Lamb v. Strother.

• Decision Date: 16 February 1937
• Docket Number: (CC 571)
• Citation: 118 W.Va. 257
• Parties: F. O. Lamb, Receiver, etc. v. D. J. F. Strother et al.
• Court: West Virginia Supreme Court

118 W.Va. 257

F. O. Lamb, Receiver, etc.

v.D. J. F. Strother et al.

(CC 571)

Supreme Court of Appeals of West Virginia.

Submitted February 2, 1937.

Decided February 16, 1937.

1.Banks and Banking

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.Jury

The legislature may confer jurisdiction upon courts of equity to entertain suits for the enforcement of" the constitutional double liability of stockholders in banks without violating Section 13, Article III, of the constitution of this state preserving the right of trial by jury as it existed at common law.

3.Constitutional Law

Section 10 of Article III of the constitution of this state does not enlarge upon the right of trial by jury.

4.Banks and Banking

The transfer of shares in a bank did not, prior to the enactment of the Banking Act of 1929 (Ch. 23, Acts of 1929), relieve the transferor of an accrued personal liability under Section 6 of Article XI of the constitution of this state imposing double liability upon stockholders in banks.

Certified from Circuit Court, McDowell County.

Suit by F. 0. 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.

Affirmed.

Philip P. Gibson and McClaugherty & McClaugherty, for plaintiff.

Zeb H. Herndon, for defendant.

Kenna, President:

F. 0. 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 re-open 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 sub-divisions 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 undertaken by a stockholder of a bank, and have therefore impaired the obligation of his contract, in violation of section 10 of Article I of the Constitution of the United States and section 4 of Article III 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 the Hagerstown Bank & Trust Company V. Sterling, Receiver, 57 S. Ct. 386, 81 L. Ed. 586, held that a change in the method of enforcing the liability of stockholders in banks, more drastic than the change before this court in the present case, effected by an act of the Legislature of Maryland during the time that the stockholders of the banks had owned their stock, related only to the remedy and impaired no substantive right under the contract of stock purchase. In further justification of its finding to the effect that the stockholders' double liability could be enforced under the terms of the new...