Case Name: John S. Lewis vs. William Robertson, Trustee of Commercial Bank of Natchez
Court: High Court of Errors and Appeals of Mississippi
Jurisdiction: Mississippi
Decision Date: 1850-01
Citations: 13 S. & M. 558
Docket Number: 
Parties: John S. Lewis vs. William Robertson, Trustee of Commercial Bank of Natchez.
Judges: 
Reporter: Mississippi Reports
Volume: 21
Pages: 558–563

Head Matter:
John S. Lewis vs. William Robertson, Trustee of Commercial Bank of Natchez.
A note executed by a stockholder in the Commercial Bank of Natchez, payable to the bank and discounted by it for the purpose of paying a call by the bank on his subscription for stock, after the first and several other calls on his stock had been paid, is a valid obligation on the maker of the note ; which may be enforced after a judgment of forfeiture against the bank, under the act of 1843, by the trustee appointed by the court.
The trustee of a bank, under the act of 1843, succeeds to all the rights of the bank ; he is to collect all debts due to the bank, and apply them to the payment of debts due from the hank ; and an amount due for stock in the hank is as much a debt as any other liability.
However it might be if there were no creditors of the hank, it is clear thé stockholders are bound to pay up all the ■ arrearages due for stock, if necessary to form a fund for the payment of the debts of the institution.
In error from the circuit court of Wilkinson county; Hon. Stanhope Posey, judge.
On the 27th May, 1847, William Robertson-, as trustee appointed by the circuit court of Adams county, on the 12th June, 1845, at May term thereof, 1845, of the Commercial Bank of Natchez, brought suit against John S. Lewis, upon a note made by him, dated 26th March, 1840, for $1519.80, payable ' twelve months after March 4, 1840, to the said bank or order.
The defendant plead:
1. Non assumpsit.
2. That the cause of action did not accrue to plaintiff within six years before suit brought, and concludes to the country.
3. That the bank was not, on the 4th of March, 1840, nor after, a body politic or corporate, and had no right to contract as such.
To this plea there was a demurrer for .these causes: 1st. Defendant is estopped by matter of record. 2d. The plea amounts to general issue, and is informal. 3d. Plea denies character in which plaintiff sues, is not sworn to, and is, in other respects, informal and insufficient.
The demurrer was sustained.
4. That a judgment of forfeiture against the bank was rendered on the 12th of June, 1845, in the circuit court of Adams county, at which date said note was property of the bank, and said judgment is in full force.
To this there was a demurrer for. cause : 1st. The matter of plea is no bar to the action. 2d. Said matters are only pleadable in abatement.
The demurrer was sustained.
5. That at November term, 1846, of Adams circuit court, said Robertson, as trustee, filed in said court a full inventory of all the effects, &c., of said bank in his possession, and said inventory was recorded, pursuant to law; and thereafter, at November term, 1846, of said court, Robertson, as trustee, was ordered and decreed by said court to sell such effects, &c., ac-. cording to the statute, &c., as by said order and decree will appear; said note sued on was included in said inventory.
A demurrer, for the same causes set forth in the demurrer to 4th plea, was sustained.
6. Pleads that after said judgment of forfeiture at said May term, said bank prayed an appeal to the high court, and said appeal was “allowed” at same term.
A demurrer, for causes set forth in demurrer to 4th plea, was sustained.
. 7. Pleads payment to the bank ¡ there was a replication of denial, and similiter.
The defendant did not plead further, and the cause was tried upon the pleas of general issue, statute of limitations, and payment.
On the trial, the defendant proved, that, about June, 1837, the bank discounted for him a note for $4000, for the purpose of paying a call on one hundred shares of his stock in said bank, on which Lewis had before paid $60 per share; the proceeds of said note were applied to pay said call, being $40 per share. About the 29th March, 1838, Lewis paid part of said note, and gave a new note for $2000, the balance at twelve months; afterwards he paid $760 on said note, and gave, for the balance, the note sued on, and to secure its payment, pledged twenty shares of the stock of said bank; no scrip has been issued for said twenty shares.
