Howarth v. Ellwanger

• Decision Date: 31 March 1898
• Docket Number: 3,211-3,213.
• Parties: HOWARTH v. ELLWANGER. SAME v. KENT. SAME v. WOODWORTH.
• Court: U.S. District Court — Northern District of New York

86 F. 54

HOWARTH v. ELLWANGER. SAME v. KENT. SAME v. WOODWORTH.

Nos. 3,211-3,213.

United States Circuit Court, N.D. New York.

March 31, 1898

P. M French, for plaintiff.

Charles M. Williams, for defendant Ellwanger.

M. H McMath, for defendant Kent.

William F. Cogswell, for defendant Woodworth.

COXE District Judge.

It is not disputed that the defendants were stockholders of the Traders' Bank, that the bank became insolvent, that the plaintiff was appointed receiver, that a large deficiency was ascertained, that an assessment was levied by the receiver upon the defendants and that all this was done under and pursuant to the constitution and laws of Washington and in conformity to the orders and decrees of the superior court of that state.

The first proposition argued by the defendants is that the plaintiff, as receiver, is not entitled to maintain the action. The constitution and statutes of Washington (Const.art. 12, Sec. 11) provide:

'That each stockholder of any banking * * * association shall be individually and personally liable, equally and ratably, and not one for another, for all the contracts, debts and engagements of such corporation or association accruing while they remain 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.'

The courts of Washington have decided that this liability can only be enforced by a receiver under the direction of the court. Cole v. Railroad Co., 9 Wash. 487, 37 P. 700; Wilson v. Book, 13 Wash. 676, 43 P. 939; Hardin v. Sweeney, 14 Wash. 129, 44 P. 138; Watterson v. Masterson, 15 Wash. 511, 46 P. 1041. The practical effect of a ruling that a receiver cannot maintain the suit would be to render the law nugatory as to all but resident stockholders. The Washington courts having ruled that a receiver only can bring the suit, it is manifest, should the federal courts and other state courts hold that he cannot maintain the action, that the defendants not only but all stockholders beyond the jurisdiction of the Washington courts will escape a liability intended to be uniform and for the benefit of all the creditors. The precise question was involved in Sheafe v. Larimer, 79 F. 921, and was answered adversely to the defendants' contention. The case arose under the same law, and, upon the facts, was almost identical with the case in hand. See, also, Schultz v. Insurance Co., 77 F. 375, 378; Avery v. Trust Co., 72 F. 700; Failey v. Talbee, 55 F. 892.

Again it is argued that the orders and decrees of the Washington court were not binding upon the...