Seymour v. Bank of Minnesota
| Decision Date | 05 March 1900 |
| Docket Number | 11,798 - (173) |
| Citation | 81 N.W. 1059,79 Minn. 211 |
| Parties | FRANK A. SEYMOUR and Another v. BANK OF MINNESOTA and Others |
| Court | Minnesota Supreme Court |
Action in the district court for Ramsey county by plaintiffs, as receivers of the Bank of Minnesota, to enforce the individual liability of the stockholders in the bank. The case was tried before Otis, J., who made findings of fact and conclusions of law, and ordered judgment in favor of plaintiffs, as stated in the opinion. From the judgment entered pursuant to such order, plaintiffs and certain of defendants appealed. Affirmed.
Laws 1895, c. 145, Constitutional.
Laws 1895, c. 145 (), held to be valid, and not in conflict with section 13, article 9, of our state constitution. Anderson v. Seymour, 70 Minn. 358 followed.
Laws 1895, c. 145, Constitutional -- Repeal of Right of Bank to Issue Bills.
Held that by the terms of Laws 1895, c. 145, the right of banks to issue bills under articles of incorporation based upon the general laws of the state previous to that act was revoked and withdrawn.
Liability of Stockholders.
The act of 1895, c. 145, reduced the liability of all stockholders in banks organized under the state laws from a double to a single liability after August 1, 1895.
Renewal of Certificates of Deposit.
Evidence in this case considered with reference to bank certificates of deposit, and the renewal of the same by issue of new ones in lieu thereof. Held, that such transactions constituted new contracts, upon which the statutory liability of stockholders for the debts of the bank is to be based.
Liability upon Debts Prior to Laws 1895, c. 145.
The act of 1895 did not reduce the liability of stockholders upon any obligation created between the passage of such act and the time when by its terms it was to take effect. As to such obligations, the double liability under the previous law applied.
Young & Lightner, for plaintiffs, appellant and respondent.
The stockholders are liable to double the amount of stock held by them for all debts of the bank. The bank was incorporated in 1882 under G.S. 1878, c. 33, containing provision for double liability (G.S. 1894, § 2501) and passed in compliance with Const. art. 9, § 13. Prior to the enactment of Laws 1895, c. 145, the bank had all the powers of a bank of issue. In Anderson v. Seymour, 70 Minn. 358, the court did not pass on the question what is the liability of the stockholders of the bank. Prior to the act of 1895 the stockholders were under double liability. Allen v Walsh, 25 Minn. 543. Whether this liability was also a constitutional liability depends on the construction of the words "in any corporation and joint association for banking purposes issuing bank notes" in Const. art. 9, § 13, subd. 3. These words mean any corporation that is organized to do a banking business and that has power to issue bank notes, and the liability under the constitution is hence double. It was beyond the power of the legislature to reduce this liability as to a bank so organized and remaining so organized. The legislature had no power to alter the charter of the bank without its assent, and if the law of 1895 is construed as attempting to take away the power to issue notes, to that extent it is unconstitutional. The bank had by its charter the right to issue notes. That right is a franchise granted by the state in the charter. International T. Co. v. American L. & T. Co., 62 Minn. 501, 504. The charter of the bank is an executed contract between the state and the corporation, and the legislature, unless the power of amendment is reserved, cannot repeal, impair, or alter such a charter without the assent of the corporation. Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, 700; Miller v. State, 15 Wall. 478. No power to amend the charter was reserved, and the bank never assented to the change. Even if the legislature had the power, it has shown no intention by the law of 1895 to reduce the liability of stockholders in existing banks.
The renewal of certificates of deposit did not operate as payment or discharge of the debts. The certificates of deposit are in legal effect promissory notes. They are not evidence of ordinary deposits, but rather of loans made to the bank. By these certificates "they (the parties) manifest an intention to change the character of the transaction from that of an ordinary deposit to that of a debt or loan evidenced by an instrument construed to be a promissory note." Mitchell v. Easton, 37 Minn. 335. See also Cassidy v. First Nat. Bank, 30 Minn. 86; Francois v. Lewis, 68 Minn. 409. The new certificates did not operate to pay or discharge the antecedent debt. The fact that the old certificate was surrendered and a new one issued is not material. In either case the certificate is mere evidence of the debt, which remains as before. The rule in a few jurisdictions is that the renewal of a promissory note or other obligation is presumed to discharge the old debt and create a new debt as of the date of the new instrument. Such appears to be the rule in Massachusetts, Maine, Vermont, Indiana and Louisiana. See 2 Daniel, Neg. Inst. § 1259. But that is contrary to the general rule, which is that a simple contract never discharges a precedent debt unless the parties expressly so agree, and the presumption is against such agreement. Geib v. Reynolds, 35 Minn. 331, 335; Good v. Singleton, 39 Minn. 340; Egan v. Fuller, 35 Minn. 515; Combination S. & I. Co. v. St. Paul City Ry. Co., 47 Minn. 207; Washington Slate Co. v. Burdick, 60 Minn. 270; Lambert v. Scandinavian-Am. Bank, 66 Minn. 185; Germania Bank v. Michaud, 62 Minn. 459, 467.
