Court Opinion

ID: 6674274
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:14:35.747377+00
Date Added: 2024-06-11T16:00:39.177674
License: Public Domain

The opinion of the court was delivered by
Willard, C. J.
The first question to be considered involves the nature of the liability of the stockholders of the Commercial Bank of Columbia, under the following section of the charter of said bank:
“ That in case of the failure of said bank, each stockholder, copartnership or body politic, having a share or shares in such bank at the time of such failure, or who shall have been interested therein at any time within twelve months previous to such failure, shall be liable and held bound, individually, for any sum not exceeding the amount of his or her or their shares.”.
To whom was this liability intended to be incurred? Evidently to the bank or to its proper representative, which would include the receiver appointed upon its insolvency. It certainly could not have been intended that each creditor of the bank, including billholders and depositors, should have a separate action against each stockholder individually. The inconveniences of such a remedy is reason for not subjecting the language of the charter to such a construction when any other construction can be found reasonably to effectuate its intent and satisfy its expressions. The language of the section quoted above contemplated liability in a single sum, to be measured in the manner pointed out by the act, and would, therefore, imply liability to a single action for the purpose of enforcing such demand. The object of the provision was to make assets of the bank, in case of failure, for the payment of its debts. A person subscribing for the stock of the bank at its original issue would be compelled to understand the effect of such subscription to be this: That he was absolutely bound to pay up the proportion of the capital represented by his stock, and an equal amount should it become necessary to make good the liability of the bank to pay its debts. He would also understand that he could not discharge *226himself of this contingent liability by merely selling and transferring his stock, although if the bank should continue to discharge its obligations for twelve months after such sale, then such contingent liability would cease. A subsequent purchaser of the stock would take it with the same contingent liability.
. It is evident that the contingent liability is of the same nature with the primary liability to pay in the capital represented by the stock, and the inference would be that the payment was to be ' enforced by the same person — namely, by the bank itself. If anything remained unpaid on the original subscription, as where stock had not been paid up, the only way by which the creditor of the bank could reach the amount thus in arrear would be through the bank, by compelling the bank, or its representative, to call in the unpaid subscription as a debt due the bank. The contingent liability stands on the same footing. The stockholder was subjected to a contingent liabilty to the bank, such contingency being the failure of the bank. That event happening, he became the debtor of the bank in respect of stock presently held by him or held at any time within twelve months prior thereto, and the remedy was primarily in the hands cf the bank. It was competent, through a creditor’s bill, for the creditors of the bank to compel the bank to call in such assets, and for that purpose the creditor could lay hold of and exercise the remedy of the bank for that purpose, through the medium of a receiver; but the nature of the debt and remedy against the stockholder was not changed thereby.
Was the suspension of specie payments by the bank, in November, 1860, a failure within the sense of the statute? Failure means a failure to meet its current obligations at maturity. Insolvency looks to the liability to pay; failure, to the fact 'of payment. It is not necessary to say that the statute intended that failure, independently of insolvency, should fix the liability of the stockholders. All that need be said, for the purposes of the present case, is that failure was the outward act that was to stand for evidence that the bank was insolvent. If it should happen that the bank refused without justifiable cause to pay its . current obligations at maturity, and had, notwithstanding such fact, sufficient assets to pay its indebtedness, the stockholder *227would get the benefit of that part, for his liability depended wholly on insufficiency of assets. At the same time the creditors of the bank, and all others interested, would be justified in assuming that the failure of the bank was by reason of its in-solvency.
The failure of the bank to pay its bills on presentation in specie was a failure to meet its current obligations at maturity, and, under the view we take of the statute, is presumptive evidence of insolvency. In the present case that presumption is not rebutted, but, on the contrary, it appears that the bank never did resume specie payments, thus strengthening the conclusion of its insolvency by another unrebutted presumption, namely— that the same cause that occasioned its original failure prevented resumption; that, is insolvency. This view supports the conclusion of the Circuit decree, that the cause of action had its origin in November, 1860.
The question of the operation of the statute depends upon the law as it then stood, making allowance for the suspension of the ■statute during the period of five years. The debt of the stockholder'under this contingent liability must be ranked as a simple ■contract debt, barred by lapse of four years from the time the cause ■of action accrued to the commencement of an action for its enforce-v ment. It is a mistake to call the liability of the stockholder a statute liability. The whole object of the provision of the •charter was to regulate the relations that should arise between the corporation and its stockholders. The subscription to the ■stock was a voluntary act that might be performed or declined. The liability that arose from such subscription, although defined by the charter, arose as the voluntary contract of the parties. This is precisely what the law does in fixing the rate of interest on money as affecting contracts demanding interest, but not fixing the rate, and interest computed under the •authority of the statute might as well be considered as representing a statute liability as the cause of action in the present case.
The decree correctly holds that the statute is a bar in the present case. The judgment appealed from must be affirmed and the appeal dismissed.
McIver and McGowan, A. J.’s, concurred.