Holmberg v. Beaumont, 4627.
| Decision Date | 23 June 1939 |
| Docket Number | No. 4627.,4627. |
| Citation | 28 F. Supp. 100 |
| Parties | HOLMBERG et al. v. BEAUMONT et al. |
| Court | U.S. District Court — District of Massachusetts |
Thomas Hunt, Gaston, Snow, Hunt, Rice & Boyd, all of Boston, Mass., for plaintiff.
Bert E. Holland, of Boston, Mass., for defendant Ethel M. Beaumont.
Declan W. Corcoran, of Boston, Mass., for defendant Ella G. Fennessey. Geo. B. Hayward of Boston, Mass., for defendants Joseph C. Walker and J. H. Frandsen.
Charles H. Morris, of Boston, Mass., for defendant Helen J. Gavin.
Paul F. Spain, of Boston, Mass., for defendant William P. Thompson.
William Reed Bigelow, of Boston, Mass., for defendants William B. Sprout and Margaret S. Clark.
This complaint is brought by certain creditors of a joint stock land bank against stockholders in said bank, residents of Massachusetts, to enforce the statutory liability of stockholders. The suit is brought on behalf of these plaintiffs and all other creditors of the bank. Some of the defendants have moved to dismiss the complaint on several grounds. Those principally relied upon are (1) non-joinder of necessary parties; (2) laches.
The following material facts are alleged:
The Southern Minnesota Joint Stock Land Bank of Minneapolis (hereinafter referred to as the Bank) was organized under the laws of the United States (Act of July 17, 1916 and Act of March 4, 1923, 12 U.S.C.A. § 641 et seq.). The Bank was the result of a merger of two Minnesota Joint Stock Land Banks. Before the merger, each of the original banks had issued bonds in accordance with the provisions of the Federal Farm Loan Act which were, and now are, outstanding obligations and liabilities of the Bank. The plaintiffs are all holders of such obligation.
In May, 1932, the Federal Farm Loan Board declared the Bank insolvent and appointed a receiver who held office until February 1, 1934, when he was succeeded by another receiver appointed by the Farm Credit Administration.
On May 2, 1932, the Bank had an outstanding capital stock of $3,000,000, divided into 30,000 shares of the par value of $100. It also at that time was liable on over $21,000,000 of bonds outstanding. On that date the Bank was insolvent, and it is alleged that "the amount of its liabilities was on that date, and continues to be, in excess of its fair value, and the market value, of its assets, to an extent greater than the par value of its entire outstanding capital stock."
The defendants are all alleged to be holders of stock in the Bank on May 2, 1932. 34 defendants are named. Of these 13 have not been located, and 10 others are without assets and are unable to pay, and for that reason no assessment as against them is sought. It is also alleged that other Massachusetts stockholders of the Bank who have not been made parties to this proceeding have either paid or have settled their assessments. The sums received are being held by the receiver for the benefit of the creditors of the Bank under order of the United States District Court for the District of Minnesota.
About July 28, 1932, a suit in equity was brought in a Federal Court in Minnesota by creditors, in which proceedings the Court declared the Bank insolvent. It entered a decree that an assessment equal to 100% par value of the shares was necessary and that a receiver be appointed to collect such assessment and disburse same among the creditors of the Bank. Thereafter this receiver began actions at law against certain stockholders, resident in Massachusetts, who are defendants in this action. The plaintiffs state with considerable detail the history of this litigation in the Massachusetts court which proceeded successfully against the opposition of the defendants until the United States Supreme Court handed down, on January 3, 1938, its decision in the case of Christopher v. Brusselback, 302 U.S. 500, 58 S.Ct. 350, 82 L.Ed. 388. Whereupon the actions pending in the State Court were abandoned, and this suit brought by a bill of complaint filed April 25, 1938. An amended complaint was filed November 18, 1938, in which all the above facts were alleged. It is this amended bill of complaint that certain of the defendants ask to have dismissed.
The Federal Farm Loan Act (12 U.S.C.A. § 812) provides: "Shareholders of every joint-stock land bank organized under this chapter shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such bank to the extent of the amount of stock owned by them at the par value thereof, in addition to the amount paid in and represented by their shares."
This statute has been considered by the courts in several cases. It is now settled that the liability arising from it cannot be enforced by a receiver appointed by the administrative authorities (Wheeler v. Greene, Receiver, 280 U.S. 49, 50 S.Ct. 21, 74 L.Ed. 160), or by a receiver appointed by the Court of another jurisdiction. Holmberg v. Carr, 2 Cir., 86 F.2d 727.
In Christopher v. Brusselback, supra, creditors of a Federal joint stock land bank located in Illinois brought a suit in the District Court of Southern Ohio to collect a 100% assessment of the statutory double liability of its shareholders, which had previously been decreed in a suit brought by the same creditors in the District Court for Northern Illinois, in which suit the Ohio stockholders were not served with process. The Court held that the Ohio stockholders were not bound by the Illinois adjudication, in their absence, of the Bank's insolvency and the amount of the...
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