Stephens v. Hamilton, 5351

Citation81 F.2d 324
Decision Date17 January 1936
Docket Number5356,5357,5355,5354,No. 5351,5353,5358.,5352,5351
PartiesSTEPHENS v. HAMILTON, and seven other cases.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Frank R. Reid and John G. Plain, both of Aurora, Ill., for appellants.

Olney C. Allen and John T. Matthews, both of Aurora, Ill., for appellee.

Before EVANS and SPARKS, Circuit Judges, and WILKERSON, District Judge.

SPARKS, Circuit Judge.

Appellee as receiver of the First National Bank of Aurora filed suits against appellant and other stockholders of the bank to enforce their stockholders' liability. Judgment was rendered against all the defendants in the amount of $100 for each share of stock owned by each, plus interest from the date of demand. From those judgments these appeals were taken. On motion of counsel for all the appellants this court ordered that only the record of the case of Mangan should be printed, and that it should stand as the record in all the appeals, and that all should be consolidated for hearing. One opinion was rendered by the District Court, in the case of Hamilton v. Scheets, reported in 6 F.Supp. 824. We refer to that opinion since it appears that the pleadings and the facts in all the cases were identical, although that particular case is not among the group appealed.

The first group of errors assigned has to do with the pleadings in the case. With his declaration the receiver filed an affidavit of claim setting out his appointment by the comptroller, the determination of the comptroller that it would be necessary to enforce the personal liability of the shareholders of the bank in order to pay its debts, an order of assessment upon the shareholders, the demand upon each, including appellant, for payment, and the failure of appellant to pay any part of the claim. The affidavit further alleged that appellant was the owner of twelve shares of the stock of the bank, and that there was due the receiver the sum of $1200 with interest from the date of demand. To this declaration and affidavit appellant filed the general issue, a special plea, and an affidavit of merits. Several of the defenses set up in the special plea were equitable in nature. Appellee demurred to this plea and moved to strike the affidavit of meritorious defense. His demurrer was sustained and his motion to strike the affidavit was granted.

Appellant first contends that since his special plea raised equitable issues it could not be reached by a demurrer, relying upon the case of Duell v. Greiner (D.C.) 15 F. (2d) 726. As to this, the District Court ruled that although a motion to strike is the proper mode of testing the sufficiency of an equitable plea, nevertheless, if a demurrer is filed, it may be treated as a motion to strike, and we think there was no error in his treatment of it as such. United States v. Mackey (C.C.A.) 216 F. 126; Thome v. Lynch (D.C.) 269 F. 995. However, appellant argued that whether the demurrer be considered as such or as a motion to strike, it admits all facts well pleaded, hence he was entitled to have his pleas considered as though set up in a bill in equity. A perusal of the opinion of the lower court convinces us that his plea received such consideration, and it was only upon its finding that none of the averments of the plea, even if true, constituted a defense to the suit that the court sustained the demurrer.

We adopt the analysis of the District Court as to the plea:

"The first matter of defense set up in the second plea is a contract between the First National Bank of Aurora, the bank involved in this case, hereafter and in the contract referred to as the Old Bank and the First National Bank in Aurora, hereafter referred to as the New Bank. By the terms of this contract, dated July 30, 1931, and ratified by the shareholders September 26, 1931, and which recited that the condition of the Old Bank was unsatisfactory, its capital stock and surplus fund impaired and an assessment pending which was considered to be dangerous to the bank, the two banks agreed that the Old Bank should transfer certain of its assets to the New Bank and execute and deliver its note or notes to the New Bank for the par value of the difference between the assets of the Old Bank accepted by the New Bank and the capital stock, surplus, and reserves of the Old Bank, such note or notes to be secured by transfer of the remaining assets of the Old Bank to certain trustees who were given authority to convert such assets into money, to apply the proceeds in payment of such note or notes, and distribute the remainder among the shareholders of the Old Bank. In consideration of such transfer of assets and the giving of the note or notes the New Bank assumed and agreed to pay the liabilities of the Old Bank which appeared upon the general statement of the Old Bank as of July 20, 1931, except the liability for circulation notes, the liabilities not shown on the general ledger of the Old Bank as of the close of business on the day aforesaid, and the liability to shareholders as such.

