Rather v. Moore

• Decision Date: 19 April 1937
• Docket Number: 32644
• Court: Mississippi Supreme Court
• Parties: RATHER et al. v. MOORE

173 So. 664

179 Miss. 78

RATHER et al. v. MOORE

No. 32644

Supreme Court of Mississippi

April 19, 1937

(Division A.)

1. BANKS AND BANKING.

Potential inchoate liability of stockholders in bank was transformed into an enforceable liability when chancery court took over bank for liquidation when it became insolvent.

2. LIMITATION OF ACTIONS.

Six-year period of limitations applicable to all actions for which no other period is prescribed held applicable to action against stockholders of insolvent bank for their double liability and not three-year period applicable to actions on unwritten contracts, since double liability of a stockholder is provable by writing, and therefore is not an implied contract, but written contract with an implied promise to pay (Code 1930, sections 2292, 2299, 3803, 3815).

3. LIMITATION OF ACTIONS.

Three-year statute of limitations would not be applicable to action against stockholders of insolvent state bank for their double liability, even if such liability is statutory, since liability is not a "penalty," and hence six-year statute would apply (Code 1930, sections 2292, 2299, 3803, 3815).

4. BANKS AND BANKING.

Actions against stockholders of insolvent state bank for their double liability held maintainable, notwithstanding all the stockholders were not joined in one action, where plea raising question did not name any necessary stockholders omitted from bill (Code 1930, sections 515, 3815).

5. BANKS AND BANKING.

Receiver of insolvent bank would not be required to join in suit against stockholders for their double liability those stockholders who had recognized and paid their obligations and insolvent stockholders, irrespective of whether all stockholders liable should be joined in one suit (Code 1930 sections 515, 3815).

6. BANKS AND BANKING.

Statute which repealed provision of former statute with respect to double liability of stockholders of insolvent state bank and re-enacted it verbatim with certain stated exceptions held to have continued double liability theretofore existing in force, where it was clear from terms of statute that it was intended to include within the terms of double liability all those classes which were not excluded by its terms (Code 1930, section 3815; Laws 1934, chapter 146, sections 115 119).

Division A

Editorial Note:

This Pagination of this case accurately reflects the pagination of the original published, though it may appears out of sequence.

APPEAL from the chancery court of Quitman county HON. R. E. JACKSON, Chancellor.

Suit by C. C. Moore, as receiver of the Riverside Bank of Marks, against L. A. Rather and others. From an adverse judgment, the defendants appeal. Affirmed.

Affirmed and remanded.

J. M. Stevens, Jr., J. Morgan Stevens, and W. E. Gore, all of Jackson, M. S. McNeil and John Armstrong, both of Hazlehurst, and T. N. Gore and W. A. Cox, both of Marks, for appellants.

Obligation and liability imposed on stockholders of state bank constitutes an implied contract.

Board of Bank Examiners v. Grenada Bank, 135 Miss. 242, 99 So. 902; Carothers v. Love, 168 Miss. 250, 152 So. 483; Gift v. Love, 164 Miss. 422, 144 So. 562; Gray v. Love, 173 Miss. 390, 161 So. 679; Mellott v. Love, 152 Miss. 860, 119 So. 913.

Implied contract of stockholders is an unwritten contract barred in three years.

Anson on Contracts; Beck v. Tucker, 147 Miss. 401, 113 So. 209; Buntyn v. Building & Loan Assn. , 86 Miss. 454, 38 So. 345; Blount v. Miller, 172 Miss. 492, 160 So. 598; Carrol v. Green, 92 U.S. 509, 23 L.Ed. 738; City of Hattiesburg v. Cobb Bros. Construction Co., 174 Miss. 20, 163 So. 676; Dunbar v. Mayes, 43 Miss. 579; Federal Land Bank v. Collins, 156 Miss. 893, 127 So. 579, 69 A. L. R. 1068; Foote v. Farmer, 71 Miss. 148, 14 So. 445; Keener on Quasi Contracts; Mellott v. Love, 152 Miss. 860, 119 So. 913; Musgrove v. City of Jackson, 59 Miss. 390; McClain v. Rankin, 197 U.S. 154, 49 L.Ed. 742; McDonald v. Thompson, 184 U.S. 71, 46 L.Ed. 437; Pate Lbr. Co. v. Southern Ry. Co., 115 Miss. 402, 76 So. 481; Warren Godwin Lbr. Co. v. Lumber Minerals Co., 120 Miss. 346, 82 So. 257.

Liability and cause of action accrue on insolvency of bank.

