Luikart v. Higgins

• Decision Date: 14 February 1936
• Docket Number: 29506
• Citation: 264 N.W. 903,130 Neb. 395
• Parties: E. H. LUIKART, RECEIVER, APPELLANT, v. M. A. HIGGINS ET AL., APPELLEES
• Court: Nebraska Supreme Court

264 N.W. 903

130 Neb. 395

E. H. LUIKART, RECEIVER, APPELLANT, v. M. A. HIGGINS ET AL., APPELLEES

No. 29506

Supreme Court of Nebraska

February 14, 1936

APPEAL from the district court for Dundy county: CHARLES E. ELDRED JUDGE. Affirmed.

AFFIRMED.

Syllabus by the Court.

1. The opinion in Luikart v. Paine, 126 Neb. 251, 253 N.W 86, reexamined and approved.

2. A suit to recover stockholders' constitutional double liability on corporate bank stock purchased prior to 1930 amendment, brought before the corporate assets are exhausted and before the exact amount justly due is judicially determined, is premature.

3. The constitutional double liability of a stockholder in a state bank is determined by the Constitution at the time of purchase of said stock.

4. A constitutional amendment becomes an integral part of the instrument and must be so construed. It must be harmonized, if possible, with all other provisions, and effect must be given to every section and clause as well as the whole instrument.

5. A constitutional amendment operates prospectively only, unless the words employed show a clear intention that it should have a retrospective effect.

Appeal from District Court, Dundy County; Eldred, Judge.

Suit by E. H. Luikart, receiver of the Farmers & Merchants State Bank of Benkelman, against M. A. Higgins and others. From a judgment of dismissal, plaintiff appeals.

Affirmed.

F. C. Radke, Leon L. Hines and George I. Craven, for appellant.

Butler & James, R. D. Druliner and Victor Westermark, contra.

Heard before GOSS, C. J., ROSE, GOOD, EBERLY, DAY, PAINE and CARTER, JJ.

OPINION

DAY, J.

This is a suit in equity instituted by the receiver of the Farmers & Merchants State Bank of Benkelman to recover stockholders' double liability under section 7, art. XII of the Constitution of the state of Nebraska, as amended in 1930. The constitutional provision is set out here with the words added by the amendment of 1930 in italics:

"Every stockholder in a banking corporation or institution shall be individually responsible and liable to its creditors over and above the amount of stock by him held to an amount equal to his respective stock or shares so held, for all its liabilities accruing or existing while he remains such stockholder, and all banking corporations shall publish quarterly statements under oath of their assets and liabilities. The stockholder shall become individually responsible for the liability hereby imposed, immediately after any such banking corporation, or banking institution shall be adjudged insolvent, and the receiver of said corporation or institution shall have full right and lawful authority, as such receiver, forthwith to proceed by action in court to collect such liabilities; and the provisions of section 4, article XII, of the Constitution of the state of Nebraska shall not be construed as applying to banking corporations or banking institutions."

Section 4, art. XII of the Constitution, provides:

"In all cases of claims against corporations and joint stock associations, the exact amount justly due shall be first ascertained, and after the corporate property shall have been exhausted the original subscribers thereof shall be individually liable to the extent of their unpaid subscription, and the liability for the unpaid subscription shall follow the stock."

In Bodie v. Pollock, 110 Neb. 844, 195 N.W. 457, this court construed these constitutional provisions before the 1930 amendment as follows: "Sections 4 and 7, art. XII of the Constitution, are self-executing when considered together, as they have been and should be; and, so considered, they form a complete constitutional rule to the effect that, while stockholders in banks are subject to the double liability set out in said sections, such liability cannot be enforced until the property of the bank has been exhausted, and the amount justly due judicially determined." In Dempster v. Williams, 118 Neb. 776, 226 N.W. 446, it was said: "Neither are complete standing alone; but, when considered as one, both the substantive law and the remedy are sufficiently declared to make them self-executing and need no legislative action to carry them into effect."

The defendants were stockholders in the bank at the time it was closed. When this suit was filed, the exact amount justly due creditors of the bank had not been judicially determined, and the assets had not been exhausted.

This court recently held in a similar case that the suit to recover the constitutional stockholders double liability was prematurely brought under such conditions. Luikart v. Paine, 126 Neb. 251, 253 N.W. 86. A reexamination of the legal principles announced in that case is requested here. A summary of the holding there is that stockholders' double liability in state banking corporations is a contractual liability and constitutional provisions at the time of purchase are material parts thereof; that the contractual obligation is determined under the Constitution extant at the time of purchase; and that a suit based on stock purchased prior to the 1930 amendment, brought before the corporate assets are exhausted and the exact amount justly due is judicially determined, is premature.

The basis of that judgment was that the amendment changed the nature of the contractual obligation from a secondary or contingent liability to a primary or absolute one. The contractual obligation as it existed prior to the 1930 amendment was to pay an amount equal to the amount of his stock for the benefit of creditors, whose claims accrued while a stockholder, when the assets had been exhausted and the amount justly due had been judicially determined. It would be a claim contingent upon a failure of the assets to produce enough to satisfy the claims of the creditors. But the amendment, if applicable to stockholders who purchased bank stock prior to its adoption, would materially change the nature of the obligation to a primary or absolute liability. Absolute because it would be payable when the bank was adjudged insolvent without any relation to the necessity for the fund to pay creditors of the bank. The contractual obligation was fixed by the constitutional provision as it existed at the time of the purchase. To permit such a change of contractual obligations as suggested would violate section 10, art. I of the Constitution of the United States, which prohibits a state from impairing the obligation of a contract by law. Upon a reexamination, we adhere to the opinion in Luikart v. Paine, supra.

Again the 1930 amendment changes the time for payment of the stockholders' double liability from the time when the assets of the bank are exhausted to immediate payment upon an adjudication of insolvency. It would seem that this court may take judicial notice of the public records of the state that the liquidation of insolvent state...