Case Name: The Kansas State Bank, Appellant, v. A. W. Laughlin, Appellee
Court: Kansas Supreme Court
Jurisdiction: Kansas
Decision Date: 1922-06-10
Citations: 111 Kan. 520
Docket Number: No. 23,739
Parties: The Kansas State Bank, Appellant, v. A. W. Laughlin, Appellee.
Judges: West and Marshall, JJ., join in the dissent.
Reporter: Kansas Reports
Volume: 111
Pages: 520–529

Head Matter:
No. 23,739.
The Kansas State Bank, Appellant, v. A. W. Laughlin, Appellee.
OPINION ON REHEARING.
SYLLABUS BY THE COURT.
Banking Act — Statute Imposing “Double Liability” Upon Stockholders of Bank — Not Repealed by Constitutional Amendment. The section of the banking act (Gen. Stat. 1915, § 523) providing that stockholders of a bank shall be additionally liable for a sum equal to the par value of the stock owned by each was not repealed by the amendment to section 2, article 12, of the constitution adopted in 1906, which provides that—
“Dues from corporations shall be secured by the individual liability of the stockholders to the amount of stock owned by each stockholder, and such other means as shall be provided by law,” etc.
Appeal from Saline district court; Dallas Grover, judge.
Opinion on rehearing filed June 10, 1922.
Former opinion reversed.
(For original opinion of affirmance see 110 Kan. 559.)
John L. Hunt, of Topeka, and B. I. Idtowich, of Salina, for the appellant.
Frank T. Knittle, Ralph Knittle, and Thomas L. Bond, all of Salina, for the appellee.

Opinion:
The opinion of the court was delivered by
Johnston, C. J.:
This controversy involves the effect of a constitutional amendment relating to the individual liability of stockholders upon a statute fixing the liability of stockholders in banking corporations, which was in force when the amendment was adopted.
The appeal, which was taken from a judgment holding that the amendment operated as a repeal of the statute, has had unusual attention. On the first hearing, the court, one justice not sitting, was equally divided on the question. A reargument of the case was therefore directed, and that hearing in which all the justices participated, resulted in a decision affirming the judgment of the district court, holding that the statute was repealed by the amendment. (Bank v. Laughlin; 110 Kan. 559.) Following that hearing an application for a rehearing was granted, and the third hearing has led to a shift of opinion so that the majority of the court now hold that the amendment did not nullify or affect the statute imposing a double liability on stockholders in banking corporations. As noted in the former opinion, the original constitutional provision on the subject was:
"Dues from corporations shall be. secured by individual liability of the stockholders to an additional amount equal to the stock owned by each stockholder, and such other means as shall be provided by law; but such individual liabilities shall not apply to railroad corporations, nor corporations for religious or charitable purposes." (Gen. Stat. 1915, § 237, note.)
This provision was changed by an amendment adopted in 1906 which provided:
"Dues from corporations shall be secured by the individual liability of the stockholders to the amount of stock owned by each stockholder, and such other means as shall be provided by law; but such individual liability shall not apply to railroad corporations nor corporations for religious or charitable purposes." (Const., Art. 12, §2.)
Before the adoption of the amendment statutes had been enacted for the enforcement of the double liability as against stockholders and corporations other than those specifically excepted in the constitutional- provision. These provisions remained in force with some minor amendments until 1903, when the legislature repealed the enforcement provisions, except as to stockholders of banking-corporations. The exception was made in these terms:
"Nothing in this act shall be construed so as in any manner to affect the liability of stockholders in any banking corporation, organized under the laws of this'state as now provided by law." (Laws 1903, ch. 152.)
About five years before that time the legislature passed an elaborate act for the regulation of banks and in it is the provision, the existence of which is now challenged, that —
"The shareholders of every bank organized under this act shall be additionally liable for a sum equal to the par value of the stock owned and no more." (Laws 1897, ch. 47, § 10.)
Later and in 1906 the constitutional amendment already quoted was adopted which in effect substituted a single for the double liability of stockholders.
On one side it is contended that the amendment applies to all corporations other than those organized for railroad, religious or charitable purposes; that it operates as a repeal of the statute in question and effectually abrogates the additional or double liability of stockholders in corporations, including those holding stock in banks; and because of the obvious conflict between the amendment abolishing the double liability and the statute in question, the latter is necessarily repealed.