The rule requiring an express agreement supported by strong evidence is not only clearly laid down in Minnesota, but is the settled rule in the United States supreme court and in New York, Wisconsin, Iowa, Indiana, California, West Virginia and other states. Peter v. Beverly, 10 Pet. 532; The Kimball, 3 Wall. 37, 45; The Bird of Paradise, 5 Wall. 545; Segrist v. Crabtree, 131 U.S. 287; The Emily Souder, 17 Wall. 666; Embrey v. Jemison, 131 U.S. 336; Lee v. Hollister, 5 F. 752; Downey v. Hicks, 14 How. 240, 249; The Agnes Barton, 26 F. 542; Muldon v. Whitlock, 1 Cow. 290; Porter v. Talcott, 1 Cow. 359; Tobey v. Barber, 5 Johns. 68; Jagger v. Walker, 76 N.Y. 521; Board v. Fonda, 77 N.Y. 350; City v. Phelps, 86 N.Y. 484; Blunt v. Walker, 11 Wis. 349; Lindsey v. McClelland, 18 Wis. 505; Matteson v. Ellsworth, 33 Wis. 488; First National v. Case, 63 Wis. 504; Allis v. Meadow, 67 Wis. 16; Willow v. Luger, 102 Wis. 636; Hunt v. Higman, 70 Iowa 406; Cushwa v. Improvement, 45 W.Va. 490; Dingley v. McDonald, 124 Cal. 90; Merrick v. Boury, 4 Oh. St. 60; Leach v. Church, 15 Oh. St. 169; Godfrey v. Crisler, 121 Ind. 203; Fry v. Patterson, 49 N.J.L. 612; Bristol v. Probasco, 64 Ind. 406. In the following cases the new obligations were given in exchange or renewals for old obligations, which were surrendered to the debtor, and it was expressly held that the new obligation was not a payment, and that the surrender of the old obligation was not evidence of an agreement that the new obligation paid the old. Peter v. Beverly, supra; Lee v. Hollister, supra; Jagger v. Walker, supra; City v. Phelps, supra; First National v. Case, supra; Allis v. Meadow, supra; Cushwa v. Improvement, supra; Welch v. Allington, 23 Cal. 322; Bristol v. Probasco, supra; Bank v. St. John, 25 Ala. 566; Crocket v. Trotter, 1 Stew. & P. 446; Fry v. Patterson, supra. The rule that renewals are not payment has been applied in several cases where the action was brought to enforce stock liability. Jagger v. Walker, supra; Dingley v. McDonald, supra; Bank v. St. John, supra. See also Bristol v. Probasco, supra; Lee v. Hollister, supra. See also Harper v. Carroll, 66 Minn. 487, where the contention was not made.
The renewal of certificates of deposit after August 1, 1895, did not operate to release the double liability. Defendants to prevail must maintain two propositions: (1) That the extension was without their consent and their want of consent has been affirmatively proved (Harper v. Carroll, supra); (2) that they were sureties. The stockholders must be deemed to have consented to the renewals, particularly as they made no inquiries or objections. They were represented by the corporation and its officers, and acting by them they consented to the renewals. Holland v. Duluth Iron M. & D Co., 65 Minn. 324, 331. This court has not, as far as we have been able to ascertain, ever adopted the rule of strict construction. National N.H. Bank v. N.W. Guaranty L. Co., 61 Minn. 375. The stock liability is contractual. Hanson v. Davison, 73 Minn. 454. See also Hencke v. Twomey, 58 Minn. 550. The rule sustained by the great weight of authority is that the liability is like that of a partner, original and for the stockholder's own debt, and not that of a surety nor entitled to the peculiar rights of suretyship. Taylor, Corp. §§ 714, 715; 2 Morawetz, Corp. § 879; Richmond v. Irons, 121 U.S. 27, 56; U.S. v. Knox, 102 U.S. 422, 425; Hobart v. Johnson, 19 Blatch. 359; Witters v. Sowles, 32 F. 130; Harger v. McCullough, 2 Denio, 119; Moss v. Averell, 10 N.Y. 449; McVickar v. Jones, 70 F. 754; Hatch v. Burroughs, 1 Woods, 439; Coleman v. White, 14 Wis. 762; Schalucky v. Field, 124 Ill. 617, and cases cited; Sonoma v. Hill, 59 Cal. 107; Appeal of Aultman, 98 Pa. St. 505. This court in defining the nature of the stockholder's liability has followed the general rule. Mohr v. Minnesota Ele. Co., 40 Minn. 343; Hanson v. Davison, supra. The rule is uniform that a stockholder is not released from his constitutional or statutory liability by an extension of time of...
To continue reading
Request your trial