Kirschler v. Wainwright

• Decision Date: 08 January 1917
• Docket Number: 134
• Citation: 255 Pa. 525,100 A. 484
• Parties: Kirschler v. Wainwright, Appellant
• Court: Pennsylvania Supreme Court

100 A. 484

255 Pa. 525

Kirschler v. Wainwright, Appellant

No. 134

Supreme Court of Pennsylvania

January 8, 1917

Argued October 18, 1916

Appeal, No. 134, Oct. T., 1916, by defendants, from judgment of C.P. Allegheny Co., July Term, 1914, No. 1325, on verdict for plaintiff in case of Charles F. Kirschler, Receiver of the Traders' & Mechanics' Bank, a corporation, v Samuel J. Wainwright and Charles P. Walker, Partners doing business as Walker & Wainwright, amended by the substitution of The Colonial Trust Company as Administrator of the Estate of Charles P. Walker, deceased. Affirmed.

Assumpsit on statutory liability of stockholders of a bank. Before REID, J.

The facts appear in the opinion of the Supreme Court.

Verdict for plaintiff for $15,015 by direction of the court and judgment thereon. Defendant appealed.

Errors assigned were in entering judgment for the plaintiff and refusing to direct a verdict for the defendants.

The assignments are all overruled and the judgment is affirmed.

Frederic W. Miller, for Samuel J. Wainwright, appellant, with him Thomas D. McCloskey, of Kinnear, McCloskey & Best, for The Colonial Trust Company, Administrator, appellant. -- The action was barred by the statute of limitations: Amer et al. v. Armstrong et al., 6 Pa. C.C. 392; Link et al v. McLeod et al., 194 Pa. 566; Franklin Savings Bank, to use of Miller, Assignee, v. Bridges, 20 W.N.C. 43; Cook v. Carpenter (No. 1), Lipper's App., 212 Pa. 165; Newton's Est., 46 Pa.Super. 40.

William A. Challener, with him Clarence Burleigh, for appellee. -- The action was barred neither by the Act of March 28, 1867, P.L. 48, nor the general statute of limitations of March 27, 1713, 1 Sm. L. 76; Miller v. Connor, 177 Mo.App. 630 (160 S.W. Repr. 582); Schofield v. Turner, 213 Pa. 548.

Before BROWN, C.J., MESTREZAT, MOSCHZISKER, FRAZER and WALLING, JJ.

OPINION

MR. JUSTICE MOSCHZISKER:

This action was instituted by Charles F. Kirschler, as Receiver of the Traders' & Mechanics' Bank, a corporation under the laws of Pennsylvania, against Samuel J. Wainwright and Charles P. Walker, copartners doing business as Walker & Wainwright; Mr. Walker died and the record was amended by substituting his administrator as a defendant; the suit was in assumpsit to recover against the defendants on their liability as stockholders of the plaintiff corporation, under the special Act of March 11, 1872, P.L. 324, incorporating the Odd Fellows Savings Bank, the name of which was subsequently changed to the Traders' & Mechanics' Bank; Section 9 of this act provides that "the stockholders shall be individually liable for all debts and liabilities of said bank double the amount of stock held by them"; judgment was entered on a verdict for the plaintiff, and the defendants have appealed.

The firm of Walker & Wainwright did a brokerage business in the City of Pittsburgh at the time of the transactions involved in this case; in 1902, forty shares of the capital stock of the plaintiff bank were purchased in their name, the certificate being issued accordingly; in 1903, a similar purchase of 50 shares was made, which was followed later in 1903 by one of 20 shares. The evidence indicates that all this stock was bought for the account of a customer, Francis J. Torrence, and that the certificate for each lot was assigned in blank by Walker & Wainwright and delivered to Mr. Torrence, such deliveries not being made, however, until from three days to two years after the respective purchases; moreover, notwithstanding the execution and delivery of the several blank transfers, the stock in question continued to stand on the books of the plaintiff corporation in the name of Walker & Wainwright, and no effort was made to apprise the bank of the alleged ownership of the transferee.

