Case Name: CORPORATION COMMISSION OF NORTH CAROLINA v. NATHAN HARRIS
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1929-05-15
Citations: 197 N.C. 202
Docket Number: 
Parties: CORPORATION COMMISSION OF NORTH CAROLINA v. NATHAN HARRIS.
Judges: 
Reporter: North Carolina Reports
Volume: 197
Pages: 202–204

Head Matter:
CORPORATION COMMISSION OF NORTH CAROLINA v. NATHAN HARRIS.
(Filed 15 May, 1929.)
1. Banks and Banking H a — Books of bank raises ¡prima facie presumption, subject to rebuttal, that those appealing thereon are stockholders.
Entry on the books of a bank of the issuance of stock to the defendant sought to be held for his statutory liability is only prima facie evidence that the defendant is such owner, which may be rebutted by his evidence, and a verdict directed against him upon conflicting evidence is reversible error. 3 C. S., 219(a).
2. Same — Evidence that defendant was not owner of bank stock held sufficient to be submitted to jury.
In an action against an alleged stockholder in a bank to recover his statutory liability, 3 C. S.; 219(a), evidence tending to show that he had not subscribed for the stock, had received no dividends nor acted as such owner is sufficient to take the case to the jury in rebuttal of the prima facie case raised by his appearing on the books of the bank as a subscriber to its stock, and alone furnishes no evidence of ratification or estoppel.
S. Same — Owner of bank stock is relieved of statutory liability thereon only by transfer of shares on books of the bank.
A subscriber to the shares of stock of a bank is not relieved of his statutory liability thereon by selling the stock unless the transfer is made on the books of the bank in accordance with the statute. 3 O. S., 219(d).
Appeal by defendant from Webb, J., at May Term, 1928, of Rowan.
New trial.
Tbe plaintiff alleged that as an administrative department of the State of North Carolina, created and organized as provided by law, it took charge of the business, property, and effects of the Peoples Bank of East Spencer on 30 July, 1926; and that the bank was insolvent. Thereafter the Atlantic Bank & Trust Company was appointed receiver of the Peoples Bank of East Spencer. The receiver filed a petition alleging that the defendant was a stockholder, and demanded payment of his statutory liability as provided in C. S., 219(a). It was admitted for the purpose of the trial that the assets of the Peoples Bank of East Spencer were insufficient to discharge its obligations and that it was necessary to assess tbe shares of stock issued by the bank to the full amount of 100 per cent. The defendant denied liability and the following issue was submitted to the jury and answered in the affirmative: “Was the defendant Nathan Harris a stockholder in the Peoples Bank of East Spencer as alleged in the complaint?” Judgment was rendered in behalf of the plaintiff and the defendant excepted and appealed.
P. S. Carlton for the receiver.
J. Harold McKeithen, Walter H. Woodson and Parrish & Peal for defendant.

Opinion:
Adams, J.
His Honor instructed the jury to answer the issue in the affirmative if they believed all the evidence. In this instruction we think there was error. The stock appeared on the books of the bank as having been issued to and in the name of the defendant but this entry, while prima facie evidence of the defendant's ownership, is not conclusive; the burden of the issue remained with the plaintiff throughout the trial to satisfy the jury by the greater weight of the evidence that the defendant Harris was a stockholder in the bank, as alleged. White v. Hines, 182 N. C., 276; Austin v. R. R., 187 N. C., 7. There was evidence in rebuttal of the presumption arising from the entry of the stock in the name of the defendant on the books of the bank. To constitute the defendant a stockholder it was necessary to show, not only that the stock had been issued, but that it had been actually or constructively accepted by the defendant. The defendant denied that he had accepted the stock.
There was evidence tending to show that on 5 January, 1921, the Peoples Bank of East Spencer issued two shares of stock to R. H. Terry and that on 4 April, 1924, Terry's certificate was surrendered to the bank endorsed by Terry to the defendant; that certificates Nos. 103 and 104 were then issued in the name of the latter. The defendant testified that he had never bought any stock in the Peoples Bank of East Spencer, had never authorized any person to buy it for him, and had never paid for such stock. In explanation he said that four or five years before the trial, one E. J. Lassiter came to the defendant's store in "Winston-Salem, told him that a letter was coming to Lassiter from East Spencer in the defendant's name, and gave the defendant instructions to deliver the letter to Lassiter without having it opened. It was in evidence that the defendant's wife opened the letter; that Lassiter came to defendant's store on the day following; that the defendant then told Lassiter that he had never authorized him to buy stock in the defendant's name;' that he did not want the stock and that be wanted Lassiter to bave tbé entry on tbe books of tbe bank canceled. Tbe defendant testified that after tbe letter was opened be signed these certificates in blank, gave them to Lassiter, and at tbe same time wrote tbe bank that be bad not subscribed for tbe stock. He said that be transferred tbe certificates to Lassiter who bad caused them to be sent because be thought Lassiter was tbe owner, and that be wanted tbe bank "to take tbe certificates out of bis name." Tbe defendant said, also, that be bad never received any dividends and bad never beard anything further in reference to tbe stock until after tbe appointment of tbe receiver.
This evidence bad a direct bearing upon tbe questions whether tbe defendant bad bought tbe stock, whether it bad been sent to him without bis knowledge, and whether be bad refused to accept it. If be neither bought nor subscribed for tbe stock nor accepted it when it was sent to him, it can hardly be said that be is a stockholder subject to liability for assessment. Under these circumstances, nothing else appearing, there would be neither ratification nor estoppel which would bar tbe defense.
We do not say there is no evidence that the defendant accepted the stock, but merely that there is evidence to the contrary. In Trust Co. v. Jenkins, 193 N. C., 761, it was shown that one of the appellants admitted that be bad been a stockholder in the bank and bad sold bis stock without having it transferred on the books of the bank. Tbe Court said: "He was not relieved of bis statutory liability as such stockholder by the sale of such stock. He remained subject to such liability so long as such shares of stock stood in bis name upfon the books of the bank. He could be relieved of such liability only by a transfer of such shares to a purchaser, in accordance with the provisions of the statutes. 3 C. S., 219(d)." This statement of the law will apply in the present case if the defendant's acceptance of the stock is established.
New trial.