Mitchell v. Banking Corporation of Montana

• Decision Date: 21 April 1933
• Docket Number: 7015.
• Citation: 22 P.2d 175,94 Mont. 165
• Parties: MITCHELL et al. v. BANKING CORPORATION OF MONTANA et al.
• Court: Montana Supreme Court

22 P.2d 175

94 Mont. 165

MITCHELL et al. v. BANKING CORPORATION OF MONTANA et al.

No. 7015.

Supreme Court of Montana

April 21, 1933

Rehearing Denied May 23, 1933.

Appeal from First Judicial District Court, Lewis and Clark County Wm. E. Carroll, Judge.

Action by Grace Mitchell and others against the Banking Corporation of Montana, John W. Blair, and others, in which W. J. Paul and others, as executors of the will of defendant Blair, were substituted for the latter as parties defendant after his death. From a judgment for plaintiffs against the executors the latter appeals.

Affirmed.

See also, 22 P.2d 155.

CALLAWAY C.J., dissenting in part.

Edward Horsky, of Helena, and W. J. Paul, of Deer Lodge, for appellants.

C. E. Pew, of Helena, for respondents.

ANGSTMAN Justice.

This action was commenced on February 27, 1925, on behalf of plaintiffs and all other creditors of the Banking Corporation of Montana, insolvent and in the hands of a receiver, to enforce the stockholders' liability. All stockholders were joined as defendants. Among the original defendants was John W. Blair. He filed a demurrer to the complaint on July 31, 1925. On September 23, 1926, Blair died. Thereafter his will was admitted to probate and W. J. Paul, E. Mittelstaedt, and Thomas Geary were appointed and qualified as executors.

Thereafter the death of John W. Blair was suggested to the court (but just when, the record does not disclose), and the executors were substituted as parties defendant in the place of John W. Blair. On July 19, 1929, the executors filed their answer. The answer alleges as an affirmative defense the death of John W. Blair, the appointment and qualification of the executors, the due publication of notice to creditors requiring claims against the estate to be presented within ten months after October 28, 1926, and the failure of plaintiffs to present the claim sued upon, or any claim, to the executors. These allegations were admitted by the reply and were found by the court to be true, but notwithstanding the court entered judgment for the plaintiffs and against the executors for the sum of $5,000, the amount demanded, together with interest at 8 per cent. per annum from the date of filing the complaint. Defendants have appealed from the judgment.

The first question presented by the appeal of the executors is whether the failure to present the claim to them for approval or rejection bars action thereon. Our statutes relating to the question of presenting claims provide in part:

"All claims arising upon contracts, whether the same be due, not due, or contingent, must be presented within the time limited in the notice, and any claim not so presented is barred forever." Section 10173, Rev. Codes 1921.

"No holder of any claim against an estate shall maintain any action thereon, unless the claim is first presented to the executor or administrator, except in the following case [not material here]." Section 10180, Id.

?7FIf an action is pending against the decedent at the time of his death, the plaintiff must in like manner present his claim to the executor or administrator for allowance or rejection, authenticated as required in other cases; and no recovery shall be had in the action, unless proof be made of the presentations required." Section 10183, Id.

The bank closed its doors on May 2, 1923. The liability of the stockholders arose by reason of section 6036, Revised Codes 1921, as amended by chapter 9, Laws of 1923, which provides: "The stockholders of every bank shall be severally and individually liable, equally and ratably, and not one for the other, for all contracts, debts, and engagements of such corporation, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares. No person holding stock as executor, administrator, guardian, or trustee, and no person holding such stock as a pledge or collateral security, shall be personally subject to any liability as stockholder in such corporation; but the person pledging such stock shall be considered as holding the same, and shall be liable as a stockholder accordingly, and the estate and funds in the hands of such executor, administrator, guardian, or trustee, shall be liable in like manner and to the same extent as the testator, intestate, ward, or the person interested in such trust fund would have been liable if he had been living or competent to act and hold the stock in his own name."

The authorities are not in accord on the question of the necessity of presenting such a claim to the executor or administrator. If the claim does not arise until after the time has expired for presenting claims, none need be presented. Zimmerman v. Carpenter (C. C.) 84 F. 747; Ebert v. Whitney, 170 Minn. 102, 212 N.W. 29, 51 A. L. R. 771; In re Macdonald's Estate, 29 Wash. 422, 69 P. 1111; Farmers' State Bank of Kingman v. Callahan, 123 Kan. 638, 256 P. 961.

