Court Opinion

ID: 6235594
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:31:47.23374+00
Date Added: 2024-06-11T08:58:02.408216
License: Public Domain

Mr. Justice Mercur
delivered the opinion of the court, October 1st 1877.
The Act of 16th April 1850, Pamph. L. 478, contains general provisions applicable to all banks thereafter to bo created under any special Act of Assembly. It prescribes a. general system for the creation, government and liquidation of banks. It specifically declares that the stockholders of every such bank, in addition to the corporative liability, shall be jointly liable to the creditors of said bank, being noteholders, in their individual capacities for the amount of all notes issued; and the manner of enforcing such liability in case of the insolvency of the bank is also prescribed. The 33d section directs the assignees to cause a scire facias to be issued by the prothonotary of the Court of Common Pleas or District Court of the county in which the bank is located, against all the stockholders of said bank, reciting the amount of the deficiency, and requiring them to appear at the next Court of Common Pleas or District Court in said county, and show cause why execution should not be issued against them for such amount.
The Farmers’ & Mechanics’ Bank of Shippensburg was incorporated as a bank of discount and deposit, by the Act of 11th April 1862, Pamph. L. of 1863, p. 661. The proviso to section second of the act declares that “ the stockholders of said company or corporation, in addition to the corporate liability, shall be jointly and severally liable to the creditors of said bank, in their individual capacities, for the amount of all deposits made with said company or corporation, whether the same be interest or transient deposits.”
The act does not provide iñ what county, nor in w'hat manner, this personal liability shall be enforced. The eighth section, however, declares “ that the said bank shall be subject to the provisions *78and restrictions of the several acts relating to banks, so far as they are applicable thereto.” Thus it appears this special act did not profess to furnish, by itself, a complete system for the bank thereby created. It provided for the organization ; but when established, it declared the corporation subject to previous legislation relating to banks: This special act was thus blended with the general acts. They became a part of its charter. They are in fari materia with the special act. Whenever the special act is silent recourse must be had to them, to ascertain the powers, and to enforce the duties and obligations of the bank and of the stockholders.
The bank in question was fraudulently insolvent. It had made an Involuntary assignment. The Act of 1850 declares proceedings to enforce a personal liability of the stockholders shall be instituted in a court of the county in which the bank is located. The Farmers’ and Mechanics’ Bank of Shippensburg was located in Cumberland county. These proceedings were commenced in the Common Pleas of Franklin county. The fact that the remedy is sought by bill in equity does not change the forum. The Act of 12th April 1867, Pamph. L. 71, provides, in cases of proceedings against the officers and directors of a bank, through whose acts the fraudulent insolvency thereof was caused, they shall be by bill in equity, in the Court of Common Pleas or District Court of the county in which the bank is located, and in the name of the assignees. Thus whenever the statute prescribes the remedy to enforce a personal liability of the officers or stockholders of an insolvent bank, it directs that the proceedings be in the name of the assignees, and in a court of the county in which the bank is located. This is required for many reasons. The whole assets have passed into the hands of the assignees. The creditors of the bank and the stockholders thereof are interested in their distribution. The court of that county has acquired jurisdiction of the accounts of the trustees. Upon that court has devolved the duty of distributing all the assets.
It was contended on the argument that the liability of the appellants does not depend on the insolvency of the bank of which they were stockholders; that they are primarily liable, and that a proceeding in behalf of a depositor may be sustained against them, wholly ignoring the assignees and the condition of the bank. In this conclusion we cannot concur. It is contrary to the whole spirit of the statutes making incorporators personally liable. The individual liability of the stockholders is in derogation of the common law. The liability of the members of a corporation for its debts was merged in the associated body. The artificial body alone was responsible. A statute changing this liability must be construed strictly: McMullin v. McCreary, 4 P. F. Smith 230; Moyer v. Pennsylvania Slate Co., 21 Id. 293. While full effect must be given to the clear intent of a statute creating a personal liability of *79the stockholder of an incorporated company, yet it is not to be extended by implication: Id.
The debt due a depositor is still a debt due from the bank. The property of the bank is primarily liable for the payment of the debts of the corporation. The assets of the bank should first be applied in discharge of that indebtedness. The personal liability of the stockholders is designed as further security to a depositor ; hence, although a stockholder is personally liable to a depositor, yet, unless the statute directs otherwise, it is a liability which in equity cannot bo enforced until the assets of the bank, which is the primary debtor, are first exhausted. This rule is clearly recognised in Patterson v. Wyomissing Manufacturing Co., 4 Wright 117. The third section of the Act of 20th April 1858, declared the stockholders should be jointly or severally liable in their individual capacities for all debts, contracts and other liabilities of the company. Yet, said Mr. Chief Justice Lowrie, “ What is the character of their liability ? We think it is secondary, not primary; collateral, not principal; analogous to a case of guarantee, to be enforced if the regular process of the principal contract proves fruitless, or if the corporation becomes insolvent.”
It is clearly manifest that equity requires the assignees to be a party to any proceedings for the enforcement of the individual liability of the stockholders. All the remedies given by the statute for the protection of a depositor can be enforced in the name of the assignees: Gunkle’s Appeal, 12 Wright 13. The equities of all parties can then be reached. We think the statute requires it.
The assignees have not settled any account. The debts due the bank have not been collected. The amount they will pay has not yet been ascertained.
It follows that the Court of Common Pleas of Franklin county had no jurisdiction of this bill. It was not in the name of the proper parties, and was premature. The 8th, 26th, 27th and 81st assignments are therefore sustained.
As this view is fatal to the bill, it is unnecessary to consider the remaining assignments ; we therefore now refrain from indicating any opinion in regard to them.
Decree reversed and bill dismissed at the costs of the appellees.