165 A. 408 | Pa. | 1933
Argued January 3, 1933. This action of assumpsit was brought by the secretary of banking, in possession of the insolvent Susquehanna Title Trust Company pursuant to the Banking Act of 1923, P. L. 809, to recover from defendant, a stockholder, an amount equal to 100% of the par value of capital stock held by him. By affidavit of defense raising questions of law, defendant denied liability on the ground that no statute obligated shareholders to contribute in excess of the par value of their shares, which, it is conceded, had been paid. The court below entered judgment for defendant (16 Pa. D. C. 505). Plaintiff has appealed.
The title company was incorporated in 1924 under section 2, paragraph 19, and section 29, of the Corporation Act of 1874, P. L. 73, 84, approved April 29th of that year, providing for incorporation for the purpose of "the insurance of owners of real estate, mortgagees and others interested in real estate from loss by reason of defective titles, liens and encumbrances." By supplementary legislation (inter alia, Acts of May 24, 1881, P. L. 22; May 9, 1889, P. L. 159; May 29, 1895, P. L. 127; June 1, 1907, P. L. 382) additional powers were granted, among them the powers of a trust company and to receive deposits. By Act of May 9, 1923, P. L. 173, entitled "extending and enlarging the powers and rights of trust companies and banks organized and incorporated under the laws of the Commonwealth," corporations, so organized under the Corporation Act of 1874, were authorized, inter alia, to discount notes, etc. We understand that all of these powers were exercised by the company involved.
While the statement of claim does not refer to any statute, in his argument plaintiff contends that defendant's liability results from an act approved May 11, 1874, P. L. 135, considered with the fact that the company exercised the power to discount paper conferred by the enabling Act of 1923, supra. The Act of May 11, 1874, is *366 entitled "An act fixing the liability of stockholders of banks, banking companies and other banking institutions in this Commonwealth." It provides "That from and after the passage of this act, all stockholders in banks, banking companies, saving fund institutions, trust companies, and all other incorporated companies doing the business of banks or loaning and discounting moneys as such in this Commonwealth, shall be personally liable for all debts and deposits in their individual capacity to double the amount of the capital stock held and owned by each: Provided, that before such liability shall accrue, in case of banks already chartered, the stockholders shall, at a regular or adjourned meeting, declare by resolution or otherwise their intention to accept the provisions of this act, and notice of their action shall, within thirty days thereafter, be filed in the office of the auditor general and secretary of the Commonwealth, setting forth at length their proceeding, declaring their intention to be bound by its provisions in the same manner and as fully as if the same had been a part of the original act by which they were incorporated." We shall designate this as the May Act to distinguish it from the general Corporation Act of April 29th of the same year.
In denying liability, defendant relies on section 24 of the general Corporation Act, as follows: "The officers and stockholders of corporations organized under or accepting the provisions of this act, shall not be individually liable for the debts of said corporation. . . . . ." He contends that the immunity or exemption from liability, so conferred, was not affected by the May Act, and that the May Act was repealed by the general Banking Act of May 13, 1876, P. L. 161.
The learned court below was of opinion that the May Act was repealed by the general Banking Act of 1876, supra, section 33, repealing all acts or parts of acts inconsistent with it.
The general rule is that a shareholder's liability for corporate debts is limited to the amount he agreed to *367
contribute to the capital stock. Enlarged liability is the exception; it possesses elements of a penalty. Section 24 shows that the legislature was not content to rest the stockholder's obligation on the implications of the general rule and, therefore, specifically expressed the immunity. It is a valuable privilege. A legislative intention to withdraw it should clearly appear before the courts may declare it withdrawn. In O'Reilly v. Bard,
When the General Assembly convened in 1874, it became necessary to enact legislation to give effect to the Constitution, as was directed in section 31 of the schedule. Special charters were prohibited in article III, section 7. General statutes providing for incorporation were therefore among the matters requiring attention, subject to the provisions of article XVI. Among the bills introduced to provide for general incorporation, was that passed and approved April 29th, since known as the Corporation Act of 1874. Another, which failed to *368 pass at that session, was a general act to provide incorporation for the transaction of the banking business. Such a law was passed in 1876, supra. In view of the subsequent development of the title insurance company into what may be called the modern trust company (to distinguish it from trust companies created by special laws prior to 1874) it may be noted, at this point, that no provision was made for the formation of trust companies, as such, in the Corporation Act of 1874, or in the general Banking Act of 1876, or by any other general law. Such trust companies developed from section 2, clause 19, and section 29 of the general corporation act, as supplemented from time to time.
The general corporation act provided for the creation of certain corporations, many of them in classes provided for, prior to the adoption of the Constitution, by various general acts, a number of which were expressly repealed by section 46 of the corporation act.
A comparison of the general Banking Act of 1876, with the May Act of 1874, in the circumstances then confronting the legislature, shows conclusively that the legislature intended that the later act should be a substitute for the May Act. It is unnecessary to discuss the extent of the enlarged liability imposed on shareholders by the May Act (though, compare Dreisbach v. Price,
Is defendant liable under section 5 of the Banking Act of 1876? It is clear that in the general acts providing, on the one hand, for the formation of corporations with the powers specified in section 2, clause 9 and section 29 of the general corporation act, and supplements, and, on the other hand, for banks of discount and deposit under the Act of 1876, the legislature kept separate and *371 apart the classes of corporations to be formed under each. Article XVI, section 11, of the Constitution, required that banking corporations be kept in a separate class. It provided: "No corporate body to possess bank and discounting privileges shall be created or organized in pursuance of any law without three months previous public notice, at the place of the intended location, of the intention to apply for such privileges, in such manner as shall be prescribed by law, nor shall a charter for such privilege be granted for a longer period than twenty years." That section 11 was amended in 1920, is immaterial in this case.
In our decisions referring to the subject, we have necessarily observed and adhered to the classification so established. The separation has been maintained with all its implications although the corporations receive deposits of money, and (in the last case) also discounted paper. In the Prudential Trust Co.'s Assignment,
In DeHaven v. Pratt,
In Maxler v. Freeport Bank,
In Media Title and Trust Co. v. Cameron,
Unless, therefore, such trust companies can be transferred from the class of title insurance companies, formed under the Corporation Act of 1874, to "the class to which banking institutions belong," the immunity created by section 24, supra, cannot be displaced by the claim of enlarged liability imposed by section 5. If such change in classification, with the resulting burden, should be made, it must be made by the legislature, not by the court. If the change had been intended by the statutes granting additional powers to companies formed under the Corporation Act of 1874, the legislature would *374 have used appropriate words to declare the intention; in the absence of such declaration, we must conclude that the change was not intended.
Judgment affirmed.