The morning news. [volume] (Savannah, Ga.) 1887-1900, 1897-02-17
LIABILITY OF STOCKHOLDERS.
THE FINAL DECISION IN BRUINS
WICK STATE BANK CASES.

Supreme Courts Confirmation of Its
Former ActiOn-Based on the Law
Requiring stockholders to Give Mo-
tice of Transfers of Their stock
Much of Its Importance Lost BE-
cause the Law Has Been Changed
SO That Parties Transferring
stock Are Not Held Liable After
Six MOnths-The Chatham Bank
and Messrs. Hull & LathrOp Inter-
ested in Small Amounts.
The recent decision of the supreme
court affirming it's former decision in the
cases of the Chatham Bank against Brobs-
ton & Co. and others, and Hull g. La
throp against Brobston & Co. and others,
while of Importance to the parties directly
concerned, win not be of so much import
to the commercial world. as might be sup
posed, because of the fact that one of the
laws upon which 1t was based has been
largely modified.
certain number Of shares of the stock
of the Brunswick State Bank were de-
posted with the Chatham Bank by Messrs.
Lloyd & Adams as collateral security for
loan about five years ago. The facts in
the case of Hull & Lathrop are very SINH
lar. The stock was transferred TO the
bank and held by it for a period of about
three months, after which the loan was
paid and the stock was transferred back
to it's owners.
When the Brunswick State Bank failed
a few years ago suit was brought against
all of its stockholders by the depositors
represented in the petition of Brobston
& Co. and others, as the assets of the
Il rar.t cuff
cient to pay the depositors. Among other
stockholders found of record were the
Chatham Bank and Hull & Lathrop,
though the stock they had held merely
as collateral had been transferred back to
the original holders long before, and suits
were brought against them along with
other stockholders. Though the capital
stock of the bank was only $4,000, by look
ing up those who had held stock for short
periods just as in these cases, stockhold-
ers representing $195,OOO we're found
In transferring their stock none Of them
had conformed to the law as to giving
notice, and it was particularly on this
that the suits were based. This law
reads as follows:
when a stockholder in any bank or
other corporation is individually liable
under the charter and shall transfer his
stock, he shall be exempt from such Ia
DlIlIHs unless ne receives a written uOLlce
from a creditor within six months after
such a transfer of his intention to hold
him liable; Provided, he shall give notice,
once a month for six months, of such
transfer, Immediately thereafter, in two
newspapers in or nearest the place where
such institution shall keep its principal
office"
The fact that this section, No. 1895 of
the code, refers to such banks as have
charters providing for individual LA
bility made the defendants think they saw
a loop-hole for escape in the charter of
the Brunswick State Bank, which makes
the bank responsible to its creditors to
| the extent of its property and assets, and
its stockholders individually liable to the
| extent OF the par value of the stock held
| by them 'at the time the debt was Gre
ated.' The defendants thought the last
| clause would let them out, as it was clear
| ~ shown that they were not stockholders
of the bank at the time the Indebtedness
| was created.
When the case first came up for trial
| in Glynn superior court, the defendants
won on a demurrer, which claimed on
| these grounds that there was no cause
| OF action against them. The supreme
court, however, oVerruled this decision,
and in doing so decided the merits of the
I case, or in other words holding emphat-
| ically that under the law above stated,
4 the Chatham Bank was liable even
/ though it did not hold the stock at the
| time the Indebtedness was created. On
| second trial of the case, therefore, the de-
| PENDANTS of course lost, being required
| to pay the assessment in proportion to the
| amount of stock held. They then petit
| toned the supreme court to review it's
| former decision, the case having been
tried in the meantime in Glynn superior
court on its merits. The supreme court
| granted this rehearing, and il took place
! several months ago. The decision just
! rendered reaffirms its former decision on
| the merits of the case at the time it re-
| Versed the lower courts ruling on the de-
| murrer.
The Importance of this decision, how
! ever, is largely lost by reason of the fact
| that since these suits were brought the
! law with reference to transfers of stock
has been changed. A law was passed in
| 1894 which provides that the stakeholder
in a corporation shall be liable where he
| transfers his stock unless the corporation
fails within six months after the transfer
| is made. This does away with the require
ment about advertising, and such suits
| as these could not come up again. 1t was
the law at that time, however and as it
| was not complied with the defendants had
| to pay the assessments. The amount
which the Chatham Bank will have to
| pay, ii is said, is not much more than
| $3.50, while Messrs. Hull & Lathrop will
| have to pay a little more than double
! that