Woodbine Sav. Bank of Woodbine v. Shriver, No. 39479.

CourtUnited States State Supreme Court of Iowa
Writing for the CourtKINDIG
Citation212 Iowa 196,236 N.W. 10
PartiesWOODBINE SAV. BANK OF WOODBINE v. SHRIVER.
Docket NumberNo. 39479.
Decision Date10 April 1931

212 Iowa 196
236 N.W. 10

WOODBINE SAV. BANK OF WOODBINE
v.
SHRIVER.

No. 39479.

Supreme Court of Iowa.

April 10, 1931.


Appeal from District Court, Iowa County; H. D. Evans, Judge.

This action was brought by the plaintiff to recover from the defendant, a stockholder, upon an assessment against such stockholder to restore the impaired capital of said bank, under the provisions of section 9248-a1 of the 1927 Code. A judgment was entered in plaintiff's favor, and the defendant appeals therefrom.

Affirmed.

Superseding 226 N. W. 374.

EVANS, ALBERT, and GRIMM, JJ., dissenting.

[236 N.W. 10]

Wallace & Claypool, of Williamsburg, for appellant.

Bolter & Murray, of Logan, and Hatter & Harned, of Marengo, for appellee.


KINDIG, J.

On May 6, 1891, the plaintiff-appellee was incorporated as a savings bank under the laws of Iowa. Thereafter, at the expiration of the charter thus granted, the appellee was reincorporated May 11, 1911. The capital stock of the appellee bank was increased in February, 1920, from $30,000 to $50,000. At that time the defendant-appellant owned 26 shares of this stock.

Appellant's stock was obtained upon three different occasions as follows: 10 shares on May 18, 1891; 10 shares on April 16, 1906, and 6 1/6 shares on February 14, 1917. For some reason there was later a reissuance of the certificate for the 6 1/6 shares, and the amount reduced to 6 shares. Later the appellee bank's capital stock became impaired to the extent of 100 per cent., and on February 15, 1927, the state banking superintendent ordered an assessment to restore the stock's value. Consequently the proper proceedings were taken and the assessment duly made. Then, according to law, appellant's stock was sold November 17, 1927, for the sum of $1 per share, or a total of $26. This action was brought for the purpose of recovering from the appellant the deficiency, due under the assessment against him, after applying the said $26. In other words, the amount demanded from the appellant by the appellee is $2,574. After a hearing the district court found against the appellant and gave appellee judgment for the amount claimed.

There is no question raised concerning the nonliability of appellant for the assessment to restore the value of the bank's stock. But it is claimed by appellant that his liability ceased when his stock was sold; that is to say, appellant contends that he, under the state and federal Constitutions, cannot be made liable personally for the deficiency above named. The basis for appellant's argument in this regard is that under the Iowa statutes, in existence when the stock was purchased, there was no personal liability for the assessment; while now, under the amended statutes, there is a personal liability. It is the personal liability that appellee seeks to enforce here. Therefore, appellant maintains that his contract will be impaired if the personal liability is enforced against him. An impairment of contract is not permitted under the state and federal constitutions (Const. Iowa, art. 1, § 21; Const. U. S. art. 1, § 10), and the primary question for determination here is whether or not the personal liability sought to be enforced is an impairment of appellant's contract under the constitutional provisions.

Apparently this legislation first appeared in chapter 29, Acts of the Twenty-Fifth General Assembly, which became effective May 5, 1894. Such legislation was later codified and became sections 1878, 1879, and 1880 of the 1897 Code. These sections of the 1897 Code are now substantially embodied in sections 9246 to and including 9250 of the 1927 Code. For convenience, the foregoing provisions of the 1927 Code are here set forth:

[236 N.W. 11]

“9246. Should the capital stock of any state or savings bank become impaired by losses or otherwise, the superintendent of banking may require an assessment upon the stockholders, and shall address an order to the several members of the board of directors of such bank, fixing the amount of assessment required.”

“9247. The board of directors shall, within thirty days after the receipt of such order, cause such deficiency to be made good by a ratable assessment upon the stockholders for the amount of stock held by them, by giving such stockholders notice in writing, signed by the president or vice president, attested by the cashier or secretary of the bank, under its seal, if it have one, and deposited in the postoffice, addressed to the last known residence of the stockholders, proof thereof to be made by the affidavit of the person so making the deposit, which notice shall state the entire sum to be raised, and the amount due from the addressed stockholder.”

