181 P. 420 | Wyo. | 1919
This is an action brought by the receiver of the Farmers State Bank of Bridger, Montana, to recover of the defendant as a stockholder of the 'bank an amount equal to the amount of his stock, alleged to be due under a statute imposing a liability to that extent, in addition to the amount invested in the stock, upon the stockholders of a banking corporation, severally and individually, for all contracts, debts and engagements of the corporation. Demurrers to the original and an amended petition having been sustained, a second amended petition was filed to which also a demurrer was filed and sustained, and thereupon, the plaintiff excepting to the ruling, and refusing to further plead, judgment was rendered and entered in favor of the defendant. The plaintiff brings the case here on error, assigning as error the order sustaining the demurrer to the second amended petition, and the rendering of judgment against the plaintiff.
The second amended petition alleges: That the Farmers State Bank of Bridger is, and at all the times mentioned in said petition was, a corporation duly organized- under the laws of the State of Montana. That its principal place of business is at Bridger, in Carbon County, Montana. That on the 8th day of May, 1915, the said bank was insolvent and unable to pay its indebtedness, -and its 'business had been suspended by order of the superintendent of banks of
“H. B. Miller, receiver of the above named Farmers State Bank of Bridger, is hereby expressly authorized and directed to forthwith assess and demand from each of the above hamed stockholders of said bank the payment of an amount equal to the par value of the capital stock owned and held by him, and to be applied upon -the indebtedness of said bank, and said receiver is hereby further authorized and empowered to bring such actions or take such other steps as he may find necessary to enforce the collection and payment of such assessments.”
That the defendant at all the times mentioned in the petition has been, and is, the owner of twenty-five shares of the capital stock of said bank of the par value of one hundred
“The stockholders of every corporation formed under this chapter, or which may avail itself of its provisions, shall be severally and individually liable, equally and ratably, and not one for the other, for all contracts, debts and engagements of such corporation to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares.”
That the district courts of the State of Montana are courts of original jurisdiction in all cases at law and itl equity. That the statutes of Montana provide for the appointment of a receiver in cases where a bank fails or becomes insolvent. That it is provided by Section 50 of Chapter 9 of the laws of that state of 1889 as follows:
“Whenever the reserve of any bank shall fall below the amount required herein to be kept (fifteen per cent of deposit liabilities), such bank shall not increase its loans or discounts, otherwise than by discounting or purchasing bills of exchange payable at sight or on demand and the superintendent of banks shall notify any bank whose reserve may be below the amount herein required to make good such reserve, and in case the bank fails for thirty days thereafter to make good such reserve the superintendent of banks may notify the attorney general and he shall institute proceedings for the appointment of a receiver and to wind up the business of the bank.”
That section 60 of the laws of 1889' provides:
“It appearing necessary to have a receiver appointed for any such -bank or banks, the superintendent of banks shall make a full and complete statement of account and report to the governor with respect to the conditions of its -business and affairs; and thereafter, should it appear to the gover*176 nor that application should be made-'for the appointment of a receiver, he shall thereupon direct the attorney general to file a petition in the District Court of the county in which the bank is situated asking for the appointment of a receiver, in the name of the State of Montana, and such a petition shall be controlling and by the Court so considered and acted upon, even though stockholders, creditors or others may have theretofore filed application for the appointment of a receiver.”
