Louise Matteson v. William Dent

• Decision Date: 26 February 1900
• Docket Number: No. 124,124
• Citation: 20 S.Ct. 419,176 U.S. 521,44 L.Ed. 571
• Parties: LOUISE M. MATTESON and Charles D. Matteson, Plffs. in Err. , v. WILLIAM H. DENT, as Receiver of the First National Bank of Decorah, Iowa
• Court: U.S. Supreme Court

176 U.S. 521

20 S.Ct. 419

44 L.Ed. 571

LOUISE M. MATTESON and Charles D. Matteson, Plffs. in Err.,

v WILLIAM H. DENT, as Receiver of the First National Bank of Decorah, Iowa.

No. 124.

Submitted January 29, 1900.

Decided February 26, 1900.

On October 31, 1864, Sumner W. Matteson became the owner of ten shares of capital stock of the First National Bank of Decorah, established in the city of Decorah, state of Iowa, and the shares were duly registered on the books of the bank in his name. In July, 1895, Matteson, whilst the stock was yet owned by him and still stood registered in his name, died intestate at St. Paul, Minnesota, where he resided leaving surviving his widow and six children, two of whom were minors. The probate court of Minnesota having jurisdiction over his estate appointed an administrator, who filed an inventory in which was embraced the shares of stock in question. In September, 1896, a final account having been previously filed by the administrator, a decree turning over the estate, including the ten shares of stock, was entered. Under this decree the widow and heirs took the ten shares of stock in indivision in proportion to their interest in the estate; that is to say, the widow became the owner of an undivided third interest in the stock and each of the children, there being six, of a one-ninth interest therein, thus the widow owned three ninths of the ten shares and each of the six children one ninth. No notice of the death of Matteson or of the allotment in question was conveyed to the bank, nor was any transfer of the stock on the books of the bank operated at the time of the allotment or subsequent thereto. Indeed, under the proportions of undivided ownership of the stock in the widow and heirs, it was impossible to have registered on the books of the bank in the name of each owner separately according to their respective ownership in the ten shares without some further partition of the undivided ownership existing between them. It follows that the stock which stood on the books of the bank in the name of Matteson during his life continued to so stand after his death, so remained at the time of the allotment, and was so registered at the time this suit was brought. On November the 10th, 1896, the bank became insolvent and was closed by the comptroller of the currency, who on the 24th of November, 1896, appointed a receiver. In January, 1897, in order to pay the debts of the bank, under the authority conferred on him by law (Rev. Stat. 5151), the comptroller made an assessment upon the shareholders of $100 upon each share, and proceedings for its enforcement were by him directed to be taken. The assessment not having been paid, although due notice was given to do so, the receiver sued in the state court of Ramsey county, Minnesota, the widow and children of Matteson, as next of kin, asking judgment for the amount of said assessment. The suit was in conformity to the General Statutes of 1894 of Minnesota, which, in §§ 5918et seq., permitted an action to be brought against all or one or more of the next of kin of a deceased person, by the creditor of an estate, to recover the distributive shares received out of such estate, or so much thereof as might be necessary to satisfy a debt of the intestate or of his estate. Service was had only upon the widow and one of the children. A general demurrer to the complaint was filed and overruled, and the order so overruling the demurrer was, upon appeal, affirmed by the supreme court of the state. 70 Minn. 519, 73 N. W. 416. Thereafter the demurring defendants answered, setting forth in substance their nonliability to pay said assessment under the statutes of the United States governing the winding up of insolvent national banking associations. A motion for judgment upon the pleadings was thereupon made and granted, and judgment was entered in favor of the receiver against Louise M. Matteson and Charles D. Matteson, and each of them, in the sum of $1,000 with interest and costs. On appeal to the supreme court of the state of Minnesota, that court affirmed the judgment. 73 Minn. 170, 75 N. W. 1041. A writ of error was allowed, and the judgment of affirmance is now here for review.

Messrs. Edmund S. Durment and Albert R. Moore for plaintiffs in error.

Messrs. Frank B. Kellogg, Daniel W. Lawler, George R. O'Reilly, and Fitzhugh Burns for defendant in error.

