Thomas v. Gilbert
| Decision Date | 15 November 1909 |
| Citation | 104 P. 888 |
| Parties | THOMAS v. GILBERT et al. In re SCHAEFFER PIANO CO. et al. |
| Court | Oregon Supreme Court |
On application for rehearing. Denied.
For former opinion, see 101 P. 393.
Rehearing denied.
At the time of the filing of the opinion in this case, I entertained grave doubts as to the soundness of the conclusion announced and since the receipt of the petition for rehearing I have carefully re-examined the record, and the legal principles involved, with the result that I am fully convinced that the conclusion reached by the majority, as disclosed by the opinion, is erroneous, and, if permitted to stand, will necessarily result in the taking of property by appellants without due process of law, in violation of the provisions of section 10 of our Bill of Rights and in contravention of the federal Constitution. I therefore feel impelled to record my dissent, and to give in part, at least, my reasons therefor.
The determination reached by the majority, as I view it, is based largely upon an inaccurate assumption of facts. In the outset it is assumed that, in making the sale under the assessment levied, "notice of this assessment was duly given to the stockholders, including the receiver; but he neglected to pay the assessment on the stock held by him, and on August 2, 1901, the board of directors of the bank ordered such stock sold at a public auction to satisfy such assessment." It was my impression during our former consideration of the case that there was no question as to the time having passed which was required before a sale of stock to pay assessments could be declared. I find, however from an inspection of the record, that under the conceded facts this required time had not elapsed before the sale was ordered, and that under no system of calculation can it be so held. It cannot be legally held that "due notice" was given, where the order for the sale was made before the expiration of the time prescribed by the statute, unless it be on the theory that such prerequisite is not jurisdictional, and that the requirements are directory, and not mandatory.
Section 5205, Rev.St., 5 Fed.St.Ann. p. 143 (U.S.Comp.St.1901, p 3495), reads as follows: That part of the above section after the words "And provided" was adopted June 30, 1876 (19 Stat. 64, c. 156, § 4), as amendatory of section 5205 as it was at that time, which section, prior to the amendment, did not provide any power to sell delinquent stock, to cure which defect this amendment was evidently adopted.
It is well also to bear in mind that the section as originally passed must be construed in connection with this amendment, which makes it impossible in all cases to comply with the provision to the effect that the deficiency be paid within 3 months from receipt of notice from the Comptroller, as indicated in the act before the 1876 amendment. It is obvious, therefore, that the 3 months' notice to pay the assessment must have reference, when applied to this case, to the time after June 15, 1901, when the assessment was made. It will be observed that the amendment requires that the shareholders be given 3 months' notice to pay the assessment, after which an order may be made for the sale of stock to meet such assessment, and such sale had after 30 days' additional notice. The first requirement appears to be that the association within 3 months after notice from the Comptroller, pay the deficiency to which attention may be called; and in case of such failure, if they refuse to go into liquidation, a receiver shall be appointed. It is evident that the banking corporation may avoid going into liquidation by the levying of an assessment to meet the deficiency. It is also clear that the corporation may levy an assessment for this purpose; and it is equally obvious that after such levy the shareholders must have 3 months in which to pay it, and that the 3 months' time must elapse, accompanied by a refusal or neglect to pay, before a sale of the stock can be legally ordered.
The Comptroller's notice was received by the bank at Moscow on May 6, 1901, and the directors' meeting, at which the shareholders were notified of the receipt of such notice from the Comptroller, was held on May 15th following, at which time the directors undertook to notify the stockholders to meet on June 15, 1901, at Moscow, for the purpose of providing for the payment of the deficiency of the capital stock by assessment. At this time, June 15th, the assessment under which the stock was subsequently sold was made, the levy thereon being 60 per cent. upon all the shares of the capital stock of the bank. On August 2d the assessment was declared delinquent, and the stock ordered to be advertised and sold at public auction; the date fixed, and upon which the sale was made, being September 14, 1901. It will be observed from an inspection of the record that the sale purports to have been ordered on August 2d, or within less than the 3 months' time required by the statute. Should the time be computed from May 6th to August 2d, the period is still inadequate; and if counted from June 15th, the date of the first meeting of the shareholders, and when the first attempted levy was made, until the date of the sale on September 14th, it would still fall short of the time necessary, for the period must be computed by calendar months. 20 Am. & Eng.Ency.L. 869; Sheets v. Selden, 2 Wall. 177, 17 L.Ed. 822; Guaranty Trust Co. v. Railroad Co., 139 U.S. 137, 145, 11 Sup.Ct. 512, 35 L.Ed. 116. And this does not include the additional 30 days' notice, or time required for making the sale after the expiration of the 3 months.
Under any view, therefore, which may be taken, it is manifest that the time required, essential to "due notice," before the making of the order for the sale of the stock, had not elapsed; and, as this time constituted one of the jurisdictional prerequisites, it follows that the sale was not voidable merely, but absolutely void. I have not understood the contention of petitioners to be that the sale was invalid by reason of irregularities only, but that the jurisdictional steps were not taken prior to the making of the order directing the sale, and that by reason thereof the sale was absolutely void, thereby invalidating all proceedings thereunder.
Generally speaking, the proceedings essential to jurisdiction are as mandatory in one class of cases as in another; that is to say, it can make no difference whether it be in a sale of stock to pay an assessment, a sale of land for taxes, or a sale to pay assessments for street improvements. The statutory time prescribed before definite action can be taken to forfeit the property assessed must be complied with. It is so well established that it may be regarded as elementary that the time required to give jurisdiction of a non-resident and sale of attached property under judgment procured thereby, or to give a right to any officer or tribunal to make an order for a sale under either of these circumstances, is a jurisdictional matter, all of which is analogous, so far as the legal effect thereof is concerned, to the question under consideration, with reference to which it has been held in this state, by an unbroken line of decisions extending over a period of more than 30 years, that any sale made in disregard thereof is absolutely void. In this connection a brief review of the authorities may contribute to the foregoing views.
In Van Sant v. Portland, 6 Or. 385, 399, the court had under consideration a street assessment, in which the record failed to show that the notice required by the charter before beginning improvement had elapsed before the work was commenced, and that the time specified by the charter had not passed before making the assessment, with reference to which the court observes: ...
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