Rogers v. Selleck, No. 26342.

CourtSupreme Court of Nebraska
Writing for the CourtROSE
Citation221 N.W. 702,117 Neb. 569
Docket NumberNo. 26342.
Decision Date10 November 1928
PartiesROGERS v. SELLECK ET AL.

117 Neb. 569
221 N.W. 702

ROGERS
v.
SELLECK ET AL.

No. 26342.

Supreme Court of Nebraska.

Nov. 10, 1928.



Syllabus by the Court.

The constitutional provision imposing upon bank stockholders a double liability to creditors in the event of insolvency and the constitutional provision that, in all cases of claims against corporations, the exact amount justly due shall be ascertained and the corporate property exhausted before enforcement of such liability, must be considered together. Const. art. 12, §§ 4, 7.

The terms of the constitutional provision imposing upon stockholders of a state bank a double liability are by construction embodied in the contracts of subscription for bank stock, but cannot be enforced until the exact amount justly due in all cases of claims against the bank has been ascertained and the corporate property exhausted.

The double liability imposed by the Constitution upon stockholders of a state bank inures to the benefit of unpaid creditors of the bank, and not to the bank in its corporate capacity.

In effect the constitutional provision imposing a double liability upon stockholders of a state bank requires them, in connection with their subscription for stock, to make contributions to a trust fund for the benefit of unpaid creditors in the event of insolvency, and the action to enforce their obligations must be prosecuted by one creditor for the benefit of all or by the receiver.

In actions at law a course of litigation permitting unnecessary trials, repeated appeals, discouraging delays and wasteful costs and expenses, should be avoided where a single suit based on recognized principles of equity jurisdiction would prevent such consequences.

The preventing of a multiplicity of suits in connection with other grounds of equitable cognizance may justify a court of equity in entertaining jurisdiction.

The remedy for the enforcement of the entire double liability imposed by the Constitution upon stockholders of a state bank in the event of insolvency is a suit in equity by a creditor for the benefit of all the creditors, or by the receiver, against all the stockholders. Dicta to the contrary in Burke v. Scheer, 89 Neb. 80, 130 N. W. 962, 33 L. R. A. (N. S.) 1057, and in Dickinson v. Kline, 96 Neb. 435, 148 N. W. 141, disapproved.


Appeal from District Court, Morrill County; Carter, Judge.

Suit by J. W. Rogers, receiver of the Broadwater Bank, against H. H. Selleck, Nils Lindquist, and others. From the judgment, defendant last named appeals. Affirmed.

[221 N.W. 702]

R. O. Canaday, of Omaha, and Paul H. Eaton, of Broadwater, for appellant.

C. M. Skiles and I. D. Beynon, both of Lincoln, for appellee.


Heard before GOSS, C. J., ROSE, DEAN, GOOD, THOMPSON, and EBERLY, JJ., and REDICK, District Judge.

ROSE, J.

This is a receiver's suit in equity for the benefit of all the creditors of an insolvent state bank against all the stockholders to recover in money and to distribute the entire par value of the stock or the double liability imposed by the state Constitution and by the contracts of subscription.

The insolvent was the Broadwater Bank, a corporation organized under the laws of Nebraska to transact a commercial banking business in Morrill county. The capital stock,

[221 N.W. 703]

paid in full, consisted of 250 shares, each of the par value of $100, or $25,000 in all. There were 15 stockholders and the individual ownership of shares varied from 1 to 141. Upon insolvency of the bank J. W. Rogers was appointed receiver to wind up its affairs. In the proceeding for that purpose it was decreed that the exact amount justly due from the bank to its creditors was $194,116.42; that all corporate property was converted into money and exhausted; that the proceeds were applied on the indebtedness, leaving unpaid $141,220.17 in liabilities incurred by the bank while defendants were stockholders. The receiver was directed by the court to bring this suit and did so, alleging in detail the foregoing facts, pleading the double liability imposed by the Constitution, naming the stockholders and indicating the share or shares of each, setting forth multiplicity of actions at law in connection with other grounds of equitable jurisdiction, averring there was no adequate remedy at law, and praying for an order on each defendant to perform his obligation, for judgment in the event of default, for distribution of the collected fund among the creditors and for general equitable relief.

Nils Lindquist, a defendant and a stockholder owning one share of the par value of $100, the full amount of his alleged double liability, demurred to the petition in equity herein on the grounds that he is improperly joined with other defendants; that the court is without equitable jurisdiction, and that the remedy of plaintiff, if any, is an action at law against each stockholder.

The demurrer was overruled. Lindquist refused to plead further and judgment was rendered against him for $100. From that judgment he has appealed.

Does the petition of the receiver state facts sufficient to constitute a cause of action cognizable in a court of equity? In resisting the 100-dollar claim, based on the liability imposed by the Constitution and assumed in the contract of subscription, is Lindquist, the owner of one share of the insolvent bank's capital stock, entitled as a matter of right to a jury trial in a technical action at law wherein he alone is defendant? These are difficult questions presented by the appeal with argument and citation of authorities on both sides. The nature of the liability created by the Constitution and the remedy of the unpaid creditors of the insolvent bank are subjects of inquiry. According to the allegations of the petition the stockholders are accountable in a proceeding of some kind under the following provision of the Constitution:

“Every stockholder in a banking corporation or institution shall be individually responsible and liable to its creditors over and above the amount of stock by him held to an amount equal to his respective stock or shares so held, for all its liabilities accruing while he remains such stockholder.” Const. art. 12, § 7.