Mr. Justice White, after making the foregoing statement, delivered the opinion of the court:

The questions arising on this record involve a consideration of §§ 5918 et seq. of the General Statutes of the state of Minnesota and of the sections of the Revised Statutes of the United States, which are in the margin.

Leaving out of view for the moment the legal effect of the allotment of the ten shares of stock to the next of kin of Matteson, let us consider what, if any, liability rested upon his estate to pay the assessment on the ten shares of stock which stood at his death in his name, and so remained up to the time of the allotment. Because the insolvency of the bank took place after the death of Matteson, did it result that the assessment, which was predicated upon the insolvency, was not a debt of his estate? To so decide the statute must be construed as imposing the liability on the shareholder for the amount of his subscription when necessary to pay debts, only in case insolvency arises during the lifetime of the shareholder. In other words, that all liability of shareholders to contribute to pay debts ceases by death. This construction, however, would be manifestly unsound. The obligation of a subscriber to stock to contribute to the amount of his subscription for the purpose of the payment of debts is contractual, and arises from the subscription to the stock. True, whether there is to be a call for the performance of this obligation depends on whether it becomes necessary to do so in consequence of the happening of insolvency. But the obligation to respond is engendered by and relates to the contract from which it arises. This contract obligation, existing during life, is not extinguished by death, but like other contract obligations survives and is enforceable against the estate of the stockholder. The principle controlling the subject was quite clearly stated by Shipman, J., in Davis v. Weed, 44 Conn. 569, Fed. Cas. No. 3,658. There, stock of a national bank stood in the name of a person who died in January, 1871. Nearly one year afterwards, on December 12, 1871, the bank became insolvent, and more than five years thereafter several assessments were made by order of the comptroller of the currency, and an action was instituted against the administrator to enforce payment. Two defenses were interposed by the administrator, as follows: 1, that the estate of the decedent had been settled according to law, prior to the assessments, and that as there were no assets in the hands of the administrator at the time of the demand, and he had fully administered the estate and had received no assets since the demand, no judgment could be rendered against him; and, 2, that inasmuch as the insolvency of the bank occurred after the death of the intestate, when the title of the stock became vested in the administrator, no debt or liability existed at any time against the estate; that the liability, if any, was against the administrator, who, by § 5152 of the Revised Statutes, was freed from personal liability, and was only liable to the extent of the trust estate and funds in his hands at the time of the demand.

The first contention was held untenable, upon a consideration of the statutes of Connecticut in regard to the settlement of estates, and the presentation, allowance, and payment of claims against the estates of solvent deceased persons. In disposing of the second contention the court said:

'The original liability of the intestate to pay the assessments which may be ordered by the comptroller was a voluntary agreement, evidenced by his subscription or by his becoming a stockholder. It is not imposed by way of forfeiture or penalty. It is imposed by the statute, but it also exists by virtue of the contract which the intestate cntered into when he became a stockholder. When the stockholder dies his estate becomes burdened with the same contract or agreement which the dead man had assumed, and so long as it, through the executor or administrator, holds the stock as the property of the estate, and the stock has not been transferred on the books of the bank, and the liability has not been discharged by some act which shows that the new stockholder has taken the place of the old one, the contract liability still adheres to the estate. This liability is not the result of any new contract, for the administrator did not voluntarily become the owner of the stock; it came to him as the dispenser of the goods of the dead, and the liability rested upon the stock, and was a part of the contingent liability of the estate, at least until it was transferred to some other person by a transfer free from fraud.'

The question was settled in Richmond v. Irons, 121 U. S. 27, 30 L. ed. 864, 7 Sup. Ct. Rep. 788, where the court said (pp. 55, 56, L. ed. p. 873, Sup. Ct. Rep. p. 801):

'Under that [the national banking] act the individual liability of the stockholders is an essential element in the contract by which the stockholders became members of the corporation. It is voluntarily entered into by subscribing for and accepting shares of stock. Its obligation becomes a part of every contract, debt, and engagement of the bank itself, as much so as if they were made directly by the stockholder instead of by the corporation. There is nothing in the statute to indicate that the obligation arising upon these undertakings and promises should not have the same force and effect, and be as binding in all respects, as any other contracts of the individual stockholder. We hold, therefore, that the obligation of the...