Jackson v. Ariton Banking Co.
| Decision Date | 29 April 1926 |
| Docket Number | 4 Div. 254 |
| Citation | 108 So. 359,214 Ala. 483 |
| Parties | JACKSON, Superintendent of Banks, v. ARITON BANKING CO. et al. |
| Court | Alabama Supreme Court |
Appeal from Circuit Court, Dale County; J.S. Williams, Judge.
Bill in equity by A.E. Jackson, as Superintendent of Banks, against the Ariton Banking Company and others. From a decree sustaining demurrer to the bill, complainant appeals. Affirmed.
Steiner Crum & Weil, of Montgomery, and Sollie & Sollie, of Ozark for appellant.
C.O Stokes, of Ozark, and M.I. Jackson and Peach & Norton, all of Clayton, for appellees.
In 1916 the Ariton Banking Company and the People's Bank of Ariton were incorporated banking concerns doing business in the town of Ariton. Each of them was capitalized at $25,000, their capital stock consisting of 250 shares of the par value of $100 each. The Ariton Banking Company stock had been paid for in full; of the People's Bank stock 40 per centum remained unpaid. In October of the year mentioned these two banks were consolidated, or, to use the language of the bill, the People's Bank was merged into the Ariton Banking Company. For the purpose of the consolidation or merger the assets of the Ariton Bank were appraised at $35,000; the assets of the People's Bank at $17,500; "but said unpaid 40 per centum of said capital stock of said People's Bank of Ariton did not enter into the appraisement of its assets." The stock of the consolidated bank was placed at 390 shares of the par value of $100 each, of which 260 were issued to the shareholders of the Ariton Bank, 130 to the shareholders of the People's Bank, in lieu of and in full payment for their interests in the older corporations. Complainant (appellant) filed the bill in this cause July 16, 1925, seeking to collect 40 per centum of the subscriptions to the stock of the People's Bank for the benefit of creditors of the consolidated bank, now insolvent and in process of liquidation by complainant according to the statute in such cases made and provided. It is to be inferred that the debts, for the satisfaction of which this collection is sought, were contracted by the Ariton Bank subsequent to the consolidation. The stockholders of the People's Bank are made parties defendant. In the circuit court, in equity, their demurrer to the bill was sustained.
We understand from the averments of the bill that the capital stock of the merging or consolidating corporations was converted into the stock of the consolidated corporation, and thereby the merging or consolidating corporations became one corporation as provided by section 3503 of the Code of 1907, which, as amended by the act of September 30, 1919 (Laws 1919, p. 1108), became section 7038 of the Code of 1923.
Sections 3504, 3505, and 3506 of the Code of 1907 (), provided as follows:
The bill avers in effect that the constituent corporations (so for convenience to speak of the original banks) surrendered their stock, and in lieu thereof stock in the consolidated corporation, paid in full, was issued to stockholders in the constituent corporations in proportion to their interest in the assets taken over by the consolidated corporation. Section 3506 secured and conserved the rights of creditors of the constituent corporations. But, as we have noted complainant does not represent creditors of that class. Unpaid subscriptions to the capital stock of corporations constitute a trust fund for the benefit of corporate creditors. Adams v. Perryman, 202 Ala. 469, 80 So. 853; Perrine Sawmill v. Powell, 207 Ala. 447, 93 So. 33. And in the case of insolvency this doctrine is established by statute in this state as to property in general of insolvent corporations. Code 1923, § 7062. But this does not mean that unpaid subscriptions to the stock of a constituent corporation remain a trust fund for the satisfaction of the subsequently contracted debts of the consolidated corporation, unless, indeed, the agreement of consolidation provides, expressly or by implication, that the balances due on subscriptions due to the old shall pass over to the new or consolidated corporation. In the case made by the present bill there is no such provision. There was an effort made in the articles of agreement for consolidation to make provision concerning the continued liability of the stockholders of the People's Bank. The averment as to that is that the articles of agreement provided for "the acquittance, relinquishment and waiver in favor of said holders of the capital stock of said People's Bank of Ariton of the unpaid balance of 40 per cent. thereon," but that this provision was disapproved by the superintendent of banks, and for that reason was omitted from the agreement. But not much importance is to be attached to that circumstance. The statute settled and determined the rights and liabilities of the stockholders of the People's Bank in their new relation as stockholders of...
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...results in the dissolution of all the constituent companies and the formation of a new corporation. In Jackson v. Ariton Banking Co., 214 Ala. 483, 108 So. 359, 45 A.L.R. 1026, 1926, the facts were as follows: In 1916 the Ariton Banking Company and the People's Bank of Ariton were corporati......
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...the ruling as to each separate ground. Allison, Russell, Withington Co. v. Sommers, 219 Ala. 33, 121 So. 42; Jackson v. Ariton Banking Co., 214 Ala. 483, 108 So. 359, 45 A.L.R. 1026. We revert to the question of whether the evidence was sufficient to admit the introduction of the note, requ......
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Allison-Russell-Withington Co. v. Sommers
... ... Hall Case has been explained or differentiated in the later ... case of Jackson v. Ariton Banking Co., 214 Ala. 483, ... 108 So. 359, 45 A. L. R. 1026, wherein an assignment of ... ...