Washington Sav. Bank v. Butcher's & Drovers' Bank

• Decision Date: 23 November 1891
• Parties: Washington Savings Bank et al., Appellants, v. Butchers and Drovers' Bank et al
• Court: Missouri Supreme Court

17 S.W. 644

107 Mo. 133

Washington Savings Bank et al., Appellants, v. Butchers and Drovers' Bank et al

Supreme Court of Missouri, First Division

November 23, 1891

Appeal from St. Louis City Circuit Court. -- Hon. L. B. Valliant Judge.

Reversed and remanded.

James P. Maginn for appellants.

(1) The statute of limitations is not a bar to this action. First. In the peculiar case of the liability of stockholders, it does not begin to run until a call by the directors of the corporation, or order of a court of equity, or other authorized demand. Lionberger v. Bank, 10 Mo.App 499; Eppright v. Nickerson, 78 Mo. 482; Bingham v. Rushing, 5 Ala. 403, 406; Hotel Co. v L'Anson, 42 N. J. L. 13; Gibson v. Turnpike Co., 18 Ohio St. 398; Bauer v. Railroad, 13 Ill. 504; Allen v. Railroad, 11 Ala. 449. Second. If it does, in any case, begin to run, never until a reasonable time has elapsed after the legal assets of the corporation have been exhausted, under execution. 2 Morawetz, Corporations, secs. 883, 884; Crim v. Walker, 79 Mo. 335; Glenn v. Dorsheimer, 23 F. 696; Ogilvie v. Ins. Co., 22 How. 380. Third. If the statute ever began to run in this case, it was not, under point second, supra, until about January, 1883, under the facts of this case. Fourth. There was no dissolution of the corporation, the Butchers & Drovers' Bank of St. Louis, on July 13, 1877, within the meaning of sections 744 and 745, Revised Statutes, 1879. Hogsden v. Donnelly, 14 Mo.App. 548. Fifth. Even if the statute of limitations had barred a general "winding-up bill," on the theory that after July 13, 1877, the corporation ceased to exist, such fact would not affect this suit, which is simply a creditor's bill to get in "equitable assets," after exhausting, under execution, "legal assets," and this particular right of action could not and did not accrue to the creditors until after exhaustion of the legal assets, under execution or otherwise. Slee v. Blum, 19 Johnson Rep. 456, and comments of Kent, Chancellor, shown in 2 Kent's Commentaries, pages 311, 312. (2) There was no laches on plaintiffs' part. Bliss v. Pritchard, 67 Mo. 181, which also holds that laches must be pleaded. Kelly v. Hurt, 61 Mo. 406; Klein v. Vogel, 90 Mo. 239; White v. Pendry, 25 Mo.App. 547; Bradshaw v. Yates, 67 Mo. 233. (3) Set-off is not allowable in this action, it being clear from the evidence that the entire trust fund is a mere trifling amount as compared with the claims of creditors. Webber v. Leighton, 8 Mo.App. 502; Shickle v. Watts, 84 Mo. 410. (4) Proceedings, at the instance of individual creditors against individual stockholders under section 745, Revised Statutes, 1879, and under section 736, by motion for execution, cannot be pleaded as "res adjudicata" by the stockholders so proceeded against, when sued in this action. Simmons v. Heman, 17 Mo.App. 444, 447. (5) The estates of deceased stockholders are liable. Lowell, Transfer of Stock, sec. 29; Thompson on Stockholders, secs. 248-254; Coquard v. Marshall, 14 Mo.App. 80; Bank v. Stockholders, 6 R. I. 154. (6) The distributees of estates of deceased stockholders are liable. Coquard v. Marshall, 14 Mo.App. 80; Simmons v. Ellis, 17 Mo.App. 475; Walker v. Deaver, 79 Mo. 664; Hall v. Martin, 46 N.H. 337. (7) Married women who are stockholders in this corporation are liable. Simmons v. Dent, 16 Mo.App. 288, and constitutional and statutory provisions therein cited in respect to this very bank. (8) The books of the corporation are evidence, prima facie, of ownership of shares therein. Bowden v. Johnson, 107 U.S. 263; Hoagland v. Bell, 36 Barbour, 57; Turnbull v. Payson, 95 U.S. 421, followed in Railroad v. Applegate, 21 W.Va. 180; R. S. 1879, sec. 737 -- now sec. 2518; Skrainka v. Allen, 76 Mo. 391; R. S. 1889, secs. 2503, 2504; Lowell, Transfer of Stock, sec. 80.

Hitchcock, Madill & Finkelnburg for Walsh, executor, respondent.

