179 N.E. 1 | Ind. | 1930
The appellee, a defendant stockholder, filed a demurrer to this complaint, on the ground that the complaint did not state facts sufficient to constitute a cause of action. This demurrer was sustained by the trial court, and, upon the refusal of appellant, plaintiff, to plead over, the court rendered judgment on the demurrer in appellee's favor for costs. The action of the court in sustaining the demurrer is assigned as error.
This action by a depositing creditor of the bank is properly brought on behalf of herself and others similarly *13 situated. Section 277 Burns 1926, provides that "when the 1. question is one of a common or general interest of many persons, or where the parties are numerous and it is impracticable to bring them all before the court, one or more may sue or defend for the benefit of the whole."
The action is not prematurely brought. When the bank was adjudged insolvent, its liabilities to its creditors were presently due. It was unnecessary to wait until all claims 2. were reduced to judgments before bringing this action. Such facts, regarding the solvency of the bank, are alleged so as to show that the entire 100 per cent liability of the stockholders, if collected, will be insufficient to make the assets equal to liabilities. Barnes v. Arnold (1898), 23 Misc. Rep. 197, 51 N.Y. Supp. 1109.
The appellee contends that this action is improperly brought by a creditor — that, under § 4952 Burns 1926, it should be brought by the receiver. In the recent case of Wheeler v. 3. Greene, Rec. (1929),
Section 6, Art. 11, Constitution, § 212 Burns 1926, is as follows: "The stockholders in every bank or banking company shall be individually responsible to an amount, over and
4. above their stock, equal to their respective shares of stock, for all debts or liabilities of said bank or bankingcompany." This section of the Constitution creates a definitely limited liability on the part of the appellee for the benefit of the appellant and it is self-executing, there being a manifest intention that it should go into immediate effect and no ancillary legislation was necessary to the enjoyment of the right given or the enforcement of the duty imposed. 12 C.J. 729;State v. Woodward (1883),
It is the contention of the appellee, supporting the action of the court below, that § 6, Art. 11, Const., does not impose any superadded liability upon her or upon the other 5-7. stockholders of the Studabaker bank for the reason that the term "bank or banking company" as used in such section does not relate to banks of discount and deposit, but that such term is restricted in its meaning and relates only to banks of issue and circulation and to state banks with branches, which are the only banks mentioned in the preceding §§ 3 and 4 of Art. 11 of the Constitution. The subject of Art. 11 is corporations. It concerns not only banks in existence in 1851, but also banks and corporations thereafter created. The language of § 6 regarding its *16
objects is simple and understandable. The words "every bank and banking company" in their general and ordinary sense certainly include the bank in question here. In construing the meaning of a constitution, its language should be taken in its general and ordinary sense, for "the enlightened patriots who framed our constitution, and the people who adopted it, must be understood to have employed words in their natural sense, and to have intended what they have said." Gibbons v. Ogden (1824), 9 Wheat. (U.S.) 1, 188. `"If the Courts venture to substitute for the clear language of the instrument, their own notions of what it should have been, or was intended to be, there will be an end of written constitutions."' Greencastle Township v. Black
(1854),
It is true that, at the time of the adoption of the Constitution of 1851, the only banks required to be incorporated were banks of issue and circulation, but from that fact it cannot logically be reasoned that this *17
provision should not apply to other banks that might by law 8. later be authorized to incorporate. State banks of issue ceased to exist after an act of Congress in 1866 imposed a tax of 10 per cent upon their notes used for circulation, the constitutionality of which act was upheld in Veazie Bank v.Fenno (1869), 8 Wall.
The appellee contends that, under the rule laid down inBishop v. State, ex rel. (1898),
"I care not whether we have State or free banks; all I want is, to have them properly restricted. . . . I am opposed to all banks — to use a vulgar phrase, `they are of the same breed of dogs.' [Laughter.] They are all evils; and perhaps at the present time we cannot say which system of banking will be the *18 most productive of benefit or injury to the people. But let us place proper restrictions on all kinds of banks; if we are to have any, it is the proper course." II Debates, Ind. Const. Convention (1850), p. 1546.
