Court Opinion

ID: 7316716
Source: CourtListenerOpinion
Date Created: 2022-07-25 21:07:48.690892+00
Date Added: 2024-06-11T16:19:39.018632
License: Public Domain

Grey, Y. C.
The Colorado statute which, is the basis of this suit declares-that the shareholders of banks in that state shall be individually responsible for the debts of the 'bank in double the amount of the par value of the stock owned by them respectively.
The bill of complaint is filed against eleven defendants in different groups, alleging that each group is severally and respectively indebted to the complainants in a certain named sum of money. The complainants pray that each group of defendants may be .decreed to pay to the complainants the definite amount of money named in the bill of complaint.
This cause has been argued upon the widest possible basis, presenting variant constructions of the Colorado statute above quoted and citing numerous decisions in different states touching the meaning of that act, the proper mode of procedure to enforce it, and also discussing the constitutionality, operation and effect of the Few Jersey act of March 30th, 1897 (P. L. 1897 p. 124), prohibiting suits of this character in the courts of this state unless the corporation and all of its stockholders shall be made parties.
I have not found it to be necessary to consider each of the grounds of demurrer to the complainants’ bill of complaint, inasmuch as several of the objections presented affect the whole case, as the complainants- have stated it in their bill of complaint, and when determined must dispose of these demurrers.
The first cause of demurrer challenges the bill of 'complaint upon the ground that the complainants have not set forth such a case as entitles them to any relief in equity, &c.
As the complainants state their cause of complaint, they have a right to the payment of seven definitely ascertained sums of money. They seek separate money decrees, that certain named defendants shall respectively pay these several sums, and they ask no other relief. The following summary of the prayer for relief exhibits this feature of the bill of complaint:
The complainants pray
“That John A. Willett may be decreed to pay $1,000; that Robert D. Kent may be decreed to pay $1,000; that Frederick Lowe may be *403decreed to pay $1,000; iliat William P. Aldrich may be decreed to pay $12,000; that Arrianna Van I-Iouten, Ella K. Goodlatte, John E. Kipp and Mary Kipp, as heirs and devisees, may be decreed to pay $1,000; that Isaac Basch, Marion Feeder, James S. Basch, Carrie Basch, Matilda Basch and Emma J. Basch, as heirs and devisees, may be decreed to pay $8,000; that Irene C. Mansur, Harry Worthen, Frank Popple, Jr., Bessie Popple and the Passaic Trust, &c., heirs and devisees, &c., may be decreed to pay $6,000.”
It is not asserted that any group of defendants which is alleged to owe one of these definite sums is in any way liable, in whole or in part, for any other of them. Nothing in the ■expressions of the bill suggests that there is any need of an accounting as between the complainants and any or all of the ■defendants. No discovery is sought by the bill of complaint. No facts are stated which indicate the existence of any trust which is sought to be enforced, nor is any fraud alleged against which relief is asked, nor is any other element of equity juris•diction presented by the complainants’ bill of complaint. All that is alleged is that certain named defendants are indebted in certain definitely ascertained sums of money to the complainants, which they seek to recover severally in full from the respective defendants by this suit.
As the complainants state their case, there is no ground of equitable jurisdiction exhibited. The facts set forth in the bill of complaint, if taken to be true, as asserted by the complainants, do show that thej1, have a direct, certain and adequate remedy by suit at law to recover each sum of money which they claim against the several defendants respectively. There is therefore no occasion for an ajopeal to equity jurisdiction. In such cases a demurrer to the bill of complaint will be sustained. JStory Eq. PI. § J¡.7S.
The bill of complaint is also challenged by the demurrants upon the ground that it is multifarious. The face of the bill •alleges that the defendants, in seven different groups, owe seven distinct sums of money, constituting seven separate causes of action, which, as between the separate groups of the defendants (so far as the bill of complaint states the situation), are wholly unrelated.
*404The Colorado statute which is alleged to- have created the liabilities sought to be enforced in- this suit is recited on tire face of the bill of complaint to make the shareholders individually re-I sponsible in double the amount of the par value of the stock I owned by them respectively.
' This is obviously a several liability of each shareholder to the creditors of the bank. It was so held in Auer v. Lombard, 72 Fed. Rep. 209. The complainants themselves insist that it is several.