That between the said 10th of June, 1915, and the commencement of this action plaintiff demanded of defendant the payment of an amount equal to the par value of his-stock, but that the latter has failed, neglected or refused to pay the same or any part thereof, and that there is now justly due and owing from the defendant to the plaintiff, by reason of the facts aforesaid, the full sum of twenty-five hundred dollars, no part of which has been paid. That on the 18th day of November, 1916, in the said district court, in said state, the said receivership being under consideration, and upon proceedings duly had in said court, the said court found that at the time of the appointment of said receiver, and that at all times since said date, the assets of the said bank have been and are of less amount than its liabilities. That said bank was and is wholly insolvent and that its liabilities exceed the assets by more than fifty-four thousand dollars. That the holders of said stock at the date of the appointment of the receiver are each liable, severally and individually, equally and ratably, for the debts of said bank, to the extent and amount invested by them, and that it was ordered, adjudged and decreed by said court, that said bank was then wholfy insolvent, that the proven liabilities exceed the value of the assets by the sum of $54,000.00, that the receiver proceed by legal action to enforce the liability of the holders of the capital stock,of said bank as provided by section 4012 of the Civil Code of the State of Montana, and that the said receiver is authorized to take whatever steps are necessary to secure the payment of said liability.
The first point is based upon the words of the section of the Montana statute (Sec. 4012, Rev. Codes) imposing the liability upon stockholders of every corporation “formed under this chapter, or which may avail itself of its provisions”; by reason of which it is contended for the defendant that no such liability is created except on the part of stockholders of a banking corporation organized under the law containing said provision subsequent to the enactment of the statute. If the statute had not been construed by the Supreme Court of Montana with reference to the words upon which said contention is made, we would not be inclined to consider this point, since we regard the question as to the right of the receiver to sue, suggested by the second point,'as the principal and decisive question in the case. But that court has construed the section against the defendant’s contention, holding that the words “formed under this chapter or which may avail itself of its provisions” have no place in the section and cannot be assigned any meaning, and that the provisions of the act applied to existing concerns, as well as those thereafter to be organized; and as. so construed the section imposing the liability was held to be valid. (Barth v. Pock, 51 Mont. 418, 155 Pac. 282.)
The question suggested by the second point, whether, upon the facts alleged, the stockholders’ liability under the
It is well settled that under a statute like that in Montana the liability of the stockholder is contractual, that it is not an asset of the corporation, nor enforceable by an assessment upon stockholders by or for the corporation, but that it is created exclusively for the benefit of, and runs directly to, the creditors. And the general and prevailing rule, sustained by the great weight of authority, is tha't the liability cannot be enforced by a general receiver of the insolvent corpora-toin, unless authorized to do so by statute, either expressly or as judicially construed, or the liability is declared by statute to be an asset of the corporation. (1 Cook on Corp., 6th Ed., Sec. 218; 3 Clark & Marshall Priv. Corp., Secs. 820, 821; 3 R. C. L. 414; 23 R. C. L. 119; 7 C. J. 518; 2 Morse on Banks & Banking, 5th Ed., 696; Jones on Insolv. Corp., Sec. 543; Williams v. Carver, 171 Cal. 658, 154 Pac. 472; Zang v. Wyant, 25 Colo. 551, 56 Pac. 565, 71 Am. St. Rep. 145; Bank v. Scott, 144 Ky. 575, 139 S. W. 801; Runner v. Dwiggins, 147 Ind. 238, 46 N. E. 580, 36 L. R. A. 645; Golden v. Cervenka, 278 Ill. 409, 116 N. E. 273; Van Tuyl v. Carpenter, 135 Tenn. 629, 188 S. W. 234; McLaughlin v. Kimball, 20 Utah 254, 58 Pac. 685, 77 Am. St. Rep. 908; Steinke v. Loofbourow, 17 Utah 252, 54 Pac. 120; Hale v. Allinson, 188 U. S. 56, 23 Sup. Ct. 244, 47 L.
In Morse on Banks and Banking, after stating who may sue for unpaid installments upon subscription for shares, it is said: “But if the demand is for further contribution beyond the amount of the par value of the shares already paid or due under the original subscriptions, then it would seem that, unless the statute expressly makes the sums thus contributed assets of the corporation, and directly gives the right of collection to the receiver or trustee, the suit should properly be brought by the creditors whose claims are to be paid out of the proceeds, It is their sole and peculiar, right which they are at liberty to enforce when they please or altogether to forego. There seems to be no ground upon which any other person could sustain suits of this description, and hence it has been regarded as proper for the creditors themselves to bring them.”