And if the claim does not arise until after the death of the stockholder, no claim need be presented to the executor or administrator. Tierney v. Shakespeare, 34 N.M. 501, 284 P. 1019; Hirning v. Kurle, 54 S.D. 334, 223 N.W. 212; Drain v. Stough (C. C. A.) 61 F. (2d) 668; Baird v. McMillan, 53 N.D. 257, 205 N.W. 682, 41 A. L. R. 177; Miller v. Katz, 10 Cal.App. 576, 102 P. 946.

When the claim accrues against the decedent during his lifetime, the authorities are in conflict regarding the necessity of presenting the claim to the executor or administrator. The following, and perhaps other cases, hold that the claim under such circumstances must be presented: Mann v. Kleisdorff (C. C. A.) 16 F. (2d) 997; Board of Bank Examiners v. Grenada Bank, 135 Miss. 242, 99 So. 903; Sanders v. Merchants' State Bank of Centralia, 349 Ill. 547, 182 N.E. 897; Barto v. Stewart, 21 Wash. 605, 59 P. 480. The following case holds that such a claim need not be presented under any circumstances: Wanz v. Park Hotel Co., 1 Ohio Cir. Ct. R. 105.

But whatever the rule may be in other jurisdictions, the question is settled in this state by the case of Springhorn v. Dirks, 72 Mont. 121, 231 P. 912, 913. In that case this court, following the case of Zimmerman v. Carpenter (C. C.) 84 F. 747, held that the presentation of a claim to the executor or administrator was unnecessary. The opinion in that case did not set out the facts as clearly as it might have. But we see from the opinion that the bank "failed to open for business on December 3, 1921. *** All the defendants, except those appearing as administrators, were on that date stockholders." On June 7, 1923, the court levied the assessment. Reference to the transcript in the Springhorn Case discloses that Hagenson died on June 17, 1922. The complaint which was filed on July 26, 1923, named the administrator as a defendant. Notice to creditors was first published on August 19, 1922, requiring claims to be presented in ten months (or before June 19, 1923). This was twelve days after the assessment was made. Hence the court pointed out in the opinion that although no claim was presented "there had been time within which it might have been." Hagenson was a stockholder and living at the time the bank closed its doors. It was at that time when the claim of the creditors accrued. Mitchell v. Banking Corporation of Montana, 83 Mont. 581, 273 P. 1055. Hence the claim involved in that case accrued during the lifetime of Hagenson and makes the case one on all fours with this one, with the exception that here the action was commenced against Blair, the stockholder, before his death. But this fact does not distinguish the two cases, for section 10183, which requires the presentation of a claim to the executor or administrator if an action is pending against decedent, applies only to such claims as would require presentation if no action had been commenced against the decedent during his lifetime. Millar v. Millar, 51 Cal.App. 718, 197 P. 811; Hibernia, etc., Society v. Wackenreuder, 99 Cal. 503, 34 P. 219; Thompson v. Byers, 116 Cal.App. 214, 2 P.2d 496.

The Springhorn Case was decided in December, 1924. Since then we have had five sessions of the legislative assembly, and that body has not seen fit to make any change in the law with respect to the matter of presenting such claims. That case is determinative of this question in favor of plaintiffs. The holding in the Springhorn Case we think is correct.

In the absence of some special legislation on the subject, the plaintiffs' claims for the amounts of their several deposits in the defunct Banking Corporation would fall within the provision of section 10173, that "all claims arising upon contracts *** due, not due, or contingent, must be presented." Whether "due, not due, or contingent" would depend upon the condition of the debtor bank at the time of the death of a stockholder. It could readily be seen, at the time the statute imposing the double liability was enacted, that, owing to the peculiar nature of the contract which the stockholders were forced to assume, the requirement of the general law governing estate matters would lead to embarrassing and impossible situations. For example: The claim of the creditors does not become fixed until the bank fails and is therefore said to be then "created," within the meaning of the statute of limitations (Mitchell v. Banking Corporation, supra), yet while a bank is a solvent going concern, the liability is "contingent," for it is "dependent upon something that may or may not occur" (Webster's Dictionary), the future insolvency of the bank. Each depositor is a creditor of the bank (In re Williams' Estate, 55 Mont. 63, 173 P. 790, 1 A. L. R. 1639), and consequently has a contingent claim, arising on contract, against each stockholder in the...