Salter v. Williams

219 F. 1017 | D.N.J. | 1914

HUNT, Circuit Judge

(after stating the facts as above). The case is disposed of by the application of the views of the Supreme Court of the United States in Scott v. Deweese, 181 U. S. 202, 21 Sup. Ct. 585, 45 L. Ed. 822. There the court referred to the liability of a shareholder in a national bank under section 5151 of the Revised Statutes, and, after discussing the inability of the shareholder to escape from the liabilities after he has claimed and been accorded by the bank the rights of a shareholder, said that it might be that a suit would lie, if brought before the suspension of the bank, for the purpose of canceling a subscriber’s subscription, but that immediately upon the failure of the bank the rights of creditors attached under section 5151, and that a shareholder who was such when the failure occurred could not escape the individual liability prescribed by this section, upon the ground that the bank had issued to him a certificate of stock before, strictly speaking, it had authority to do so. Again the court said:

“Ii the subscriber became a shareholder in consequence of frauds practiced upon him by others, whether they be officers of the bank or officers of the government, he must look to them for such redress as the law authorizes, and is estopped, as against creditors, to deny that he is a shareholder, within the meaning of section 5151, if at the. time the rights of creditors accrued he occupied and was accorded the rights appertaining to that position.”

The allegations in the present complaint do not withdraw plaintiff’s position from the pertinency of these rules. On the contrary, plaintiff avers that he was a purchaser, that he held for several months,. that he was a shareholder at the time of the insolvency of the bank, and that he never made any complaint until after the appointment of a receiver. The rights of the creditors, however, intervened when the bank suspended, and it is now too late for him to come into court and claim to b"e relieved upon the ground of misrepresentation and deceit by any person who was an officer of the bank at the time of the purchase of his shares. In Scott v. Abbott, 160 Fed. 573, 87 C. C. A. 475, the Circuit Court of Appeals for the Eighth Circuit stated this general rule:

“That when one has for a considerable period of time prior to the failure of a corporation occupied the position of one of its stockholders, and exercised and enjoyed the rights, privileges, and fruits of that relation, including the chance of enhanced value of his holdings, when fortune frowns, and the chances turn against him, it is too late to assert, as against creditors of the corporation, the right to rescind his contract of stock subscription on the ground of false representations after a state of insolvency has supervened, and after proceedings to wind up the corporation for the benefit of creditors have been or are about to be instituted.” Hood v. Wallace, 97 Fed. 983, 38 C. C. A. 692, affirmed in 182 U. S. 555, 21 Sup. Ct. 885, 45 L. Ed. 1227.

For lack of equity, the complaint is dismissed, and the plaintiff’s application for injunction is denied.