State of Oklahoma Johnson v. Cook

• Citation: 304 U.S. 387,58 S.Ct. 954,82 L.Ed. 1416
• Parties: STATE OF OKLAHOMA ex rel. JOHNSON, Bank Com'r, v. COOK. No. ___
• Decision Date: 23 May 1938
• Court: United States Supreme Court

304 U.S. 387

58 S.Ct. 954

82 L.Ed. 1416

STATE OF OKLAHOMA ex rel. JOHNSON, Bank Com'r,

v COOK.

No. ___.

Argued on Return to Rule April 25, 1938.

Decided May 23, 1938.

Mr. Houston E. Hill, of Oklahoma City, Okl., for plaintiff.

Mr. Chief Justice HUGHES delivered the opinion of the Court.

The State of Oklahoma, upon the relation of its Bank Commissioner, asks leave to bring suit in this Court to enforce the statutory liability of a shareholder of a state bank which is in course of liquidation.

The statutes of Oklahoma provide that the shareholders of every bank organized under the state law shall be additionally liable for the amount of stock owned.' Okla.Stat.1931, § 9130, 6 Okl.St.Ann. § 63. The Bank Commissioner, when satisfied of the insolvency of a bank, may take possession of its assets and 'proceed to wind up its affairs and enforce the personal liability of the stockholders.' Id. § 9172, 6 Okl.St.Ann. § 148. That liability becomes due when the Bank Commissioner takes possession of the bank and his order finding the bank to be insolvent is conclusive evidence of that fact. Id. § 9174, 6 Okl.St.Ann. § 152. The Bank Commissioner is authorized to 'prosecute all suits necessary for the liquidation of the assets of the insolvent corporations taken over by him' and such suits are to be brought 'in the name of the State of Oklahoma, on the relation of the Bank Commissioner.' If, after liquidation and payment in fll of depositors and creditors, any assets remain in the hands of the Bank Commissioner, they revert to the stockholders. Id. § 9173, 6 Okl.St.Ann. § 149.

The statutes further provide that: 'The State of Oklahoma, on the relation of the Bank Commissioner, shall be deemed to be the owner of all of the assets of failed banks in his hands for the use and benefit of the depositors and creditors of said bank.' Id. § 9179, 6 Okl.St.Ann. § 157. No costs are required to be paid by the State in any suit in which the State of Oklahoma, on the relation of the Bank Commissioner, is a party, and preference is directed to be given in the courts of the State to all matters pending in such suits. Id.

The proposed complaint alleges that in May, 1931, the Bank Commissioner took possession of the Osage Bank of Fairfax, Osage County, finding it to be insolvent, and proceeded to wind up its affairs and enforce the personal liability of its stockholders; that the defendant, R. M. Cook, was the owner of sixty-nine shares of the capital stock of the bank of the par value of $100, and became liable to the State of Oklahoma, upon the relation of its Bank Commissioner, in the sum of $6,900, with interest; that the defendant has paid the sum of $2,300 in part satisfaction and that the balance is due; that the Bank Commissioner has liquidated all the assets of the bank except the claim here presented and certain other claims against other stockholders; that dividends have been paid to depositors and creditors amounting to ninety-one per cent. of their claims and that the enforcement of the statutory liability of the defendant is necessary to discharge the liabilities of the bank.

In answer to the rule to show cause why leave to bring this suit should not be granted, the proposed defendant contends that the cause of action is not within article 3, § 2, cl. 2, of the Constitution, U.S.C.A.Const. art. 3, § 2, cl. 2, providing for the original jurisdiction of this Court.

The purpose in creating the stockholder's liability, the authority conferred upon the Bank Commissioner to enforce it, and the relation of the State to its enforcement are clearly set forth in the decisions of the Supreme Court of Oklahoma. In State ex rel. Mothersead v. Kelly, 141 Okl. 36, 284 P. 65, the court said:

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

'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 nor by any act on its part release the stockholders 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. * * *' Id., pages 37, 38, 284 P., page 66.

The court added that 'the bank commissioner, alone, is empowered by law to prosecute an action to enforce the stockholders' liability.' Id., page 41, 284 P. page 69. See, also, American Exchange Bank v. Rowsey, 144 Okl. 172, 173, 289 P. 726; Griffin v. Brewer, 167 Okl. 654, 655, 31 P.2d 619.

