McGrath v. Moody, 48.

• Court: Supreme Court of Michigan
• Citation: 286 N.W. 129,288 Mich. 691
• Docket Number: No. 48.,48.
• Parties: McGRATH v. MOODY.
• Decision Date: 05 June 1939

288 Mich. 691
286 N.W. 129

McGRATH
v.
MOODY.

No. 48.

Supreme Court of Michigan.

June 5, 1939.

Action by Joseph J. McGrath, receiver of Peoples Wayne County Bank of Wyandotte, a Michigan banking corporation, against Arnott H. Moody, to recover a stockholders' assessment upon stock claimed to have been owned by defendant in the Peoples Wayne County Bank of Wyandotte. From a judgment for plaintiff, defendant appeals.

Affirmed.

Appeal from Circuit Court, Wayne County; John Simpson, Judge.

Argued before the Entire Bench.

[286 N.W. 130]

Charles L. Goldstein, of Detroit (Herbert B. Thompson, of Detroit, of counsel), for appellant.

Henry Messimer, of Detroit, for appellee.

BUTZEL, Chief Justice.

Defendant became the nominal owner of 10 shares of stock in the Peoples Wayne County Bank of Wyandotte in order to qualify as a director and thus conform with the law which provided that every director must own in his own name such shares of the bank stock, the par value of which shall not be less than $1,000, and that he take and subscribe to an oath stating that he is the owner in good faith of such qualifying shares. 3 Comp.Laws 1929, § 11911 (Stat.Ann. § 23.19). As a matter of fact, all of the shares of the bank were owned or controlled by the Detroit Bankers Company with whom defendant made a purchase agreement for the acquisition of the 10 shares of stock in order to comply with the statute, and also for the escrowing of the stock to a trustee. In the event that defendant should cease to be a director, the Detroit Bankers Company was to reacquire the stock upon paying to the holder the price at which he had purchased it; Detroit Bankers Company was to receive all dividends and retain all subscription rights which might accrue to the stock. The price paid for the 10 shares of $100 each was $5 per share, or $50. Peoples Wayne County Bank of Wyandotte closed February 13, 1933. Subsequently plaintiff was appointed receiver and brought this suit to recover stockholders' assessment of 100 per cent. Defendant appeals from a judgment in favor of plaintiff.

Defendant strenuously insists that the instant case is governed by the cases in which we held that the true owner of the stock and not the nominal owner was liable for the stockholder's liability on bank stock. Foster v. Row, 120 Mich. 1, 79 N.W. 696,77 Am.St.Rep. 565;Gibson v. Oswalt, 269 Mich. 300, 257 N.W. 825;Fors v. Farrell, 271 Mich. 358, 260 N.W. 886. These cases do not involve a director who has taken the...