The Portland daily press., 1885-03-16
THE PACIFIC BANK.
The Second Assessment of 100 Per
Cent. Must be Paid.
Am Interesting Decision by Judge Colt in
she United States Circuit Court = Net
Loss 10 the stockhoIdecs of the Bank
Nearly S2,OOO,OoO.

BosToN, March 14--Judge Colt of the U. s.
Circuit Court has ordered to be dismissed the
bill in equity of Charles e. Morrison " Linus
NJ. Price, Receiver OF the Pacific National
Bank. The suit was to restrain the further
prosecution OF the action at law to recover the
second assessment of 100 per cent. on the
capital stock made under the direction Of the
Comptroller OF Currency for the purpose Of en-
forcing the individual liability of the stock
holders under the statute. The Court finds
upon the facts presented the most that can be
claimed is that the proceedings in respect to
the increase were not regular. 1t is urged
with more force that the stockholders sub
scribed to an increase of $500.0O0, and that
they paid for their new stock. But here, in
view Of what afterward took place, comes in
the principle of estoppel. Supposing this new
new stock had proved profitable, undoubtedly
the complainant would have reaped the bene-
Mt. Stockholders should not be permitted to
deny their liability in case Of loss, when they
wonld have shared in the benefits in case OF
pront The purpose OF the voluntary assess
ment was to restore the impaired capital stock
In order that the bank might reopen. The
only alternative was for the bank to pass into
the hands OF receiver. The stockholders de-
cided to levy the assessment. This may have
been bad Judgment, but general creditors can
not suffer for that reason. If the reorganiza-
tion Of the bank had proved successful the
stockholders might have saved their property.
The assessment was voted, the greater part
p1tu III auu tuo uauk r6-Open6Q. from THIS
time new rights and equities intervened. 1t is
no answer to the rightful claims of the new
creditors to enforce, through Receiver, the
statutory liability OF stockholders to say that
the assessment went to pay old debts. Suppose
the bank bad continued business for ten years,
instead OF two months; surely, the stockholders
could not get rid of their individual liability
BY setting up that, ten years before, there was
paid an assessment of 100 per cent. which
went to liquidate certain claims against the
bank. Ii the bank had not re-opened and the
assessment had passed into the hands of the
Receiver the situation might be different. 1t
might then be claimed with more reason that,
though the assessment was paid for restoring
the stock and enabling the bank to continue
1t had not been devoted to that purpose, but
being passed into the hands OF the Receiver,
1t would be used for the payment of general
creditors, and it should be regarded therefore
as an equitable performance of the statutory
liability. But here the assessment was used
for the very purpose for which 1t was made.
II went to restore the impaired stock, and
thus enable the bank to reopen. To be sure it
was used to pay some debts, because that was
incidental to restorting the stock, but 1t did
not 60 10 pay all debts.
In our opinion, this assessment, made under
another section Of the statute and for diff
ferent purpose, cannot, on any legal or equit-
able ground, be held to relieve a stockholder
from his individual liability under section
6151. The question whether bill in equity
will lie to restrain a suit of this character was
not pressed at the hearing; but independent of
this consideration our conclusion is that the
bill must be dismissed
The decision is Of very serious import to the
unfortunate stockholders of this bank. 1t will
be remembered that they voluntarily assessed
themselves $685., 900 on the capital stock at the
time of failure, of which about $750,000 was
paid in. Two months after the bank resumed
it again suspended, and, by direction of the
Comptroller, Receiver Price levied a second
assessment of 1856, 900. None of this has been
paid, the stockholders believing it to be Illegal
~ levied. By Judge Colts decision the stock
holders must pay in all about 2,000, 900, in
cluding the $3.50, 600 already paid on the stock
which they hold. OF course the decision is of
corresponding benefit to the depositors and
other creditors of the bank, for instead of the
paltry dividend of 10 per cent, they will prob
ably receive substantial portion of their
claims. The decision of Judge Colt is, how
ever, subject to revision by the Supreme Court,
where the case will probably go, so that q final
settlement is still afar off,