Abbey v. Delta Bank & Trust Co.

103 So. 801 | Miss. | 1925

^* Headnotes 1. Banks and Banking, 7 C.J., Sections 82, 85, 110 (1926 Anno), 112 (1926 Anno); 2. Banks and Banking, 7 C.J., section 85. The suit is by bill in chancery by the Delta Bank Trust Company, through the state banking department liquidating the bank, to recover from certain stockholders the value of the stock held by them in the bank, the proceeding being under the statute, section 3619, Hemingway's Code, making the stockholders liable for the amount of their stock; the statute being generally spoken of as the "statute imposing double liability on stockholders of a bank."

The action was brought against all of the stockholders in one suit. There was a demurrer attacking the suit on the ground that such a procedure joining all the defendants in one suit was not permissible; that is to say, one suit against all of the stockholders, instead of separate suits against each stockholder, cannot be maintained. Therefore the only question presented for our decision is whether or not one suit against all of the stockholders to enforce their liability where the bank has failed can be maintained. The lower court held in the affirmative.

It will be noticed that section 3619, Hemingway's Code, which imposes double liability upon stockholders of a bank which fails, provides:

"Such liability may be enforced in a suit at law or in equity by any such bank in process of liquidation, or by any receiver or other officers succeeding to the legal rights of said bank."

The appellee contends this section confers jurisdiction upon the chancery court and authorizes one suit against all of the stockholders liable on their stock. The appellant contends the section merely gives jurisdiction to the chancery court in suits against the stockholders, but that it does not authorize one suit against all stockholders.

The bill admitted to be true by the demurrer, alleges, in part, as follows: "The complainants allege that this suit is brought for the purpose of an accounting in order that the amount owing by each of the defendants herein to the Delta Bank Trust Company may be definitely fixed and determined, and in order to force said stockholders to pay the amount owing by them. That all of said stockholders residing in the state of Mississippi who have not discharged their stockholders' liability are made defendants hereto and joined in this suit in order to avoid a multiplicity of suits; that this court has jurisdiction over said defendants, and each of them, in this suit; that the law and the facts pertaining to each defendant herein and the controversy between such defendants and the complainants are identical; that this court can try and determine the cause of the complainants against each of the said defendants in one proceeding and at one time with great convenience and at much less expense."

Whether the statute expressly authorizes the bringing of one suit against all of the stockholders we think is unnecessary to decide, because it is our judgment that the allegations of the bill are sufficient to maintain the one action against all of the stockholders of the bank.

The stockholders have a common interest in the bank and its liquidation; they are called upon for an accounting as between themselves and the bank which affects their individual and common interest; the rights and interests of all the stockholders originate and come from the same source, a common enterprise, the bank. The parties and interests are practically identical, and separate suits are not necessary in order to afford the defendants separate individual defenses.

As between the stockholders there is a community of interest in the subject-matter and a common right and title involved, because every stockholder is a part owner of the assets of the bank, and therefore a necessary party for the purpose of determining the primary question as to the amount of the deficit which will exist after the exhaustion of all their assets, and upon the settlement of this question depends the responsibility of the different stockholders, and the suit also adjudicates at one time the exact liability of the respective stockholders.

The one suit in equity against all of the stockholders is more in the nature of an accounting and adjudication between them and their bank as to their respective liabilities in a common enterprise. Therefore we think the one suit against all the stockholders is maintainable, and the decree of the lower court will be affirmed and the cause remanded for further proceedings.

Affirmed, and cause remanded for further proceedings.

ON SUGGESTION OF ERROR. Appellants in their suggestion of error vigorously challenge the soundness of the opinion handed down in this case. It is provided, among other things, in section 160 of the Constitution, that in all cases where the chancery court "exercised jurisdiction, auxiliary to courts of common law, it may exercise such jurisdiction to grant the relief sought, although the legal remedy may not have been exhausted or the legal title established by a suit at law." Section 161 of the Constitution provides, among other things, for jurisdiction in the chancery courts of suits "involving inquiry into matters of mutual accounts."

It is true under the decisions of this court that the state banking department is entitled to recover from each stockholder the full amount of the par value of his stock, regardless of whether the entire recovery be needed in the administration of the affairs of the bank or not. It is hardly conceivable, however, that all judgments against the stockholders could be collected to their full amount. Take, for illustration, a bank of one hundred thousand dollars capital, with one hundred stockholders of shares of the par value of one thousand dollars each. Judgments at law are recovered against each one of them for the amount of his liability under the statute. One-fourth of the stockholders are execution proof; the judgments against them are worthless. On the judgments against the balance of the stockholders, after due diligence in their enforcement, there is collected varying proportions of their liability, ranging from ten per cent. to one hundred per cent. And it is found, after all efforts to enforce the judgments have been exhausted, and after discharging all obligations for which the fund is liable, there is left twenty-five thousand dollars of it to go back to the stockholders. As it appears to us, the settlement of such a matter would involve inquiry into mutual accounts, and, furthermore, that the circuit court would be wholly inadequate to administer the required relief. It would be necessary to have all the parties before one court in one cause, in order to furnish an adequate remedy. One of the original heads of equity jurisdiction was the lack of an adequate remedy at law. We are unable to see how the affairs of an insolvent bank in liquidation under the state banking law could be justly and adequately administered in a court of law.

Suggestion of error overruled.