"There is no averment in the plea that the note or notes mentioned in the contract to be given by the Old Bank to the New Bank (and in the brief filed by defendant it is admitted that such note or notes were given) have ever been paid. They are still outstanding obligations of the Old Bank. Defendant seeks to avoid the effect of this fact by the allegation that the note or notes given by the Old Bank did not evidence any indebtedness of the Old Bank to the New Bank for the reason that the trusteed assets of the face value of over $1,000,000 were taken by the New Bank as full payment of the difference in the amount between the liabilities and assets of the Old Bank assumed by the New Bank and that said purported note or notes were merely given as a memorandum of the amount of the assets when liquidated. But the terms of the contract do not warrant such a construction. The trusteed assets were merely collateral security to said note.

"It is further averred in the plea that it was not the intention or purpose of the officers of the Old Bank that the `agreement should constitute any liability of the shareholders of the Old Bank for the payment of said note,' and that it was represented by the officers of both the banks to the shareholders of the Old Bank that the agreement relieved the shareholders and the shareholders relying on such representations ratified the agreement. But the purpose and intention of the officers of the Old Bank is immaterial, and the shareholders cannot be relieved from liability by oral representations varying, or attempting to vary or change the plain terms of the written agreement."

We think the District Court was correct in this ruling, and also in holding that since it appeared that the Old Bank had an outstanding liability at the time it was taken over by the comptroller and the suits here involved started, appellant could not question the necessity of an assessment or the amount thereof as determined by that officer. See Forrest v. Jack, 294 U.S. 158, 55 S.Ct. 370, 79 L.Ed. 829, 96 A.L.R. 1457, and cases there cited as to this point. That the determination of the comptroller as to the necessity and amount of the assessment is conclusive appears to be too well settled to require further citation of authorities. In his reply brief appellant seeks to distinguish his case from Crawford v. Gamble (C.C.A.) 57 F.(2d) 15, and other cases relied upon by appellee as to this issue on the ground that in all of these cases a debt was admitted and that the defense attempted to be pleaded sought to avoid it on other grounds, whereas in the case at bar, it is alleged that there were no debts of the Old Bank and that the assessment of the comptroller was the "result of fraud, error or...

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4 cases
  • Bacon v. Barber, 1111.
    • United States
    • United States State Supreme Court of Vermont
    • May 2, 1939
    ...Christopher v. Norvell, supra, 201 U.S. at page 222, 26 S.Ct. at page 503, '50 L.Ed, at page 735, 5 Ann.Cas. 740; Stephens v. Hamilton, 7 Cir., 81 F.2d 324, 326; Miller v. Stock, 3 Cir., 65 F.2d 773, 774, 90 A.L.R. 1061. It is the duty of the receiver to enforce the individual liability of ......
  • John D. Bacon, Receiver of the National Bank of Bellows Falls v. Richard Robbins Barber
    • United States
    • United States State Supreme Court of Vermont
    • May 2, 1939
    ......at page 222, 50 L.Ed. at page 735, 26. S.Ct. at page 503, 5 Ann. Cas. 740); Stephens v. Hamilton, (7th Cir.) 81 F.2d 324, 326;. Miller v. Stock, (3rd Cir.) 65 F.2d 773,. 774, 90 ......
  • Abel v. Munro, 8476.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • April 26, 1939
    ...bank had gone out of existence, through a voluntary liquidation, does not prevent a stock assessment by the Comptroller. Stephens v. Hamilton, 7 Cir., 81 F.2d 324; O'Conner v. Watson, 5 Cir., 81 F.2d Plaintiffs make a point of the release by the Richmond Bank of the guarantee given, by John......
  • Heady v. Simmons, 74--55
    • United States
    • United States Appellate Court of Illinois
    • February 19, 1975
    ...is in practically the same language as the second count, except that mistake rather than fraud is alleged. The case of Stephens v. Hamilton (1936), 7 Cir., 81 F.2d 324, is cited by the defendant as holding that specific acts which constitute a mistake of law must be alleged, and a mere alle......

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