Lawhead v. Davis

• Citation: 163 S.E. 629,112 W.Va. 13
• Decision Date: 22 March 1932
• Docket Number: 7223.
• Parties: LAWHEAD v. DAVIS.
• Court: Supreme Court of West Virginia

163 S.E. 629

112 W.Va. 13

LAWHEAD v. DAVIS.

No. 7223.

Supreme Court of Appeals of West Virginia.

March 22, 1932

Submitted March 2, 1932.

Syllabus by the Court.

Receiver of insolvent stake bank may recover, in action at law stockholder's liability before administering assets or apportioning indebtedness among stockholders (Code 1931 31-4-16, 31-8-32; Const. art. 11, § 6).

The receiver of an insolvent bank may recover at law the liability of a stockholder under section 6, article 11 of the Constitution, and section 16, article 4, chapter 31, Code 1931, without waiting to administer the assets of the corporation or to apportion its indebtedness among the existing and former stockholders, by showing that a substantial part of the indebtedness accrued against the institution during the stockholder's ownership of stock.

Error to Circuit Court, Harrison County.

Action by Charles E. Lawhead, receiver of the Clarksburg Trust Company, against George W. Davis. To review a judgment in favor of the plaintiff, the defendant brings error.

Affirmed.

Ernest D. Lewis, of Clarksburg, for plaintiff in error.

Steptoe & Johnson and James M. Guiher, all of Clarksburg, for defendant in error.

LITZ J.

This action, in assumpsit, was brought by Charles E. Lawhead, as receiver of Clarksburg Trust Company, a defunct banking corporation, against George W. Davis to recover of him his constitutional liability as owner of 25 shares of the capital stock of the corporation. To a judgment of $2,500 in favor of the plaintiff, defendant prosecutes error.

Section 6, article 11 of the state Constitution declares that stockholders of any bank shall be personally liable to the creditors thereof, over and above the amount of stock held by them, respectively, to an amount equal to their respective shares "for all its liabilities accruing while they are such stockholders." This constitutional provision is carried into legislative enactment as section 16, article 4 chapter 31, Code 1931.

Clarksburg Trust Company, since its incorporation in 1914, issued 3,000 shares of capital stock, which are now outstanding, of the par value of $100 each. Its indebtedness, at the time defendant purchased his stock, December 10, 1927, was $2,397,352, and on June 6, 1929, when the receiver took charge of its affairs, $2,084,643. It owes to its depositors more than $300,000 for deposits made by them during 1929. H A. Abbott, commissioner of banking, called on the stockholders December 7, 1929, for payment of their constitutional liability. Defendant refused to respond because a large part of the obligations of the bank had accrued prior to his ownership of stock, contending that an apportionment of the indebtedness among the present and former stockholders is prerequisite to the right of the receiver to enforce liability against any of them. Plaintiff answers that such procedure, if formerly required, has been obviated by chapter 31, article 8, § 32, Code 1931 (Acts 1929), the pertinent parts of which follow: "The receiver, under the authority of the commissioner of banking, shall institute and prosecute any suit or suits necessary to obtain possession of any property and to sell and dispose of the same and to collect all obligations due such institution or other corporation. The receiver in such suit, or by separate suits, under the authority of the commissioner of banking, shall enforce against the officers, directors and stockholders any liability incurred by them and existing in favor of the creditors of such institution or other corporation, and collect from such officers, directors and stockholders any sums for which they are liable as aforesaid. If it shall appear that the assets of such insolvent institution or other corporation are not sufficient to pay in full all of its creditors and depositors, without waiting to administer the assets of such institution or other corporation, or delaying for any...