State ex rel. Mothersead v. Kelly

• Decision Date: 07 January 1930
• Docket Number: Case Number: 18099
• Parties: STATE ex rel. MOTHERSEAD, Bank Com'r, v. KELLY.
• Court: Oklahoma Supreme Court

1930 OK 16

284 P. 65

141 Okla. 36

STATE ex rel. MOTHERSEAD, Bank Com'r, v. KELLY.

Case Number: 18099

Supreme Court of Oklahoma

Decided: January 7, 1930

Syllabus

¶0 1. Banks and Banking--Insolvent State Banks--Stockholders' Statutory Liability not Asset of Bank Subject to Assignment.

An order of assessment by the Bank Commissioner against shareholders of an insolvent bank is not a liquidated claim and cannot become an asset of the bank subject to assignment, otherwise the shareholder would be deprived of property without due process of law in violation of federal and state constitutional provisions.

2. Same--Stockholders' Liability Enforceable by Bank Commissioner Alone.

Under section 2, ch. 80, S. L. 1924, the Bank Commissioner is named as the person who may enforce the statutory liability against shareholders and he cannot delegate such power to one not authorized by statute, nor can a purported assignee of such liability be subrogated.

3. Same--Approval of Assignment of Stockholders' Liability by District Court Held Void.

Approval of purported assignment of such shareholder's liability by the district court is void for want of jurisdiction. The purported order of approval is subject to collateral attack.

4. Pleading--Presumptions not Indulged in Favor of Petition After Being Amended Three Times.

After a party has amended his petition three times and a demurrer is again sustained to it; no presumptions will be indulged in favor of the pleadings.

Error from District Court, Blaine County; E. L. Mitchell, Judge.

Action by the State on relation of O. B. Mothersead, Bank Commissioner, et al. against M. C. Kelly; judgment for defendant, and plaintiffs appeal. Affirmed.

Erman S. Price, M. B. Cope, J. P. Wishard, and M. W. McKenzie, for plaintiffs in error.

Beets, Bessey & McIntosh and Walter Marlin, for defendant in error.

RILEY, J.

¶1 This action was instituted to recover upon an assigned statutory stockholder's liability arising out of an insolvent state bank. The trial court sustained a demurrer to the third amended petition. The material facts presented follow:

¶2 Defendant Kelly was the owner of $ 3,000 par value stock of the Blaine County Bank. The Bank Commissioner of the state of Oklahoma, on December 21, 1925, declared said bank insolvent; that official assessed the full statutory liability against the stockholders and, upon order of the district court of Blaine county, sold the assets of the insolvent bank, including the assessed stockholder's liability, to the First Bank & Trust Company of Watonga; whereupon Kelly declined to pay the assessment in the amount of $ 3,000, levied against him, and assigned. By the third amended petition the State of Oklahoma ex rel. the Bank Commissioner joins with the assignee, the First Bank & Trust Company of Watonga, and asserts claim against Kelly with allegations aforesaid and with results as stated.

¶3 It is agreed by the parties that the only question presented by this appeal is whether the Bank Commissioner could legally sell and assign what is known as stockholder's double liability.

¶4 Section 4122, C. O. S. 1921, provides:

"The shareholders of every bank organized under this article shall be additionally liable for the amount of stock owned and no more."

¶5 There can be no question but that in a proper case, i. e., in the event of insolvency of a state bank, a shareholder would be liable to the agency of the state; the issue presented, however, is whether such a liability may be assigned; does that liability constitute an ordinary asset of the failed bank, and is it classed with debts, real or personal property, belonging to the bank as may be sold and assigned under authority conferred by statute or otherwise?

¶6 It is admitted by both parties to this appeal that the provisions of section 4167, C. O. S. 1921, inhibit the inclusion of stockholder's liability in the sale or compounding of bad or doubtful debts as therein authorized. That provision reads:

"The Bank Commissioner shall take possession of the books, records and assets of every description of such bank or trust company, collect debts, dues and claims belonging to it, and upon order of the district court, or judge thereof, may sell or compound all bad or doubtful debts, and on like order may sell all the real or personal property of such bank or trust company upon such terms as the court or judge thereof may direct, and may, if necessary, pay the debts of such bank or trust company and enforce the liability of the stockholders, officers and directors; provided, however, that bad or doubtful debts as used in this section shall not include the liability of stockholders, officers or directors."

