Luikart v. Jones
| Decision Date | 19 July 1940 |
| Docket Number | 30862. |
| Parties | LUIKART v. JONES. |
| Court | Nebraska Supreme Court |
Syllabus by the Court.
1. The discharge in bankruptcy releases a bankrupt from all his claims and debts which are provable against his estate including a fixed liability, absolutely owed, whether then payable or not, and from debts founded upon a contract, but does not release the bankrupt against such debts as are excepted from the discharge in bankruptcy.
2. The bankrupt's liability as a bank stockholder may form the basis of a provable claim, where the liability is regarded as being contractual in origin and nature, and it is not too contingent or too uncertain.
3. Stockholders are not liable for acts in an attempted liquidation of a going bank which are unauthorized or ultra vires, unless they have assented thereto, or have estopped themselves from denying liability therefor.
4. The double liability of a stockholder in a state bank, formerly imposed by section 7, art. XII of the Constitution of Nebraska, is a secondary and exceptional liability. It is not an asset of the bank, but is for the security of the bank's creditors.
Appeal from District Court, Dundy County; Eldred, Judge.
Action by E. H. Luikart, as receiver of the Bank of Benkelman Nebraska, against Paul Jones, Sr., and others to recover double liability from the defendants as stockholders of the Bank of Benkelman, Neb. From an adverse judgment, the plaintiff appeals.
Judgment affirmed.
F. C Radke, of Lincoln, and Leon L. Hines, of Benkelman, for appellant.
Butler, James & McCarl, of McCook, Victor Westermark, of Benkelman, and Perry, VanPelt & Marti and Arthur E. Perry, all of Lincoln, for appellees.
Heard before SIMMONS, C. J., and ROSE, EBERLY, PAINE, CARTER, MESSMORE, and JOHNSEN, JJ.
This is an action to recover double liability from stockholders of the Bank of Benkelman by the receiver of that bank, as formerly provided by section 7, art. XII of the Constitution, which was repealed November 8, 1938. After trial the action was dismissed as to the defendants, and they were allowed to go hence without day, from which plaintiff appealed.
The plaintiff's amended petition, filed December 3, 1938, alleges that the Bank of Benkelman was organized September 1, 1887, and given charter No. 38. On March 17, 1932, the bank having been adjudged insolvent, E. H. Luikart, plaintiff, was appointed receiver, and on March 18, 1938, it was adjudged that the bank owed creditors $164,164.10. On May 21, 1938, the receiver reported that he had completed liquidation of the bank, and that the deficiency due to its creditors amounted to $138,201.58, and that there is due from each and every stockholder their double liability; that defendants Paul Jones, Sr., and Robert E. Moore owned 70 and 10 shares of stock respectively, and prayed for an accounting and judgment for the amount due from each of said stockholders.
Paul Jones, Sr., filed answer, setting out that on January 14, 1933, he was adjudged a bankrupt in the McCook division of the United States district court for Nebraska, and on April 26, 1933, he was discharged as a bankrupt; that the causes of action set forth in plaintiff's petition accrued prior to the adjudication in bankruptcy, and are among the debts and claims from which the defendant was discharged as a bankrupt.
Plaintiff files reply, admitting the bankruptcy proceedings, and denying all other allegations, and charges that the claim against the defendant on the ownership of 70 shares of stock in said bank was entirely contingent, and not a provable claim in bankruptcy, as the deficiency was judicially determined by the court on May 21, 1938, and that the defendant has not been discharged from the liability.
Robert E. Moore for answer alleged that he was adjudged bankrupt in the McCook division of the United States district court for the district of Nebraska on June 6, 1935, and on the 14th day of February, 1936, he was discharged as a bankrupt, and that the debts referred to in plaintiff's petition for a double liability on his shares of bank stock are among the debts from which he was so discharged by the federal court.
After trial the court held that the defense of bankruptcy as pleaded in the answers of the defendants, was a good defense to plaintiff's cause of action, and dismissed plaintiff's petition as to each of the bankrupts.
The plaintiff assigns as errors that the judgment of the district court is contrary to the evidence and contrary to law, and erred in finding that, when the defendants were discharged in bankruptcy, the plaintiff's claim was then a provable claim, and was discharged by said bankruptcy proceedings.