Banks of discount and deposit, as distinguished from banks of issue and circulation and state banks with branches, must have been known to the framers of our Constitution, regardless of whether such banks then existed in this State. Each of the classes of banks named in §§ 3 and 4 did a discount and deposit business and a separation of such functions from the issue and circulation of money could readily be contemplated. The cases indicate that banks of discount and deposit existed prior to the adoption of the 1851 Constitution, both as private institutions(Davis v. McAlpine [1858],
The appellee, to support the judgment of the trial court, cites and relies upon the case of Allen v. Clayton (1884),
"Counsel insist, and it is true, that there are banks of issue, and those of discount and deposit. If a corporation possessed all of these powers, it would be a banking corporation, and it would be such a corporation if it had the power only of issuing bills to circulate as money, or, if it only had the power to discount bills and receive deposits, it would still be a banking corporation."
but the court held that:
"To arrive at the meaning of the words `banking corporations' in section nine, the sections preceding *20 and following it, which have reference to the same subject-matter, must be read and considered. . . . It is there provided that corporations with banking powers shall not be created, unless the statute so providing shall be submitted to and be approved by a majority of the electors of the state. This means full or unlimited banking powers; that is, the power to issue bills to circulate as money, and also the power to discount bills and receive deposits. The general incorporation law in force when the constitution of 1857 was adopted was broad enough . . . to permit the organization of banks of discount and deposit, and something more than this was contemplated by the constitution. This being so, . . . the proper construction of section nine . . . is corporations having the power to issue bills to circulate as money."
The only authorities cited in Allen v. Clayton, supra, arePape v. Capitol Bank (1878), 20 Kans. 440, 27 Am. Rep. 183, and People v. Loewenthal (1879),
Practically every state now has in effect either a constitutional or statutory provision for double liability of bank stockholders. Constitutional provisions in substantially the same wording as our own are uniformly given effect and held applicable to banks of discount and deposit. See Rogers v.Selleck, supra; Fredericks v. Hammons, supra; Smith v.Olsen, supra; Lynch v. Jacobsen, supra; Hanson v. Soderberg
(1919),
"`The stockholders in every corporation or association for banking purposes issuing bank notes or any kind of paper credit to circulate as money, shall be individually responsible for all the notes or bills issued or put in circulation by said corporation or association.'"
This motion and amendment were put to a vote and lost, and the section (§ 6, Art. 11) was thereupon put to a vote and passed. II Debates, Ind. Constitutional Convention (1850) p. 1641.
In addition to the provisions of the Constitution regarding the double liability of bank stockholders, § 3858 Burns 1926 (§ 13, ch. 8 of the acts of 1873, concerning the incorporation of 10. banks of discount and deposit, as amended by act of 1919, p. 832), provides for an assessment of not to exceed 100 per cent of the par value of the stock "to be levied and collected *22 as hereinafter (in the act) provided when such assessment is required for the payment of the debts or liabilities of such bank or association or to restore the capital stock thereof." The act provides in case the capital of the bank "is reduced by impairment or otherwise below the amount required by law" for notice to and assessment of stockholders and for the sale of their stock and application of the proceeds. The appellant states in her brief that she "declares (in the complaint) upon this (double) liability as imposed both by the Constitution and the statutes." While this statute is primarily addressed to banks as going concerns and specifically provides for its enforcement by a proceeding in rem against the stock to restore an impairment of the capital, a majority of the court are of the opinion that this statute was enacted in furtherance of § 6, Art. 11, Constitution, § 212 Burns 1926, and that, under it, the double liability for the benefit of creditors may be enforced against the stockholders of an insolvent bank in the process of liquidation.
No question is presented for decision in the case at bar as to whether or not a stockholder who, during the operation of the bank, has paid an assessment of not to exceed 100 per cent required for the payment of debts or liabilities of a bank or to restore its capital stock under § 3858 Burns 1926, is subject to the double liability imposed by § 6, Art. 11, Constitution, § 212 Burns 1926, upon liquidation of the bank, but we may note in passing that similar questions are considered at length in the following cases: Citizens Bank v. Needham (1926), 120 Kans. 523, 244 P. 7, 45 A.L.R. 1202; Duke v. Force (1922),
The complaint properly sets forth facts which show a liability of appellee to appellant under § 6, Art. 11, Constitution, and also under § 3858, supra, and the judgment is, therefore, reversed, with directions to the trial court to overrule the demurrer to appellant's complaint.
Gemmill and Willoughby, J.J., did not participate in the decision of this cause on December 11, 1930. For opinion as originally filed see 174 N.E. 83. The action of the court in modifying the original opinion and in denying the petition for a rehearing was participated in by the entire court as constituted on this date, November 20, 1931. Myers, J., still adheres to the result only, reached in the opinion as modified.