Union Nat. Bank of Omaha v. Halley

• Decision Date: 06 July 1905
• Citation: 104 N.W. 213,19 S.D. 474
• Parties: UNION NAT. BANK OF OMAHA v. HALLEY et al.
• Court: South Dakota Supreme Court

104 N.W. 213

19 S.D. 474

UNION NAT. BANK OF OMAHA v. HALLEY et al.

Supreme Court of South Dakota

July 6, 1905

Appeal from Circuit Court, Pennington County.

Action by the Union National Bank of Omaha against James Halley and another. From an order sustaining a demurrer to the complaint, plaintiff appeals. Reversed.

Martin & Mason, for appellant. Charles J. Buell and A. K. Gardner for respondent James Halley.

CORSON P. J.

This is an appeal by the plaintiff from an order sustaining the defendants' demurrer to its complaint. The complaint states, in substance, that the plaintiff is a corporation duly organized under and by virtue of the banking laws of the United States; that the Minnekahta State Bank was in May 1899, and for years prior thereto, a banking association or corporation organized and existing under and by virtue of the laws of the state of South Dakota, and doing business in the city of Hot Springs; that said bank was organized with a capital stock of $25,000, divided into 250 shares of the par value of $100; that defendant James Halley was on, prior, and subsequent to said date a stockholder in said state bank owning and having on the records of said bank 20 shares of stock of the par value of $2,000; that the plaintiff is the owner and holder of a judgment against said state bank, duly entered in the circuit court of Fall River county on May 6, 1899, for the sum of over $7,000, and that no part of the same had been paid, and that the whole thereof is due and owing to this plaintiff with interest thereon; that said state bank is, and has been for years past, insolvent, and without assets, and that no part of said judgment is collectible from said bank on execution or otherwise, and the plaintiff demands judgment for the sum of $2,000 and its costs. The defendant Halley interposed a demurrer to said complaint on the grounds (1) that there is a defect of parties plaintiff; (2) that there is a defect of parties defendant; (3) that the complaint does not state facts sufficient to constitute a cause of action. This demurrer was sustained, and from the order sustaining the same this appeal was taken.

It is contended by the respondent in support of the ruling of the court below (1) that a suit at law by a single creditor against one or more shareholders of an insolvent corporation cannot be maintained in this state, and that the only remedy in such a case is a bill in equity, in which all the creditors, or one in behalf of all, should be made plaintiff and all persons owning stock in the bank should be made defendants; (2) that the complaint does not state facts sufficient to constitute a cause of action, in that it does not appear from the complaint what was the amount of the outstanding indebtedness of the bank and the names of the stockholders, and the amount due from each, and that these allegations are essential in a complaint to constitute a cause of action; (3) that the plaintiff can only recover upon the original cause of action, and not upon the judgment. The appellant, on the other hand, contends that neither the other creditors nor the other stockholders were necessary parties to the action; that it was not necessary in the complaint to set forth the amount of the indebtedness of the bank to parties other than the plaintiff, or the amount of stock held by other stockholders; and that the indebtedness by judgment comes within the provisions of the law authorizing the recovery of money from stockholders of a state bank. As it does not affirmatively appear from the complaint that there are other creditors of the insolvent corporation or other solvent stockholders who have not paid the amount...