Whitney v. Butler

• Decision Date: 01 November 1886
• Citation: 118 U.S. 655,7 S.Ct. 61,30 L.Ed. 266
• Parties: WHITNEY and others, Ex'rs, etc., v. BUTLER, Receiver, etc
• Court: U.S. Supreme Court

118 U.S. 655

7 S.Ct. 61

30 L.Ed. 266

WHITNEY and others, Ex'rs, etc., v. BUTLER, Receiver, etc.

November 1, 1886.

E. R. Hoar, for plaintiff in error.

A. A. Ranney, for defendants in error.

HARLAN, J.

The plaintiffs in error are the personal representatives of Leonare Whitney, who, at the time of his death, held two certificates, for 50 shares each, of the capital stock of the Pacific National Bank of Boston. That bank suspended on November 18, 1881, and from that date until March 18, 1882, was in charge of an examiner of national banks. On the day last named, with the permission of the comptroller of the currency, it resumed business, and so continued until May 20 1882, when it failed, and was placed by that officer in the hands of a receiver to be wound up. At the time the receiver took possession, as well as when this action was brought, March 14, 1883, the above shares of stock stood in the name of Whitney on the books of the bank. This suit was brought against the executors of Whitney, pursuant to the orders of the comptroller of the currency. It is based upon those provisions of the statute which declare that the shareholders of national banking associations shall be individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements, to the extent or amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares; and that estates and funds in the hands of executors of persons holding stock shall be liable in like manner, and to the same extent, as the testator would have been if living. Rev. St. §§ 5151, 5152. The assessment by the comptroller upon shareholders to meet the bank's debts was for the full amount authorized by the statute.

The defendants insist that they were not shareholders of the bank, and did not hold, nor were entitled to hold, any certificates of shares of its capital stock, either at the date of its suspension, or when the receiver was appointed, or when the assessment was made by the comptroller. This defense was overruled, and the executors of Whitney were adjudged to be liable, the circuit judge observing: 'This being a suit brought by the receiver, who represents the creditors, and it appearing that the stock was not transferred on the books of the company, as provided by the by-laws, we think the defendants liable.

The question before the court is whether, under the statute and the facts specially found, the defendants were liable to be assessed for the contracts, debts, and engagements of the bank. The statute declares that the capital stock of a national bank shall be transferable on its books in such manner as may be prescribed in the by-laws or articles of the association; every person becoming a shareholder by such transfer succeeding, in proportion to his shares, to all the rights and liabilities of the prior holder. Rev. St. § 5139. The by-laws of this bank provide that its stock should be assignable only on its books, subject to the restrictions and provisions of the statute; that a transfer-book be kept, in which all assignments and transfers of stock should be made; that each certificate should state upon its face that the stock is transferable only on the books of the bank; and that when a transfer is made the certificate shall be returned and canceled, and a new one issued. Whether these by-laws were so far complied with as to release the defendants, as executors, from the liability imposed by statute, depends upon the effect to be given to certain acts of the executors and of the president of the bank in connection with the sale of the stock standing in Whitney's name.

It appears from the special finding of this bank, made a special deposit in desiring to buy 250 shares of the stock of this bank, made a special deposit in it of $25,000 to be applied for that purpose. This fact appears from a letter addressed to him by Benyon, the president of the bank, under date of September 21, 1881, in which the latter said: 'Yours of 20th received, with check $25,000, which we will use pending the purchase of our stock, and will hold on your account, as a special deposit, securities to the same amount till we succeed in making the purchase. This leaves the amount in your control until invested, and, I trust, will be satisfactory to you.' That the stock might be obtained, Benyon secured the services of one Eager, who had a deposit account with the bank; and that the latter might have money with which to buy the stock, Benyon placed to his credit, as a temporary loan out of the funds of the bank, the exact amount required for the purchase.

On November 8, 1881, the defendants—having no reason whatever to believe that the bank was insolvent, or was about to become so, on the contrary, believing it to be solvent, and having no information as to Coburn's order—placed the certificates held by them in the hands of Day & Co., brokers, with directions to sell the stock. They also placed in their hands a power of attorney in the form usually adopted for transfers of stock. It was blank as to the names of the attorney and the purchaser, but was signed by the executors, and duly witnessed. It was in these words: 'Know all men by these presents, that, for value received, we, the executors of the estate of Leonard Whitney, of Watertown, do hereby make, constitute, and appoint, irrevocably, ___, true and lawful attorney, (with power of substitution,) for and in our name and our behalf to sell, assign, and transfer unto ___, one hundred shares, now standing in the name of L. Whitney, of Watertown, Mass., in the capital stock of the Pacific National Bank; and said attorney is hereby fully empowered to make and pass all necessary acts for the said assignment and transfer. Witness our hands and seals.' To that power of attorney was appended the following: 'For value received, I appoint, irrevocably, ___, as my substitute, with all the powers above given to me. Witness ___ hand and seal, ___, 187_. ___. ___. [Seal.]' The other papers were the two certificates of stock, and the certificate from the proper probate court, showing the appointment and qualification of the defendants as executors. Each stock certificate contained the following words: 'Transferable only on the books of the said bank, in person or by attorney, on surrender of this certificate.'

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