Howarth v. Angle

• Citation: 56 N.E. 489,162 N.Y. 179
• Parties: HOWARTH v. ANGLE.
• Decision Date: 27 February 1900
• Court: New York Court of Appeals Court of Appeals

162 N.Y. 179

56 N.E. 489

HOWARTH

v.ANGLE.

Court of Appeals of New York.

Feb. 27, 1900.

Appeal from supreme court, appellate division, Fourth department.

Action by Leonard Howarth, as receiver of the Traders' Bank of Tacoma, against Charles E. Angle. From a judgment of the appellate division (57 N. Y. Supp. 187) affirming a judgment for plaintiff, defendant appeals. Affirmed.

This action was brought by the plaintiff, as receiver of an insolvent bank in the state of Washington, to recover the equal and ratable proportion of an alleged deficiency claimed to be due from the defendant on account of his ownership of 65 shares of the capital stock of said bank. Upon the trial the following facts, among others, were found by the court:

The bank in question, incorporated under the laws of the territory (now state) of Washington, became insolvent in May, 1894, and on the 19th of that month the plaintiff was duly appointed receiver thereof, ‘and of all its property and assets, real and personal, of whatsoever nature,’ by a court of general jurisdiction in that state; but the defendant was not a party to the action. The bank had a capital of $500,000, divided into 5,000 shares of the par value of $100 each, and prior to the appointment of the plaintiff as receiver, as well as ever since, the defendant owned 65 shares. From the organization of said bank the statutes of Washington have provided that the stockholders of every bank incorporated thereunder ‘should be held individually responsible, equally and ratably, and not one for the other, for all the contracts, debts and engagements of the bank accruing while they remain such stockholders, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares.’ They further provide for the appointment of a receiver by the superior court whenever a corporation becomes insolvent, with ‘power, under control of the court, to bring and defend actions, take and keep possession of property, receive rents, collect notes, and generally to do such acts, respecting the property in his hands, as the court should authorize.’ Said statutes have received judicial construction in the highest court of said state, which established the law ‘that a receiver of an insolvent corporation, appointed under and in accordance with said laws, and under circumstances similar to those under which plaintiff was appointed receiver, as aforesaid, became and was a receiver for all of the creditors of the respective corporation or association of which he was so appointed receiver, and a quasi assignee, and invested with the title to all rights of action possessed by his principals; and was entitled to bring and defend, in his own name, as such receiver, any and all actions involving the property, funds, and effects in his hands as receiver, or concerning the persons represented by him, including the creditors of such corporations. * * * That the liability of the stockholders of a banking corporation organized under the provisions of the laws of the said state as above quoted was a contingent and secondary liability, to be enforced after all other assets of said bank had been exhausted, and was provided for the benefit of all creditors of said bank, and became a part of and added to the funds and property of such bank in the possession of the receiver thereof, and the title to which was in said receiver as a trust fund for the purpose of satisfying the claims of such creditors; and that such trust funds, including said contingent and secondary liability of the stockholders of such bank, were all assets in the hands of such receiver, and should be adjusted in receivership proceedings; and that such receiver had the right, under the direction of the court, to enforce the said contingent and secondary liabilities and every liability of whatsoever nature which the court might find necessary in order to pay the amount owing to the creditors; and that the receiver of such corporation, and not the individual creditors themselves, was and is the proper person to sue upon and enforce the said liabilities against the stockholders of such insolvent banking corporation.’

