments or any part thereof. And said complaint further alleges that prior to the date of the purported transfer of said stock from defendant Dahlberg to defendant Forsberg, to wit, on November 16, 1922, the guaranty fund commission of the state, and the public examiner and superintendent of banks, ordered an assessment of 100 per cent. upon all of the stock of said banking corporation, for the purpose of making up an impairment in the capital of said bank, and that said order was outstanding and in full force and effect on the 23d day of November, 1922, when the aforesaid purported transfer was made, and that said order was made to the actual knowledge of each of the said defendants on or about the 16th day of November, 1922. And upon this complaint the plaintiff demands judgment against the defendants, and each of them in the sum of $500, and interest thereon at 7 per cent. from February 9, 1924.
To this complaint defendant Dahlberg demurred on the following grounds: (1) That there is a defect of parties plaintiff; (2) that the plaintiff has no legal capacity to sue; (3) that the complaint does not state facts sufficient to constitute a cause of action against the said defendant, N. A. Dahlberg. The demurrer was overruled by the trial court, and from the order overruling the demurrer the defendant Dahlberg takes this appeal.
At the time the appeal was taken it was stipulated between counsel that four other cases, to wit, those of Hirning, as Superintendent of Banks, v. N. Forsberg and L. J. Sundin, Same Plaintiff v. N. Forsberg and Eloff Nelson, Same Plaintiff v. N. Forsberg and Sam T. Nelson, and the Same Plaintiff v. N. Forsberg and Charles G. Swan, involved practically the same questions of law and the same allegations in the several complaints, except that in the case against Swan the transfer of stock from Forsberg is alleged to have taken place on March 3, 1923, instead of on November 23 or 24, 1922. And it was stipulated that, because of the similarity of the questions involved, the five cases might be submitted upon the same set of briefs.
In accordance with these stipulations the opinion of the court upon the questions involved will be set forth in this discussion of the Dahlberg Case, and the other four cases will be treated as controlled by the decision in the instant case. In their brief appellant's counsel fail to argue the ground that there is a defect of parties plaintiff. Therefore that contention may be deemed to be abandoned.
As to the contention that the plaintiff has not legal capacity to sue, this contention is not specifically argued. The only argument in any way approaching this point is that in which counsel say that the complaint is defective in failing to allege affirmatively that the action is brought and conducted under the direction and supervision of the Attorney General. This contention is not properly covered by the allegation that the plaintiff has not legal capacity to sue. Section 8937 of the Revised Code specifically makes it the duty of the superintendent of banks to prosecute actions of this class, and in the recent decision of Hirning, as Superintendent, v. Oppold, 201 N.W. 721, this court has passed upon the precise question, and has affirmed the overruling of a demurrer setting forth this contention. That decision is conclusive of this ground of demurrer. As to the suit being conducted under the authority and supervision of the Attorney General, it will be noted that this officer appears as one of the counsel for respondent in this court, while in the Oppold Case he did not appear even on the appeal. The right of an attorney to appear in an action is not properly challenged by a demurrer alleging that the plaintiff has not legal capacity to sue. If the Attorney General had appeared in the action at its commencement, he could not maintain the action unless the plaintiff had legal capacity to sue. This contention of appellant is without merit.
This leaves for our consideration the single question whether the complaint states facts sufficient to constitute a cause of action. For the purpose of this demurrer the court must treat as true all facts properly pleaded in the complaint. This means that on the date of the alleged transfer of stock from the appellant to the defendant Forsberg both parties to this transaction knew that the superintendent of banks and the guaranty fund commission had ordered an assessment of 100 per cent. on the capital stock of the bank for the purpose of making up an impairment of its capital. It further means that the bank was insolvent at the time these parties attempted to make the transfer, and that the liabilities of the bank exceed its assets to such extent as to require the enforcement of the liability of stockholders to its full extent, and that the insolvency existed to that extent when appellant attempted to transfer the stock to Forsberg, and it means that, while the bank was thus insolvent, while the order for assessment was in existence, and while both the appellant and Forsberg knew of the making of the order, the appellant, without consideration and not in good faith, transferred the stock to Forsberg.
From these facts admitted by the ...
To continue reading
Request your trial