Source: https://supreme.justia.com/cases/federal/us/300/598/
Timestamp: 2019-04-19 01:14:08+00:00

Document:
1. Shares of national bank stock, scheduled by their registered owner in his voluntary petition in bankruptcy, were disclaimed by the trustee as burdensome assets, by direction of the court. Held that, notwithstanding the adjudication of bankruptcy, their ownership remained in the bankrupt, continuously, or by relation, from the date of filing the petition. P. 300 U. S. 602.
2. The statutory liability of a shareholder in a national bank in course of voluntary liquidation (12 U.S.C. 181, 182), is enforceable by a creditor or creditors suing for themselves and for others similarly situated. P. 300 U. S. 603.
3. An assessment by the Comptroller is not a condition precedent, in cases of voluntary liquidation, to proceedings by creditors. P. 300 U. S. 604.
direct the liquidation of, such claims when, as in this case, their amount is susceptible of prompt ascertainment. P. 300 U. S. 604.
5. The liability of the shareholder of a national bank to creditors, though statutory, is a liability upon quasi or implied contract, in kind provable and dischargeable in bankruptcy. P. 300 U. S. 606.
Certiorari, 299 U.S. 539, to review the affirmance of a judgment against a shareholder of a national bank in a suit by the Receiver of the bank based on a Comptroller assessment. The shareholder interposed a discharge in bankruptcy.
In a suit for the enforcement of the personal liability imposed by the statute then in force upon shareholders in national banks, petitioner, the defendant in the suit, disclaimed liability, first upon the ground that, before the assessment of the shareholders, his ownership of the shares was divested by the filing of a bankruptcy petition and the appointment of a trustee thereunder, and second upon the ground that, if ownership continued, liability was extinguished by virtue of a discharge in bankruptcy. Whether the defense should have prevailed is now to be determined.
Rev.St. §§ 5220 and 5221, 12 U.S.C. §§ 181, 182), the Atlantic City National Bank being the liquidating agent. The terms of liquidation are defined by an agreement. Union sold to Atlantic all its assets of every kind for $1,686,977.63, which the buyer was to pay through an assumption of the seller's liabilities. The seller covenanted that the assets had a value equal to the price, and bound itself to pay the deficiency if any should ensue. To this there was to be an exception in the case of the banking house and fixtures, which were to be taken at a valuation of $353,000, irrespective of the outcome. The amount of the seller's liability was to be fixed at the expiration of two years (i.e., on September 30, 1933), at which time all notes then uncollected were to be reckoned as losses. Before that time arrived, the liquidating bank met with troubles of its own. In January, 1933, it was declared to be insolvent by the Comptroller of the Currency, and a receiver was appointed to wind up its affairs. In December, 1933, Union also was declared insolvent, and the receiver then appointed is the respondent in this Court. Valuing the uncollected assets, the Comptroller found it necessary to enforce the personal liability laid upon the shareholders (Rev.St. § 5151, as amended, 12 U.S.C. § 63; 38 Stat. 273, 12 U.S.C. § 64), and, by an order made and filed on January 8, 1934, assessed them to the amount of the par value of the shares. The receiver has sued the petitioner as one of the shareholders of Union to recover that assessment.
had begun, and only about five months were left before it would be deemed to be complete.
Upon these facts, established by the pleadings and supporting affidavits, the receiver moved for judgment. The District Court held the defenses insufficient, and gave judgment against the defendant for the amount of the assessment. Slaughter v. Brown, 16 F.Supp. 494. There was an appeal to the Court of Appeals for the Third Circuit, where the judgment was affirmed. 85 F.2d 885. An important question of bankruptcy law being involved, a writ of certiorari issued from this Court.
be the same whether title is conceived of as remaining in the bankrupt or as afterwards reverting. Albany Hospital v. Albany Guardian Society, supra, pp. 443, 445. In either view, it is his after disclaimer by the trustee, wherever it may have been while acceptance was uncertain. American File Co. v. Garrett, supra.
The petitioner being held to be the owner of the shares, we pass to the closer question whether the effect of the discharge in bankruptcy was to extinguish the personal liability that was attached to his ownership as a statutory incident.
U.S.C. §§ 63, 64. If the bank is in course of liquidation by a voluntary liquidator, the liability is enforceable by a creditor or creditors, suing for themselves and for others similarly situated. Act of June 30, 1876, c. 156, § 2, 19 Stat. 63, 12 U.S.C. § 65. Cf. 12 U.S.C. § 181. We have no occasion to inquire whether, in the absence of an assessment by the Comptroller of the Currency the statutory liability may be enforced by a receiver through the medium of a claim in bankruptcy. Cf. Erickson v. Richardson, 86 F.2d 963. That question is not here. An assessment by the Comptroller, even if a necessary preliminary to a suit by a receiver when a bank is in the course of involuntary liquidation, is not a condition precedent, in cases of voluntary liquidation, to proceedings in behalf of creditors. No adequate reason occurs to us, and none, we think, is stated in the arguments of counsel, why a court of bankruptcy is then incompetent to liquidate the amount of the indebtedness effectively and speedily, and give relief accordingly. Cf. Cunningham v. Commissioner of Banks, 249 Mass. 401, 426, 144 N.E. 447; United States v. Illinois Surety Co., 226 F. 653, 662-663.
bankrupt may, pursuant to application to the court, be liquidated in such manner as it shall direct, and may thereafter be proved and allowed against the estate."
