Hirning v. Oppold
| Decision Date | 13 January 1925 |
| Docket Number | No. 5657.,5657. |
| Parties | HIRNING, State Superintendent of Banks, v. OPPOLD. |
| Court | South Dakota Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Circuit Court, Minnehaha County; John T. Medin, Judge.
Action by John Hirning, as State Superintendent of Banks, against John Oppold. From an order overruling a demurrer, defendant appeals. Affirmed.M. G. Luddy and Boyce, Warren & Fairbank, all of Sioux Falls, for appellant.
Bielski, Elliott & Marker, of Sioux Falls, for respondent.
This is an action by John Hirning, as superintendent of banks, against a stockholder of the failed bank of Tea, founded on the constitutional and statutory liability as such stockholder. Defendant's demurrer was overruled, and he appeals.
The complaint, omitting formal parts, alleged plaintiff's capacity to sue; that the action was brought under direction and supervision of the Attorney General, and that the attorneys appearing were authorized to conduct the suit; that Farmers' Savings Bank of Tea is a banking corporation under the laws of South Dakota. On June 31, 1923, it was found insolvent and John Hirning, as superintendant of banks, took charge under the statute of this state, and such bank has since been suspended in its operations; that, when so taken over, the assets were insufficient to pay its liabilities; that the superintendent found it necessary to liquidate the affairs of the bank as provided by law, and, after taking possession of the bank, it appeared to the superintendent, and now so appears, and the facts are that the assets of said bank are insufficient to pay its liabilities and the whole legal liability of its stockholders must be collected to pay its debts; that defendant was, and is, the owner of 10 shares of the stock of said bank of the par value of $1,000; that $1,000 was due from defendant to plaintiff; and that demand for payment was duly made and payment refused.
To this complaint a demurrer was interposed on the following grounds: (1) Plaintiff has no legal capacity to sue. (2) Defect of parties plaintiff. (3) Defect of parties defendant. (4) The complaint does not state facts sufficient to constitute a cause of action.
Under this demurrer appellant states his contention in the three following questions:
“(A) Should this action be brought at law to recover the stockholder's liability as an asset of the bank, or should the action be a suit in equity for an accounting and determination of the liability of the defendant and the amount which he may be required to pay after determining the assets and liabilities of the bank and the deficiency upon which it may be necessary to apply the sum sought to be recovered from this defendant?
(B) Should the other stockholders be joined as parties defendant in such a suit?
(C) Should the complaint set forth the financial condition of the bank, pleading the facts with respect to the assets and liabilities of the bank and the deficiency remaining, so that the complaint will show upon its face whether or not it is necessary to call upon defendant for this extraordinary liability, and if so, how much of the liability would be necessary to be called in for this purpose.”
[1]It should be noted that the individual liability of stockholders in a corporation is always a creature of the Constitution and statutes. It was not known to the common law. Terry v. Little, 101 U. S. 216, 25 L. Ed. 864;Pollard v. Bailey, 20 Wall. 520, 22 L. Ed. 376;Smith v. Huckabee, 53 Ala. 191. In a federal court the nature and extent of the liability of a stockholder of a corporation under the laws of any particular state is to be determined according to the law of such state, as declared by the highest court of such state. Fidelity, etc., Co., v. Mechanics' Savings Bank, 97 F. 297, 38 C. C. A. 193, 56 L. R. A. 228.
[2]Article 18, § 3, of our state Constitution provides:
“The shareholders or stockholders of any banking corporation shall be held individually responsible *** for all contracts, debts and engagements of such corporation to the extent of the amount of their stock therein at the par value thereof, in addition to the amount invested in such shares of stock.”
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Federal Deposit Ins. Corp. of Washington, D. C. v. Ensteness
...first, upon the theory that the bank stockholder's liability is self]executing, Smith v. Olson, 50 S.D. 81, 208 N.W. 585; Hirning v. Oppold, 48 S.D. 70, 201 N.W. 721, second, that it is a primary liability of the stockholder under the constitution when the liability was contracted. This cou......
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Gaiser v. Buck
...415, 56 L. Ed. 749, Ann. Cas. 1913D, 1292;Whitman v. National Bank (1900) 176 U. S. 559, 20 S. Ct. 477, 44 L. Ed. 587;Hirning v. Oppold (1925) 48 S. D. 70, 201 N. W. 721;Union National Bank v. Halley (1905) 19 S. D. 474, 104 N. W. 213;Bodie v. Pollock (1923) 110 Neb. 844, 195 N. W. 457;Farm......
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Federal Deposit Ins. Corp., v. Ensteness
...first, upon the theory that the bank stockholder’s liability is self-executing, Smith v. Olson, 50 SD 81, 208 NW 585, Hirning v. Oppold, 48 SD 70, 201 NW 721, second, that it is a primary liability of the bank stockholder under the constitution when the liability was contracted. This court ......
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