Taylor v. Fontaine

• Decision Date: 25 June 1928
• Docket Number: No. 16357.,16357.
• Parties: TAYLOR et al. v. FONTAINE et al.
• Court: Missouri Court of Appeals

10 S.W.2d 68

TAYLOR et al. v. FONTAINE et al.

No. 16357.

Kansas City Court of Appeals, Missouri.

June 25, 1928.

Rehearing Denied July 9, 1928.

Appeal from Circuit Court, Jackson County; Ralph Latshaw, Judge.

Action by Mrs. Ella D. Taylor, individually and as executrix and devisee under the will of T. J. Taylor, deceased, and others, against C. L. Fontaine and others. A demurrer to the petition was sustained, and plaintiffs appeal. Reversed and remanded.

Cooper & Neel and William E. Kemp, all of Kansas City, for appellants.

Hyden J. Eaton, of Kansas City, for respondent.

FRANK, C.

This action was brought in the circuit court of Jackson county in aid of an equity proceeding in the United States District Court at Wichita Falls, Tex., the domicile of the American National Bank, of Wichita Falls, Tex., to enforce the liability of defendants as nonresident stockholders of said bank. A demurrer was sustained to the petition and plaintiffs appealed.

The record in this case shows that plaintiffs are proceeding under the provisions of the statutes of the United States which fix the liability of stockholders of national banks, and provides the manner in which such liability may be enforced.

Section 5151, U. S. R. S. (section 9689, U. S. Compiled Statutes 1916 [12 USCA § 64]) fixes the liability of stockholders of national banks. It reads in part as follows:

"The stockholders of every national banking association shall be held individually responsible for all contracts, debts, and engagements of such association, each to the amount of his stock therein, at the par value thereof in addition to the amount invested in such stock."

Section 2 of the Act of June 30, 1876, c. 156, par. 2 (12 USCA § 65) provides the manner in which the liability of stockholders of a national bank may be enforced by creditors. It provides that:

"When any national banking association shall have gone into liquidation under the provisions of section five thousand two hundred and twenty of said statutes, the individual liability of the shareholders provided for by section fifty-one hundred and fifty-one of said statutes may be enforced by any creditor of such association, by bill in equity, in the nature of a creditor's bill, brought by such creditor on behalf of himself and of all other creditors of the association, against the shareholders thereof, in any court of the United States having original jurisdiction in equity for the district in which such association may have been located or established."

The petition in the instant case alleges, among other things, that prior to the institution of this suit plaintiffs instituted a suit against the American National Bank of Wichita Falls, Tex., and its stockholders, in the United States District Court, in the Northern Division of Texas [Taylor v. American Nat. Bank of Wichita Falls, Tex., 2 F. (2d) 479], the corporate domicile of said bank, for the purpose of establishing their debt against said bank and to enforce the statutory liability of the stockholders thereof in order to pay the indebtedness of said bank; that in said suit, said bank and all resident stockholders were duly served with process; that in said cause the court found, adjudged, and decreed that said bank was indebted to plaintiffs in the total sum of $251,303.94 and that said sum was all the indebtedness owing by said bank; that said indebtedness exceeded in amount the capital stock of said bank and an additional amount equal to the full par value of the stock owned by the shareholders of said bank; that said shareholders were individually responsible to the extent of the full par value of their stock, which was $100 per share; that said decree found who were the shareholders of said bank and recited the name of each shareholder and the number of shares owned by him; that defendants owned 25 shares of the stock of said bank; that said court further adjudged and decreed that plaintiffs have and recover of and from said bank and from the stockholders residing in the Northern district of Texas, who were duly served with process, the total sum of $251,303.94; and that plaintiffs be authorized to institute such ancillary proceedings as might be deemed advisable by them for the collection of the amount due from shareholders of said bank, who were nonresidents of the state of Texas.

Defendants were not served with process in the Texas suit, did not appear therein, and no judgment was rendered against them.

Defendants' demurrer challenges the sufficiency of the petition on two grounds: (1) Because it appears on the face of plaintiff's petition that this court has no jurisdiction of the subject-matter of this action; and (2) because it appears from the face of plaintiff's petition herein that said petition does not state facts sufficient to constitute a cause of action against defendants.

