159 Ga. 426 | Ga. | 1924
Bennett, as superintendent of banks of the State of Georgia, filed a petition against J. L. Newton and his wife, M!rs. Kate B. Newton, alleging in substance that on March 13, 1924, petitioner took possession of the assets and business of Walton County Bank for the purpose of winding up and liquidating its business: that on February 2, 1922, and May 17, 1922, there were transferred one hundred and thirty-eight shares in the aggregate of the capital stock of said bank from J. L. Newton to Mrs. Kate B. Newton; that at the time petitioner took charge of said bank said'shares appeared on the books of the bank in Mrs. Newton’s name; that pursuant to law petitioner made against the stockholders of record an assessment amounting to 96 per cent, of the par value of the stock held, in the case of Mrs. Newton $13,248, for the purpose of paying the depositors of said bank; that he issued execution against Mrs. Newton, which remains unpaid; that at the time of the transfers mentioned Newton was the president and a director of said bank, and had an active part in the management and operation of the same, by reason of which he possessed full and intimate knowl
The defendants demurred to the petition, upon the following grounds: 1. The allegations are insufficient, and do not show that plaintiff is entitled to the relief sought. 2. The plaintiff’s right to assess stockholders arises under the banking laws of the State, and the petition shows that the transfers complained of were made more than six months before plaintiff took charge of the bank; that there is no allegation to show whether or not the transfers were entered on the books of the bank, or notice given as provided by
The allegation in the petition, that “at the time of these transfers said bank appears to have been insolvent and in an unsound condition, which the said Newton well knew and had good reason to know and suspect, and ought to have-known,” is,a sufficient allegation that the bank was in fact insolvent at the time of the transfer of the stock by Newton to his wife; and this is especially true in the absence of a special demurrer raising the point that said allegation was not sufficient to show that the bank was insolvent at the time of such transfer.
This case involves the proper interpretation of section 3 of article 18 of the act of August 16,1919, creating the Department of Banking of this State, which is as follows: “Whenever a stockholder in'any bank is individually liable under the charter, and shall transfer his stock, and have such transfer entered upon the books of the bank or give to the bank written notice thereof, he shall be exempt from such liability by such transfer, unless such bank shall fail within six (6) months from the date of the entry of such transfer, or from the delivery of such notice to the bank.” Ga. Laws 1919, pp. 135, 190. Two questions are involved. One is
It is insisted that the rule of construction of this statute should be strict, on the ground that it is in derogation of the common law. Statutes imposing individual liability upon stockholders in corporations are held to be in derogation of the common law; but the statutory provision under consideration does not fix liability upon the stockholder, but provides the method by which the stockholder may escape from such liability. So it is in effect remedial, and not merely in derogation of the common law. Wheatley v. Glover, 125 Ga. 710 (54 S. E. 626); Crawford v. Swicord, 147 Ga. 548, 550 (94 S. E. 1025). We think that the rule applied by this court in the last-cited case, in dealing with the construction of section 2270 of the Civil Code, should be applied in construing this statute; and that rule is that it “should be construed neither liberally nor strictly, but reasonably.” Giving it a reasonable construction, does it discharge from liability a stockholder who makes a colorable and fraudulent transfer of stock with knowledge of the impending insolvency of the bank, and to avoid liability to depositors ? We do not think that it was the intent of the legislature to discharge from liability a stockholder who, in bad faith,. transfers his stock to escape such liability. This statutory provision deals with bona fide transfers. It does not include male fide transfers. A stockholder, who, with knowledge, of the insolvency of the bank, and with the intent to escape liability, transfers to an irresponsible person his shares, remains a stockholder subject to the liability imposed by this statute. Transfers made in good faith and in compliance with the requirements of this statute are valid, and release-stockholders from subsequent liability. 7 C. J. 504, § 69; Harper v. Carroll, 62 Minn. 152 (64 N W. 145); Persons v. Gardner, 113 N. Y. App. Div. 597 (98 N. Y. Supp. 807); Foster v. Row, 120 Mich. 1, 77 Am. St. R. 565; National Bank v. Case, 99 U. S. 628 (25 L. ed. 448); Bowden v. Johnson, 107 U. S. 251 (2 Sup. Ct. 246, 27 L. ed; 386); Pauly v. State L. & T. Co.,. 165 U. S. 606 (17 Sup. Ct. 465);
In Pauly v. State L. & T. Co., supra, the Supreme Court of the United States again affirmed the principle for which we are contending, using the following language: “That if the real owner of the shares transfers them to another person, or causes them to be placed on the books of the association in the name of another person, with the intent simply to evade the responsibility imposed by section 5151 on shareholders of national banking associations, such owner may be treated, for the purposes of that section, as a shareholder, and liable as therein prescribed.” In Stuart v. Hayden, supra, the Supreme Court of the United States said: “One
We do not think it necessary to cite further cases in support of the proposition that if a solvent stockholder transfers his stock in an insolvent bank to an irresponsible transferee, with intent to avoid this statutory liability, under our statute he will be still held to such liability, although the stock, so transferred has been entered in the name of the transferee on the books of the bank. This principle is supported by sound reason. Depositors in banks chartered by the laws of this State are entitled to enforce this liability against the stockholders. It is a property right. A'stockholder can no more avoid such liability by transferring his stock than he can defeat any other debt by a fraudulent transfer of his property.
But it is insisted that the stockholder so transferring his stock would only be liable to "depositors who were such at the date of the transfer of his stock. This is the controlling question in this case, and the one which has made us pause to carefully consider it before reaching a conclusion. We think it necessarily follows, from the proposition that a fraudulent transferer of stock in a bank chartered under our law is still liable to depositors, that such stockholder is liable for all deposits made before and after the transfer. A fraudulent transfer is void as to depositors. As to them it amounts to no tranfer. Such a transfer is a fraud against both existing and subsequent depositors. No one is entitled to the benefits of his fraud. A stockholder will not be permitted to substitute in his place an irresponsible person even as to future depositors. In case of a fraudulent transfer, he continues to .be a stockholder as to depositors, and as to depositors who become such after such transfer.
The view we take of this matter is further supported by section
Applying the above principles, the court did not err in overruling the demurrer to the petition in this case.
Judgment affirmed.