Maddison v. Bryan

• Decision Date: 16 March 1926
• Docket Number: No. 3071.,3071.
• Citation: 31 N.M. 404,247 P. 275
• Parties: MADDISONv.BRYAN et al.
• Court: New Mexico Supreme Court

31 N.M. 404

247 P. 275

MADDISON

v.BRYAN et al.

No. 3071.

Supreme Court of New Mexico.

March 16, 1926.Rehearing Denied May 28, 1926.

Syllabus by the Court.

In suit by receiver of failed bank to enforce statutory stockholders' liability, complaint need not allege insolvency of bank.

Statutory liability of stockholders of failed bank is an asset in the hands of the receiver, who may enforce same, in course of liquidation, without awaiting final determination of fact or amount of deficiency of assets.

Order assessing stockholders' liability and directing receiver to enforce same, made in proceedings to wind up failed bank, is proper exercise of court's control over its receiver, and is conclusive on stockholders, though not parties, as to necessity of assessment.

Liability attaches under section 8, c. 149, Laws 1923, to beneficial and equitable owners of stock in failed bank.

Contract by which stockholders of a national bank acquire ownership of all stock of state bank, proportionate to their holdings in the former, and disqualify themselves from transferring their interests in the latter except by transfer of their stock in the former, is not void, even though its purpose and effect are to give the national bank control over affairs of the state bank.

A demurrer to a complaint, on the ground that it does not state facts sufficient to constitute a cause of action, does not raise a question merely as to the amount of judgment.

Additional Syllabus by Editorial Staff.

“Insolvent bank,” within Laws 1915, c. 67, § 86, relating to stockholders' liability, means one which, after thorough examination, state bank inspector is satisfied it cannot resume business or liquidate its indebtedness to satisfaction of all its creditors authorizing appointment of receiver under Laws 1919, c. 120, § 32.

On Motion for Rehearing.

That allegations are incomplete, indefinite, or conclusions of law or fact, not sufficient to sustain a demurrer to the complaint for failure to state a cause of action, following Michelet v. Cole, 20 N. M. 357, 149 Pac. 310.

In suit by receiver of failed bank to enforce statutory liability against equitable owners of stock, trustees who are the registered holders are not necessary parties.

Appeal from District Court, Bernalillo County; Hickey, Judge.

Action by Thomas K. D. Maddison, receiver of the State Trust & Savings Bank of Albuquerque, against Susie P. Bryan and others. Some defendants suffered judgment by default. From judgments rendered for the plaintiff against all defendants severally, some defendants appeal, and some defendants against whom judgment went by default also appeal. Affirmed and remanded, with directions.

As respects stockholders' liability, contract by which stockholders of national bank acquire ownership of stock of state bank proportionate to holdings in former, and disqualify themselves from transferring their interests in latter except by transfer of stock in former, is not void, even though purpose and effect are to give national bank control over affairs of state bank.

F. E. Wood, R. P. Barnes, A. A. Sedillo, and E. W. Dobson, all of Albuquerque, for appellants.

Merritt C. Mechem and F. W. Vellacott, both of Albuquerque, for appellee.

WATSON, J.

This action is for the enforcement of the statutory additional liability of the stockholders of the failed State Trust & Savings Bank of Albuquerque. There were numerous defendants, against all of whom, severally, judgments were rendered. Some of the defendants demurred to the complaint and are here complaining of the overruling of their demurrers. The remainder of the defendants made no appearance, but suffered judgment by default. A few of this latter class have appealed from the judgments, urging here that the complaint is so fundamentally defective as not to support the judgments.