The principle is stated in Clark & Marshall on Private Corporations at the section cited as follows:
“In the absence of provision to the contrary, the individual liability for corporate debts imposed upon the stockholders of a corporation by a charter, statutory, or constitutional provision is solely for the benefit of, and directly to, creditors, and they only can enforce the same. The liability is not imposed for the benefit of the corporation, and is not in any sense a part of the assets, like unpaid subscriptions of stock, and, unless so provided by statute, it cannot be enforced by the corporation itself, by assessment or otherwise, even for the purpose of raising a fund for the payments of debts. It follows that the liability does not pass under an assignment by the corporation for the benefit of creditors, so as to entitle the assignee to enforce it; nor, in the absence of provision to such effect, can the liability be enforced by an assignee or receiver in bankruptcy or insolvency of the corporation, or by an agent appointed by the stockholders to wind up the affairs of the corporation, or by a receiver appointed by a court of equity, whether appointed at the suit of a stockholder or at the suit of a creditor, and whether he*180 is a general receiver invested with all the ‘estate, property, and equitable interests of the corporation,’ or a special receiver appointed for the purpose.”
In 7 Corpus Juris 518, it is said on this subject: “Under some statutes the action to enforce the liability of stockholders is properly brought by the receiver of the bank, or it may be brought either by the receiver or by the creditors; but-whether the statute does not designate by whom such an action shall be brought, the right of a receiver to sue depends on the view taken of the character of the stockholders’ liability, so that, if it is regarded as a corporate asset, the receiver can sue therefor, while, if it is not so regarded, a suit cannot he brought by the receiver, but only by the creditors.”
It seems clear that' where, in addition to imposing the liability upon stockholders,' the statute declares such liability an asset of the corporation, the receiver is vested with title thereto and the right to enforce it. Some statutes so providing go beyond that and also provide for the enforcement of the liability by the receiver, assignee, or other officer having the right to collect and distribute the corporate assets. Where, without declaring the liability to be an asset of the corporation, the receiver is required or authorized to enforce the liability, it is held that he is not then merely the ordinary chancery receiver, but that the legal effect of such provision is to make him a quasi assignee and representative of the creditors, vested as such with their rights of action against stockholders; and upon that ground his right to sue in a foreign jurisdiction is sustained. (Bernheimer v. Converse 206 U. S. 516; 27 Sup. Ct. 755, 51 L. Ed. 1163; Converse v. Hamilton, 224 U. S. 243, 32 Sup. Ct. 415, 56 L. Ed. 749, Ann. Cas. 1913, p. 1292; 1 Cook on Corp., 6th Ed., 218.)
And the right of the receiver to maintain such an action in a foreign state is sustained also where the statute, though silent as to the procedure for enforcing the liability, has been construed by the highest court of the state in which it was enacted as requiring or authorizing the liability to be en
And in. Howarth v. Lombard, supra, said construction was held to be binding upon the Massachusetts court. In Howarth v. Angle, the court said that the “implied promise” of the stockholder as to such statutory liability “runs to the creditors, and may, according to the common law of the state zvhere it was made, be enforced for the benefit of creditors by a receiver of the corporation appointed to wind up its affairs”; and, further, referring to the decision of the Supreme Court of Washington respecting the nature of the liability: “The statutory liability of stockholders is an asset of the insolvent bank, ‘the title to which was in said receiver, as a trust fund for the purpose of satisfying the claims of’ creditors." In Howarth v. Ellwanger, the court said: -“The courts of Washington have decided that this liability can only be enforced by a receiver under the direction of the court. (Citing cases.) The practical effect of a ruling that a receiver cannot maintain the suit would be to render the law nugatory as to all' but resident creditors. The Washington courts having ruled that a receiver only can bring the suit, it is manifest, should the federal courts and other state courts hold that he cannot maintain the action, that the defendant not only but all stockholders beyond the jurisdiction of the Washington courts will escape a liability intended to be uniform and for the benefit of all creditors.”
