State ex rel. Dept. of Financial Institutions v. Hardy
| Decision Date | 13 January 1941 |
| Docket Number | 27478. |
| Citation | 30 N.E.2d 974,218 Ind. 79 |
| Parties | STATE ex rel. DEPARTMENT OF FINANCIAL INSTITUTIONS v. HARDY. |
| Court | Indiana Supreme Court |
Appeal from Madison Circuit Court; Charles E. Smith Judge.
Wade H. Free, Sp. Atty., of Anderson, for appellant.
Mays & Shine, of Anderson, for appellee.
This is an appeal from a judgment in favor of the appellee entered upon the refusal of the appellant to plead further after the court below had sustained the appellee's demurrer for want of facts to the appellant's third amended complaint. The facts disclosed by the complaint and admitted by the demurrer for the purpose of forming an issue of law were as follows: On October 31, 1931, the Citizens Bank of Anderson Indiana, a bank of discount and deposit organized under the laws of Indiana, voluntarily closed and entered into a process of liquidation under the jurisdiction of the State Banking Department. The bank was not at that time insolvent. On July 14, 1933, the property and assets of the bank were taken over for liquidation by the Department of Financial Institutions of the State of Indiana, and on September 26 1935, the bank was adjudged insolvent and a 100 per cent. assessment was levied against its stockholders. In the meanwhile, on August 11, 1933, Thomas M. Hardy died testate, the owner of 30 shares of the capital stock of said bank, and there was an administration upon his estate. The complaint alleges that in the administration of said estate the 'executors sold said thirty shares of stock to the defendant Georgia Hardy, and said sale was submitted to and duly approved by the Judge of the Madison Circuit Court, Indiana, and that thereby the defendant Georgia Hardy became and is the owner of said thirty shares of the capital stock of Citizens Bank, Anderson, Indiana.' It was further alleged that the certificate representing said stock was not surrendered by the appellee and that no transfer thereof was made on the books of the bank. The exact date when the appellee acquired the stock is not disclosed, but it was after the Department of Financial Institutions had taken over the affairs of the bank for liquidation.
The third amended complaint was not attacked by any motion to make more specific or to require that facts be pleaded to sustain the conclusions contained therein. It seems to be one of the contentions of the appellant that the sufficiency of the complaint is not before us, because the memorandum accompanying the demurrer did not specifically point out the defects now relied upon by the appellee. As the record is presented to us, however, the judgment will not be reversed if it is determined that the complaint is insufficient, and in considering that subject we are not restricted to the grounds set out in the memorandum to the demurrer. Where a demurrer has been sustained, the court of review may look beyond the memorandum to determine whether the ruling was right on the merits. Bruns v. Cope, 1914, 182 Ind. 289, 296, 105 N.E. 471.
The appellant relies upon that part of the complaint quoted above, and contends that by this allegations the appellee is sufficiently charged with being the owner of the bank stock in controversy. It is admitted that the allegation 'that thereby the defendant Georgia Hardy became and is the owner of said thirty shares of the capital stock of Citizens Bank, Anderson, Indiana,' is a conclusion, but urged that it is a permissible conclusion of fact. Conclusions in affirmative pleadings are of two kinds--conclusions of law and conclusions of fact. Conclusions of law have no place in a complaint, add nothing to it, and may be ignored, if not stricken out. Conclusions of fact, though subject to a motion to require the party to plead the specific facts, will otherwise be considered as allegations of all the facts required to sustain them in determining the sufficiency of the pleading. § 2-1005, Burns' 1933, § 155, Baldwin's 1934. A direct charge that one was or is the owner of property is ordinarily considered as a statement of an ultimate fact, although the same end may be accomplished by detailing the facts out of which ownership necessarily arises. While we consider the first part of the allegation of the complaint that 'executors sold said thirty shares of stock to the defendant Georgia Hardy, and said sale was submitted to and duly approved by the Judge of the Madison Circuit Court, Indiana,' a sufficient charge that the appellee owned the stock in controversy, the clause, 'the defendant Georgia Hardy became and is the owner of said thirty shares of the capital stock of Citizens Bank, Anderson, Indiana,' which immediately follows the words 'and that thereby,' must be treated as a conclusion of law rather than of fact, and, standing alone, it would not aid the complaint. Union Traction Co. v. Ross, Rec., 1919, 71 Ind.App. 473, 125 N.E. 72.
There is another controlling rule of practice, however, to the effect that a demurrer will lie to a complaint which states a cause of action and then anticipates a defense and attempts to avoid it, if the facts stated are not sufficient to avoid or defeat the anticipated defense. Many cases supporting this rule are cited in I Watson's Revision of Works Practice and Forms, § 519, pp. 373, 376. The complaint before us affirmatively discloses that the appellee acquired the stock in controversy after the bank had ceased to operate and had entered into liquidation. This suggests an inquiry as to the status and liabilities of one who acquires stock in a closed bank. The problem is not without difficulties, and we shall review some of the cases that appear to throw light upon the subject. In Broderick v. Aaron (Kornberg), 1935, 268 N.Y. 260, 197 N.E. 274, 276, 103 A.L.R. 684, the New York Court of Appeals considered a situation which, upon the facts, is comparable to the case now before us. An effort was made to enforce an assessment liability against one to whom bank stock was transferred after the institution had passed under the control of the Superintendent of Banks and after it had suspended operations. Section 7 of article VIII of the New York Constitution 1894, upon which the liability for assessment was based, was as follows: 'The stockholders of every corporation and joint-stock association for banking purposes, shall be individually responsible to the amount of their respective share or shares of stock in any such corporation or association, for all its debts and liabilities of every kind.'
The New York court pointed out in its opinion that there was a statute in that state which defined stockholders of corporations and joint associations for banking purposes so as to include 'every owner of stock, legal or equitable, although the same may be on such books in the name of another person.' In the consideration of the case, significance was attached to this legislative enactment; while in this state, the constitutional liabilities imposed upon stockholders of banks are regarded as self-executing, no ancillary legislation being necessary to the enjoyment of the rights given or the enforcement of the duties imposed. Gaiser v. Buck, 1931, 203 Ind. 9, 179 N.E. 1, 82 A.L.R. 1348 (annotated). We therefore quote from the New York opinion for the reasoning appearing therein, recognizing that the situation presented differs somewhat from that before us in the instant case (268 N.Y. 266, 197 N.E. 277, 103 A.L.R. 687):
'The question is narrow. We do not now determine...
To continue reading
Request your trial