“9248. Should any stockholder neglect or refuse to pay his assessment within ninety days from the date of mailing notice thereof, the board of directors shall cause a sufficient amount of the capital stock held by such stockholder to be sold at public auction to make good the deficiency, after giving ten days' notice thereof by personal service or by posting the same in the bank, and publishing it in some newspaper of the county in which the bank is located, which notice shall recite the assessment made, the amount due thereunder from the stockholder, and the time and place of sale; proof of all which may be made in the manner provided in the preceding section.”

About the foregoing statutory provisions the appellant makes no complaint, but he does attack section 9248-a1 of the 1927 Code, which reads as follows:

“Should the proceeds of a sale under the preceding section of all of the stock of any stockholder be insufficient to satisfy his entire assessment liability he shall be personally liable for the deficiency, which may be collected by suit brought in the name of the bank against such stockholder.”

Said last-named statute was enacted March 13, 1925, by the Forty-First General Assembly, as shown by chapter 181 of the acts thereof. Because section 9248-a1, aforesaid, was not in existence when appellant purchased his stock in the appellee bank, he argues that his contract with the state and with the bank's other stockholders cannot be controlled by the new legislation. Under the contract arising through the old statutory provisions, appellant says that his stock could be appropriated for the purpose of paying the assessment, but that he was not personally liable therefor. See Leach v. Arthur Savings Bank, 203 Iowa, 1052, 213 N. W. 772. Hence, because the new statute authorizes a personal liability, appellant contends that his contract aforesaid is changed and thereby impaired. Such impairment, appellant insists, is not avoided under the reserve power of the Iowa Constitution and the statutes enacted in connection therewith. That reserve power is set forth in section 12, article 8, of the Iowa Constitution, as follows:

“Subject to the provisions of this article, the General Assembly shall have power to amend or repeal all laws for the organization or creation of corporations, or granting of special or exclusive privileges or immunities, by a vote of two thirds of each branch of the General Assembly; and no exclusive privileges, except as in this article provided, shall ever be granted.”

Thereunder, the Legislature of this state adopted the following statute, set forth as section 1619 of the 1897 Code:

“The articles of incorporation, by-laws, rules and regulations of corporations hereafter organized under the provisions of this title, or whose organization may be adopted or amended hereunder, shall at all times be subject to legislative control, and may be at any time altered, abridged or set aside by law, and every franchise obtained, used or enjoyed by such corporation may be regulated, withheld, or be subject to conditions imposed upon the enjoyment thereof, whenever the general assembly shall deem necessary for the public good.”

Those provisions contained in section 1619 of the 1897 Code are substantially the same as the ones embodied in section 1090 of the 1873 Code. So, when the appellee bank was incorporated, the foregoing constitutional and statutory provisions were operative. The principles announced in the well-known Dartmouth College Case, therefore, are not applicable to Iowa corporations within the realm of the foregoing reserve power. Appellant, however, attempts to avoid the reserve power doctrine by arguing that the assessment liability created by section 9248-a1 is not within such reservation. To illustrate, appellant claims that there is a distinction between the assessment in question and an assessment imposed for liquidation purposes. A line of demarcation appears, appellant urges, because, on the one hand, the state granted the stockholder freedom from the corporate debts to the extent only of the assessment for liquidation purposes, while, on the other, the state granted the stockholder nothing, but imposed upon him a liability for the purpose of restoring the value of impaired stock. See Garey v. St. Joe Mining Company, 32 Utah, 497, 91 P. 369, 12 L. R. A. (N. S.) 1554;Yoncalla State Bank v. Gemmill, 134 Minn. 334, 159 N. W. 798, L. R. A. 1917A, 1223;County of San Mateo v. Southern Pacific (C. C.) 13 F. 722;Central Pacific R. R. Co. v. Albert Gallatin, 99 U. S. 727, 25 L. Ed. 504.