Having referred to the decisions of the Minnesota Supreme Court denying the right of the receiver to maintain an action to enforce the liability, the court said:
“If a receiver cannot maintain this kind of an action in the courts of his own state, because its statute provides*183 another in the name of a creditor, or permits it only after the performance of conditions precedent which he has not performed, he cannot, although appointed in the State, maintain such action in a foreign jurisdiction. * * * This would seemingly be enough to compel the affirmance of the judgment herein, when we see that the Minnesota Supreme Court has held that a receiver cannot maintain Such an action as this in the courts of that state. * * * We are of opinion, following the decisions of the highest court of Minnesota, that the statutes of that state do not provide for the appointment of a receiver to recover as such the amount of the added liability of the non-resident shareholders to creditors of an insolvent corporation. They do not provide that such liability shall be assets of the corporation, to be recovered by the receiver and payable to its creditors when such liability is enforced and the money recovered. There is no transfer of any right or title-to a receiver to enforce the liability (certainly not as to non-resident stockholders), nor is it a case where any assignment of such right by the creditors has been made, so that the receiver is, in fact, an assignee of the persons interested in the recovery from the stockholders.”
And the court said further that it was a simple case of the appointment, authorized by statute, of a receiver by a court of equity in the exercise of its general jurisdiction, with no title to the fund in him, “and where he acts merely as the arm of the court without any other right or title,” and that “the question of comity cannot avail in a case where the courts of the state in which the receiver was appointed hold that an action similar to the one brought in the foreign jurisdiction cannot be maintained by him in the courts of the state of his appointment.”
In that case it appeared also that the receiver, by order of the court appointing him, had been “authorized, empowered and directed to institute and prosecute all such actions or proceedings in foreign jurisdictions as may be necessary” for the purpose of enforcing the liability of nonresident stockholders. As to that matter, the court said
It appeared in the case of Converse v. Hamilton, which had been brought in a state court in Wisconsin, that another statute had been enacted in Minnesota not involved in the case of Hale v. Allinson, which prescribed the mode of enforcing the liability pursued in the case then before the court, that by such later statute provision was made for bringing in all creditors into a sequestration suit, for the presentation and adjudication of their claims, ascertaining the relation of the corporate debts and expenses of receivership to the available assets, and whether and to what extent a resort to the double liability of stockholders was necessary, for levying assessments upon stockholders necessary to pay the debts, and for investing the receiver with authority to collect such assessments on behalf of the creditors, and to maintain actions therefor against each stockholder, severally, in Minnesota “or in any other state or country where such stockholder, or any property subject to attachment, garnishment or other process in an action against such stockholder may be found.”
Referring to that statute, after stating that under the earlier statute, a receiver could not sue on behalf of the creditors in a home court or elsewhere, citing Hale v. Allinson, supra, and Finney v. Guy, 189 U. S. 335, 23 Sup. Ct. 558, 47 L. Ed. 839, the court said:
“Under this statute, as interpreted by the Supreme Court of the state,- as also by this court, the receiver is not an ordinary chancery receiver or arm of the court appointing him, but a quasi-assignee and representative of the creditors, and when the order levying the assessment is made he becomes invested with the creditors’ rights óf action against the stockholders and with full authority to enforce the same in any*185 court of competent jurisdiction in the state or elsewhere. (Straw & Ellsworth Co. v. Kilbourne Co., supra; Bernheimer v. Converse, supra.) * * * It is true that an ordinary chancery receiver is a mere arm of the court appointing him, is invested with no estate in the property committed to his charge, and is clothed with no power to exercise his official duties in other jurisdictions. (Booth v. Clark, 17 How. 322, 15 L. Ed. 164; Hale v. Allinson, 188 U. S. 56, 23 Sup. Ct. 244, 47 L. Ed. 380; Great Western Mining and Mfg. Co. v. Harris, 198 U. S. 561, 25 Sup. Ct. 770, 49 L. Ed. 1163.) But here the receiver was not merely an ordinary chancery receiver, but much more. By the proceedings in the sequestration suit, had conformably to the laws of Minnesota, he became a quasi-assignee and representative of the creditors, was invested with their rights of action, against the stockholders, and was charged with the enforcement of those rights in the courts of that state and elsewhere. So, when he invoked the aid of the Wisconsin court the case presented was, in substance, that of a trustee, clothed with adequate title for the occasion, seeking to enforce, for the benefit of his cestuis que trustent, a right of action, transitory in character, against one who was liable contractually and severally, if at all.”