¶7 But counsel for plaintiffs in error suggests that the section has been repealed, by implication, in the enactment of section 2, chapter 80, S. L. 1924, which enactment omitted the proviso.

¶8 We are not unmindful of a rule of law with relation to legislative intent and repeal of statutes by implication to the effect that:

"A statute revising the whole subject-matter of former acts, containing in the main the provisions of the former acts, and evidently intended as a substitute for them, although it contains no express words to that effect, operates to repeal the former acts." Smock v. Farmers' Union St. Bk., 22 Okla. 825, 98 P. 945.

¶9 Yet it is impossible to make applicable that rule, and the applicability of it is wholly immaterial for the reason that the section most recently adopted in no manner makes the double liability an asset of the bank, nor does it confer power by implication or otherwise upon the Bank Commissioner to assign such liability, but, on the other hand, specifically imposes the duty upon that official to "enforce the liabilities of the stockholders of such bank." The section now reads:

"Upon taking possession of the property and business of such bank the Commissioner is authorized to collect money due it and do such other acts as are necessary to conserve its assets and business and shall proceed to liquidate the affairs thereof, as hereinafter provided. The Commissioner shall collect all debts due and claims belonging to it, and, upon order of the district court of the county in which it is doing business, may sell or compound all bad or doubtful debts, and, in like order, may sell all of its real and personal property on such terms and at public or private sale as the court shall direct, and shall enforce the liabilities of stockholders of such bank."

¶10 Our analysis of the provisions of that statute discloses that four privileges and two duties were conferred upon the Bank Commissioner, as follows:

(1) Shall collect all debts due and claims belonging to the bank.

(2) May sell or compound all bad or doubtful debts, when authorized.

(3) May sell real and personal property at public or private sale, when authorized.

(4) Shall enforce liability of stockholders.

One and 4 are duties to be performed, and 2 and 3 are privileges conferred.

¶11 What is this stockholder's liability, and for whose benefit is it created?

¶12 It was designed solely for the benefit of creditors and constitutes a fund available only when the bank is insolvent and thus rendered unable to meet its liabilities in full. The corporation itself has no authority over the fund and cannot either compel its payment or by any act on its part release the stockholder therefrom. It amounts, for all practical purposes, to a reserve or trust fund, to be resorted to only in proceedings in liquidation, when necessary to meet the payment of obligations of the corporation. It is limited to an amount equal to the par value of the stock held and owned by each stockholder and exists in favor of the creditors collectively, not separately, and in proportion to the amount of their respective claims against the corporation. Trust Co. v. Bradbury, 117 Minn. 83, 134 N.W. 513; Blackert v. Lankford, 74 Okla. 61, 176 P. 532.

¶13 In the latter case our court quoted from Thompson on Corporations, as follows:

"Their liability (stockholders'--ours) is not only primary, but generally is direct to the creditors, and may be enforced without any proceedings whatever against the corporation, unless a suit against the corporation is made a condition precedent. The liability of the stockholder is, in our opinion, says the Supreme Court of California, as distinct and separate from that of the corporation as it would be if the act had made no provision for any other liability than that of stockholders for debts of the company.* * * The stockholders are liable as principals and not as sureties or guarantors. This liability is said to be a security for the exclusive benefit of creditors and over which the corporate authorities have no control."

¶14 This doctrine was approved in Reigel v. Planters' State Bank, 100 Okla. 42, 227 P. 105, wherein this court specifically considered stockholders' liability of an insolvent bank where the assets of the defunct bank had been sold to another bank and the second bank had assumed payment of the obligations of the first bank. There this court affirmed the trial court's judgment that such stockholders were not liable to a creditor under such circumstances. See, also, Page v. Jones, 7 F.2d 541, wherein Justice Sanborn cited with approval, Blackert v. Lankford, supra.

¶15 In Farmers Bank v. Scott, 139 S.W. 801, the Kentucky Court of Appeals considered whether such statutory liability imposed upon shareholders was an asset, right or interest of the insolvent bank, assignable in the absence of statutory provision conferring that right. It held:

"Neither the corporation nor its assignee nor receiver can enforce such liability as that in question." Citing Runner v. Dwiggins, 147 Ind. 238, 46 N.E. 580, 582, 30 L. R. A. 645.

¶16 In the Dwiggins Case, the Indiana court held:

"Neither the receiver, an assignee in bankruptcy, nor an assignee under a voluntary general assignment for the benefit of creditors, each of whom represent

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