January 23, 1908, at the suggestion of the attorney general of the Commonwealth, a temporary receiver for the bank was appointed by the Common Pleas of Dauphin County. February 4, 1908, Mr. Kirschler was made permanent receiver, the order for that purpose stating that the bank was then "insolvent and in an unsound and unsafe condition to do business"; further, that "the manner of conducting its business" was "injurious and contrary to the interests of the public." The receiver was authorized "to take charge of its property and wind up its business . . . under and subject to the orders of the court"; and, having duly qualified, he proceeded with his duties.

February 21, 1910, Mr. Kirschler presented a petition to the proper court, in which he averred an insufficiency of assets to meet the bank's indebtedness, and prayed for authority to enforce the full statutory liability of its stockholders; whereupon it was ordered and decreed that the petitioner "be and he is hereby authorized and directed to assess against each of said stockholders a sum equal to their statutory liability for the indebtedness of said bank, and to collect the same." An assessment was forthwith made, and, not being able to collect the amount alleged to be due by the defendants, on May 28, 1914, the receiver instituted the present suit.

Defendants assign for error the affirmance of plaintiff's request for binding instructions, the refusal of a like request on their own behalf and the subsequent declination to enter judgment for them non obstante veredicto; and they state three questions involved: (1) When did the statute of limitations begin to run? (2) Under the circumstances of this case, were the defendants subject to assessment as owners of the stock here in controversy? (3) If subject to assessment, were the defendants liable for interest on the demand against them from the due date thereof?

On the last two propositions the appellants contend that they were not legally liable as stockholders, and, if it should be decided to the contrary, then that no interest should be charged against them; since we see no shadow of merit in either of these contentions, we shall first briefly dispose of them before taking up the more serious question of the statute of limitations. The governing rules of law in reference to defendants' liability, both as to principal and interest, are thus stated in 7 R.C.L., p. 393, Sec. 378: "A creditor of an insolvent corporation is entitled to hold liable as a stockholder him who appears to be such on the books"; Sec. 390, "Where a stockholder who transfers his stock fails to have the transfer registered on the corporate books, he remains liable as a stockholder to the creditors of the corporation" (see Aultman's App., 98 Pa. 505, 516); p. 380, Sec. 362, "The weight of authority and reason are to the effect that, where the amount of the liability of a stockholder is ascertained . . ., such a liability will from that date bear interest; this is especially true if the stockholder denies and contests the question of his liability" (see Casey v. Galli, 94 U.S. 673, 677; Bowden v. Johnson, 107 U.S. 251, 263). Therefore, on the admitted facts in this case, without regard to the alleged bar of the statute of limitations, under the law the defendants were liable as stockholders for the full amount of the assessment against them, with interest from the date thereof; but the question as to when the statute commenced to run against this liability, presents an interesting and important point which calls for more extended consideration.

As already noted, the bank was alleged to be insolvent on January 23, 1908, and closed its doors not later than February 4, 1908, when the permanent receiver was appointed. This suit was not brought until May 28, 1914, more than six years from the initial date of insolvency, but less than six years from February 21, 1910, when it was judicially ascertained that the bank's collectable assets were insufficient to pay its debts, and enforcement of the full statutory liability of the stockholders was authorized for that purpose. Hence, the controlling question is: Does the statute of limitations run from the initial insolvency decree, when the receiver was appointed, or from the time of the decree ascertaining the deficiency of assets and authorizing the assessment? The court below determined that the latter was the proper date to fix upon in computing the limitation period, and the defendants contend this was error; which contention we shall now consider.

The first statute depended upon by the appellants is the Act of March 28, 1867, P.L. 48, providing that "no suit at law or in equity shall be brought or maintained against any stockholder or director in any corporation . . ., to charge him with any claim for materials or moneys for which said corporation . . . could be sued, or with any neglect of duty as such stockholder or director, except within six years after the delivery of the materials or merchandise or the lending to or deposit of money with said corporation or the commission of such act of neglect by such stockholder or director." It is clear the case before us is not within the express terms of this statute, and we are of opinion that the act never was intended to apply to circumstances such as here presented; furthermore, absurd results would follow were an attempt made to force its application. As said by the learned court below, "If the act applies so as to bar the statutory liability of stockholders of an insolvent bank, then the statute would begin to run when the deposit is made and not at the insolvency of the bank; and we would have the...