The trial court further found as follows: ‘Tenth. That at the time the defendant became the owner and holder of sixty-five shares of stock in the said bank, as aforesaid, the provisions of the laws of the state of Washington, as stated above, as interpreted by the courts of that state, were in full force, and became a part of the said defendant's contract of purchase and ownership of said shares of stock; and said defendant, in and by his purchase and ownership and holding of said sixty-five shares of stock of said bank as aforesaid, contracted and agreed for a valuable consideration that he would be and remain individually responsible, equally and ratably with the other stockholders of said bank, for all contracts, debts, and engagements of said bank accruing while he remained such stockholder, to the extent of the amount of his stock therein at the par value thereof, to wit, to the amount of $6,500 in addition to the amount invested in said shares; and that it is provided by the laws of the said state of Washington that an action to enforce said liability or any liability under the said contract and obligation is transitory, and may be brought by a receiver as aforesaid in any court of general jurisdiction in any state where personal service can be made upon said stockholder. Eleventh. That, while the said defendant remained a stockholder of said Traders' Bank of Tacoma, and the owner of sixty-five shares of its stock of the par value of $100 each, as aforesaid, certain contracts, debts, engagements, and obligations duly accrued against said Traders' Bank of Tacoma, upon which, after exhausting and applying the proceeds of all property and assets of said bank of whatsoever nature, there still remains due and owing the sum of $131,670.40, and that the equal and ratable proportion of the said deficiency due from said defendant on account of the sixty-five shares of the capital stock of said bank owned by him as aforesaid, and on account of the contract and agreement entered into by him at the time of his purchase and ownership as aforesaid, and in accordance with the provisions of the statutes and laws of the state of Washington, is the sum of $1,712.10. Twelfth. That prior to the commencement of this action, and prior to the making of the assessment hereinafter referred to, plaintiff, as receiver of the Traders' Bank of Tacoma, as aforesaid, and acting under orders of the said superior court of the state of Washington for the county of Pierce, had duly and regularly collected in and sold and disposed of all property and assets of said Traders' Bank of Tacoma, real, personal, and mixed, and of whatsover kind and nature, except the said contingent as secondary liability against the stockholders of said bank, and had distributed the money so collected and the proceeds so realized to the several creditors of the said Traders' Bank of Tacoma entitled thereto, as was duly found and ordered by the said superior court last above named; and that, after so selling and disposing of all of the assets of said bank, and on or about the 17th day of March, 1897, upon a full report and showing to said superior court last above named, and upon full proof of the facts above stated and of the condition of said bank, an order and judgment of said superior court was duly made and entered in said cause No. 11,673 by said superior court of the state of Washington for the county of Pierce, adjusting all the affairs of said receivership and the liabilities of the stockholders of said bank, and finding and adjudging the aggregate amount of the several deficiencies upon the several contracts, debts, and engagements which had accrued against said bank prior thereto to be the sum of $131,670.40; and further ordering, directing, and adjudging that plaintiff, as receiver as aforesaid. at once levy an assessment upon the several stockholders of said bank equal to 26.34 per cent. of the par value of the stock of said bank, which was by said judgment found to be an assessment sufficient and necessary to make up the full amount of said deficiency, and which said judgment directed that said assessment be paid forthwith to said plaintiff, as such receiver, at Tacoma, Pierce county, Washington, in cash, on or before the 24th day of April, 1897; and which said judgment further ordered and directed said plaintiff, as such receiver, to forthwith give notice to and make demand upon the several stockholders of said bank for the amount of the respective assessments upon them on account of their several proportions of the capital stock of said bank, and authorized and directed him, said plaintiff, as such receiver, to proceed forthwith by suit brought in his own name as such receiver against all stockholders, if any, who refused to pay their respective portions of such assessment, or any portion thereof, according to the said terms and demands. * * * ’ The receiver thereupon levied an assessment on the several stockholders of the bank, in accordance with said judgment, of 26.34 per cent. upon the par value of said stock. Before the commencement of this action he gave notice of such assessment to the defendant, as one of said stockholders, and demanded payment of his proportionate amount of the assessment and deficiency, amounting to $1,712.10. Upon the refusal of the defendant to pay said sum, this action was brought for the recovery thereof, and the trial judge directed a judgment in favor of the plaintiff for the amount, with tinterest and costs. That judgment was unanimously affirmed by the appellate division, and the defendant now comes here.

Horace McGuire, for appellant.

Porter M. French, for respondent.

VANN, J. (after stating the facts).

The appeal book contains but three exceptions, two of which relate to...