Robertson v. Conway

• Decision Date: 06 June 1911
• Docket Number: 2,104.
• Citation: 188 F. 579
• Parties: ROBERTSON v. CONWAY et al.
• Court: U.S. Court of Appeals — Sixth Circuit

188 F. 579

ROBERTSON v. CONWAY et al.

No. 2,104.

United States Court of Appeals, Sixth Circuit.

June 6, 1911

Brown &amp Nuckols (Eli H. Brown, of counsel), for appellant.

William T. Ellis, James J. Sweeney, and Clarence M. Finn, for appellees.

Before SEVERENS and KNAPPEN, Circuit Judges, and SATER, District judge.

KNAPPEN Circuit Judge.

This is an appeal from a decree of the Circuit Court requiring appellant to pay to complainants, for the benefit of themselves and other creditors, the sum of $1,000 and interest as the full 'double liability' of appellant as stockholder in the Owensboro Savings Bank & Trust Company under the statutes of Kentucky. Ky. St. Sec. 547 (Russell's St. Sec. 2131). The decree appealed from is the same decree considered by this court in the case of Alsop v. Conway, 188 F. 568, decided May 2, 1911, in which the case generally and its history are fully stated. It was there held (1) that the motion to dismiss the appeal on the ground that the parties interested therein are not before the court was not well taken; (2) that the stockholders' double liability under the statute in question belongs to the creditors, and is not an asset of the receiver provided for by the Kentucky statute relating to the administration of the affairs of insolvent banks; (3) that there is nothing in the receivership proceedings in the state court to interfere with the exercise of jurisdiction as actually exercised in this case by the court below; (4) that this suit was properly brought in equity and against all the stockholders made parties; (5) that the Circuit Court did not lose jurisdiction over the case by reason of the nonmaturity of claims exceeding $2,000, nor by the fact that the claims of some of the complainants did not exceed that amount; and (6) that the fact that certain creditors of the bank, not parties upon the record, were citizens of Kentucky did not oust the court of jurisdiction on the ground of diversity of citizenship between the original parties. This case differs from the case of Alsop v. Conway in but two important respects: First, the defense is made that the matter in dispute was but $1,000 exclusive of interest, and that the Circuit Court had thus no jurisdiction as to this appellant; and, second Robertson's stock consisted only of 10 shares, of the par value of $100 each, of the increased capital stock of the bank, authorized December 9, 1905, and issued about January 1906.

In addition to the defense upon the merits urged in the Alsop Case, that the purchase of this stock was induced by fraudulent representations by officers of the bank as to its financial condition, the further defense is made that the increased stock sold appellant was 'invalid, fictitious, and void' under the laws of Kentucky, and the sale not binding on appellant, for the reason that bona fide subscriptions for the entire authorized amount of such increase were not made within one year from the date of such authorization; that but a small portion of such stock was paid for in cash, the purchasers of the larger part thereof having paid therefor by executing and delivering their promissory notes, the certificates thereof being retained by the bank as collateral security for such notes; that appellant gave his promissory note (with surety in part) for the entire amount of such stock purchase; that said notes have not been paid; and that an action is pending in one of the state courts of Kentucky for the cancellation of said stock subscription. It is further urged that, if appellant is subject to any part of the statutory double liability, he can equitably be charged with only 50 per cent. thereof, on account of having paid a premium of 50 per cent. on the stock purchase.

In disposing of this defense upon the merits, little need be said in addition to the considerations stated in the Alsop Case with respect to the liability on account of the increased stock there in question. Appellant purchased his stock about two years before the failure of the bank. He made no attempt to rescind until after such failure. His right to rescind by reason of the false representations as to the financial condition of the bank is concluded by the considerations expressed in the Alsop Case. The defense that the increased stock was fictitious is not supported by any proof in the record before us. It is, however, without merit as against the creditors. Bailey v. Tillinghast (6th Circuit), 99 F. 801, 40 C.C.A. 93. Nor is there any merit in the defense that another suit is pending for the cancellation of the stock subscription. Not only is there no assertion, either in pleading or proof, that such suit was pending at the time of the institution of the present suit, but there is neither allegation nor proof that any one authorized to represent creditors with respect to the statutory double liability is a party to such suit in the state court. As pointed out in the Alsop Case, the liability in question is to creditors, and not to the bank or its receiver appointed under the insolvency proceedings in the state court. It is too clear for argument, that the premium paid for the purchase of the stock cannot be offset against the statutory liability in question. The fact that appellant did not pay for his stock in money, nor receive possession of the certificates therefor, is not, in our opinion, material by way of defense to this statutory action in favor of creditors. In view of these considerations, and upon the authority of the Alsop Case, we are constrained to hold that the defense made as to the merits cannot be sustained.

We are thus brought to the question of law peculiar to this appeal, viz., whether the fact that the amount claimed against appellant is but $1,000, exclusive of interest and costs, deprived the Circuit Court of jurisdiction over him.

It is the general rule that, in a suit in equity brought in the Circuit Court by two or more persons on several and distinct demands, a defendant cannot be joined against whom the sum demanded does not exceed $2,000. In that class of cases the amount in controversy as to such defendant is merely the amount claimed from him. Thus in Walter v. Northeastern R. Co., 147 U.S. 370, 374, 13 Sup.Ct. 348, 37 L.Ed. 206 it was held that the Circuit Court had no jurisdiction over a bill to enjoin the collection of taxes from a railroad company under distinct assessments, in separate counties, no one of which amounts to more than $2,000. In Citizens Bank of Louisiana v. Cannon, 164 U.S. 319, 17 Sup.Ct. 89, 41 L.Ed. 451, it was held that separate assessments were not sufficient to give jurisdiction to a bill to enjoin the collection of taxes in several parishes by joining against different collectors. And under statutes limiting the appellate jurisdiction of the Supreme Court to cases where the amount in controversy exceeds a certain sum, it is the rule that, where suit in equity is brought by two or more persons on several and distinct demands, the defendant can appeal as to those complainants only to each of whom the jurisdictional amount is decreed. The rule is also well settled that distinct decrees against distinct parties on distinct causes of action, or on a single cause of action in which there are distinct liabilities, cannot be joined to give the Supreme Court jurisdiction on appeal. Ex parte Phoenix Ins. Co., 117 U.S. 367, 369, 6 Sup.Ct. 772, 29 L.Ed. 923; Paving Co. v. Mulford, 100 U.S. 147, 25 L.Ed. 591; Stratton v. Jarvis, 8 Pet. 4, 8 L.Ed. 846; Henderson v. Wadsworth, 115 U.S. 264, 274-277, 6 Sup.Ct. 140, 29 L.Ed. 377; Chamberlin...