The result is to invest the court with a discretionary power that can be fitted to the needs of varying situations. Maynard v. Elliott, 283 U. S. 273; cf. Foust v. Munson S.S. Lines, 299 U. S. 77, 299 U. S. 83. A holding that a creditor is disabled from making proof in bankruptcy till a suit in equity against the shareholders has been brought to a decree would have unfortunate results. Today it is the bankrupt who is asserting the provable quality of such a claim in order to preserve for himself the benefit of a discharge. Tomorrow it may be a creditor who, unless he is given that opportunity, may lose his dividend from the assets and find his suit in equity illusory. In that predicament, the malleable processes of courts of bankruptcy give assurance of a remedy that can be moulded and adapted to the needs of the occasion. Cunningham v. Commissioner of Banks, supra.
dependent upon unpredictable events. [Footnote 2] Here, the progress of the liquidation had already brought about a deficiency too great to be corrected by any unexpected windfall. This at least is the situation as the petitioner describes it. What infusion of contingency will vitiate a claim is, at best, a question of degree (Maynard v. Elliott, supra, p. 283 U. S. 278), though there is a leaning toward allowance in aid of the purpose of the statute to relieve the honest debtor (Williams v. U.S. Fidelity & G. Co., 236 U. S. 549, 236 U. S. 554-555; Central Trust Co. v. Chicago Auditorium Assn., 240 U. S. 581, 240 U. S. 591). To all this we add that the uncertainty, if there was any, as to the exact amount of the assessment was to be dispelled, at the farthest, by September 30, 1933, less than six months later, for obligations then unpaid were to be classified as losses. Cf. Bankruptcy Act, § 5m, as amended May 27, 1926, 11 U.S.C. § 93n. Upon the facts of this case, the impediments to a prompt ascertainment of the liability of shareholders were unsubstantial, if not imaginary.
Other objections are made to the operation of the discharge, but they need not detain us long.
U.S. 467, 285 U. S. 477; Coffin Brothers & Co. v. Bennett, 277 U. S. 29, 277 U. S. 31; Bernheimer v. Converse, 206 U. S. 516, 206 U. S. 529; Christopher v. Norvell, supra; McClaine v. Rankin, supra, p. 197 U. S. 159; McDonald v. Thompson, 184 U. S. 71, 184 U. S. 74. Cf. Erickson v. Richardson, supra. It is an incident affixed by law to the contract of membership between shareholder and bank. Ibid. A liability upon quasi-contract is one upon an "implied contract," and so provable in bankruptcy (Bankruptcy Act § 63a(4), as amended, 11 U.S.C. § 103(a)(4)); Crawford v. Burke, 195 U. S. 176; Tindle v. Birkett, 205 U. S. 183, 205 U. S. 184; Davis v. Aetna Acceptance Co., 293 U. S. 328, 293 U. S. 331, if the other conditions of allowance are found to be fulfilled.
Finally, argument is possible that the discharge is ineffective against the creditors of the bank for the reason that only a single creditor of Union was listed in the schedules. This, however, is unimportant if the creditor so listed (the liquidating agent) was in fact the only creditor, as the petitioner insists it was. Cf. Longfield v. Minnesota Savings Bank, 95 Minn. 54, 103 N.W. 706. If in fact there were other creditors whose names have been omitted, the burden rests on the respondent to make proof of such omission. Hill v. Smith, 260 U. S. 592, 260 U. S. 595. The conclusion may well follow if the omission shall be proved that, as to any creditors not listed, the discharge is without effect.
Whether the petitioner will be able to make good the allegations of his answer, amplified and explained by the supporting affidavits, is not to be predicted now. Enough for present purposes that there are issues to be tried.
"At the time that I was adjudicated a bankrupt as aforesaid, it had been determined, and from then until now it has been definitely determined and known, that said Union National Bank was insolvent. Said Union National Bank was, throughout all of that time, and ever since September 30, 1931, had been closed to business. Also at said time, it had been determined, and throughout said period it was definitely known, that the assets of said Union National Bank were insufficient in value to liquidate at a sum equal to the value placed upon them by said agreement of September 30, 1931."
"Also, at the time that I was adjudicated a bankrupt as aforesaid, it had been determined, and from then until now it has been definitely determined and known, that an assessment and requisition upon the shareholders of said Union National Bank to the total par value of the amount of stock outstanding would be necessary to pay the debts and claims of said bank."
"Under the clause in question, it was, at the time the petition in bankruptcy was filed, uncertain -- a mere matter of speculation -- whether any liability ever would arise under it."
Miller v. Irving Trust Co., 296 U. S. 256, 296 U. S. 258.

References: § 5151
 § 63
 § 64
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 § 2
 § 65
 § 181
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 § 5
 § 93
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 § 63
 § 103
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