International Mortg. Trust Co. v. Henry

• Citation: 30 P.2d 311,139 Kan. 154
• Decision Date: 10 March 1934
• Docket Number: 31562.
• Parties: INTERNATIONAL MORTGAGE TRUST CO. v. HENRY.
• Court: United States State Supreme Court of Kansas

30 P.2d 311

139 Kan. 154

INTERNATIONAL MORTGAGE TRUST CO. v. HENRY.

No. 31562.

Supreme Court of Kansas

March 10, 1934

Rehearing Denied April 14, 1934.

Syllabus by the Court.

Trust company held not "banking corporation" within statute regarding double liability of stockholders of banking corporations (Rev. St. 1923, 9--138, 9--101 et seq. as amended, 9--110, 17--810, 17--2001 et seq.; Rev. St. Supp 1931, 17--2009, 17--2015; Const. art. 12, § 2).

Generally statute will not be given retrospective force unless legislative intent that it should so operate is unequivocally expressed.

Statute making provisions of banking law, relating to double liability of bank stockholders, applicable to trust companies, held without retrospective force (Rev. St. Supp 1931, 17--2015).

1. The statutes with reference to banks and to trust companies examined, and it is held that a trust company is not a banking corporation within the meaning of the exception contained in Laws 1903, c. 152, § 2 (see R. S. 17--810).

2. As a general rule of statutory construction, an act will not be given retrospective force and effect unless the intention of the Legislature that it shall so operate is unequivocally expressed, and the presumption is against retroactive intention unless it is clearly expressed.

3. Gauged by the above rule, it is held that Laws 1931, c. 152 § 1 (R. S. Supp. 1931, 17--2015), making the provisions of the Banking Law relating to shareholders' liability applicable to trust companies, has no retrospective force and effect.

Appeal from District Court, Shawnee County, Division No. 2; George H. Whitcomb, Judge.

Action by the receiver of the International Mortgage Trust Company against Ira E. Henry. From an adverse judgment, the receiver appeals.

Ralph T. O'Neil, J. D. M. Hamilton, and Barton E. Griffith, all of Topeka, for appellant.

Walter T. Chaney, B. J. Lempenau, Robert Stone, James A. McClure, Robert L. Webb, Beryl R. Johnson, and Ralph W. Oman, all of Topeka, for appellee.

THIELE Justice.

This was an action to recover a claimed statutory double liability of a stockholder in an insolvent trust company organized under Laws 1901, c. 407, as amended, and now appearing as R. S. c. 17, art. 20, as amended (R. S. 17--2001 et seq.; R.S.Supp. 1931, 17 --2009, 17--2015).

The second amended petition alleges the incorporation of the International Mortgage Trust Company on March 24, 1925, its charter reciting: "That this corporation is organized for profit and that the purposes for which it is formed are: To have and to exercise all the powers such as are granted to and exercised by trust companies under the laws of the State of Kansas."

And that: "Pursuant to said corporate charter, said The International Mortgage Trust Company has been engaged in the banking business and has transacted its business in the State of Kansas as a banking corporation."

That the corporation was found to be insolvent by the bank commissioner who took charge and appointed a receiver to liquidate it. That its assets are insufficient to pay its liabilities and it has become necessary to enforce the individual liability of the stockholders. Three causes of action are alleged, two of which are based on certificates issued prior to February, 14, 1931 (when the statute was amended as hereafter noted), and one of which is based on a certificate for 47 shares issued November 2, 1931. This certificate was issued upon the surrender of a certificate issued March 3, 1926, for 49 shares, the last certificate having been surrendered so that a new certificate could be issued to a purchaser of 2 shares, and another certificate for the remaining 47 shares could be issued to the original holder, the defendant here.

The defendant's general demurrer to the above-amended petition was sustained, and the receiver appeals.

Attention is directed to the allegation that, pursuant to its charter, appellant has been engaged in the banking business and has transacted its business as a banking corporation. There are no further allegations as to what it did that would show it was engaged in the banking business, and it might well be said the allegation is a conclusion. As is more fully shown later, under its corporate powers it was authorized to do certain things that are defined as "doing a banking business," and, if the allegation refers to these, all well and good; if it refers to doing all the business a "banking corporation" could do, the doing of those acts not authorized by the trust company act was ultra vires.