Anderson v. Love, 169 Miss. 219, 151 So. 366; Board of Bank Examiners v. Grenada Bank, 135 Miss. 242, 99 So. 903; Carrol v. Green, 92 U.S. 509, 23 L.Ed. 738; Cowden v. Williams, 259 P. 570, 55 A. L. R. 1059; Gift v. Love, 164 Miss. 442, 144 So. 562; Gray v. Love, 173 Miss. 390, 161 So. 679; McClaine v. Rankin, 197 U.S. 154, 49 L.Ed. 702; Pate v. Bank of Newton, 116 Miss. 666, 77 So. 60.

Statute of limitations may be pleaded by special demurrer in equity.

Central Trust Co. v. Meridian Light & Power Co., 64 So. 216; Dolan v. Tate, 161 Miss. 615, 137 So. 515; W. T. Raleigh Co. v. Fortenberry, 133 Miss. 467, 97 So. 722.

P. H. Lowrey, of Marks, for appellants.

The court below held that the six year, and not the three year, statute applied, which holding was certainly excusable if it was error, as only that side was presented. We sincerely contend and believe that the court erred in this particular.

We think there is no ground for the contention that statutes of limitations do not apply in suits by bank receivers, and we do not suppose this point will be pressed.

Board of Bank Examiners v. Grenada Bank, 99 So. 903; Warren County v. Lamkin, 46 So. 511.

Inasmuch as all statutes creating an additional liability on the part of stockholders are in derogation of the common law, they are to be strictly construed. They are a wide departure of the established rule, and, though supposed to be founded on considerations of public policy and general convenience, are not to be extended beyond the plain intent of the words of the statute.

Mellott v. Love, 119 So. 913; Gift v. Love, 144 So. 562; Richmond v. Iron, 121 U.S. 27, 7 S.Ct. 788, 30 L.Ed. 864.

The case of Aldrich v. McClaine, 106 F. 791, is the strongest and best considered case I have found and it holds that a statute similar to our three year statute of limitations applies.

The liability under our statutes being direct, immediate and primary, the principles announced in the McClaine case, 106 F. 791, are controlling here.

Pate v. Bank of Newton, 77 So. 601.

The term of liability created by statute, or an equivalent phrase, which is of frequent occurrence in statutes of limitations, is intended to embrace liabilities arising out of and existing purely by virtue of some positive obligation imposed by statute. It does not embrace a liability which, though declared by statute and not enforceable in the absence of the statute, arises out of some voluntary act or agreement of the party. It, therefore, does not embrace an action to enforce the liability of a stockholder in a national bank for debts of the bank, nor an action to enforce the liability of a corporation under a charter granted by the Legislature imposing the obligations upon which the liability is founded.

19 Encyc. of Law, page 281.

The right of action by a corporation, or by its trustees in bankruptcy, or by its receiver, or by its creditors, on a subscription to its stock, or by stockholders against directors for losses caused by defendants' negligence, or by creditors against the stockholders, or against stockholders and directors, of an insolvent corporation, is barred within the same period that an action of debt founded on a contract not under seal, or an action of assumpsit or on the case founded on contract, is barred.

37 C. J. 749.

It seems to me that it is clear that the action in this case bars as in other cases as between individuals and that the statute of limitations begins to run as soon as an action might be begun to recover the debt and the question for solution here is whether the three year statute, section 2299, Code of 1930, governs. Under this statute, all actions bar in three years on "any unwritten contract, express or implied." It seems to me to be established by the foregoing authorities, and all other authorities, so far as I have been able to find, the double liability of the stockholder is a contract implied from his subscription to or purchase of the stock. It is clearly an unwritten contract, that is, the stockholder does not, in any writing, contract to pay this double liability, but as said by the authorities, the contract is implied from its purchase.

It seems to me superfluous to argue that an implied contract cannot be a written contract, and this is strictly in accord with the decisions of our court.

Buntin v. National Building & Loan Assn., 86 Miss. 454.

L. A. Smith, Sr., of Holly Springs, for appellants.

Inasmuch as statutes imposing double liability on stockholders of banks are in derogation of the common law, they are to be strictly construed against the imposition thereof.

Mellott v. Love, 119 So. 913.

To take a case out of the statute there must be a writing evidencing an acknowledgment of indebtedness, or promising to pay, in such terms as to render any supplemental evidence unnecessary.

Foote v. Farmer, 71 Miss. 148, 14 So. 445; 1 Cook on Corporations, 644.

Our court refers to the liability of a stockholder as a "contract." (Pate v. Bank of Newton, 116 Miss. 666 77 So. 601.) And lays down the rule in that case as to its accrual in the following language: "We think the liability of the stockholder, as to deposits, accrues with the making of the deposit." Certainly this is an implied contract, and not one to which the statute is inapplicable, because the liability is not created in the way described in Foote v. Farmer, supra, i.e., there is "no writing evidencing an acknowledgment of indebtedness or promising to pay, in such terms as to render any supplemental evidence unnecessary." It seems to me clear,...