Lamb v. Strother

• Decision Date: 16 February 1937
• Docket Number: C. C. 571.
• Citation: 189 S.E. 865,118 W.Va. 257
• Parties: LAMB v. STROTHER et al.
• Court: West Virginia Supreme Court

189 S.E. 865

118 W.Va. 257

LAMB v. STROTHER et al.

C. C. No. 571.

Supreme Court of Appeals of West Virginia.

February 16, 1937

Syllabus by the Court.

1. Section 16 of article 4 and section 32 of article 8 of chapter 31, Code, prescribing the method of enforcing the constitutional double liability of stockholders in banks, may be applied to enforce that liability against stockholders who purchased their stock prior to the enactment of those sections without impairing the obligation of their contracts of stock purchase.

2. The Legislature may confer jurisdiction upon courts of equity to entertain suits for the enforcement of the constitutional double liability of stockholders in banks (article 11, § 6) without violating section 13, article 3, of the Constitution of this State preserving the right of trial by jury as it existed at common law.

3. Section 10 of article 3 of the Constitution of this State does not enlarge upon the right of trial by jury.

4. The transfer of shares in a bank did not, prior to the enactment of the Banking Act of 1929 (chapter 23, Acts 1929), relieve the transferor of an accrued personal liability under section 6 of article 11 of the Constitution of this State imposing double liability upon stockholders in banks.

Certified from Circuit Court, McDowell County.

Suit by F. O. Lamb, receiver of the Huntington Banking & Trust Company, against D. J. F. Strother and another. On certification of questions arising upon the sufficiency of the bill of complaint.

Bill of complaint held sufficient.

Philip P. Gibson, of Huntington, and McClaugherty & McClaugherty, of Bluefield, for plaintiff.

Zeb H Herndon, of Welch, for defendant.

KENNA President.

F. O Lamb, receiver of Huntington Banking & Trust Company, filed his bill of complaint in the circuit court of McDowell county seeking to enforce against D. J. F. Strother, a former stockholder of that institution, and Otis E. St. Clair assignee of his shares, the constitutional double liability of shareholders in banks. The defendant, Strother, appeared and filed his demurrer in writing, which was overruled, and thereupon the trial chancellor, of his own motion, certified to this court the questions arising upon the sufficiency of the bill of complaint, propounding six specific queries. The presentation of the case in this court, however, has taken greater scope than the specific questions propounded, and in disposing of the case upon the basis of its presentation, the restrictions imposed by the specific questions will be ignored. The presentation here would reopen all of the fundamental constitutional questions respecting the double liability of shareholders in banks, although practically all of the questions that arise upon this certification are directly answered by well-settled holdings of this court. There are some eighteen or twenty points raised against the sufficiency of the bill of complaint. We shall not attempt to discuss them all, because they are mainly subdivisions of four principal questions that attack the sufficiency of the bill.

The first point made by the defendant below is that whereas the bill of complaint shows that the defendant acquired his stock in Huntington Banking & Trust Company in 1912 and 1915, when the liabilities and remedies arising under his contract of stock purchase were fixed by sections 2394, 2405, 2406, and 2418 of the Code of 1906, the provisions of section 16 of article 4, and section 32 of article 8, of chapter 31 of the Code of 1931, under which he and his assignee, St. Clair, are sued, have, since he acquired his stock, materially increased the obligations under taken by a stockholder of a bank, and have therefore impaired the obligation of his contract, in violation of section 10 of article 1 of the Constitution of the United States and section 4 of article 3 of the Constitution of West Virginia. The defendant below urges that this material change consists in the fact that under the old statute, suit could be brought only against all of the stockholders at the place of business of the banking corporation in order to enforce the double liability, while under the new statute suit may be brought in the county of the residence of the stockholder and against all or any of them. He urges further that under the statutes in effect at the time he bought his shares, as construed in the case of Finnell v. Bane, 93 W.Va. 697, 117 S.E. 549, his liability was secondary and in the nature of a guaranty, and was not to be enforced until after the assets and liabilities of the bank were ascertained and the necessity of collecting the double assessment determined, whereas under the new statute the collection in full of the double liability follows immediately upon the declaration of insolvency by the Commissioner of Banking, and the determination of the ultimate pro rata liability of the stockholders is left to follow.

We think that it is not necessary to enter into a lengthy discussion of these questions, since we believe that the opinion of Judge Lively in Tabler v Higginbotham, 110 W.Va. 9, 14, 156 S.E. 751, meets and disposes of them squarely against the contention of the defendant below. The facts in that case gave rise to these same legal questions and they were there fully discussed and, we think, plainly decided. Furthermore, the Supreme Court of the United States, on February 1, 1937, in an opinion by Mr. Justice Cardozo, in the consolidated cases of Stockholders of Peoples Banking Company of Smithsburg, Maryland, v. Sterling, Receiver, and Stockholders of Hagerstown Bank & Trust Company v. Sterling, Receiver, 57 S.Ct. 386, 81 L.Ed. ---, held that a...