Stewart v. Allison

• Decision Date: 16 March 1927
• Docket Number: 1315
• Citation: 36 Wyo. 202,254 P. 117
• Parties: STEWART et al v. ALLISON [*]
• Court: Wyoming Supreme Court

254 P. 117

36 Wyo. 202

STEWART et al v. ALLISON ^[*]

No. 1315

Supreme Court of Wyoming

March 16, 1927

APPEAL from District Court, Campbell County; JAMES H. BURGESS Judge.

Action by J. A. Stewart and others against J. A. Allison. Judgment for defendant, and plaintiffs appeal.

Judgment affirmed.

E. C Raymond, R. G. Diefenderfer and W. K. Somers, for appellants.

The stock was sold by Allison through his agent Shields to irresponsible people, at a time when the bank was insolvent to the knowledge of Allison; this did not relieve him of liability; Banta v. Hubbell, 150 S.W. 1089. The only transfer on the books is from Allison to the Nelsons and Hume, indicating that Shields was a mere agent; actual intent to defraud is unnecessary if the effect of the act is to defraud; National Carriage Mfg. Co. v. Story, 44 P 157; Welch v. Sargent, 59 p. 319; Northwestern Trust Co. v. Bradbury, 134 N.W. 513; Richmond v. Irons, 121 U.S. 7; McConey v. Co., 106 N.W. 901. It was unnecessary that the insolvency of the purchaser be known to vendor; McDonald v. Dewey, 26 S. C. R. 734. If transfer was to corporation, it was a fraud on creditors; Sherrill v. Hutson, 65 S. 539; Hall v. Co., 2 L. R. A. (N. S.) 130; Atlanta Ass'n. v. Smith, 123 N.W. 106; Bank v. Case, 99 U.S. 628. The voluntary assessment paid by Allison does not excuse him from liability; Delano v. Butler, 118 U.S. 634, and cases cited. Where a transfer is void, the stockholder remains such; Gillette v. Trust Co., 82 N.E. 891; Savings Bank v. Richard, 73 P. 858. This action, brought under 5595 C. S., is for the creditors who are all before the court; those who were creditors at the time of the transfer can recover.

C. A. Kutcher, for respondent.

The record does not contain all of the evidence; the cause should be affirmed upon the portions of the record before the court; France v. Bank, 3 Wyo. 187; Callahan v. Houck, (Wyo.) 83 P. 372. Allison paid an assessment of $ 50.00 per share and assigned his stock to Shields, cashier, for sale under a guaranty that he would not be called upon for stock contributions to save the bank; he also resigned as a director; he practiced no fraud upon creditors; no fraud was proven; the insolvency of the bank, at the time of the transfer, was not proven; Blyth & Fargo Co. v. Kestor, 97 P. 927. A transfer in good faith cannot be attacked even if the bank was insolvent at the time. 3 R. C. L. 407. The evidence shows that Shields was responsible at the time of transfer; this precludes an action by creditors against transferor; 14 C. J. 1021; McDonald v. Dewey, 50 L.Ed. 1128. The limit of liability would be debts of the bank; at the time of transfer, and on this point there was no evidence; 3 R. C. L. 406. Allison contributed $ 7,250.00 for which he received nothing; how could this defraud the creditors? The transfer to Shields was legitimate.

E. C. Raymond, R. G. Diefenderfer and W. K. Somers, in reply.

The case was presented on the record in the Collins case, and the point suggested that the record herein is incomplete is not well taken; the pleadings stated that the sale was made to Hume and the Nelsons; the testimony about transfer to Shields was immaterial under the pleadings; likewise the financial responsibility of Shields was immaterial.

Before POTTER, Justice, and TIDBALL and BROWN, District Judges. POTTER, J., and BROWN, District Judge, concur.

OPINION

TIDBALL, District Judge.

In this case, the plaintiffs are suing as creditors of the defunct Peoples Bank of Moorcroft for themselves and all other creditors of the bank. The defendant was a stockholder in that bank, owning twenty-nine shares of stock, and the suit is to enforce payment against the defendant under Section 5186, W. C. S. 1920. By the suit, the plaintiffs seek to recover for themselves and the other creditors of the bank the sum of $ 2900, with interest, being the par value of the stock held by defendant.

The plaintiffs allege that on October 15th, 1921, the bank was insolvent and had been insolvent for some time prior to that date and continued to be insolvent during all times thereafter; that on October 28th, 1921, the bank was closed by the State Bank Examiner, and that proceedings were had whereby, on December 5th, 1921, the District Court made an order declaring the corporation insolvent, continuing the receivership, and perpetually closing the corporation and enjoining it from further proceeding with its business; that the liabilities of the bank to its creditors, after the sale of all assets of the bank, were in excess of $ 100,000 and in excess of the stock of the bank.

The section of the statute under which the action was brought provided:

"The shareholders of each and every banking association, savings bank, and loan and trust company or association, organized under the provisions of this chapter shall be held individually responsible, equally and ratably and not one for another, for all contracts, debts and engagements of such company or association to the extent of the amount of their stock therein at the par value thereof, in addition to the amount invested in such stock."

This section has since been repealed and a new section re-enacted as Sec. 87, Ch. 157, S. L. 1925. However, this latter chapter does not apply to the case at bar, the suit in question antedating the law of 1925.

It appears from the evidence that prior to the 6th day of August, 1921, the defendant Allison owned twenty-nine shares of the capital stock of the bank, of the par value of $ 2900, for which he had paid the full sum of $ 2900; that on the 6th day of August, 1921, a proceeding was had whereby all the stockholders in said bank, in order to take up bad paper held by the bank, turned in their shares of stock in the bank and had them cancelled, and on said date new stock in the same amount as theretofore held by the stockholders was issued to them and they paid the full par value thereof, so that on the 6th day of August, 1921, the defendant Allison surrendered his twenty-nine shares of stock for which he had paid $ 2900 and received a new certificate for twenty-nine shares, for which he paid $ 2900 in cash into the bank. At the same time that the defendant took out the twenty-nine new shares of stock and paid in $ 2900, he was elected a director and president of the bank. At that time, the State Bank Examiner and other persons interested in the bank held a meeting in the bank and the arrangement of cancelling the old stock and buying new stock was carried out, pursuant to the suggestion of the State Bank Examiner and the other parties interested in the bank, and, according to the testimony, it was believed at that time that this reorganization placed the bank in a sound and solvent condition, and to show his faith in the solvency of the bank at that time the State Bank Examiner deposited $ 300 therein. The action taken on August 6th, 1921, was controlled and supervised by the State Bank Examiner and was apparently approved by him.

The bank continued to function thereafter, and on September 30th 1921, High Shields, who was then the cashier of the bank, went to Gillette, where defendant resided, and advised him, as well as two other stockholders, to-wit: Maycok and Keeline; that there was still some doubtful paper in the bank which should be taken care of. Shields then proposed to defendant and the other stockholders present that they should pay into the bank an amount equal to fifty dollars per share on the stock held by them in order to absorb this doubtful paper, and that they should also transfer and turn over to Shields their stock and that he would assume all further responsibility on the doubtful paper. After some discussion this proposition was accepted by Allison, and he thereupon paid into the bank the further sum of $ 1450...