Defendant further proved, that the bank commenced business in 183é; that Lewis was a stockholder in said bank; that the first call on stock was paid in specie; that it was the uniform custom of the bank, in the 'Case of all stock notes, to discount the same, so that the maker might with the proceeds pay calls upon his stock; and that it was the uniform custom for the maker to check for the proceeds of the note so discounted, and have the same credited upon the maker’s stock account; whether in this case that method was adopted, witness could not say.
The defendant asked, in substance, these charges :
1. If the jury believed the note sued on was given in payment for stock of said bank, it is void; Refused.
2. If the note was given for stock in said bank, and if defendant never received said stock, and cannot now receive it, in consequence of the dissolution of the bank, the verdict must be for defendant., Refused.
The verdict was for plaintiff, and defendant moved for a new trial, for error in refusing said instructions, and because the verdict was contrary to law and evidence. The motion was overruled. and defendant excepted and sued out this writ of error.
Gordon, for plaintiff in error,
Argued the cause, and cited King v. Elliott, 5 S,. & M. 444; Leighty v. Susquehanna and Waterford Turnpike Co., 14 Serg. & Raw. 434.
Gaines, for defendant in error,
Thought the ease of Hayne v. Beauchamp, (5 S. & M. 515,) determined this case for defendant in error.
Better, argued the cause on the same side.
Simrall, for plaintiff in error, in reply,
Made an elaborate argument, in which he reviewed the proof at length, and insisted that the transaction by which the note of the defendant below was given for stock, could not be sustained either by the charter of the bank, or upon charter law principles.

Opinion:
Mr. Justice Clayton
delivered the opinion of the court.
This was a suit upon a note given to obtain money from the Commercial Bank of Natchez, to pay for stock in that bank. The first and several other calls on the stock had been paid pre-' vious to the discount of this note, which had been made to raise funds to pay a farther call. The case is distinguishable from that of Hayne v. Beauchamp, (5 S. & M. 515,) in this, that the first call on the stock had been paid in cash, at the time required by the charter, consequently there was no reason for holding the subscription to be void. It was the failure to pay at. the time of the subscription in accordance with the requisitions of the charter, which induced the majority of the court, in the case referred to, to hold that there was no valid obligation upon the subscriber. Subscription and payment of the first call, according to that decision, completed the contract, and made the party a stockholder. These acts concurred in this instance, and bound Lewis from that time.
The case also falls within the other branch of that decision, for it held the party bound to pay the note which he had given to obtain a discount to be applied to payment of his subscription, although he was not bound for the stock. Much more would this be the case where the subscription itself, and the acts concurrent with it, had created a valid contract for stock.
The dissolution of the bank by judgment of forfeiture, makes no difference in the result. The trustee appointed upon such judgment succeeds to all the rights of the bank. He is to collect all debts due to the bank, and apply them to the payment of debts due from the bank. The amount due for. stock is as much a debt as any other liability. However it might be, if there were no creditors of the bank, it is clear the stockholders are bound to pay up all the arrearages due for stock, if necessary, to form a fund for the payment of the debts of the institution.
The case of Spear v. Grant, (16 Mass. 9,) has no bearing on this question, at least to the prejudice of this conclusion. It holds, " that where a banking corporation, at the expiration of its charter, had divided its capital stock among the stockholders, leaving corporate notes in circulation, an individual stockholder who had received his share of the stock so divided, was not liable in an action at law to a holder of the notes of the corporation." The same case, however, states, " that if the stock is withdrawn before the debts are discharged, there would seem to arise an equitable obligation on the part of the stockholders to account for so much as they originally consented to pledge."
The case of Wood v. Dummer, 3 Mason, R. 308, grew out of the same transaction of the same bank. The court held the stockholder liable in equity to repay to a creditor the amount of stock so withdrawn. It says: "The capital stock of banks is to be deemed a pledge or trust, fund for the payment of the debts contracted by the bank. The individual stockholders are not liable for the debts of the bank in their private capacity. The charter relieves them from personal responsibility, and substitutes the capital stock in its stead. If the stock be withdrawn by the stockholders, they are, to all intents and purposes, privy to the trust, and receive it cum onere."
It is the same thing where the stock has not been paid, as where it has been paid and withdrawn. King v. Elliott, 5 S. & M. 428.
The judgment of the court below was in accordance with these views, and the same is affirmed.