Court Opinion

ID: 3845777
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:19:16.426166+00
Date Added: 2024-06-11T14:14:33.017272
License: Public Domain

I dissent from the majority opinion. It is clear to me that the Secretary of Banking made no assessment against the appellee which imposed any liability on him until that official on January 28, 1944, "assessed" him the amount he "deemed necessary" and sent him "by registered mail . . . a demand that the amount assessed against him be paid." Then and not until
then did this shareholder's obligation to pay, and the Secretary's right to collect from him, arise.
The measure of the maximum liability of a shareholder of an insolvent bank to a levy to help make up the insufficiency of the bank's assets, is 100% of the par value of his stock. Under Section 723 of the Banking Code, no such liability rests upon a shareholder until the Secretary of Banking, as the Receiver of the closed bank, (1) "assesses" against the shareholders the amount which the Secretary "deems necessary for the payment of such debts, not however exceeding the maximum liability of such shareholder as provided by law," and (2) "sends to every such shareholders by registered mail to the address which appears on the records of the corporation, or if none appears there, then to his last known address, a demand that the amount assessed against him be paid."
Since no such "demand" was made upon this shareholder after the making of the 1934 "assessment" it follows that the latter imposed no liability upon him. There was no power to collect anything from this defendant *Page 336 
until the demand prescribed by statute as a prerequisite to a shareholder's liability was made. A cause of action accrues only when one has the right to institute a suit. McDonald v.Leverington Construction Co., 331 Pa. 381, 200 A. 8, 9. This court has declared unequivocally that the statute of limitations begins to run against the Secretary of Banking as Receiver of a closed bank "only from the date when by proper notice to the stockholders, he demanded that payment [of the assessment] should be made:" Bell, Secretary, v. Brady et al.,346 Pa. 666, 670, 31 A.2d 547. It was decided in Freeman v.Rogal, 351 Pa. 266, and in earlier cases that the statute of limitations against a Receiver of a closed bank does not begin to run until the Receiver makes the levy he is authorized to make. This consists of an assessment plus a demand made in
statutory form.
The verb "assess" has two meanings: (1) "To determine the amount of" a tax or charge, and (2) "to determine and impose a tax" or charge. (See any standard dictionary). When Section 723 of the Banking Code uses the phrase "He [the Secretary] shall assess against such shareholders the amount which he then deems necessary," etc., it obviously uses "assess" in the first named sense. The Secretary's "determination" does not become a legal levy until he makes a "demand that the amount assessed against" the shareholder "be paid" and designates within what period it shall be paid and sends a notice of this demand and time designation to the shareholder "by registered mail." Until all
this is done the Secretary's power to make a levy is not exhausted or impaired. When the Secretary determines the amount which shall be assessed against the shareholders, his "determination" alone is a mere "brutum fulmen" which does not affect his authority to make later a 100% assessment because his compliance with all the statutory prescriptions as to demand and notice is necessary to make his assessment a jural act giving rise to rights and obligations. It is the "demand" and "notice" which gives *Page 337 
the "assessment" its legal compulsion. The error in the reasoning of the court below is in its statements: ". . . the Banking Department on May 31, 1934 levied a one hundred per cent assessment. . ." and thereby its power to levy assessments against shareholders was "fully exercised." The answer to this is: The Secretary "determined" in 1934 on such an assessment but never "levied" it, and therefore his power was not "fully exercised."1
The fact that a few of the shareholders "made full or partial payments on account of this [1934] assessment" (as the majority opinion states) is immaterial in this issue between the Secretary of Banking and this one defendant. A shareholder who received by registered mail the demand for payment which the statute prescribes as an essential of the liability of a shareholder of a closed bank would be discharging a legal obligation by paying the assessment. A shareholder who, like this appellee shareholder, received no demand in statutory form for the payment of the 1934 "determination" or "assessment",was under no obligation to pay anything and, of course, the Secretary, in that state of the record, had no right to make him pay. As to this defendant no assessment which carried withit any legal compulsion was made against him until the 1944 assessment, followed by due demand, was made. Therefore, he (and any shareholder similarly situated) was and is in no position to complain that he was assessed twice. It is obvious that he was not assessed twice, for the simple reason that he never received the demand and notice by registered mail which section 723 of the Banking Code makes exactly as essential to a shareholder's legal liability to *Page 338 
pay as it makes what it calls the "assessment of the amount which he [the Secretary] then deems necessary." This "assessment" is obviously the Secretary's computation or determination of the amount needed from the shareholder.Before the Secretary can proceed to collect from the shareholder, he must under the statute take a second equally important step, which is, as already pointed out, (1) make a formal demand on the shareholder for payment, (2) designate the period within which payment must be made, and (3) send to the shareholder a notice of this demand and period for payment, "by registered mail".
In this case the Secretary of Banking determined upon an assessment of $100,000 against the shareholders of this closed bank. Forty-one of the shareholders who would have had aliability of $80,950 if they had received a demand in due formof the Secretary's determination or "assessment" have paidnothing on their statutory liability.
If the action of the court below is sustained, substantial practical difficulties will be put in the way of the Secretary of Banking's collection of anything from the shareholders of this bank who have up to this time paid nothing. For one thing, demands and notices under the 1934 assessment will now have to be sent out "by registered mail", and separate suits in assessments and statements of claim will have to be filed by the Secretary of Banking in each case, because the pending suits based on the 1944 assessment will now be of no avail. As the Secretary of Banking has about completed his liquidation of closed banks and has dispensed with the service of most of his legal staff, it will probably be necessary for him, in order to begin new cases against these shareholders, to engage additional counsel. I see no reason why the Secretary of Banking and the Commonwealth should be put to this unnecessary annoyance and expense.
Furthermore, if we would decide that the defendant's obligation to pay the assessment made by the Secretary *Page 339 
of Banking did not arise until a demand for a payment was madein the manner prescribed by the Banking Code and the 1934 mere determination of liability created no respective rights and obligations in the parties, we would thereby avoid any troublesome question as to when the statute of limitation began to run in the defendant's favor. If the 1934 determination (i.e. "assessment") gave the Secretary of Banking the right tocollect from this defendant the amount then "determined", it would be logical to hold that the statute of limitation began to run from the date of that determination. If the "assessment" of 1934 gave the Secretary of Banking no right to collectanything from this shareholder until a demand for payment wasmade in statutory form, it follows that the 1934 assessment standing alone vested in the Secretary no legal right whatever to collect anything from this shareholder and consequently it did not impair in any way the Secretary's right to make aneffective assessment against the shareholder in 1944.
I would let the suits now pending under the 1944 assessments, which were followed by due demand and statutory notice, proceed to final judgments.
Mr. Justice DREW and Mr. Justice PATTERSON concur in this dissent.
1 For example, if the Secretary should determine that a 50%
assessment on the shareholders was all that was necessary butbefore sending out the statutory demand by registered mail, he should determine that a 100% assessment on the shareholders was necessary and should then send to the shareholders in the prescribed manner the demand for a 100% assessment, it could not logically be held that the first 50% "assessment" which never ripened into a "levy" made the 100% assessment void pro tanto.