Wincock v. Turpin

• Decision Date: 25 September 1880
• Citation: 1880 WL 10086,96 Ill. 135
• Parties: GEORGE WINCOCK et al.v.VIRGINIUS A. TURPIN.
• Court: Illinois Supreme Court

96 Ill. 135

1880 WL 10086 (Ill.)

GEORGE WINCOCK et al.

v.VIRGINIUS A. TURPIN.

Supreme Court of Illinois.

Filed at Ottawa Sept. 25, 1880.

OPINION TEXT STARTS HERE

WRIT OF ERROR to the Appellate Court for the First District; the Hon. THEODORE D. MURPHY, presiding Justice, and Hon. GEORGE W. PLEASANTS and Hon. JOSEPH M. BAILEY, Justices;--heard in that court on appeal from the Superior Court of Cook county, the Hon. SAMUEL M. MOORE, Judge, presiding.

The Fidelity Bank was organized under an act of the legislature of this State, approved February 15, 1865, and transacted a general deposit, savings and loan business until it became insolvent, in September, 1877, when the appellee was appointed receiver of the bank by the Superior Court of Cook county, upon complaint of a creditor, alleging its insolvency, and by confession and consent of the bank.

After the suspension of the bank, various depositors (among whom were appellants) commenced separate suits at law against different stockholders of the bank to recover, under the provisions of that act, the amount due them as depositors.

Afterwards appellee, as receiver, having procured one Potter, a creditor of the bank to the amount of $45, to join him, commenced this suit in chancery to enforce the liability of the stockholders and to restrain the depositors from prosecuting their said suits at law. The depositors, including appellants, demurred to the bill, but the court overruled the demurrers and perpetually enjoined the appellants and all other depositors from commencing suit or prosecuting suits already commenced, to recover of the stockholders, as a body, or of any individual stockholder, any claim which such depositor might have against said bank. The Appellate Court for the First District affirmed the decree of the Superior Court, and from that decision this appeal was prayed.

Messrs. ROGERS & APPLETON, Mr. D. J. SCHUYLER, and Messrs. SHUFELDT & WESTOVER, for the appellants:

1. The liability of stockholders, under the particular provision of the charter in question, is not to the bank, but is an original and primary liability to the depositors in the corporation, and becomes a debt due from each stockholder to each depositor, the moment a debt be contracted by the corporation for a deposit. Corning v. McCullough, 1 Com. 47; Allen v. Sewell, 2 Wend. 327; Harger v. McCullough, 2 Denio, 123; Aspinwall v. Sacchi, 57 N. Y. 335; Lindsay v. Hyatt, 4 Edw. Ch. 104; Culver v. Third National Bank, 64 Ill. 535; Fuller v. Ledden, 87 Id. 310; Ingalls v. Cole, 47 Me. 530; Eaton v. Aspinwall, 19 N. Y. 119; Stanley v. Stanley, 26 Me. 191; Paine v. Stewart, 33 Conn. 516; Adkins v. Thornton, 19 Ga. 325; Middletown Bank v. Magill, 5 Conn. 28; Southmayd v. Russ, Id. 52; Sherman v. Smith, 1 Blackf. 587; Wright v. Field, 7 Porter (Ind.), 376; Patterson v. Arnold,45 Pa. St. 376; Bank of Poughkeepsie v. Ibbotson, 24 Wend. 473; Spear v. Crawford, 14 Id. 30; Simondson v. Spencer, 15 id. 548; Garrison v. Howe, 17 N. Y. 458; Burr v. Wilcox, 22 Id. 551.

2. It is, therefore, no part of the assets of a corporation, and will not pass to a receiver of the corporation or to an assignee thereof. Dutcher v. Marine National Bank, 12 Blackf. 435; Judson v. Rossie Galena Co. 9 Paige 597; Arenz v. Weir, 89 Ill. 25.

3. Being an original and primary liability, it is not a liability incurred by the stockholders en masse, but attaches to those alone who are stockholders of the corporation at the time a debt is contracted. Corning v. McCullough, 1 Com. 47; Moss v. Oakley, 2 Hill, 268; Harger v. McCullough, 2 Denio, 122; Adderly v. Storm, 6 Hill, 636; Tracy v. Yates, 18 Barb. 152; Southmayd v. Russ, 5 Conn. 28; Holyoke Bank v. Burnham, 11 Cush. 183; Culver v. Third National Bank, 64 Ill. 537; Fuller v. Ledden, 87 Id. 310.

4. It follows, from the foregoing principles, that the liability being not en masse, but strictly a legal liability of certain individual stockholders to certain individual creditors, and it being no part of the assets or property of the corporation, the remedy can not be in favor of the receiver; it can not even be in favor of the creditors, as a body, against the stockholders en masse, but it is solely at law, at the suit of individual creditors. Culver v. Third National Bank, 64 Ill. 529; McCarthy v. Lavasche, 89 Id. 270; Arenz v. Weir, Id. 25; Paine v. Stewart, 33 Conn. 516; Judson v. Rossie Galena Co. 9 Paige, 597.