The court, in the same opinion, had said that “the liability is not to the corporation but to the creditors collectively, is not penal but contractual, is not joint but several, and the mode and means of its enforcement are subject to legislative regulation.”
Now, in the case here, while the petition alleges that the stockholder is liable to the extent of the par value of his stock for the bank’s indebtedness, and sets out the statute declaring the liability, and also two sections providing for the appointment of a receiver under stated conditions, the matter of the recovery of the liability is not mentioned in either of the sections pleaded, and it is not alleged or claimed that there is any statute in Montana prescribing the procedure or method for enforcing such liability, or declaring that the receiver shall have- power or authority to enforce
Upon the allegations of the petition, therefore, the case seems to be controlled -by the general rule that the liability is not an asset of the corporation, but runs directly to the creditors, and is not enforceable by a receiver having no greater rights than the ordinary chancery receiver. And there is nothing in the statutory provisions for the appointment of a receiver, set out in the petition, making him anything more than an officer or the arm of the court appointing him for the collection and distribution of - the corporate assets, and to wind up the business of the 'bank. The conclusion would necessarily follow, in our opinion, that the receiver does not show a right to maintain this action.
But we are materially aided in thus interpreting the statutes by the officially published decisions of the highest court in Montana on the subject, for we find that the statutes have been considered and construed by the Supreme Court of that state. In a decision by that court in November, 1914, it'was held that the receiver of an insolvent bank, like the receiver in charge of the estate of any other insolvent, is the arm of the court to accomplish the distribution of the assets of the insolvent, and occupies a position in no respect different from that of the insolvent prior to the appointment; and that he becomes merely the assignee of the insolvent, and has exactly the same rights. (Williams v.
That case was decided in December, 1915, prior to the filing of the first amended petition in this case, and nearly a year before the second amended petition was filed. In that action, which was brought, apparently by creditors, against certain stockholders of an insolvent bank, the State Savings Bank of Butte, to enforce their liability under the Montana statute, the court had before it two questions affecting that liability: First, the stockholder’s right to set-'off against his liability the amount of the bank’s indebtedness to him, and, second, the liability of a stockholder upon stock which had been donated by him to the bank some time prior to its suspension for the purpose of increasing its surplus and providing a fund to pay losses incurred by the bank, and which remained unsold at the time of its failure. Explaining the reasons for denying the asserted right of set-off, and holding the stockholder liable on the unsold donated stock, the court defined the nature of the liability under the
“The double liability of a stockholder in a banking corporation is in its nature contractual and not penal. * * * The liability is several and individual, created by statute in favor of all who are creditors at the date of the bank’s failure. Under this statute, the fund collected from an assessment upon the stock is held in trust for a ratable distribution among all the creditors, and its character is such as to preclude the idea that a stockholder may have his creditor's claim set off against his stockholder’s liability. The two claims do not arise in the same right. His claim is against the bank, while his liability is to the creditors — not to the bank.” And, considering the question of the liability upon the donated stock, upon the contention that under the decisions of the court to the effect that a domestic corporation may purchase its own stock it must also have the right to accept a gift thereof, resulting in relieving the stockholder from liability upon the stock so donated, the court said, after stating that a distinction is clearly drawn in that state between a trading and a banking corporation:
“The statutory double liability of a stockholder is peculiar to the law governing banking corporations — including therein trust companies. The creditor of a trading corporation must look to the corporation's assets for the discharge of his claim, but, in a sense, the creditor of a banking corporation has double security. He may look to all the assets of the bank in the first instance, and, if they are not sufficient, he may then call upon the stockholders to contribute a fund which may equal the par value of the entire authorized capital. Over such fund the corporation has no control. It cannot release a stockholder from all or any portion of his liability, and neither it nor the receiver in charge of its affairs can even maintain an action for its enforcement for it is not a corporate asset. (Zang v. Wyant, 25 Colo. 551, 71 Am. St. Rep. 145, 55 Pac. 565; Farmers’ Bank v. Scott, 144 Ky. 575, 139 S. W. 901.) It*189 is a reserve trust fund created for the benefit of creditors, and under our statute must be distributed ratably to all of them. Its character is so far distinct that collection can be enforced only at the suit of all the creditors or by one or more creditors for the use and benefit of all. (Bank v. Scott, above; 3 Clark & Marshall on Private Corporations, p. 2584; 3 R. C. L. 412.)”
That construction of the statute by the Montana Supreme Court is certainly persuasive as to’ its interpretation in this case, and should be followed by this court, even if we might be of the opinion that it should be construed otherwise, unless it was not necessary to a decision of any question then before the court. And we do not feel at liberty to regard it as mere dictum. The statement that an action to enforce the liability cannot be maintained by the receiver of the bank may not have been necessary, since it does not appear that the receiver was a party to the case. But creditors were parties, as we understand the case,. seeking as plaintiffs to recover upon the liability, and the court’s statement that collection can be enforced only by the creditors or by one or more creditors for the use and benefit of all seems to have been pertinent, though perhaps outside the issues presented by the defenses considered in the opinion; and the result was an affirmance of a judgment in favor of the creditors.
If the statement as to the right of a receiver to enforce the liability might be held so far from necessary to a decision of the case as to amount to mere dictum, what was said as to the nature of the liability — that it is not a corporate asset, that the corporation has no control over it, that neither it nor its receiver can release a stockholder from his liability, and that the liability is to creditors and not to the bank, cannot, we think, be considered as unnecessary to a decision in the case upon the questions presented. That the liability is to the creditors and not to the bank was stated as a reason precluding the idea that a stockholder might have his claim as a creditor set off against his liability. That it
It is chiefly argued by counsel for the receiver that a decision denying his right to recover upon the liability will violate section 1 of article IV of the Federal Constitution requiring that full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. But it is well settled that said provision does not prevent an inquiry into the. jurisdiction of the court which rendered the judgment over the subject matter, or the parties affected by it, or into the facts necessary to give the original court jurisdiction. (2 Watson on the Const. 1196; Tucker on the Const., sec. 306; Simmons v. Saul, 138 U. S. 439, 11 Sup. Ct. 369, 34 L. Ed. 1054; Thompson v. Whitman, 18 Wall. 457, 21 L. Ed. 897; Reynolds v. Stockton, 140 U. S. 254, 11 Sup. Ct. 773, 35 L. Ed. 464.) And the
The contention was directly made in Finney v. Guy, that the Wisconsin court had failed to give full faith and credit to the laws and judgments of the state of Minnesota, but it was held by the Supreme Court of the United States that in refusing to allow the receiver appointed in Minnesota to maintain the action, although he had been expressly authorized to proceed against stockholders in other jurisdictions by an order of the court appointing him, the courts of Wisconsin did not fail to give full faith and credit to the laws and judgments of Minnesota, since the Supreme Court of Minnesota had decided that the liability was not enforceable by the receiver.
We conclude that it was not error to sustain the demurrer, and the judgment will be affirmed. Affirmed.
