Vandagrift v. Rich Hill Bank

• Decision Date: 05 August 1908
• Docket Number: 2,820.
• Parties: VANDAGRIFT v. RICH HILL BANK et al.
• Court: U.S. Court of Appeals — Eighth Circuit

163 F. 823

VANDAGRIFT v. RICH HILL BANK et al.

No. 2,820.

United States Court of Appeals, Eighth Circuit.

August 5, 1908

John A Eaton and E. H. McVey, for plaintiff in error.

T. B Wallace (Thomas J. Smith, on the brief), for defendants in error.

Before VAN DEVANTER, Circuit Judge, and W. H. MUNGER, District Judge.

W. H MUNGER, District Judge.

This action was brought by William J. Butler, receiver of the Bates National Bank of Butler, Mo., against the Rich Hill Bank, Frank McVey, and W. F. Tygard, to recover a stockholder's assessment levied by the Comptroller of the Currency.

In the petition it is alleged, among other things, that the Rich Hill Bank is a banking corporation, organized under the laws of the state of Missouri, and that at the organization of the Bates National Bank said Rich Hill Bank became a shareholder in the same, and owned 40 shares of the par value of $100 each, which stock was held in the name of W. F. Tygard, as trustee for said Rich Hill Bank; that on February 16, 1907, said Tygard, who was president of the Rich Hill Bank, had said stock transferred to Frank McVey, the old certificate being taken up and a new certificate issued in the name of said Frank McVey.

It is alleged that Frank McVey was a farm hand in the employ of said Tygard, and was insolvent; that said transfer was made to him in contemplation of the liability on said stock of the Bates National Bank, and for the fraudulent purpose of avoiding the payment of additional liability on said stock; that said transfer was colorable merely, and not made in good faith. It is further alleged in the petition that the Rich Hill Bank received dividends paid upon said stock up to the time of the insolvency of the Bates National Bank, and charges that by reason of this fact said Rich Hill Bank is estopped from denying not only its ownership, but that the contract of ownership was ultra vires. It is further alleged in the petition that on the . . . day of September, 1906, the Bates National Bank went into liquidation, and complainant was appointed receiver by the Comptroller of the Currency of the United States. The answer of the defendant Rich Hill Bank admits its incorporation under the laws of the state of Missouri, and alleges that it had no authority to subscribe for or hold stock in said the Bates National Bank; admits that the officers of the Rich Hill Bank subscribed for said stock in the Bates National Bank for and on behalf of said Rich Hill Bank; but alleges that their acts in that respect were ultra vires. It pleads the following provisions of the statutes of Missouri:

Section 903, Rev. St. 1879:

'Every such corporation shall be authorized and empowered to conduct the business of receiving money on deposit, and allowing interest thereon, and of buying and selling exchange, gold, silver, coins of all kinds, uncurrent money, of loaning money upon real estate or personal property and upon collateral and personal security at a rate of interest not exceeding that allowed by law, and also of buying, selling and discounting negotiable and non-negotiable paper of all kinds as well as all kinds of commercial paper, and for all loans and discounts made such corporation may receive and retain in advance the interest thereon.'

Section 915:

'No corporation now existing, nor any hereafter organized under any law of this state, whether general or special, as a bank, or to carry on banking business, shall employ its money directly or indirectly in trade or commerce, by buying and selling ordinary goods, chattels, wares and merchandise, provided that it may use all kinds of property which may come into its possession as collateral security for loans, or in the ordinary collection of debts.'

It also pleads section 7 of article 12 of the Constitution of Missouri (Ann. St. 1906, p. 304), as follows:

'No corporation shall engage in business other than that expressly authorized in its charter or the law under which it may have been or may hereafter be organized, nor shall it hold any real estate for any period longer than six years, except such as may be necessary and proper for carrying on its legitimate business.'

Other allegations of the petition were denied.

It appears from the evidence that the defendant bank was the owner by subscription of shares of stock in the Bates County Bank, a Missouri corporation; that September 4, 1902, the Bates County Bank was reorganized as the Bates National Bank, under the laws of the United States.

The stock in the Bates County Bank was held in the name of the defendant bank, but at the time of the reorganization of said bank as a national bank the stock in the National Bank was taken in the name of W. F. Tygard, as trustee for the defendant bank, and the books of the defendant bank showed said stock as an asset of such bank. On April 1, 1905, the Secretary of State wrote the defendant bank that it was not authorized under the laws of Missouri to hold stock in any other corporation, and directing it to dispose of such stock as soon as practicable. On the 7th of the same month the Secretary of State again wrote the bank, calling its attention, not only to the statutes of Missouri, but to the constitutional provision heretofore quoted. It is not alleged in the petition that the Bates National Bank was insolvent at the time of the transfer of the stock to McVey, nor does it appear anywhere in the evidence when said National Bank became insolvent. At the trial it was admitted by the parties that the National Bank was declared insolvent by the Comptroller on September 20, 1906. There is no evidence as to the bank being insolvent at the time of the transfer of the stock to McVey. The testimony of the officers...