Lewis v. West Side Trust & Sav. Bank

• Citation: 32 N.E.2d 907,376 Ill. 23
• Decision Date: 02 April 1941
• Docket Number: No. 25371.,25371.
• Court: Supreme Court of Illinois
• Parties: LEWIS et al. v. WEST SIDE TRUST & SAV. BANK et al.

376 Ill. 23

32 N.E.2d 907

LEWIS et al.

v.WEST SIDE TRUST & SAV. BANK et al.

No. 25371.

Supreme Court of Illinois.

Feb. 14, 1941.

As Modified on Denial of Rehearing April 2, 1941.

Consolidated suits by Joseph P. Lewis and others against the West Side Trust and Savings Bank and others, to enforce bank stockholders' liability. From the decree, defendants appeal and from certain orders, plaintiffs cross-appeal.

Decree affirmed in part and reversed in part and cause remanded, with directions.

SHAW, J., dissenting.Appeal from Superior Court, Cook County; John J. Lupe, Judge.

Poppenhusen, Johnston, Thompson & Raymond, Hyman J. Rosenberg, Haffenberg & Rosenbaum, Winston, Strawn & Shaw, George W. Ott, John M. Lee, Carl M. Loos, Brown, Fox & Blumberg, Mayer, Meyer, Austrian & Platt, Isaac S. Rothschild, Levinson, Becker, Peebles & Swiren, Moses, Kennedy, Stein & Bachrach, Pope & Ballard, Thomas G. Deering, Krinsky, Levitan & Glassner, William E. Anderle, D'Ancona, Pflaum & Kohlsaat, Wilhartz & Hirsch, Sonnenschein, Berkson, Lautmann, Levinson & Morse, Arkin & Berman, Ashcraft & Ashcraft, Bayley, Webster, Gregory & Hunter, Samuel Blair, Rudolph F. Bostelman, David A. Canel, James, Colburn Hamilton, Archie H. Cohen, Morton B. Hochberg, W. J. Colohan, Jr., Jacob Diamond, Harry C. Diamond, Bell, Boyd & Marshall, Charles M. Geringer, Louis T. Herzon, Kamfner, Halligan & Marks, S. A. Karlin, Lowenhaupt & Wolff, McInerney, Epstein & Arvey, Norman Naiman, Pruitt & Grealis, Joseph Rosenstein, Bailey Samelow, Arnold Seeder, David J. Shipman, Sugarman & Rothman, Welch & Hoffman, Sidney Wolfe, Samuel C. Horwitz, and Ward, Curtis & Polin, all of Chicago, for appellants and cross-appellees.

Warren H. Orr, Gold & Liebman, and Philip H. Mitchel, all of Chicago, for appellees and cross-appellants.

Leo Waxman, of Chicago (Maurice W. Lee, of Chicago, of counsel), for Samuel R. Ballis, receiver and cross-appellant.

FARTHING, Justice.

Plaintiffs, appellees and cross-appellants, on behalf of themselves and other creditors of the West Side Trust and Savings Bank of Chicago, brought representative suits against former and final stockholders of the bank to enforce the liability imposed upon bank stockholders by section 6 of article 11 of the Illinois constitution, Smith-Hurd Stats. On March 4, 1933, Joseph P. Lewis filed his suit in the superior court of Cook county to enforce stockholders' liability. Four similar suits were filed thereafter, but, by orders of court, the five were consolidated, and the prosecution of four other suits was enjoined.

The West Side Trust and Savings Bank of Chicago was organized June 21, 1905, to do a banking business, with a capital stock of $200,000, divided into 2000 shares of $100 par value. On December 23, 1911, its capital stock was increased to $400,000. On September 9, 1920, the capital stock was increased to $700,000, and on February 1, 1924, the bank was authorized to accept and execute trusts and to receive deposits of trust funds. On August 1, 1929, the capital stock was increased to $1,000,000, where it remained until the bank closed. On March 3, 1933, the bank placed a limit of two per cent on withdrawals from depositors' balances as of the close of business on March 2, 1933. On March 4, 1933, the bank closed and the Lewis suit was filed. The Auditor of Public Accounts began an examination of the bank on March 28, 1933, and on December 19, 1933, he determined the bank was being conducted in an unsafe manner and that its capital had become impaired to such an extent that the impairment could not be made good. He assumed control of the bank and on January 12, 1934, appointed a liquidating receiver. In connection with the liquidation a suit was filed in the superior court of Cook county on the same day. The plaintiffs in the stockholders' suit filed a second amended and supplemental bill of complaint on December 7, 1934, and defendants filed answers thereto denying generally the allegation of the amended and supplemental bill. Replications to the answers were filed and the cause was referred to a master in chancery. On June 23, 1937, the master made his original report to which both plaintiffs and defendants objected. For the most part, these objections were overruled by the master in his first supplemental report of September 16, 1937. After a hearing upon the exceptions to the master's report on November 20, 1937, the cause was rereferred to the master to take further evidence and render a supplemental report containing a calculation of the unsatisfied liabilities accruing during each period of stock holding, after deducting all credits, deductions and set-offs. The master made a second supplemental report on November 14, 1938, in which he found that the unsatisfied liabilities had been reduced by what had taken place in the liquidating receivership up to and through February, 1938. Objections and exceptions to this report were overruled and a decree was entered on June 2, 1939, adjudicating the liabilities of the defendants. The decree was amended four times and was vacated as to defendants Regenery and Coleman. Edward Morris, Jr., Nelson Morris, and Helen Swift Neilson filed notice of appeal and several other defendants filed notice of separate appeal as co-parties. This case is numbered 25371 in this court. Plaintiffs filed cross-appeals from certain orders of the court and separate appeals were numbered 25415, 25416, and 25417, and the causes have been consolidated for hearing.

