Schutz v. Read
| Decision Date | 06 June 1938 |
| Docket Number | No. 4.,4. |
| Citation | 284 Mich. 548,280 N.W. 45 |
| Parties | SCHUTZ v. READ et al. |
| Court | Michigan Supreme Court |
OPINION TEXT STARTS HERE
Suit in equity by Charles H. Schutz, receiver of Kalamazoo Bancshares, Incorporated, against Ruby C. Read and others, to enforce the alleged liability of defendants as heirs and distributees of the estate of Edward G. Read, deceased, for the latter's share of the amount of such corporation's adjudicated liability on an assessment against stockholders of the Bank of Kalamazoo. Decree for plaintiff, and defendants appeal.
Affirmed.
Appeal from Circuit Court, Kalamazoo County in Chancery; George V. Weimer, Judge.
Argued before the Entire Bench.
Stearns, Kleinstuck & Stapleton, and Herbert J. Stapleton, all of Kalamazoo, for appellants.
Joseph S. Folz and Lucien F. Sweet, both of Kalamazoo, for appellee.
On January 18, 1930, Edward G. Read, of Kalamazoo, signed an agreement for the purpose of carrying out the formation of a corporation designated as Kalamazoo Bancshares, Inc., with the object of acquiring the outstanding shares of the capital stock of the Kalamazoo National Bank and Trust Company, the Kalamazoo Trust and Savings Bank and the Kalamazoo Company. Among the provisions of the said agreement was the stipulation that the common stock issued by Kalamazoo Bancshares, Inc., should be subject to the same liability as shares of the capital stock of a bank and/or trust company organized in Michigan, and/or shares of the capital stock of a national bank. The corporation was organized and, by a reason of an exchange of stock, Mr. Read became the owner of 3,660 shares of the stock in Kalamazoo Bancshares, Inc.
Edward G. Read died May 4, 1932, and on February 25, 1933, petition was filed praying for administration of the estate and his son, Edward G. Read, Jr., was duly appointed administrator March 27, 1933. The appraisers appointed in probate appraised the value of the real estate in the amount of $17,800.00 and the personal property in the amount of $43,062.50.
On December 29, 1933, after petition by the administrator praying for settlement of his final account, the probate court for the county of Kalamazoo allowed the final account, made determination of heirs, entered order of distribution, discharged the administrator, and closed the estate. According to the determination of heirs and order of distribution, Ruby C. Read, the widow, received one-third of the said estate, and each of the children of deceased, Edward G. Read, Jr., Sherman Read, and Caroline Read, received two-ninths of the estate. All heirs receipted for their proportionate share and the estate was closed.
Among the assets of the estate were the 3,660 shares of Kalamazoo Bancshares, Inc., which were inventoried as being of no value. Each of the distributees refused to accept or have any interest in these shares and each signed a statement that he expressly refused to accept or have any interest in the stock of Kalamazoo Bancshares, Inc.
On February 13, 1933, the Bank of Kalamazoo was closed by proclamation of the governor, and on March 31, 1933, a conservator of the said bank was appointed. On December 19, 1933, Kalamazoo Bancshares, Inc., amended its articles limiting its corporate existence to December 28, 1933. On February 23, 1934, the state banking commissioner ordered an assessment of 100% against the stockholders of the Bank of Kalamazoo; and on August 10, 1934, a receiver was appointed for the said bank. The receiver of the bank then filed a bill in equity against Kalamazoo Bancshares, Inc.; whereupon a receiver was also appointed for the said defendant, and on the hearing of the equity suit, Kalamazoo Bancshares, Inc., as a stockholder in the bank, was adjudicated liable to the receiver of the Bank of Kalamazoo in the amount of $472,800.00; and the receiver of Kalamazoo Bancshares, Inc., was directed by said decree to collect from stockholders of the Kalamazoo Bancshares, Inc., the sum of 3.876 dollars per share.
In compliance with such decree, plaintiff herein, receiver of Kalamazoo Bancshares, Inc., filed a bill in chancery in the circuit court for the county of Kalamazoo against Ruby C. Read, Sherman Read, Edward G. Read, Jr., and Caroline Read Barton for recovery of $14,186.16 on the theory that they were liable as heirs of the said Edward G. Read by reason of the fact that the said deceased would have been liable in this amount because of his ownership of the said shares of stock; and that because the said defendants were distributees of his estate they were liable for such assessment.
The trial chancellor found that the defendants received assets of the estate of Edward G. Read, deceased, equal to the proportionate share of the stock assessments made against them because of the ownership of said stock by Edward G. Read, deceased; that the defendants were apprehensive of an impending assessment on the bank stock prior to the closing of the estate and for this reason refused to accept the stock in Kalamazoo Bancshares, Inc., from the estate, and accordingly a decree was entered holding defendants liable in the amount of the assessments against the stock standing in the name of deceased and at the same time giving plaintiff, receiver, a lien on the assets which defendants had received from the said estate as distributees.
Defendants appeal, claiming that since the stock assessment liability did not arise until more than a year after the estate of the decedent was entirely closed and distributed, and because defendants expressly refused to accept such stock, there is no liability on their part.
In their contention, defendants rely upon the terms of 3 Comp. Laws 1929, § 11945, which provide: ‘The stockholders of every bank shall be individually liable, equally and ratably, and not one [1] for another, to satisfy the obligations of said bank to the amount of their stock at the par value thereof, in addition to the said stock; but persons holding stock as executors, administrators, guardians or trustees, and persons holding stock as collateral security, shall not be personally liable as stockholders, but the assets and funds in their hands constituting the trust shall be liable to the same extent as the testator, intestate, ward or person interested in such trust funds would be, if living or competent to act; and the person pledging such stock shall be deemed the stockholder and liable under this section.'
It is the contention of defendants that the above statute does not seek to impose individual liability upon the heirs of the deceased, and that, therefore, there is no liability upon them. But the statute says nothing about heirs or distributees. It provides for the liability of stockholders in banks; and its distinguishes between the liability of stockholders and those who hold the stock in a representative capacity. It defines the liability of the stockholder in banks to be individual, equal and ratable; while the liability of one who holds stock in a representative capacity is not such a personal liability, but rather, it is limited only to the assets of the estate of such stockholder in his hands. There is nothing in express terms or by implication in the language of the statute that would warrant the conclusion that heirs of a deceased bank stockholder would not be subject to an assessment liability in proportion to the assets which they receive from such estate if in equity or by law they would be so liable. In Lawrence v. DeBoer, 273 Mich. 172, 180, 262 N.W. 660, such heirs and distributees were held liable.
Defendants, however, rely further upon the statutes of the State of Michigan relating to the administration of estates of decedents, in particular, 3 Comp.Laws 1929, §§ 15712, 15713, 15716, which provide:
* * *'
All of the foregoing statutory provisions relate to procedure in probate court and are predicated upon the estate's still being open...
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