Lucas v. Coe
| Decision Date | 11 May 1898 |
| Citation | 86 F. 972 |
| Parties | LUCAS v. COE. |
| Court | U.S. District Court — Northern District of New York |
Fred W Noyes, for plaintiff.
R. J Fish, for defendant.
The plaintiff is the receiver of the Marine National Bank of Duluth, and brings this suit to recover of the defendant an assessment of 78 per centum upon the par value of eight shares of the capital stock of the bank alleged to be owned by the defendant. The capital stock of the bank was originally $250,000. In 1894 it was reduced to $200,000.
On October 6, 1890, the defendant, as trustee of E. Emmons Coe Hamlin, who was an infant of tender years and a grandson of the defendant, subscribed for five shares of the capital stock of the bank and received a certificate running to 'E. Emmons Coe, as trustee for E. Emmons Coe Hamlin ' When the stock was reduced this certificate was returned to the bank and a new one for four shares substituted running to the defendant 'as trustee' merely. The officers of the bank were advised that he held this stock as trustee precisely as in the surrendered certificate. The omission of the words 'for E. Emmons Coe Hamlin' was their work and not the work of the defendant. Being done by them without his knowledge, consent or suggestion it did not change the legal status of the parties. On the same day that he subscribed for the stock as trustee he subscribed for five shares on his own account and received a certificate for five shares and, subsequently, a new certificate for four shares, running to him individually. In July, 1894, before the bank became insolvent, the defendant surrendered this certificate and received a new one in his name 'as trustee,' the name of the beneficiary not being mentioned in the certificate. The consideration for this transfer was $250 paid to the defendant by F. M. Hamlin the father of E. Emmons Coe Hamlin, who purchased the stock for his infant son.
No question is raised as to the appointment of the plaintiff, the insolvency of the bank or the validity of the assessment. It is not pretended by the plaintiff that these transactions were fraudulent or made with intent to avoid liability on the part of the defendant. The defense is that the defendant was trustee of E. Emmons Coe Hamlin, the actual owner of the shares, and that he is, therefore, exempt from liability, under section 5152 of the Revised Statutes which provides that:
'Persons holding stock as executors, administrators, guardians or trustees, shall not be personally subject to any liabilities as stockholders; but the estates and funds in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward or person interested in such trust funds would be, if living and competent to act and hold the stock in his own name.'
If, then, the defendant was the trustee for his grandson at the time the assessment was made it follows that he cannot be held personally liable. Some one was the legal owner of these shares; some one is liable to assessment. In the absence of all evidence of fraud or concealment, the true situation being fully understood on both sides, it is plain that he would be liable whose property paid for the stock and who was entitled to receive the dividends and proceeds in case the stock was sold. 'One who may profit by the gains of an enterprise should bear its losses, rather than that they should fall on strangers; and the statute imposing a liability on the shareholders of national banks undoubtedly rests on this. ' Beal v. Bank, 15 C.C.A. 128, 67 F. 816.
The fact that the defendant is responsible and the cestui que trust presumably irresponsible is a matter of no moment. There is nothing requiring a shareholder in a national bank to be solvent and these shares may be held alike by the millionaire and the pauper. The question for the receiver in making an assessment is, who owns the shares, not who is best able to pay?
But it is argued that the section quoted refers only to a trustee appointed by a will or by the order of a court or judge. The statute does not so say and there can be no question that the relation of trustee and cestui que trust may exist without such formal action.
In Mabie v. Bailey, 95 N.Y. 206, it was held that a deposit of a sum of money in a bank by A. 'in trust for' B who was an infant, constituted a trust which was...
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