5. If it should be held that the remedy in this case might be either at law or in equity (although we most assuredly deny it could be in equity), the depositors having elected a remedy at law, and commenced their action to enforce a clear legal right, before the bill in this cause was filed, can not be enjoined in this proceeding, at the instance of either receiver or a creditor, from prosecuting their several actions. Judson v. Rossie Galena Company, supra; Arenz v. Weir, supra.

The familiar rule that in cases of concurrent jurisdiction, the court first acquiring jurisdiction will proceed with the case to judgment, applies with full force to this proceeding.

6. The additional and further liability of corporators for the debts of the corporation, as generally modified and provided by statute or charter, is in no manner whatever an obligation to the company, but is a liability direct to creditors of the corporation. This principle is distinctly asserted in Ingalls v. Cole, 47 Me. 530; Stanley v. Stanley, 26 Id. 191; Paine v. Stewart, 33 Conn. 516; Southmayd v. Russ, 5 Id. 52; Adkins v. Thornton, 19 Ga. 325; Middletown Bank v. Magill, 5 Conn. 28; Sherman v. Smith, 1 Black, 587; Atwood v. R. I. Agricultural Bank, 1 R. I. 376; Patterson v. Arnold,45 Pa. St. 410; Coleman v. White, 14 Wis. 700; Wright v. Field, 7 Porter, 376; Bank of Poughkeepsie v. Ibbotson, 24 Wend. 473; Spear v. Crawford, 14 Id. 20; Simondson v. Spencer, 15 Id. 548; Garrison v. Howe, 17 N. Y. 458; Harger v. McCullough, 2 Denio, 119; Burr v. Wilcox, 22 N. Y. 551; Culver v. Third Nat. Bank, 64 Ill. 529.

The following are a few of the cases where a particular remedy was prescribed by statute: Martin v. Rossie Lead Mining Co., 2 Sanf. Ch. 333; Bogardus v. Rosendale Manf'g Co. 4 Id. 92; Walker v. Crane, 17 Barb. 119; In re Empire City Bank, 18 N. Y. 199; Story v. Furman, 25 Id. 214; Pruym v. Van Allen, 39 Barb. 354; In re Oliver Lee's Bank, 21 N. Y. 9; Calkins v. Atkinson, 2 Lansing, 13; 101 Mass. 385; 106 Mass. 131; 109 Mass. 473.

Messrs. HITCHCOCK, DUPEE & JUDAH, for the appellee:

On the part of the appellants, it is contended that the liability of the stockholders is at law, and directly to the depositors.

On the part of the appellee, it is insisted that, as the bank is insolvent and in the hands of a receiver, being wound up under the law, and all the stockholders parties by supplemental bill, the liability creates a fund to be administered upon equitable principles for the benefit of all the depositors, and is so far an asset that the receiver is a proper party to sue upon it in equity, and the only party who can enforce it, if he is ready and willing to do so.

To maintain the position of the appellee, the following authorities will be cited: Honore v. Henning, 3 Otto, 228; Coleman v. White, 14 Wis. 762; Harris v. Dorchester, 23 Pick. 112; Crease v. Babcock, 10 Met. 525; Storey v. Forman, 25 N. Y. 215; Pollard v. Bailey, 20 Wallace, 520; Hurd's Statutes, p. 290, ch. 32 § 25 (as amended); Laws of 1877, p. 66; Chandler v. Brown, 77 Ill. 333; Richardson v. Akin, 87 Id. 138.

Mr. JUSTICE WALKER delivered the opinion of the Court:

Turpin, as receiver of the Fidelity Savings Bank, and Potter, a depositor therein to the amount of $45, filed this bill. It alleges that it is brought on behalf of Turpin as trustee of all depositors in the bank to whom money is due; that the bank was incorporated under an act of the General Assembly, approved on the 15th day of February, 1865, and transacted business as a savings bank until the 24th day of September, 1877, at which time it became insolvent. Thereupon a bill was filed, under which Turpin was appointed receiver, and the corporation dissolved, and its property and assets were conveyed to the receiver; that Turpin qualified as receiver, and took possession of the property and estate of the bank; that the assets of the bank are less than the liabilities to at least the amount of its capital stock, which is $200,000. The bill claims the liability of the stockholders under the charter is to the depositors pro rata, and when collected the money is assets to be distributed according to the principles of equity; that the several depositors who are made defendants have brought suits against a number of shareholders, and there is danger that these parties may obtain judgments and secure priority of payment and inequitable advantages; that the liability of stockholders can only be established in a court of equity, which may marshal assets and determine the date of deposits, and the time and good faith of transfers of stock, and secure to depositors as an aggregate body their rights, and prevent a preference to any one depositor by his action at law.

The bill alleges that Haines and others were stockholders at the time the bill for a receiver was filed; that one Wintherbottam claims to have transferred his stock, but was a stockholder within six months prior to filing the bill, and was still liable; that Wincock, Mary H. Teed and other persons had commenced suits at law or in equity to obtain inequitable priority over the general creditors in the liability of stockholders.

A demurrer was interposed to the bill, but on a hearing thereon it was overruled, the bill taken as confessed, and the defendants perpetually enjoined from prosecuting their suits. They thereupon prosecuted an appeal to the Appellate Court, where, on a hearing, the decree of the Superior Court was affirmed, and they have brought the case to this court, and assigned errors on the record.

This bill is singularly...