Runner v. Dwiggins

• Decision Date: 11 March 1897
• Docket Number: 18,044
• Citation: 46 N.E. 580,147 Ind. 238
• Parties: Runner, Assignee, v. Dwiggins
• Court: Indiana Supreme Court

46 N.E. 580

147 Ind. 238

Runner, Assignee, v. Dwiggins

No. 18,044

Supreme Court of Indiana

March 11, 1897

From the Lake Circuit Court.

Affirmed.

Walter Olds, Charles F. Griffin, G. P. Haywood and C. A. Burnett for appellant.

Frank Foltz, H. R. Kurrie and Elliott & Elliott and S. P Thompson, for appellee.

OPINION

Jordan, C. J.

The Commercial Bank of Oxford, Indiana, is a bank of discount and deposit, organized and incorporated under the statutes of this State. Section 2921, Burns' R. S. 1894 (2684, R. S. 1881). On the 19th day of May, 1893, being in an insolvent condition, it made a voluntary assignment to appellant under the statutes authorizing an embarrassed debtor to make a general assignment of all his property in trust for all of his bona fide creditors. Appellee is one of the stockholders of the insolvent bank and this action was instituted to recover $ 5,000.00 by appellant, as such assignee, upon the statutory liability of appellee existing under section 2933, Burns' R. S. 1894 (2696, R. S. 1881), being section 13 of the act pertaining to the incorporation of banks as amended by an act approved March 9, 1895. Acts 1895, p. 202.

This section provides that the shareholders of such associations shall be individually responsible to an amount over and above their stock, equal to the par value of their respective shares, for all debts or liabilities of the association. Appellee demurred to the complaint upon the grounds, among others, that appellant had not the legal capacity to sue, and for insufficiency of facts. The demurrer was sustained and judgment was rendered in favor of appellee. The principal question presented for our determination, is that of the right of appellant as the assignee of the insolvent banking association, to sue for and enforce against appellee the liability under the statute as a share-holder. The learned counsel for appellant insist that this right is vested in the latter. They cite, however, no statute, nor are we aware of any, that expressly confers upon an assignee of an insolvent corporation the right to enforce such a liability against its stockholders. Section 2899, Burns' R. S. 1894 (2662, R. S. 1881), relating to assignments by failing debtors, provides: "Any debtor * * * in embarrassed or failing circumstances may make a general assignment of all his * * * property," etc.

Section 2908 provides that, "The trustee, * * shall proceed to collect the rights and credits of the assignor," Certainly, it cannot be asserted with any reasonable support, that this peculiar liability imposed by the statute upon those who became shareholders of a banking association organized under the existing law, is in any sense an asset, right or interest of the bank which it, as an insolvent debtor, can by its deed of assignment pass to its assignee, or in any manner vest the enforcement thereof in him. In the absence of some statutory provision conferring the right, neither the corporation nor its assignee, nor receiver can enforce such a liability as that in question. The statute creating the liability against the stockholders, was enacted for the benefit of the creditors of the bank, and it is these creditors, when the right of action accrues, that are authorized under our present statutes, to maintain the action. This doctrine is affirmed and settled by many authorities. See Wallace, Rec., v. Milligan, Assignee, 110 Ind. 498, 11 N.E. 599; Ewing v. Stultz, 9 Ind.App. 1, 36 N.E. 170; Jacobson, Rec., v. Allen, 12 F. 454; Wright v. McCormack, 17 Ohio St. 86; Umsted v. Buskirk, 17 Ohio St. 113; Liberty, etc., Association v. Watkins, 70 Mo. 13; In re People, etc., Ins. Co., 56 Minn. 180; Pfohl v. Simpson, 74 N.Y. 137; Farnsworth v. Wood, 91 N.Y. 308; Wincock v. Turpin, 96 Ill. 135; Dutcher v. Marine Nat. Bank, 12 Blatchf. 435, 8 F. Cas. 152; Lane v. Morris, 8 Ga. 468; Elliott on Railroads, sections 185, 186, 187; Morawitz on Private Corp., section 869; Thompson on Corp., section 3560; Taylor Private Corp. section 721; Cook on Stockholders, section 218; Minneapolis Paper Co. v. Swinburne (Minn.), 66 Minn. 378, 69 N.W. 144.

Mr. Morawitz in the section of his work above cited says:

"A provision of this character does not increase the capital or pecuniary resources of a corporation, except indirectly, by increasing its commercial credit; its object is merely to provide a security for creditors in addition to the security furnished by the company's capital. The liability assumed by the shareholders is solely for the benefit of the company's creditors. The corporation and its officers and agents cannot dispose of or control it in any manner. They cannot collect it by an assessment upon the shareholders; nor can they assign it to a trustee for the benefit of creditors, though the corporation be insolvent."

Judge Thompson in his Commentaries on Corporations in the section cited says:

"It may be stated, as a general rule, that statutes making stockholders individually liable to creditors, independently of what they owe the corporation on account of their stock, create a right following directly from the stockholders to creditors. The sums thus secured to creditors form no part of the assets of the company, but are a supplemental or superadded security for the benefit of creditors. An attempted assignment of this security is therefore inoperative. No action to enforce such liability can be brought by a receiver or assignee of the corporation; such an action must be brought by one or more of the creditors."

In Cook on Stockholders in the section to which we have referred the author says:

"The statutory liability of the stockholder is created exclusively for the benefit of the corporate creditors. It is...