(1) Plaintiffs are not in a position to invoke equitable relief in the guise of a general creditors' bill, because they have heretofore secured a priority at law over other creditors to the extent of $ 16,000. One of the fundamental elements of equity jurisdiction in this class of cases is an equal distribution of the debtor's assets among all its creditors. Thompson on Stockholders, par. 259; Pomeroy's Equity, par. 410. (2) Plaintiffs' claim against these defendants is barred by the statute of limitations. Suit should have been brought within five years from July 13, 1877, when the corporation became dissolved within the meaning of the law so as to confer a right of action against stockholders. R. S. 1879, secs. 3228, 3230; R. S. 1889, secs. 6773, 6775; Moore v. Whitcomb, 48 Mo. 543; Savings Ass'n v. Kellogg, 52 Mo. 583; Chouteau v. Allen, 70 Mo. 290, 336; Slee v. Brown, 19 Johns. 456; Penniman v. Briggs, 1 Hopk. Ch. 300, 303; Thompson on Stockholders, sec. 291; Henry v. Railroad, 17 Ohio 187. (3) The dissolution of a corporation operates to mature the liability of its stockholders. Garesche v. Lewis, 15 Mo.App. 565; S. C., affirmed, 93 Mo. 197; Henry v. Railroad, 17 Ohio 187; Terry v. Tubman, 92 U.S. 156; Hatch v. Damon, 101 U.S. 205. (4) "When a company becoming insolvent, as in this case, abandons all action under its charter, the ordinary mode of making calls upon stockholders cannot be pursued. The debt, therefore, from that time must be treated as due without further demand." Henry v. Railroad, 17 Ohio 187, quoted in Hatch v. Damon, 101 U.S. 205, 214. (5) Unless statutory provisions make it necessary, the remedy against stockholders for unpaid stock is not dependent on the exhaustion of all other assets by execution. Terry v. Tubman, 92 U.S. 156; Terry v. Anderson, 95 U.S. 628; Morgan v. Lewis, 46 Ohio St. 1; Thompson on Stockholders, par. 316. Nor is a previous judgment necessary. Kankakee Co. v. Kampe, 38 Mo.App. 229; Batchelder v. Altheimer, 10 Mo.App. 181; Turner v. Adams, 46 Mo. 95. (6) The conduct of plaintiffs in waiting eight years before bringing suit constituted laches in equity. Bliss v. Pritchard, 67 Mo. 190; Landrum v. Bank, 63 Mo. 56. (7) Defendant, Julius S. Walsh, representing the estate of Mrs. Marie C. Chambers, is not liable in this action, because said Marie C. Chambers in fact never held more than fifty shares of the stock of said bank (being the fifty shares originally subscribed by her), and as to these fifty shares she had already responded in full on a stockholder's execution against her under section 736, Revised Statutes, 1879, in the case of Simmons v. Walsh, executor of M. C. Chambers, No. 63,525, St. Louis circuit court. (8) The pro forma assignment of fifty additional shares by Mr. B. M. Chambers to his wife without her knowledge to subserve a purpose of his own as explained by him in his testimony did not make her liable to creditors in respect of the fifty shares thus transferred. The evidence tending to show ratification upon her part was insufficient. Rogers v. Bank, 69 Mo. 560; Eystra v. Capelle, 61 Mo. 578. (9) The judgment in the Simmons case, supra, was a bar to the present suit, for in the former as in the present suit it was sought to charge Mrs. Chambers' estate with a liability on one hundred shares, and it was then judicially determined that she held but fifty. Donnelly v. Mulhall, 12 Mo.App. 139, 140; Bittner v. Lee, 25 Mo.App. 559; Railroad v. Traube, 59 Mo. 355.

W. H. Clopton for Maguire, respondent.

(1) It is the rule in this state that when a stockholder is proceeded against by a creditor of a corporation by motion under the statute, the stockholder is entitled to offset against his liability any demand he may have against the corporation. Jerman v. Benton, 79 Mo. 149. (2) The laches of plaintiff is a defense to the suit, so far as Maguire is concerned. Plaintiff's attorney knew of the proceeding by Welsh, and it would be a fraud upon Maguire to allow plaintiff now to recover against him. Bradshaw v. Yates, 67 Mo. 221; Landrum v. Bank, 63 Mo. 48. (3) A creditor cannot proceed by motion against single stockholders and then resort to a creditor's bill for deficiency. Jerman v. Benton, supra; Garrison v. Howe, 17 N.Y. 458.

M. L. Gray for administrators of J. A. Wright, respondents.

(1) The plaintiff's right of action against the bank and James A Wright's estate accrued and existed on the day the bank closed, to-wit, July 13, 1877. On this thirteenth of July, 1877, the estate of Wright was in course of administration, and notice to creditors had been already given on, to-wit, July 12, 1877. The two years' limitation of the administration act began to run in favor of Wright's administrators on that day, and also the five years of the general law. The subsequent arrangement of the bank with the creditors to extend the time of payment for three years did not affect or stop the running of the statute in favor of Wright's administrators. (2) The abandonment of business by the bank, and its insolvency was so far a dissolution as entitled plaintiff, or any creditor, to file a bill against the stockholders; and the right to do so accrued on the fourteenth of July, 1877. Bank v. Kellogg, 52 Mo. 583; Heralson v. Mason, 53 Mo. 213; Shickle v. Watts, 94 Mo. 420; Kehlor v. Lademann, 11 Mo.App. 550; Moore v. Whitcomb, 48 Mo. 543; Chouteau v. Allen, 70 Mo. 336. (3) The return of nulla bona on J. P. Sinele's execution, at June term, 1878, gave plaintiffs the right, but for their extension, to proceed against the stockholders in June, 1878. Bank v. Seligman, 11 Mo.App. 142; Knight v. Frost, 14 Mo.App. 331; Garesche v. Lewis, 15 Mo.App. 565; 93 Mo. 197; Marks v. Hardy, 86 Mo. 232; Paxon v. Talmage, 87 Mo. 13; Glenn v. Dorsheimer, 23 F. 695; Ogilvie v. Ins. Co., 22 How. 380. (4) The judgment in A. J. Chaphe v. Wright's Administrators, these respondents, was a bar. Manning...