Because the state granted a concession to

[236 N.W. 12]

the stockholder when it freed him from liability for the corporate debts, appellant concedes that such grant may be entirely withdrawn and the stockholder compelled to bear a greater liability for the debts. See Williams v. Nall, 108 Ky. 21, 55 S. W. 706; Walsh v. Shanklin, 125 Ky. 715, 102 S. W. 295, 31 L. R. A. (N. S.) 365;Whitman v. National Bank, 176 U. S. 559, 20 S. Ct. 477, 44 L. Ed. 587;Sherman v. Smith, 1 Black, 587, 17 L. Ed. 163;Smathers v. Western Carolina Bank, 135 N. C. 410, 47 S. E. 893;Sleeper v. Goodwin, 67 Wis. 577, 31 N. W. 335;State v. Brown & Sharpe Mfg. Co., 18 R. I. 16, 25 A. 246, 17 L. R. A. 856;Pate v. Bank of Newton, 116 Miss. 666, 77 So. 601...

To continue reading

Request your trial
5 practice notes
  • Shriver v. Woodbine Sav Bank of Woodbine, Iowa, No. 158
    • United States
    • United States Supreme Court
    • April 11, 1932
    ...statute, which is assailed as infringing the contract and due process clauses of the Federal Constitution (article 1, § 10; Amend. 14). 236 N. W. 10. On different dates between 1891 and 1917, appellant acquired twenty-six shares of the capital stock of the appellee. Appellee, originally inc......
  • Hudson v. Bank of Waldo
    • United States
    • United States State Supreme Court of Florida
    • May 17, 1932
    ...stockholder.' In commenting upon these statutes, the Supreme Court of Iowa in the case of Woodbine Savings Bank of Woodbine v. Shriver, 236 N.W. 10, 12, said: 'Returning again to section 9246 of the 1927 Code, it is found that the legislative provision there is: the capital stock of any sta......
  • Woodbine Sav. Bank of Woodbine v. Kneeper, No. 39494.
    • United States
    • United States State Supreme Court of Iowa
    • April 10, 1931
    ...Harned, of Marengo, for appellee.PER CURIAM. This cause presents the same questions that are involved in Woodbine Savings Bank v. Shriver, 236 N. W. 10, in which opinion is filed at the current term. Following the rule announced in said cause, the judgment of the district court in the above......
  • Woodbine Sav. Bank of Woodbine v. Bladen, No. 39491.
    • United States
    • United States State Supreme Court of Iowa
    • April 10, 1931
    ...Harned, of Marengo, for appellee.PER CURIAM. This cause presents the same questions that are involved in Woodbine Savings Bank v. Shriver, 236 N. W. 10, in which opinion is filed at the current term. Following the rule announced in said cause, the judgment of the district court in the above......
  • Request a trial to view additional results
5 cases
  • Shriver v. Woodbine Sav Bank of Woodbine, Iowa, No. 158
    • United States
    • United States Supreme Court
    • April 11, 1932
    ...statute, which is assailed as infringing the contract and due process clauses of the Federal Constitution (article 1, § 10; Amend. 14). 236 N. W. 10. On different dates between 1891 and 1917, appellant acquired twenty-six shares of the capital stock of the appellee. Appellee, originally inc......
  • Hudson v. Bank of Waldo
    • United States
    • United States State Supreme Court of Florida
    • May 17, 1932
    ...stockholder.' In commenting upon these statutes, the Supreme Court of Iowa in the case of Woodbine Savings Bank of Woodbine v. Shriver, 236 N.W. 10, 12, said: 'Returning again to section 9246 of the 1927 Code, it is found that the legislative provision there is: the capital stock of any sta......
  • Woodbine Sav. Bank of Woodbine v. Kneeper, No. 39494.
    • United States
    • United States State Supreme Court of Iowa
    • April 10, 1931
    ...Harned, of Marengo, for appellee.PER CURIAM. This cause presents the same questions that are involved in Woodbine Savings Bank v. Shriver, 236 N. W. 10, in which opinion is filed at the current term. Following the rule announced in said cause, the judgment of the district court in the above......
  • Woodbine Sav. Bank of Woodbine v. Bladen, No. 39491.
    • United States
    • United States State Supreme Court of Iowa
    • April 10, 1931
    ...Harned, of Marengo, for appellee.PER CURIAM. This cause presents the same questions that are involved in Woodbine Savings Bank v. Shriver, 236 N. W. 10, in which opinion is filed at the current term. Following the rule announced in said cause, the judgment of the district court in the above......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT