Tabler v. Higginbotham

• Decision Date: 20 January 1931
• Docket Number: (No. 6916)
• Court: West Virginia Supreme Court
• Parties: W. E. Tabler, Receiver, etc., v. A. G. Higginbotham

110 W.Va. 9

W. E. Tabler, Receiver, etc.,

v.A. G. Higginbotham

(No. 6916)

Supreme Court of Appeals of West Virginia.

Submitted January 15, 1931.

Decided January 20, 1931

1. Banks and Banking

In a suit by the statutory receiver of an insolvent bank, appointed by the commissioner of banking and acting under him, against a stockholder of the insolvent bank for personal liability for an amount equal to the par value of the stock held by him, the finding of the commissioner that the bank is in fact insolvent and on which the suit is predicated, as provided in section 32, chapter 23, Acts 1929, is conclusive and cannot be controverted.

2. Same

In such suit the burden rests upon the plaintiff to show that the liabilities of the bank, for which the stockholder!, is personally liable, as in point one set out, accrued while he was such stockholder.

Error to Circuit Court, Wetzel County.

Action by W. R. Tabler, receiver of the Bank of Jacksonburg, against A. G. Higginbotham. Judgment for plaintiff, and defendant brings error.

Reversed; verdict set aside; new trial awarded.

II. II. Rose and LarricJc & Lemon, for plaintiff in error, in error.

Willis & Ball, for defendant in error,

Lively, Judge:

From a judgment on a directed verdict, rendered May 23, 1930, defendant Higginbotham prosecutes error.

Defendant owned. 42 shares of stock in the Bank of Jacksonburg on July 29, 1929, the date of the appointment of plaintiff as receiver for the bank, and on September 24, 1929, the commissioner of banking assessed against each stockholder owning stock on June 22, 1929, the full "double liability'' of stockholders, the bank being insolvent. This action is to recover against defendant the sum thus assessed.

The bank was chartered in 1903 with an authorized capital stock of $25,000.00, divided into 250 shares of the par value of $100.00 each. Defendant acquired fifteen shares in 1908 fifteen shares in 1909, one share in 1912, and eleven shares in 1921, making 42 shares, all of which he owned when the receiver was appointed.

On June 22, 1929, the board of directors passed a resolution by which it turned over to the commissioner of banking all of the bank's assets and liabilities for liquidation, and immediately an assistant commissioner took charge, closed the doors, found the capital impaired, and that the assets were not sufficient to pay the liabilities due to losses, embezzlement and a "run" on the bank. Defendant was duly notified of the assessment, made September 24, 1929, and payment requested. Upon his failure to pay, this suit was promptly instituted to December Rules, 1929.

Upon the trial of the issue raised by defendant's plea of nil debit, defendant attempted to show by plaintiff's witnesses that the bank had sufficient assets, including liability of the directors (alleged to be an asset), to pay the liabilities without resorting to collection of the stockholder's statutory "double" liability. The trial judge refused to allow the question of solvency of the bank to go to the jury, holding that the banking statute vested in the commissioner of bank- ing the power to determine the question of insolvency. The refusal of the court to allow the assets and liabilities of the bank as found by the officers of the banking department to go to the jury, for the purpose above stated, is the principal assignment of error relied upon in oral argument and brief. The consideration of this assignment impels a close inspection, and construction of the banking act of 1929, which radically changed the former banking laws as contained in Barnes' Code of 1923 and the subsequent amendments thereto, and which act of 1929 designates the act as chapter 54-d of the Code. It is now incorporated in Chap. 31 of the Revised.Code of 1931. Under that act, the commissioner of banking is given far-reaching powers in the visitation, regulation and control of banks and like institutions, and in the summary and expeditious winding up of their affairs. In former years, the slow process of the courts in winding up insolvent banks, which often delayed final settlement for many years, had brought about insistent criticism and complaints, and the legislature, following the federal act and other progressive legislation, enacted an expeditious, exclusive and comparatively inexpensive method of liquidation. The intent of these acts should be effectuated by the courts. In sec. 2 of chap. 23, Acts 1929, under consideration, authority is given the commissioner, upon finding that the capital stock of a bank is impaired and upon failure to make the bank solvent, upon notice from him, to appoint a receiver who shall take charge and wind up its affairs under the supervision of the commissioner. The commissioner determines the question of the insolvency, a power given him by the act, and the procedure for winding up the bank, faithfully performed, is exclusive. Picklesimer v. Morris, Judge, 101 W. Va. 127. Before suit can be instituted by the receiver to collect the liabilities of the stockholders it must appear that the assets of the insolvent corporation are not sufficient to pay in full all of its creditors and depositors. "While the act does not say who shall first determine the insufficiency of the assets to pay the creditors in full, it seems to us that it would necessarily fall upon the commissioner and receiver who is required, upon taking charge, to make, in duplicate, a complete inventory of all assets and an itemized list of all liabilities, the original to be filed with the commissioner and the duplicate retained by the receiver. This provision, coupled with the authority of the commissioner to determine the insolvency of the bank before appointment of the receiver, accentuates the intent of the statute that the question of the insolvency of the bank is to be determined by the commissioner or receiver or perhaps jointly by them, before suit can be instituted against the stockholders for double liability. In that particular, the statute is somewhat broader and clearer than the federal statute, sec. 9272, Barnes' Federal Code 1919, which provides: "On becoming satisfied, as specified * * * that any association has refused to pay its circulating notes as therein mentioned, and is in default, the comptroller of the currency may forthwith appoint a receiver * * *. Such receiver, under the direction of the comptroller, shall take possession of the books, records, and assets of every description of such association, collect all dues, and claims belonging to it * * * and may, if necessary to pay the debts of such association, enforce the individual liability of the stockholders." The United States Supreme Court has held, and many state courts having similar statutes, have consistently decided that the question of the insolvency of the bank is with the comptroller and his determination is conclusive. Thus(in Kennedy v. Gibson, 8 Wall. 498, 505, it was said: '' The receiver is the instrument of the comptroller. He is appointed by the comptroller, and the power of appointment carries with it the power of removal. It is for the comptroller to decide when it is necessary to institute proceedings against the stockholders to enforce their personal liability, and whether in whole or in part, and if only in part, how much shall be...