In State ex rel. Murray v. Pure Oil Co., 169 Okl. 507, 37 P.2d 608, referring to the provision of the statute authorizing the Bank Commissioner to institute all suits necessary for the liquidation of the assets of the insolvent corporations taken over by him and providing that such suits shall be brought in the name of the State, on the relation of the Bank Commissioner, the court said:

'Since the state is the proper party plaintiff by virtue of the above statute, it may maintain the action, regardless of whether i i § the real party in interest or merely a nominal plaintiff for the use and benefit of depositors and creditors. An action may be maintained by one expressly authorized by statute, even though that person is not in fact the real party in interest. Section 144, O.S.1931 (12 Okl.St.Ann. § 223) * * *

'The protection of depositors of insolvent state banks is a distinct economic policy of the state. * * * In so far as the object of this action is to further the established economic policy of the state, the state may be said to have a real interest created by its governmental policy, as distinguished from a mere nominal interest, even though the pecuniary benefits of the litigation, if ultimately successful, go to the depositors and creditors of the insolvent bank.

'The statute (section 9173, supra (6 Okl.St.Ann. § 149)) which authorizes the state to be a party plaintiff names the bank commissioner as the proper officer to institute legal actions and carry out this economic policy. * * *

'The nature of the powers vested by law in the bank commissioner have been many times considered by this court and their exclusive character recognized. * * *

'It was legislative intent that litigation of this character should be instituted and conducted under the direct supervision of the bank commissioner through the staff of legal assistants provided by law for that purpose and not by the Governor nor through independent action.' Id., pages 509-512, 37 P.2d page 610.

Again, in Richison v. State ex rel. Barnett, 176 Okl. 537, 539, 56 P.2d 840, 843, the court observed: 'Under the provisions of article 6, chapter 40, O.S.1931 (section 9168 et seq. (6 Okl.St.Ann. § 144 et seq.)) the state has assumed exclusive jurisdiction and control of the affairs of insolvent banking institutions. By operation of law the bank commissioner is the officer through which the state liquidates the assets and winds up the affairs of such institutions. While engaged in the performance of such statutory duties and functions, the bank commissioner is performing duties for the benefit of certain members of the public who were depositors in such institution.'

The state court has also held that the statute of limitations does not run against the State in an action to enforce the statutory liability of the stockholders. State ex rel. Shull v. McLaughlin, 159 Okl. 4, 12 P.2d 1106. And the same rule applies to actions on promissory notes and other claims taken over by the Bank Commissioner as assets of an insolvent bank. White v. State, 94 Okl. 7, 220 P. 624; Lever v. State, 157 Okl. 162, 11 P.2d 498; Richison v. State ex rel. Barnett, supra.

May the State through its Bank Commissioner invoke our original jurisdiction to prosecute claims of this character for the benefit of creditors?

To bring a case within that jurisdiction, it is not enough that a State is plaintiff. Florida v. Mellon, 273 U.S. 12, 17, 47 S.Ct. 265, 266, 71 L.Ed. 511. Nor is it enough that a State has acquired the legal title to a cause of action against the defendant, where the recovery is sought for the benefit of another who is the real party in interest. New Hampshire v. Louisiana, New York v. Louisiana, 108 U.S. 76, 2 S.Ct. 176, 27 L.Ed. 656. In those cases provision was made by statutes of New Hampshire and New York for the assignment to the State of the obligations of another State. Thereupon it became the duty of the Attorney General of the State, if in his opinion the claim was a valid one, to bring suit in the name of the State in this Court in order to enforce collection. The money collected was to be held in trust, as stated, and to be paid over to the assignor of the claim. Id., pages 77, 79, 2 S.Ct. 176. The States, respectively, acquired title to bonds of the State of Louisiana and filed in this Court bills in equity in the name of the State to enforce recovery. The bills were dismissed. The fact that the effort was made to use the name of the complainant States in order to evade the applicatio o f the Eleventh Amendment, U.S.C.A.Const. Amend. 11 was undoubtedly a controlling consideration, but that consideration derived its force from the fact that the State was not seeking a recovery in its own interest, as distinguished from the rights and interests of the individuals who were the real beneficiaries.

The underlying point of the decision was that in determining the scope of our original jurisdiction under clause 2 of section 2 of article 3 of the Constitution, U.S.C.A.Const. art. 3, § 2, cl. 2, we must look beyond the...