Source: http://openjurist.org/300/us/175
Timestamp: 2015-08-28 17:31:34
Document Index: 307640875

Matched Legal Cases: ['art. 11', '§ 72', '§ 237', '§ 344', '§ 344', 'art. 3', '§ 39']

300 US 175 Stockholders of Peoples Banking Co of Smithsburg v. Sterling Stockholders of Hagerstown Bank & Trust Co | OpenJurist
300 U.S. 175 - Stockholders of Peoples Banking Co of Smithsburg v. Sterling Stockholders of Hagerstown Bank & Trust Co Home
300 US 175 Stockholders of Peoples Banking Co of Smithsburg v. Sterling Stockholders of Hagerstown Bank & Trust Co 300 U.S. 175
57 S.Ct. 386
81 L.Ed. 586
STOCKHOLDERS OF PEOPLES BANKING CO. OF SMITHSBURG, MD.,v.STERLING. STOCKHOLDERS OF HAGERSTOWN BANK & TRUST CO. v. SAME.
Nos. 298, 299.
Argued Jan. 6, 7, 1937.
Appeals from the Court of Appeals of the State of Maryland.
Messrs. Charles F. Wagaman, John Wagaman, and Harvey R. Spessard, all of Hagerstown, Md., for appellants.
Messrs. William H. Bovey and R. H. McCauley, both of Hagerstown, Md., for appellees.
Stockholders in banking corporations, charged with personal liability, contend that a statute of Maryland defining the form of liability and its measure offends against the Constitution of the United States by impairing the obligation of contracts previously made.
In No. 298, the liability in controversy is that of stockholders in the Peoples Banking Company of Smithsburg, which was incorporated under the laws of Maryland, January 24, 1910, and closed its doors June 29, 1931. The bank commissioner of the state, after being appointed receiveer, filed a petition with a circuit court in Maryland for an order assessing the stockholders of record in an amount equal to 100 per cent. of the par value of their shares. An order was made accordingly in conformity with the provisions of Acts 1910, c. 219 (Code of Maryland, art. 11, § 72). Thereafter the appellants filed petitions for the revocation of the order, alleging the invalidity of the statute imposing liability, and alleging also that those of them who had paid the assessments before joining in the petitions had done so by mistake. At the date of liquidation appellants were the holders of over 2,000 shares of stock. Thirteen appellants had become the holders of a relatively small portion of these shares (345) before the enactment of the applicable statute. Nearly all the appellants were depositors in the insolvent bank and were thus creditors as well as stockholders. The circuit court for Washington county, Md., granted the petitions, holding the statute void as an impairment of existing contracts. The Court of Appeals reversed, and adjudged the statute valid. Ghingher v. Bachtell, 169 Md. 678, 182 A. 558. The case is here upon appeal. Judicial Code, § 237, as amended, 28 U.S.C. § 344 (28 U.S.C.A. § 344).
In No. 299, the liability in controversy is that of stockholders in the Hagerstown Bank & Trust Company, which was incorporated in 1902. The trust company was closed in February, 1933, and in January, 1935, an order was made for the assessment of all the stockholders to the extent of 100 per cent. of the par value of their shares, provided that no good cause was shown to the contrary within a stated time. The appellants in this case, unlike some of the appellants in No. 298, acquired their shares after the enactment of the 1910 statute. Even so, they appeared within the time limit in opposition to the assessment, asserting that the statute was invalid as to them. The circuit court of Washington county sustained their opposition, and the Court of Appeals reversed. Ghingher v. Kausler, 169 Md. 696, 182 A. 566. In this case also the controversy is here upon appeal.
The Constitution of Maryland provides that 'the General Assembly shall grant no charter for Banking purposes * * * except upon the condition that the Stockholders shall be liable to the amount of their respective share or shares of stock in such Banking Institution, for all its debts and liabilities upon note, bill or otherwise.' Maryland Constitution 1867, art. 3, § 39. This provision was effective without more to impose a substantive liability upon stockholders in banks. Ghingher v. Bachtell, supra, 169 Md. 678, at pages 688, 690, 182 A. 558. On the other hand, it did not take from the Legislature the power to implement the liability with statutory remedies, nor, in the absence of such statutes, did it take that power from the courts. Ghingher v. Bachtell, supra. In January, 1910, when the Smithsburg bank was organized, the only applicable statute was chapter 206 of the Acts of 1870. The act shows by its title that it is one 'to create State Banking Institutions to enable the several Banks in this State—State and National—to avail of the provisions thereof.' It provides (section 11) that 'the continuance of the said several corporations shall be on the condition that the stockholders and directors of each of said corporations shall be liable to the amount of their respective share or shares of stock in such corporation, for all its debts and liabilities upon note, bill or otherwise; and upon this further condition, that this Act and every part of it may be altered from time to time, or repealed by the Legislature.' The Maryland courts have held in a series of decisions that the liability thus recognized was not enforceable by the bank itself in the event of its insolvency, or by a inquidator or receiver suing in its behalf. Ghingher v. Bachtell, supra; Miners' Bank v. Snyder, 100 Md. 57, 67, 59 A. 707, 68 L.R.A. 312, 108 Am.St.Rep. 390; Colton v. Mayer, 90 Md. 711, 714, 45 A. 874, 47 L.R.A. 617, 78 Am.St.Rep. 456. The right of action was no part of the assets of the insolvent corporation. The meaning of the statute was thought to be that every creditor of the corporation in assuming that relation acquired for his individual use, and not as a class representative, a supplem