While this case was under advisement, the individual members of the Morris family, and such other parties as had to do with the various interests of the Morrises, made a compromise with plaintiffs. As a result, an order was entered August 21, 1940, by which this settlement was approved and causes numbered 25415, 25416, and 25417 were dismissed. The cross-appeals in cause No. 25371 were dismissed as to the following defendants: Edward Morris, Jr., Nelson Morris (also known as Nelson Swift Morris), and Helen Swift Neilson, Walter Kjoss; Edward Morris, Jr., Helen Swift Neilson, Thomas E. Wilson, Nelson Morris, Helen Swift Neilson, and Edward Morris, Jr., described in the decree appealed from as executors of the estate of Edward Morris, deceased, and sued in the second amended and supplemental bill of complaint as executors of the last will and testament of Edward Morris, deceased; Herbert E. Kerber, Henry C. Schwab, Thomas E. Wilson, Edward Morris, Jr., Nelson Morris, and Helen Swift Neilson, Francis Neilson, Carl L. Jernberg, Nelson Morris, Charles A. Jernberg, Oliver A. Bestel with respect to that part of the decree against him aggregating $15,855.82, and the First National Bank of Chicago with respect to that part of the decree against it aggregating $48,300 based according to the decree on the holding by its predecessor of stock in the West Side Trust and Savings Bank as trustee for Ruth May Morris Bakwin, Helen Muriel Morris Abramson, and as trustee for HelenSwift Morris Neilson. It was stipulated that the decree against Oliver A. Bestel should be reduced by $15,855.82 and against the First National Bank of Chicago by $48,300 and this was ordered done.

A settlement was reached between the plaintiffs and the First National Bank of Chicago, as executor of the last will of John A. Spoor, deceased, and the First National Bank of Chicago and Oliver A. Bestel, and a similar order was entered December 21, 1940, as to these defendants, appellants. This results in only a part of the matters remaining before us that were involved in cause No. 25371.

In their brief, plaintiffs have renewed their motion to dismiss the appeal in 25371, because they assert they were not made appellees in their representative capacities. On October 18, 1939, this court denied this motion, and we will not again consider it. If the parties to any case apprehend that the court has fallen into error in the decision or disposition of a motion, the proper practice is to apply at the same term of the court at which the decision upon the motion is entered, for a reconsideration of the action of the court upon the motion. Village of North Chicago v. American Steel Co., 221 Ill. 539, 77 N.E. 1041.

Defendants contend that under section 6 of article 11 of the constitution, the plaintiffs had the burden of proving the essential elements of the case to establish the liabilities of the stockholders. They say that plaintiffs had to prove (1) who were the creditors of the bank, (2) what were the unsatisfied net liabilities of the bank to each of its creditors, and (3) when these liabilities respectively accrued, and that they failed to sustain this burden. In short, defendants contend that plaintiffs were bound to prove the net amount due to each creditor, after allowing all credits, set-offs, and counterclaims in favor of the bank. Plaintiffs insist the burden was not on them to show either offsets or payments. According to the theory of the defendants, the audit introduced in evidence was incorrect, because it considered only the liability side of the bank's books. In answer, plaintiffs point out that the matter of bank's assets,-i. e., offsets against bank liabilities, are shown in the books of the bank and its receiver, and such claims as had been allowed and paid were, in fact, used to reduce the liabilities. The audit was made at the bank premises from the books of the bank showing liabilities. The accountant first set up all the liability accounts, applying the ‘first in, first out’ rule to savings and checking accounts. The accounts were identified and transcribed, showing the respective balances due when the bank closed. To the amount of the last deposit was added the last prior deposits sufficient to equal the amount of balance due the depositor. From this information was prepared the accrual sheets, in sequence of dates. The accrual sheets were totalled and balanced with the records of the bank. The totals were tabulated in sequence of...