Whether the demurrer was properly sustained depends on whether or not stockholders in an insolvent trust company are liable for an additional amount equal to the par value of the stock held by them; or, in common parlance, whether or not they are subject to "double liability." Appellant urges three methods of statutory interpretation, any one of which, if sound, sustains its contention that such an additional liability exists: (1) By reason of the provision in Laws 1898 (Sp. Sess.) c. 10, § 15, not having been repealed by Laws 1903, c. 152; (2) by reason of the provisions in the statute with reference to trust companies, as they existed prior to the amendment of 1931, making certain sections in the banking law with reference to insolvency, etc., applicable to trust companies; and (3) by reason of R.S.Supp. 1931, 17--2015 (Laws 1931, c. 152), which expressly makes the provisions of the banking laws relating to shareholder's liability applicable to trust companies and has a retroactive force by reason of reserved power under article 12, § 2, of the state Constitution, and is fully effective as to stockholders of a trust company becoming insolvent after its passage. The words "shareholder" and "stockholder" are both used in the statutes mentioned herein, and in this opinion are used as synonymous words.

1, 2. It may be observed that the contention that a trust company is a banking corporation is based on R. S. 9--138, which provides that any person, firm, or corporation doing certain named things "shall be considered as doing a banking business." A similar provision was in the Banking Act prior to the enactment of the Trust Company Act and was in effect when the latter act was passed. Laws 1897, c. 47, § 36, recited: "Any individual, firm or corporation who shall receive money on deposit, whether on certificates or subject to check, shall be considered as doing a banking business and shall be amenable to all the provisions of this act," etc.

As originally adopted, our Constitution provided in article 12, § 2, that: "Dues from corporations shall be secured by individual liability of the stockholders to an additional amount equal to the stock owned by each stockholder; and such other means as shall be provided by law;" etc.

Although it was held by the Supreme Court of the United States in Whitman v. Oxford, 176 U.S. 559, 20 S.Ct. 477, 44 L.Ed. 587, that the above provision was self-executing, in Woodworth v. Bowles, 61 Kan. 569, 60 P. 331, it was held that it was not self-executing, but required legislative action to give it effect.

Prior to 1898, the general corporation statute (G. S. 1868, c. 23, art. 4,§ 32) provided, under conditions therein, that: "Execution may be issued against any of the stockholders, to an extent equal in amount to the amount of stock by him or her owned, together with any amount unpaid thereon"; etc., and article 5, § 46, of the same act provided: "No stockholder shall be liable to pay debts of the corporation, beyond the amount due on his stock, and an additional amount equal to the stock owned by him."

In the special session of 1898 changes were made, in that the right of a creditor to proceed individually against the stockholder was taken away, and it was provided by Laws 1898 (Sp. Sess.) c. 10, § 14, that, with certain exceptions not here important, the receiver of a failed corporation should institute proceedings against all stockholders to collect unpaid subscriptions to the stock of such corporations, together with the additional liability of such stockholders equal to the par value of the stock held by each, and section 15 of the last-mentioned act read as follows: "The stockholders of every corporation, except railroad corporations or corporations for religious or charitable purposes, shall be liable to the creditors thereof for any unpaid subscriptions, and in addition thereto for an amount equal to the par value of the stock owned by them, such liability to be considered an asset of the corporation in the event of insolvency, and to be collected by a receiver for the benefit of all creditors."

By Laws 1903, c. 152, § 1, the last above mentioned sections 14 and 15 were repealed; section 2 of the repealing act reciting: "Nothing in this act shall be construed so as in any manner to affect the liability of stockholders in any banking corporation organized under the laws of this state, as now provided by law."

At the time of the enactment of the 1903 repealing act, liability of shareholders of banks was defined by Laws 1897, c. 47, § 10, as follows: "The shareholders of every bank organized under this act shall be additionally liable for a sum equal to the par value of stock owned, and no more." This section has never been changed, and now appears as R. S. 9--110.

In the meantime, Laws 1901, c. 407 (now appearing as amended as R. S. 17--2001 et seq., and R.S.Supp. 17--2009 and 17--2015), was enacted and provides for the organization of trust companies.

It is the contention of appellant that by virtue of the general corporation statute, prior to the 1903 enactment stockholders in all companies, with exceptions not here important, were subject to double liability; that said double liability as to banking...