Another provision of the Constitution is in this form:

“In all cases of claims against corporations and joint stock associations, the exact amount justly due shall be first ascertained, and after the corporate property shall have been exhausted the original subscribers thereof shall be individually liable to the extent of their unpaid subscription, and the liability for the unpaid subscription shall follow the stock.” Const. art. 12, § 4.

[1][2][3][4] The sections quoted must be considered together. Hastings v. Barnd, 55 Neb. 93, 75 N. W. 49;State v. German Savings Bank, 50 Neb. 734, 70 N. W. 221;Bodie v. Pollock, 110 Neb. 844, 195 N. W. 457;State v. Farmers' State Bank, 113 Neb. 497, 203 N. W. 629. The terms of the constitutional provisions are by construction embodied in the contracts of subscription for bank stock and the liability imposed upon and assumed by the stockholders is contractual, but cannot be enforced until the exact amount justly due in all cases of claims has been ascertained and the corporate property exhausted. Bourne v. Baer, 107 Neb. 255, 185 N. W. 408;State v. Banking House of A. Castetter, 116 Neb. 610, 218 N. W. 584. The double liability inures to the benefit of unpaid creditors, and not to the bank in its corporate capacity. Hamilton Nat. Bank v. American Loan & Trust Co., 66 Neb. 67, 92 N. W. 189. In effect the constitutional provision imposing a double liability upon bank stockholders in a state bank requires them, in connection with the...

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22 practice notes
  • Heine v. Degen, No. 22785.
    • United States
    • Supreme Court of Illinois
    • February 5, 1936
    ...creditors, alone, in whose favor such liabilities were incurred. In re Wilson's Estate, 127 Neb. 106, 254 N.W. 717;Rogers v. Selleck, 117 Neb. 569, 221 N.W. 702;Pickering v. Hastings, 56 Neb. 201, 76 N.W. 587;McClaren v. Anderson, 110 W.Va. 380, 158 S.E. 379;Benedum v. First Citizens' Bank,......
  • Brownell v. Adams, No. 27682.
    • United States
    • Nebraska Supreme Court
    • May 29, 1931
    ...in the event of insolvency is a suit in equity by a creditor for the benefit of all the creditors, or by the receiver.” Rogers v. Selleck, 117 Neb. 569, 221 N. W. 702.Syllabus by the Court. Jurisdiction of equity to enforce constitutional liability of stockholders of an insolvent banking co......
  • Gaiser v. Buck, No. 25701.
    • United States
    • Indiana Supreme Court of Indiana
    • November 20, 1931
    ...shall be exclusive, and it was proper for such a suit to be brought either by a creditor or by the receiver. See Rogers v. Selleck (1928) 117 Neb. 569, 221 N. W. 702. [4] Section 6, art. 11, Const., section 212, Burns 1926, is as follows: “The stockholders in every bank or banking company s......
  • Parker v. Luehrmann, No. 28731.
    • United States
    • Supreme Court of Nebraska
    • January 26, 1934
    ...to be taken by the receivership court before an action can be brought by the receiver to judicially determine the same. Rogers v. Selleck, 117 Neb. 569, 221 N. W. 702. 5. “Jurisdiction of equity to enforce constitutional liability of stockholders of an insolvent banking corporation is based......
  • Request a trial to view additional results
22 cases
  • Heine v. Degen, No. 22785.
    • United States
    • Supreme Court of Illinois
    • February 5, 1936
    ...creditors, alone, in whose favor such liabilities were incurred. In re Wilson's Estate, 127 Neb. 106, 254 N.W. 717;Rogers v. Selleck, 117 Neb. 569, 221 N.W. 702;Pickering v. Hastings, 56 Neb. 201, 76 N.W. 587;McClaren v. Anderson, 110 W.Va. 380, 158 S.E. 379;Benedum v. First Citizens' Bank,......
  • Brownell v. Adams, No. 27682.
    • United States
    • Nebraska Supreme Court
    • May 29, 1931
    ...in the event of insolvency is a suit in equity by a creditor for the benefit of all the creditors, or by the receiver.” Rogers v. Selleck, 117 Neb. 569, 221 N. W. 702.Syllabus by the Court. Jurisdiction of equity to enforce constitutional liability of stockholders of an insolvent banking co......
  • Gaiser v. Buck, No. 25701.
    • United States
    • Indiana Supreme Court of Indiana
    • November 20, 1931
    ...shall be exclusive, and it was proper for such a suit to be brought either by a creditor or by the receiver. See Rogers v. Selleck (1928) 117 Neb. 569, 221 N. W. 702. [4] Section 6, art. 11, Const., section 212, Burns 1926, is as follows: “The stockholders in every bank or banking company s......
  • Parker v. Luehrmann, No. 28731.
    • United States
    • Supreme Court of Nebraska
    • January 26, 1934
    ...to be taken by the receivership court before an action can be brought by the receiver to judicially determine the same. Rogers v. Selleck, 117 Neb. 569, 221 N. W. 702. 5. “Jurisdiction of equity to enforce constitutional liability of stockholders of an insolvent banking corporation is based......
  • Request a trial to view additional results

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