It has been declared by the Colorado courts interpreting this statute, in the case of Zang v. Wyanl, 25 Col. 551, that a suit in equity for the common benefit of all the creditors affords the most effectual and convenient proceeding to enforce the provision under examination. This very general statement of the occasion for a suit in equity may define correct equity practice in a state in which the distinction between law and equity tribunals is not maintained, but the course of the procedure there suggested cannot be recognized as authority here without bringing our practice into inextricable confusion. Suits in equity in this state are maintained, not because they are effectual or convenient remedies to complainants, but because the relations of the complainants to the defendants are such that they have, as against them, equitable grounds for relief. In the Colorado case cited it does not appear whether all the shareholders or only some of them were made defendants, nor whether the amount of the bank’s unpaid debt exceeded the whole sum for which the shareholders were liable, or only a part thereof requiring an accounting and decree for proportionate pajunents.
In the ease presently before me the bill of complaint contains no allegations of facts which justify the joining in one suit these several and respective claims against many different persons. No concert of action by the defendants is alleged. No obligation common to all defendants is set forth, nor is there any tie suggested by which the claims of the complainants against all these defendants should be joined, except that it will prevent a multiplicity of suits. But that would be true if the complainants should join in one suit all the unrelated claims *405they might have against any number of defendants. The complainants say each defendant separately owes the whole sum which he is asked to pay, but they state no reason for joining in one suit these seven several and distinct and apparently (so far as the bill shows) unrelated claims.
This feature of the bill of complaint justifies the defendants’ contention that it is multifarious. It subjects the defendants, who the complainants show are entitled to defend separately, to the embarrassments of a suit in which others are joined who apparently have no common interest.
It also appears on the face of this bill of complaint that no equitable decree can be made in this suit against the defendants.
It must be noted that the complainants do not ask, nor does their bill contemplate, a collection in this suit from each defendant of that proportion of the bank’s debt (not exceeding his whole liability) which he ought to pay. Such a procedure would require not only an accounting, but also the presence, as parties in the suit, of all the shareholders who are liable for proportionate shares of the bank’s debt. What the complainants here demand is that each defendant shall pay the uttermost sum for which he may be liable, although the total of the ^payments which may thus be demanded from all the shareholders will far exceed the bank’s debt. This seeks to force upon each defendant an obligation beyond what any equitable construction of his statutory liability requires. " -
The Colorado statute declares that the shareholder shall be individually responsible for the debts of the bank in double the amount of the par value of the stock which he owns. The obvious meaning is that whatever of the bank’s debts its assets (when applied) shall fail to pay, the shareholders shall make good to the creditors, each shareholder being responsible individually, and not jointly, for his proportionate share of the bank’s unpaid debts to an extent not exceeding double the amount of the par value of the stock which he may own. It is an obligation severally owed by each shareholder to all of the creditors.
In the present suit the complainants allege that the total of *406the hank’s unpaid debts is $56,469.03; that the par value of ■each share issued by the bank is $100, with an issue "amounting in the total to $80,000; that of the eight hundred shares issued, the defendants in this suit hold one hundred and fifty, which are of the total par value of $15,000. The present suit seeks several and respective decrees against the defendants (wlm hold only three-sixteenths of the shares) to the amount in all of $30,000. Like suits against the other shareholders will make them pay $130,000. By such a construction of the statutory liability and procedures to enforce it, the creditors will collect $160,000 to pay the bank’s indebtedness, which it is admitted on the face of the bill is little more than one-third of that amount.
There has been some discussion in the cases cited of the question whether this statutory liability is the imposition of a penalty or the creation of a statutory contractual obligation, imposed by the state in granting the franchise, which the shareholder has accepted by taking his shares. The tendency of 'the courts is to adopt the latter view.
It is a familiar principle that courts of equity will not enforce penalties. The complainants in this suit do not present their case as one seeking to enforce penalties, yet their bill of complaint as framed—by insisting upon the several liability of each defendant to pay as an absolute sum double the par value of his shares, the total of which is far in excess of the bank’s unpaid debts, and omitting to bring in as defendants all the shareholders, and to invite an accounting and the ascertainment of the proportionate sums which each should respectively pay to satisfy the bank’s unpaid debts—in effect seeks to enforce against each defendant the payment of a fixed sum wholly unrelated and out of all proportion to the amount needed to pay the bank’s debts. In short, to enforce a penalty. This defect of the bill of complaint is apparent upon its face, and affects this court’s ability to make any decree in this cause which will be just and equitable.
For the reasons above stated, the demurrers to the bill of complaint must be sustained, with costs.