Hubbell v. Houghton

• Decision Date: 26 April 1898
• Docket Number: 667.
• Citation: 86 F. 547
• Parties: HUBBELL v. HOUGHTON.
• Court: U.S. District Court — District of Massachusetts

86 F. 547

HUBBELL v. HOUGHTON.

No. 667.

United States Circuit Court, D. Massachusetts.

April 26, 1898

Charles S. Hamlin and Robert M. Morse, for plaintiff.

Benjamin E. Bates and William F. Dana, for defendant.

PUTNAM Circuit Judge.

The shares of the capital stock of the national banking association involved in this litigation were never entered on the books of the association in a way which would indicate ownership of them by the defendant. Nevertheless, when they were acquired by the parties in whose names they appeared on its books at the time it became insolvent, they were acquired by them as the agents of the defendant; and, from the time they were acquired, the substantial proprietorship had always been in the defendant, and the defendant had always held the corresponding stock certificates, so indorsed that it was in his power to have the shares properly registered in his name at any time.

Under these circumstances, it is entirely clear, and it is not denied, that the receiver might have brought actions against the individuals in whose names the stock appeared on the books of the association, for the assessment claimed in this suit, and might have recovered judgments against them for the same; and that thereupon, so far as this case shows, those individuals would have had rights of action over against the defendant for the amounts which they might have been required to pay on the judgments, and could have recovered the same from him. In other words, it is clearly the law, and it is not denied, that the ultimate result, under the circumstances shown here, would have been payment by the defendant to somebody of the assessment in suit. If, therefore, there is anything which renders necessary in this instance, in order to accomplish the ultimate result, the multiplicity of suits which the law abhors, it must be something imperative in that behalf, either in the terms of the statues relative to national banking associations or in the technical rules as to the proper parties to actions.

It is also settled that the individuals who permitted this stock to remain registered in their names on the books of the association were estopped from denying that they were liable for this assessment; but it does not follow that the converse of the proposition is true. On the other hand, it is not inconsistent with the principles of law that, under such circumstances, the receiver had an option to avail himself of this estoppel or to recover from the person who was in substantial proprietorship of the stock, and ultimately liable for the assessment, as he might find the one or the other having the better pecuniary responsibility, or within easier reach of legal process.

It is also well settled that a receiver is not, under all circumstances, limited to a remedy against stockholders of record in a national banking association; because, when such a stockholder has transferred his shares in anticipation of the insolvency of an association, a receiver may, under some circumstances, pursue him, notwithstanding the books of the association did not exhibit his name at the time the insolvency actually occurred. The latest authoritative decision of this character is Stuart v. Hayden, 169 U.S. 1, 18 Sup.Ct. 274. Nevertheless, this line of decisions does not reach the case at bar, because it depends on the proposition that the transfer of the stock was, under the circumstances, fraudulent, and, in law, a thing done fraudulently is held as though not done.

The defendant relies on various expressions in the statutes relating to national banking associations which, by their letter, treat, for certain purposes, as stockholders only those persons who appear such of record. We need not detail these, as substantially nothing can be found in them which indicates any purpose except that common in various states to legislation of this character.

Section 5139 of the Revised Statutes provides:

'The capital stock of each association shall be divided into shares of one hundred dollars each, and be deemed personal property, and transferable on the books of the association in such manner as may be prescribed in the by-laws or articles of association.'

The by-laws of the association involved in this case provide:

'The stock of this bank shall be assignable and transferrable only on the books of this bank, subject to the provisions and restrictions of the banking laws, and a transfer book shall be provided in which all assignments and transfers of stock shall be made.'

The certificates put in evidence contain a like restriction, but in a modified form; that is to say, they contain the words, 'Transferable only on the books of the bank in person or by attorney subject to the by-laws, by indorsement hereon, and surrender of this certificate. ' They are, therefore, in the usual form, so far, at least, as to contemplate the passing of the certificates from hand to hand after proper indorsements, which delivery, according to the well-established usage, conveys, as between the seller and the purchaser, the entire interest. Johnston v. Laflin, 103 U.S. 800, 804; National Bank v. Watsontown Bank, 105 U.S. 217, 221. In Johnston v. Laflin, at page 804, Mr. Justice Field, speaking in behalf of the court, says that 'the transferability of shares in the national banks is not governed by different rules from those which are ordinarily applied to the transfer of shares in other corporate bodies. ' Several other decisions of the supreme court are to the same effect, the latest expressions being in Leyson v. Davis, 170 U.S. 36, 40, 18 Sup.Ct. 500.

Therefore, as was well said in Sibley v. Bank, 133 Mass. 515, 520, the by-law and the stock certificates do not affect the construction of the statute. They run pari passu with it, and only indicate the details of the manner in which the transfer shall be made on the books of the association, without adding to, or taking anything from, the legal effect of such a transfer, or of the absence of it.

The defendant cites several expressions of various judges delivering opinions in behalf of the supreme court, to the effect that, under the statutes, no person can be regarded a shareholder, liable to contribution, unless stock appears of record in his name, with the exceptions to which we have referred, and, perhaps, with some other exceptions which are not pertinent here. It is conceded, however, that there is no actual decision in his behalf by that court. It must, also, be conceded by the plaintiff that there is no decision in his behalf; although there are two cases which we think outweigh the various expressions favorable to the defendant, as we sill hereafter explain.

The circuit court of appeals for this circuit has so fully considered the nature of expressions found in the opinions of courts which are necessary to the disposition of the case, in King v. Asylum, 12 C.C.A. 139, 64 F. 331, 340, that we do not deem it of value to add anything to what is there said as to the lack of the obligatory force of dicta, even of the supreme court. What is there said is reinforced by a late opinion, with reference to this very question of the liability of the holder of shares of the stock of national banking associations, in Stuart v. Hayden, 169 U.S. 1, 7, 18 Sup.Ct. 274, already cited, and in a latter case, relating to a different topic, McCormick Harvesting Mach. Co. v. C. Aultman & Co., 169 U.S. 606, 611, 18 Sup.Ct. 443.

The decisions of the English courts and of the various state courts on which the defendant relies cannot control us except so far as they commend themselves to our judgment, and are based on circumstances of like character with those at bar. It is true, as claimed by the defendant, that by a long line of decisions in England, with the exception of a limited class as to which the courts are authorized by statute to rectify a corporation's register, no person can be regarded as a shareholder, subject to calls, unless he appears as such or record; but the subject-matter of the winding up of corporation in England constitutes a special statutory system, harmonious in the whole, and the elements of one part of which necessarily work with, and are molded by, the remaining elements. Therefore we ca-not safely transfer elements from it into the system established with reference to national banking associations, which is also peculiar and wholly statutory. It is enough to say that in England no person can become a shareholder, except under special circumstances,...