As we gather defendant's theory of this demurrer from the presentation in brief, it is: (1) That under the statute heretofore quoted plaintiff cannot maintain this action in any court except a court having jurisdiction in equity in the district in Texas where the bank is located; and (2) that defendants are not bound by the Texas decree because they were not parties to said cause and were not served with summons therein.

Defendant's contentions raise questions of law, and, as the petition is not challenged in other respects, it is unnecessary to lengthen this opinion by a reproduction of its allegations.

Defendants do not and could not successfully challenge the jurisdiction of the Texas court in the parent action or the validity of the decree rendered therein. Section 5151 of the statute heretofore quoted provides that stockholders of a national bank shall be held individually responsible for contracts, debts, and engagements of such association, each to the amount of his stock therein at the par value thereof, in addition to the amount invested in such stock.

The act of June 30, 1876, expressly provides that the shareholder's liability created by section 5151 may be enforced by any creditor of the bank by bill in equity brought by such creditor on behalf of himself and of all other creditors of the bank, against the shareholders thereof in any court having original jurisdiction in equity for the district in which the bank is located.

Plaintiffs were the only creditors of the bank. They brought a suit in equity against the bank, and all of its shareholders in the federal court in the Northern district of Texas, where the bank was located. In that case the court found that plaintiffs were the only creditors of the bank and that the bank was indebted to them in a sum in excess of its capital stock and an additional amount equal to the full par value of the shares of stock owned by the shareholders of the bank.

The court rendered judgment against the bank, and the resident shareholders who were served with process, for the amount of said indebtedness, in the sum of $251,303.94, and ordered and decreed that the shareholders were individually responsible therefor to the extent of the full par value of their stock, and authorized plaintiffs to bring such ancillary proceedings as in their judgment was necessary to collect the amount due from shareholders who were nonresidents of the state of Texas. The provisions of the statute were strictly followed in the proceedings in the Texas court and that court granted all the relief it was authorized to grant. After ascertaining that it was necessary to enforce the individual liability of the shareholders in order to pay the debts of the bank, it rendered judgment against the bank and the resident shareholders who were served with process, then authorized plaintiffs to take the necessary steps to collect from the nonresident shareholders. It is true that this court did not render judgment against defendants, but it did ascertain that it was necessary that defendants pay their individual liability as shareholders in order to pay the debts of the bank. The question presented is whether or not this ascertainment is binding on defendants.

Defendants say that they want the basic facts establishing their liability fully proven with opportunity to cross-examine and defend; that they deny that plaintiffs are creditors of the bank and deny that plaintiffs' claims are liabilities of the bank. There is no merit in this contention.

The Texas court rendered judgment against the bank. It has been repeatedly held, and the great weight of authority is, that a judgment rendered against a corporation in favor of a creditor, without notice to a stockholder, conclusively establishes the fact of indebtedness, while, in a comparatively few jurisdictions, it is treated as prima facie only. Hale v. Hardon (C. C. A.) 95 F. 747, 757, and cases cited. Speaking of the validity of the ascertainment of the necessity for an assessment upon stockholders of a corporation, without notice to the stockholders, the court in Hale v. Hardon, supra, said:

"We cannot conceive that there can be any reason for a different rule in respect to the ascertainment of the corporate indebtedness, and the conclusive establishment of the fact of indebtedness by judgment, and the ascertainment of the necessity for an assessment upon the stockholders, and the establishment of such fact by judgment or decree, without notice to the stockholder. Indeed, Holland v. Development Co., 65 Minn. 324, 68 N. W. 50 , a well-reasoned case, holds that a judgment against a corporation is conclusive upon the question of corporate indebtedness in a subsequent action against a stockholder to enforce individual liability. The indebtedness against a corporation is as much a corporate affair as an assessment upon the stockholders, for the indebtedness relates to the corporate interests as well as an assessment. When an assessment is made and paid, the money becomes a corporate asset, and increases the corporate estate; and, if indebtedness is found, it becomes a...