Case Name: Rowley v. Pogue
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1931-11-24
Citations: 203 Ind. 655
Docket Number: No. 25,994
Parties: Rowley v. Pogue.
Judges: 
Reporter: Indiana Reports
Volume: 203
Pages: 655–682

Head Matter:
Rowley v. Pogue.
[No. 25,994.
Filed November 24, 1931.
Rehearing denied July 1, 1932.]
Atkinson v. Husselman and H. W. Mountz, for appellant.
Wood & Wood, for appellee.

Opinion:
Martin, J.
The receiver of the Angola Bank Trust Company brought this action against appellant (who was president and director of the institution) to recover from him the double liability, imposed upon stock holders in banks, upon ten shares of the capital stock thereof.'
It appears from the special findings of facts that: The Angola Bank Trust Company, because of its insolvency, was closed by the banking department of the State of Indiana on March 14, 1927; for fifteen years prior thereto it was' a corporation duly organized and doing business as a loan, trust, and safe deposit company; the state, on relation of a deputy bank commissioner, filed suit in the Steuben Circuit Court alleging such insolvency and praying for the appointment of a receiver, and appellee was appointed receiver and given the usual powers, etc.; appellant, on March 14, 1927, "was the owner in his own right of ten shares of the capital stock of said Angola Bank Trust Company of the par value of $1,000"; .the company was indebted in the sum of $608,868.80 to depositors and creditors whose claims have been allowed by the court and the receiver (up to Jan. 5, 1929) had collected and realized from the assets $378,244.48; that the remaining assets after deducting losses will produce $63,346.01 (making the total of all available assets $441,590.49), leaving unpaid to creditors, $167,278.31; certain stockholders have paid on their stock assessment or liability $42,068.06, and the receiver has been paid $44,500 in settlement of a suit for damages brought against certain of the directors, and there still remains unpaid and unsatisfied of the indebtedness of the trust company the sum of $80,710.25. The company was capitalized for the sum of $60,000 and the capital stock was fully paid long previous to March 14, 1927; appellant, although requested to do so, has not paid any sum upon the stock owned by him, and there is due and unpaid from him as the owner of ten shares the sum of $1,000.
The trust company here involved was organized under ch. 161, Acts 1893, p. 344, section 10 of which, as amended by §3, ch. 20, Acts 1921, p. 44, being §3950 Burns 1926, provides that "Such corporation shall exercise the powers and possess the privileges conferred on banks by the laws of this state and all powers properly incidental thereto or which may be necessary or usual in carrying on the general business of banking, subject to the restrictions imposed by the laws of this state relative to a general banking business, etc." It appears from the record that the company carried on a general banking business.
"The stockholders in every bank or banking company shall be individually responsible to an amount over and above their stock, equal to their respective shares of stock for all debts or liabilities of said bank or banking company." §6, Art. 11, Const. §212 Burns 1926. This section of the Constitution creates a • definitely limited stockholder's liability for the benefit of creditors; such constitutional provision is self-executing and the liability may be enforced in an action brought either by a creditor or by the receiver under §4952 Burns 1926, ch. 189, Acts 1915. Gaiser v. Buck (1931), 203 Ind. 9, 179 N. E. 1. (The action at bar was brought on Dec. 17, 1927, before §4822 et seq. Burns 1926, ch. 215, Acts 1929 became effective.)
It follows that upon the special findings of fact set out above, the conclusions of law that appellee recover from appellant $1,000 and costs and the judgment in that amount against appellant are correct.
The alleged errors which present the questions decided above were assigned on the action of the court in overruling appellant's demurrer to the second paragraph of complaint and on the conclusions of law. Two other questions are presented (1) by the assignment that the court erred in sustaining appellee's demurrer to appellant's third paragraph of answer, and (2) by the assignments that the court erred in overruling appel lant's demurrer to the first paragraph of complaint, and in. sustaining appellee's demurrer to the second paragraph of answer.
(1) Appellant's third paragraph of answer alleged that prior to the appointment of the receiver the trust company had for a long time been insolvent, and while it was so insolvent, but without any knowledge on appellant's part of that fact, the officers and stockholders solicited him to purchase stock, representing that the company was solvent and the stock reasonably worth its face value; that, relying upon such false representations, appellant agreed to purchase conditionally from a stockholder ten shares of stock with the right to disaffirm the contract of purchase if an investigation of the business should disclose it was not solvent and the stock not valuable; that, thereafter appellant (who was elected as director and president of the company and served for more than a month in that capacity) learned of the insolvency of the company and disaffirmed his agreement to purchase the stock and refused to accept the same. Although the court sustained a demurrer to the third paragraph of answer, it allowed the appellant to present his evidence fully on this issue under his general denial. The court found against him on the issue as shown by the finding that "he was the owner in his own right of ten shares," etc. An error in sustaining or overruling a demurrer is harmless where the substantial rights of the objecting party w'ere not affected thereby. 4 C. J. 930. The error, if any, in sustaining a demurrer to a paragraph of answer is harmless where all the facts alleged in such paragraph can be, or are permitted to be, proved under a general denial or other special answer already pleaded. Henderson v. State, ex rel. (1926), 198 Ind. 608, 612, 154 N. E. 378; Federal Life Ins. Co. v. Sayre (1924), 195 Ind. 7, 22, 142 N. E. 223; Washington Hotel Realty Co. v. Bedford Stone, etc., Co. (1924), 195 Ind. 128, 136, 143 N. E. 156; Indianapolis, etc., Co. v. Isgrig (1914), 181 Ind. 211, 104 N. E. 60; Perry v. Acme Oil Co. (1909), 44 Ind. App. 207, 88 N. E. 859; American Express Co. v. State (1906), 167 Ind. 428, 79 N. E. 352; and cases cited in Indiana and North. Eastern digests, title, "Appeal and Error," Key number §1040-(7). Available error cannot be predicated upon the action of the court, either in overruling a demurrer to an answer, Souders et al. v. Jeffries (1884), 98 Ind. 31; Keegan v. Carpenter (1874), 47 Ind. 597, or in sustaining a demurrer to an answer, Romy v. Brannon (1903), 32 Ind. App. 146, 67 N. E. 998; Travelers Ins. Co. v. Fletcher, etc., Co. (1925), 84 Ind. App. 563, 150 N. E. 825, where, as here, there is a finding that the facts alleged in such paragraph of answer are not true.
(2) The first paragraph of complaint (answered by the second paragraph of answer) proceeded upon the theory of the stockholders liability under an as-sessment made for the payment of debts and liabilities under §4, ch. 161, Acts 1893, p. 344, as amended by §1, ch. 118, Acts 1923, p. 315, being §3944 Burns 1926. This section of the statute concerning trust companies is almost identical with §3858 Burns 1926, §1, ch. 230, Acts 1919, it was enacted in furtherance of §6, Art. 11 Constitution, §212 Burns 1926, and under it the double liability for the benefit of creditors may be enforced against the stockholders of an insolvent banking company in the process of liquidation, as well as assessments to restore the capital stock of a banking company as a going concern. Gaiser v. Buck, supra.
The first paragraph of complaint contains the necessary allegations for an action at law to collect such assessment for the payment of debts and liabilities, and the special findings of fact set out (in addition to what has hereinbefore been stated) the various steps that were taken by the receiver relating to the assessment. The judgment as properly follows the findings based on the allegations of the first paragraph of complaint as it does the findings based on the second paragraph. There is no contention that two double liabilities for the benefit of the creditors of the insolvent trust company—one under the Constitution and another under the statute— can or should be enforced against this appellant. Judgment affirmed.
Myers, J., absent.