Washington Sav. Bank v. Butchers' & Drovers' Bank

• Decision Date: 23 November 1891
• Citation: 17 S.W. 644,107 Mo. 133
• Court: Missouri Supreme Court
• Parties: WASHINGTON SAV. BANK et al. v. BUTCHERS' & DROVERS' BANK et al.

17 S.W. 644

107 Mo. 133

WASHINGTON SAV. BANK et al. v. BUTCHERS' & DROVERS' BANK et al.

Supreme Court of Missouri, Division No. 1.

November 23, 1891.

LIMITATION OF ACTIONS — EXCEPTIONS.

For five years previous to the suspension of an insolvent bank its president had managed its affairs with little assistance from the directors. Upon its suspension, without being authorized by the directors, he issued scrip to the creditors, payable in three years, and secured by a mortgage on his own property. Without any objection by the directors, he wound up the bank's affairs, collected the assets, and applied them to the payment of the scrip until the remaining assets were levied upon under execution. The stockholders had not fully paid their subscriptions, the remainder of which was payable upon calls by the directors, which the latter had never made. Held that, although upon the bank's suspension a cause of action arose in favor of creditors against the stockholders for their unpaid subscriptions, the running of the statute of limitations was postponed three years by the issuance of said scrip, since the bank was bound thereby.

Appeal from St. Louis circuit court; L. B. VALLIANT, Judge. Reversed.

Creditors' bill by the Washington Savings Bank et al. against the Butchers' & Drovers' Bank and certain of its stockholders, to recover unpaid subscriptions of stock, and have the same applied to the payment of defendant bank's debts. From a judgment for defendants, plaintiffs appeal.

Jas. P. Maginn, for appellants. Hitchcock, Madill & Finkelnburg, W. H. Clopton, and M. L. Gray, for respondents.

BLACK, J.

The Washington Savings Bank and Rudolph Kohn brought this suit, for themselves and all other creditors of the Butchers' & Drovers' Bank who should come in and contribute to the expenses of the suit, against the defendant bank and some 20 or more stockholders therein, to recover balances due on unpaid stock. The circuit court gave judgment for all of the defendants, on the ground that the cause of action was barred by the five-years statute of limitations, and hence did not consider the other questions presented by the pleadings and evidence. The facts will now be stated with a view only of disposing of this question.

The Butchers' & Drovers' Bank was a corporation organized under the laws of this state. It became insolvent, and ceased to do a banking business, on the 13th July, 1877, owing at that time about $700,000. The stock consisted of 2,610 shares of $100 each, upon which there had been paid in cash and dividends 50 per cent., and no more. At the commencement of this suit some of the stockholders had paid the balance due upon their stock, and the remaining resident solvent stockholders are made defendants. Mr. B. M. Chambers was president of the bank for a period of ten years before its suspension, and during the last five years of that time the board of directors held but few meetings. In short, Mr. Chambers managed the business without aid from the directors. He got some of them together on the day the bank suspended. They opposed suspension, but the bank being insolvent, he closed the doors. Mr. Chambers, as president of the bank, called a meeting of the creditors, and at that meeting he proposed to issue scrip for the outstanding debts, to mature in three years, — that is to say, on the 1st August, 1880, — and to secure the same by a mortgage upon property owned by his wife and sisters, he to go on and close up the business of the bank. The proposition was accepted by nearly all the creditors. The scrip was issued in the name of and as obligations of the bank, and security given as proposed. The arrangement was made by Chambers, as president, without any action on the part of the directors. During the three years Chambers collected in the assets and paid off from $400,000 to $500,000 of the scrip. Shortly after the expiration of that time the remaining assets were levied upon under executions issued on judgments recovered on the unpaid scrip. The plaintiff Kohn and one Kelcher were creditors of the Butchers' & Drovers' Bank when it closed, and they received scrip in payment of their debts, thus extending the time of payment for three years. They brought suit against the bank on this scrip in 1880. Kohn recovered judgment on the 22d December, 1880, for $10,225, and another on 7th April, 1881, for $6,230; and in December, 1880, Kelcher obtained judgment for $15,330, which last judgment was assigned to the Washington Savings Bank, the other plaintiff in this case. Executions were issued, and were returned nulla bona the 6th June, 1881. Proceedings were then prosecuted against some of the stockholders under section 736, Rev. St. 1879, by means of which the plaintiffs collected some $16,000. This suit was commenced on the 10th October, 1884. There is this provision in the bank articles of association: "The remainder of the stock so subscribed shall be paid upon calls, and upon such terms as the board of directors hereinafter mentioned may from time to time prescribe." No call was ever made by the directors. To repeat, the important dates are: The bank closed July 13, 1877; three years scrip issued August 1, 1877; plaintiffs sued the bank in 1880; judgments recovered, December 21, 1880, and April 7, 1881; nulla bona return of executions, June 6, 1881; this action commenced, October 11, 1884.

The important question is, when did this cause of action accrue in favor of these plaintiffs and against the defendant stockholders? The stockholders, by the terms of their subscriptions, agreed to pay the remainder of their stock at such times as it should be called for by the board of directors. As between the corporation and a stockholder, the liability of the latter on his unpaid stock does not mature until a call is made, and it is then that the statute of limitations begins to run. Where the officers of the corporation have neglected to make the call, and the affairs of the corporation are in the hands of a court, the court may make the call in the interest of creditors, though the stockholders are not made parties to the suit. In such cases the receiver or other officer of the court may collect the unpaid stock subscriptions by suits at law against the stockholders, and in such cases the cause of action does not accrue, nor the statute of limitations begin to run, until a call or some authorized demand is made. Scovill v. Thayer, 105 U. S. 143; Glenn v. Semple, 80 Ala. 159; Lehman, Durr & Co. v. Glenn, 87 Ala. 618, 6 South. Rep. 44; Glenn v. Williams, 60 Md. 93; Hawkins v. Glenn, 131 U. S. 319, 9 Sup.Ct. Rep. 739; Wait,...