The complaint alleges, in substance, that the plaintiff was, on April 5, 1924, appointed by the district judge as receiver of the State Trust & Savings Bank (formerly American Trust & Savings Bank) in certain proceedings in which the state was plaintiff and said bank was defendant; that the bank was incorporated in 1912 with a capital stock of 500 shares of the par value of $100 each; that in June, 1915, the stockholders of the State Bank were also stockholders of the National Bank of Albuquerque, and that at that time a trust agreement was entered into, pursuant to which the stockholders of the State Bank transferred and delivered to five trustees all of the capital stock, to be held by said trustees in trust for the owners and holders of the shares of the capital stock of said National Bank in proportion to their ownership of such stock; that said trust agreement was carried into effect by the transfer of the stock of the State Bank to the trustees, and by issue to the stockholders of certificates of stock of the National Bank bearing upon the reverse an indorsement to the effect that the owner of the shares represented by such certificate was beneficially interested, by and under the trust agreement, in the capital stock of the State Bank in proportion to his ownership of stock in the National Bank, which beneficial interest should not be sold or transfered otherwise than by transfer of the stock in the National Bank, and that such beneficial interest should pass by such transfer. The complaint further alleged that the present holders of stock in said National Bank all hold certificates upon which such indorsement appears, evidencing their ownership of shares of the capital stock of said State Bank. It was further alleged that in September, 1915, the State Bank, by amendment of its articles of incorporation, increased its capital stock to $100,000 and that the 500 shares thus created were issued to the five trustees, so that each of them hold 200 shares, and that they hold the same for the use and benefit of the stockholders of the National Bank, in proportion to their holdings in said National Bank; namely, one share of the capital stock of the State Bank to two shares of the stock of the National Bank. The complaint then sets forth an order of the district court in the receivership proceedings, declaring the liability of the stockholders of the State Bank for an assessment of 100 per cent. on the par value of their stock, and directing the receiver to enforce such liability by suit or otherwise, and alleges that the defendants, naming them, are the beneficial and equitable owners, respectively, of designated numbers of shares of stock of the State Trust & Savings Bank, as shown by the stock books of the State National Bank.

The trust agreement, above mentioned, is annexed to the complaint and made a part thereof as an exhibit. We shall not attempt to summarize it here, but will refer to its provisions in discussing the several points raised.

[1] Some of the appellants urged that the complaint is fatally defective, in that it fails to allege the insolvency of the bank. The statutory provision for the additional liability of stockholders of state banks is found in section 8, c. 149, Laws of 1923, amending section 40 of the Banking Code of this state (chapter 67, Laws of 1915). That section is as follows:

“Sec. 8. That sec. 40, chapter 67, of the Session Laws of 1915, be and the same is, hereby amended to read as follows:

‘The stockholders of every banking corporation shall be held individually responsible for all contracts, debts and engagements of such corporation, each to the amount of his stock therein, at the par value thereof, in addition to the amount invested in such stock. The stockholders in any banking corporation who shall have transferred their shares or registered the transfer thereof within six months next before the date of the failure of such corporation to meet its obligations, or with knowledge of such impending failure, shall be liable to the same extent as if they had made no such transfer, to the extent that the subsequent transferee fails to meet such liability, but this provision shall not be construed to affect in any way any recourse which such shareholders might otherwise have against those in whose names such shares are registered at the time of such failure.”

Section 86 of chapter 67, Laws of 1915, provides as follows:

“No bank shall make an assignment for the benefit of creditors. No writ of attachment or execution shall be levied upon the property or assets of any bank when in the possession of the state bank examiner, special deputy bank examiner or receiver appointed by the court. No creditors shall maintain any action to recover upon a stockholder's or officer's or director's liability while a bank is in the possession of the receiver, but such stockholder's, officer's and director's liability shall be deemed an asset of said insolvent bank and such receiver shall have the sole and exclusive right to maintain such action.”

[7] It might be inferred from the former section that the additional liability is to arise upon “failure of such corporation to meet its obligations.” It might be inferred from the latter section that the liability only arises in case of insolvency of the bank. It is argued that, since the complaint does not allege the insolvency of the bank, it fails to exclude the theory that it is being would up because of the expiration of its charter, or for violation of it. The receiver is appointed in a proceeding instituted by the Attorney General, upon full and complete report by the state bank examiner, after a thorough examination of the affairs of the bank, from which he shall become satisfied that such bank cannot resume business or liquidate its indebtedness to the satisfaction of all of its creditors. Section 32, c. 120, Laws of 1919. It is this condition of the bank that warrants a receivership, and it is this condition, we think, that is meant by the term “insolvent bank” as used in section 86, supra.

There would seem to be no basis for the claim that the bank's...