The sole question involved is, whether a stockholder of a state bank who goes through bankruptcy some years after the state bank in which he holds stock has been adjudged insolvent, but before there has been a judicial determination as to the exact amount for which each stockholder is liable under the constitutional double liability clause, is released from his obligation as a stockholder to pay the double liability.
The discharge in bankruptcy means the release of a bankrupt from all his debts which are provable, including a fixed liability, absolutely owing, whether then payable or not, and debts founded upon a contract, express or implied. 7 Remington, Bankruptcy, sec. 3516.
In a case involving the California banking law, it was held that assessment made after filing of petition in bank ruptcy could not be rejected on the ground that it was too indefinite and remote a contingency to constitute a debt at the time of filing the petition. Erickson v. Richardson, 9 Cir., 1936, 86 F.2d 963, 964.
" Stockholders' double liability in banking corporations is contractual obligation and by construction constitutional provisions in effect at the time of purchase of corporate stock are material parts thereof." Luikart v. Paine, 126 Neb. 251, 253 N.W. 86.
Counsel for the receiver of the Bank of Benkelman insist that contingent claims are not provable as debts in bankruptcy, and that a contingent claim is one where the liability depends on some future event which may or may not happen, and that a bank stockholder's liability is unliquidated until the amount is fixed, and must be liquidated before it can be provable, and that a discharge in bankruptcy does not operate as a release therefrom.
There is no question but that authorities may be found on both sides, for in the receiver's reply brief he cites 6 Am.Jur. 582, sec. 120, reading as follows:
But in examining 8 C.J.S., Bankruptcy, 1263, § 404, it is said: " Unless the contingency or uncertainty is so great as to prevent the claim from being susceptible of liquidation, a claim or demand is not necessarily unprovable because it is contingent at the time of the filing of the petition, if it can be brought within some provision or subdivision of Bankruptcy Act § 63 [sub.] a [11 U.S.C.A. § 103 sub. a] which contains no express requirement that the claims provable thereunder be a fixed and absolute liability of the bankrupt at the time of the petition."
Referring now to 8 C.J.S., Bankruptcy, 1258, § 399, it is said: " The bankrupt's liability as a stockholder may form the basis of a provable claim, under Bankruptcy Act § 63 [sub.] a (4) (11 U.S.C.A. sec. 103 [sub.] (a) (4), where the liability is regarded as being contractual in origin and nature and it is not too contingent or uncertain to be susceptible of liquidation."
The Circuit Court of Appeals of the United States, in Brown v. O'Keefe, 3 Cir., 85 F.2d 885, has held that claims based upon assessment against the bankrupt to enforce his statutory liability as a stockholder are provable in bankruptcy.
In Justice Cardozo's opinion in Brown v O'Keefe, 300 U.S. 598, 57 S.Ct. 543, 547, 81 L.Ed. 827, being the same case on appeal, it is said: " By the mandate of the statute (Bankruptcy Act § 63 [sub.] b, 11 U.S.C. § 103 [[[sub.] (b), 11 U.S.C.A. § 103 [sub.] (b): ‘ Unliquidated claims against the bankrupt may, pursuant to application to the court, be liquidated in such manner as it shall direct, and may thereafter be proved and allowed against the estate.' The result is to invest the court with a discretionary power that can be fitted to the needs of varying situations. Maynard v. Elliott, 283 U.S. 273, 51 S.Ct. 390, 75 L.Ed. 1028; Cf. Foust v. Munson S.S. Lines, 299 U.S. 77, 83, 57 S.Ct. 90, 93, 81 L.Ed. 49. * * *Liquidation being possible, the claim is not defeated though there was uncertainty as to its amount at the filing of the petition. Maynard v. Elliott, supra. Yet even the amount was certain, if we are to credit the defendant's statement. By this it appears that long before the bankruptcy the necessity for an assessment to the amount of the par value of the shares had become obvious to the liquidating agent and indeed to all concerned. The facts are far removed from those in Miller v. Irving Trust Co., 296 U.S. 256, 56 S.Ct. 189, 80...
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