Reimers v. Larson
| Decision Date | 05 February 1925 |
| Docket Number | 22635 |
| Citation | 202 N.W. 653,52 N.D. 297 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Stutsman County, Jansonius, J.
Affirmed.
Lemke & Weaver, for appellant.
While the books and records are prima facie evidence as to who the owners of the stock in the bank are, yet such prima facie evidence is overcome by proof to the contrary, and the general rules as to the sufficiency of evidence applies in this class of cases. (7 C. J. Banks & Banking, § 115).
While in certain cases where a person knowingly permits his name to appear upon the stock books as a shareholder, he may be estopped to deny his liability, but in such a case it must be proven by a fair preponderance of evidence that such stockholder had knowledge that his name was upon the books and records as a stockholder before it became insolvent. (3 R. C. L. § 28, Banks.)
"The liability of a stockholder, then, under the statute, having been settled as a debt due from the stockholder to the creditor, there can be no valid reason, it seems to us, why a stockholder, who is also a creditor should not be entitled as a matter of equity to set up as an equitable defense the debt of the bank to him against his own liability." Cahill v. Original Big Gun Beneficial etc. Assoc. 50 A. 1044.
"The law is well settled that a depositor can set off his deposit as against a claim of an insolvent bank." 7 C. J. page 852, § 350, Banks and Banking; Re Maritime Bank, 27 N B. 295.
"Such a creditor should not be required to contribute to a fund in which he is entitled to share except to the extent of the difference between what is owing to him and what he owes." Mosler Safe Co. v. Guardian Trust Co. 208 N.Y. 524, 101 N.E. 786.
C. B Craven, for respondent.
"On the resignation or removal of the receiver of an individual or a corporation, pending an action brought by or against him as such receiver, the action may still be prosecuted in his name." 1 C. J. 150 and cases cited, note 96.
The general rule is that a court will not take judicial notice of proceedings in another cause, although such cause may have been tried in the same Court. The decision of a cause must depend upon the evidence introduced. Murphy v. Citizens Bank, 12 Ann. Cas. 537 and note; 23 C. J. 113, notes 40 41; Amundson v. Wilson (N.D.) 91 N.W. 37.
"The right of a bank stockholder to set off the indebtedness of the bank to him in a suit by the receiver, depends upon the nature of the cause of action against the stockholder."
The nature of the liability, if created by statute, depends upon the phraseology of the statute. The general nature of the statute creating a double liability on part of stockholders of banks is one in favor of all who are creditors at the date of the bank's failure. Tardy's Smith, Receivers, 2d ed. § 483, p. 1430.
See 5 Cyc. 422, and cases cited, note 3.
"All persons unaffected with notice to the contrary, are at liberty to act upon the faith of the title of the stock being where it appears upon the corporation books to be." Fisher v. Essex Bank, 5 Gray (Mass.) 373.
Hoagland v. Bell, 36 Barb. (N.Y.) 57.
Conmy Young & Burnett, for L. R. Baird, Receiver.
Each of the defendants was sued in the district court of Stutsman county in an action to recover on account of an alleged liability as a stockholder in the Security State Bank of Courtenay, a failed bank. The actions were consolidated for trial and are likewise consolidated on appeal. The complaint in the Larson case alleges that the capital stock of the bank was $ 25,000, divided into 250 shares of $ 100.00 each; that previous to February, 1921 the corporation was engaged in the banking business and that at that time it was found to be insolvent, with an indebtedness exceeding $ 200,000 and assets of not to exceed $ 100,000; that the defendant Larson held 35 shares of the capital stock of the total par value of $ 3500; that notice had been given to him of an assessment of the stockholders equal to the stock held and demand made for the payment thereof and that there was a refusal to comply with the demand. The answer admits the existence of the bank and its capital stock at $ 25,000. It denies ownership in Larson of more than ten shares and contains an offer to pay the assessment of $ 1,000 on account of the ten shares admittedly owned. There is further pleaded an alleged indebtedness by the bank to Larson, existing at the time the bank was closed, of $ 1724 on account of a deposit in the bank and a further sum of $ 1075 on account of collections which the bank had made on behalf of the defendant Larson in that sum. In an amended answer there is a further claim of indebtedness owing by the bank to Larson on account of his having paid a certain portion of an alleged liability of the Security State Bank to the American Exchange Bank of Valley City. It pleads that there was a note for $ 7245 given by the Security State Bank of Courtenay to the American Exchange Bank and that this note was paid in April, 1921 by the giving of four individual notes, one of which was for $ 1800 and signed by Larson. The issues in the other cases are substantially the same, varying principally as to amounts. The defendants Larson, Nelson and Albrecht were original organizers of the Security State Bank of Courtenay and were members of its board of directors. In June, 1918 at an adjourned stockholders' meeting it was voted to increase the capital stock of the bank from $ 15,000 to $ 25,000 and the selling price of the additional stock was fixed at 115. In the fall of 1918 steps were taken to dispose of the increased stock in the vicinity of Courtenay. At that time the defendants Larson, Nelson and Albrecht, together with the cashier of the bank, one Ehred, decided to negotiate a loan from the American Exchange Bank of Valley City for the amount necessary to increase the capital stock as planned and to provide $ 1500 as surplus. This loan was made upon the note of the directors and the amount of it was credited to the account of J. H. Albrecht, trustee, and later transferred to the capital stock and surplus account of the bank. The defendants deny knowledge of the issuance of the stock, but at the time the bank was closed its books and records indicated that it had been issued to persons named, including the three mentioned defendants.
The principal contentions on this appeal concern questions of law. It is first asserted that, in view of chapter 137 of the Session Laws of 1923, which is an act to provide administration of affairs of insolvent banks, the district court of Stutsman County was without authority to entertain the actions brought by the receiver and that the receiver, who was appointed before chapter 137 took effect, had been superseded by a receiver appointed under that act and consequently was an improper party plaintiff. It did not appear that the plaintiff receiver had been checked out or supplanted by the new receiver as provided in § 8, chapter 137, Laws of 1923. We are of the opinion that these contentions find no support in the law relied upon. There is no provision in chapter 137 of the Laws of 1923 which, in our opinion, is susceptible of the construction adopted by the appellant. That chapter, as we view it, places the jurisdiction of insolvency proceedings affecting banks in the district court of Burleigh County, but it does not affect the venue of actions brought by or on behalf of such banks where venue is determined by the residence of the defendant under other statutory provisions. (See State v. First State Bank, ante, 83, 202 N.W. 404; State v. First State Bank, ante, 231, 202 N.W. 391; Baird v. Lefor, ante, 155, 38 A.L.R. 807, 201 N.W. 997.
The next question presented is the right of a stockholder to offset against his statutory liability the indebtedness of the bank to him. It is claimed that at the time the bank failed each of the defendants had various amounts on deposit and that, in addition, the defendant Larson had a sum in the bank resulting from the collection of certain notes which he had placed there for collection. The trial court charged the jury that they should not consider the matter of the liability of the bank to the stockholders, as it could not be set off against the receiver's claim for double liability, and during the progress of the trial rulings were made on the admission of evidence consistent with the view stated in the instruction. Error is predicated upon these rulings as well as upon the instruction. It is contended that justice to the stockholders requires that the setoff be allowed. The following quotation from the appellant's brief will, perhaps, best illustrate the contention: ...
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