On the other side it is contended that there is no repugnancy between the amendment and the statute, that the amendment prescribes the minimum of liability, but leaves the maximum or extent of liability that may be imposed to the legislature and that this is disclosed by the words in the amendment, "such other means as may be provided by law." And it is further contended that the statute which provides "other means"; that is, the double liability of stockholders in banks, being in force when the amendment was adopted, continued in force and was as effective as if it had been reenacted after the adoption of the amendment. It is further insisted that the interpretation contended for is the practical construction which has been placed upon the amendment by the executive and legislative departments of the state and should be given consideration by the court.
• The majority view of the court is that the amendment did not effect a repeal of the statute and that the plaintiff is entitled to recover the amount claimed from .defendant. The theory is that there are no limits upon the legislative power except such as are prescribed in the state and federal constitutions, that under our system a constitutional provision is not a grant of power but is a limitation on the power the legislature may exercise and where there is no limitation, its power is absolute and plenary. The only limitations imposed upon that body by the constitutional amendment is that no individual liability shall be imposed on stockholders of railroad, religious and charitable corporations and that the liability of stockholders in other corporations shall not be less than the amount of stock owned by each of them. Under the amendment the legislature is admonished that the debts of the corporation must be secured by stockholders up to the prescribed minimum of liability and as no maximum of liability is prescribed the legislature under its general power is free to provide for such additional liability-as it deems to be wise. The constitutional provision is a measure for the protection of creditors, and under it creditors may look to the stockholders upon their individual liability to an amount equal to the stock held by each of them and to such further liability as the legislature in its discretion shall provide. The legislature could not under the constitutional mandate fix the protection of creditors at an amount less than the single liability, but under its general power could make it a double or treble liability or any reasonable amount in excess of the minimum fixed by the amendment. The legislature had provided for a double liability of stockholders in banks in harmony with the original constitutional limitation and as it is not inconsistent with the amendatory provision as construed, that apt continued in force without an express provision to that effect. It has been said that—
"The adoption of a constitutional amendment will not repeal a valid statute unless the repugnance between them be irreconcilable." (Fischer v. Moore, 69 Kan. 191, 202, 76 Pac. 403. See, also, Leavenworth Co. v. The State, 5 Kan. 688, 693; Prohibitory-Amendment Cases, 24 Kan. 700, 722.)
Under the construction placed upon the amendment there is nothing approaching repugnancy between it and the statute. Reference has been made to Bicknell v. Altman, 81 Kan. 436, 105 Pac. 694, and Douglass v. Loftus, 85 Kan. 720, 119 Pac. 74, as being opposed to the construction now given the amendment. It is the view of the court that neither of these cases can be regarded as an authority against the construction adopted as the corporations dealt with in those cases were not banks, and the statute involved here was not under consideration. It may be said further that the language employed in those cases is to be interpreted in the light of the questions the court had under consideration. They are no more controlling as to the effect of the amendment on an existing and valid statute than Faulkner v. Bank, 77 Kan. 385, 94 Pac. 153, and Bank v. Strachan, 89 Kan. 577, 132 Pac. 200, in both of which language was used' that was open to the interpretation that the double liability of stockholders was still in existence. So far as the practical construction of the amendment is concerned, it is held that the court may call to its aid not only the history of the times when it was adopted, but also the contemporaneous construction placed upon it for a considerable period by those charged with its application and execution. So attention is called to the fact that the legislature had framed and submitted the amendment in 1905 and that in 1909 it passed an act which provided for the collection of double liability from stockholders in banking corporations. (Laws 1909, ch. 59, § 7, Gen. Stat. 1915, § 573.) There was a like reference when the bank guaranty law was enacted, for in it was a provision requiring the officer in charge of an insolvent bank to exhaust the double liability of its stockholders. (Laws 1909, ch. 61, § 4, as amended by Laws 1911, ch. 62, § 1, Gen. Stat. 1915, § 598.) It was said in argument that the banking department since 1906 when the amendment was adopted had interpreted it and the statute as justifying and requiring the enforcement of a double liability against stockholders of insolvent banks, and that this interpretation had been acquiesced in by banks and the stockholders of banks during the period napied. The constitutional amendment is of course to be construed in the sense in which it was understood by those who adopted it and cannot be given a meaning contrary to the import of the language used. However, where there is obscurity or ambiguity in the provision, resort may be had to the aids mentioned to ascertain the purpose and meaning of those who framed and adopted the amendment. Of themselves they are of little weight, none at all unless the construction is a doubtful one, but such light as they throw on the purpose of the authors of the amendment is corroborative of the construction placed upon it. It follows that the former decision is set aside and that the judgment of the district court is reversed with the direction to enter judgment against the defendant.