Court Opinion

ID: 3889672
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:18:58.900376+00
Date Added: 2024-06-11T10:02:39.421176
License: Public Domain

The right of bank creditors to look to stockholders to the extent of the amount of the par value of their stock is embedded in the Constitution of this state. Article 18, § 3. The liability thus imposed upon stockholders is direct and primary and cannot be varied or diminished by legislative act. Smith v. Olson,50 S.D. 81, 208 N.W. 585. The liability is not an asset of the bank and the bank can neither collect, compromise, nor release it. Smith v. Goldsmith, 50 S.D. 1, 207 N.W. 977; Farmers' State Bank v. Erickson, 54 S.D. 345, 223 N.W. 306. It is doubtless competent for the Legislature, within certain limits, to prescribe a method of procedure for the enforcement of such liability in the case of a closed bank. By section 8937, Rev. Code 1919, the superintendent of banks is authorized in the case of a closed bank to bring action to enforce stockholders' liability, and the individual creditor, who would otherwise be entitled to bring such action, is forbidden to commence the same unless the superintendent of banks refuses to do so. In *Page 562 
other words, the superintendent of banks is authorized to make the collection of the stockholders' liability in behalf of the creditors entitled thereto. This does not amount to an unconstitutional impairment of the creditor's rights. Smith v. Olson, supra. Cf. also Lynch v. Jacobsen, 55 Utah, 129, 184 P. 929; McClaren v. Anderson, 110 W. Va. 380, 158 S.E. 379. In the absence of specific statute the superintendent of banks would have no authority to make this collection for creditors. Barret v. Skalsky, 118 Kan. 162, 233 P. 1043. There is nothing in our statute, however, which authorizes, or purports to authorize, either the superintendent of banks or the circuit court in charge of the liquidation of a failed bank, to compromise or release stockholders' liability or to substitute anything else therefor, or to accept anything less than full payment in satisfaction thereof. I very much doubt whether any such power could constitutionally be extended to the superintendent of banks or to the circuit court. In any event, the statute has made no attempt to give them such power. The statutory power granted to the superintendent of banks in liquidation by section 8928, Rev. Code 1919, to compound bad or doubtful debts, has no application whatever to stockholders' liability, since the statute refers to debts due the bank, and the stockholders' liability is not and never was in any sense due to the bank.
I am therefore of the opinion that as against nonconsenting creditors neither the superintendent of banks nor the circuit court had any authority, as part of a reorganization scheme or otherwise, to compromise or release the constitutional stockholders' liability or to substitute any payment to the reorganized bank in place of it, conceding that by the reorganization agreement in this case they probably attempted so to do. Upon these considerations I concur in the result arrived at in the foregoing opinion.