Court Opinion

ID: 6905611
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:59:53.106985+00
Date Added: 2024-06-11T16:06:20.158895
License: Public Domain

*178Denied February 27, 1917.
On Petition for Rehearing.
(163 Pac. 416.)
Petition for rehearing denied.
Mr. Martin L. Pipes, Mr. Samuel B. Huston, Mr. J. P. Winter, Mr. John M. Pipes, Mr. George A. Pipes, and Mr. Oliver B. Huston, for appellants.
Mr. Cicero M. Idleman and Mr. Isaac H. Van Winkle, for respondent Sargent.
Messrs. Joseph & Haney, for defendants Julius H. Alexander and John E. Davis.
No appearance for defendant E. C. Knoernschild.
Department 1.
Mr. Justice Burnett
delivered the opinion of the court.
The plaintiff has filed a petition for rehearing of this cause, the leading feature of which is an endeavor to make the decision of Sargent v. American Bank & Trust Co., 80 Or. 16 (154 Pac. 759, 156 Pac. 431), of controlling influence for his contention here. That case is also known as the Ralston case, as he was the principal defendant, and will be so designated for convenience in discussion. The two cases may be thus distinguished: The defendants here signed the subscription paper set out in the complaint as original direct subscribers to the capital stock of the bank. All this occurred before the concern began business as a bank, for it is recited in the same pleading that the corporation was formed March 15, 1906; that the subscription paper was signed November 12, 1906; and *179that the institution was engaged in business from January 1, 1907, until December 18, 1911, at which last named date the plaintiff took control. On the other hand, after the bank was a going concern it made a contract with Ralston on May 2, 1908, whereby it bartered to him and he traded for some shares of its stock which were then its property or which at least it had in some manner acquired from its stockholders. The latter transaction is substantially the same as if the bank had been the owner of a carload of pig iron or a block of municipal bonds which it had sold to Ralston and he had given but not paid his note therefor. The bank examiner in charge of the concern could sue on the note the same as if given for borrowed money. In fact to all intents and purposes he sued to recover from Ralston the contract price of the stock he bought but did not pay for.
The par value of the stock was $100 a share. If Ralston had agreed to pay the bank $150 a share the plaintiff could have recovered that amount. Likewise, if the purchase price had been fixed at $75 a share, that would have been the limit of the plaintiff’s recovery. The principle is not changed by the fact that the contract price was fixed at the par value. It is true that the allegation in Ralston’s case was that he “subscribed” for the stock, but the evidence was to the effect and the court expressly found that he purchased it and hence in a proceeding to recover the contract price whether at, above or below par, the balance due thereon is all that the plaintiff can recover.
7. In Ralston’s case we note, indeed, it is averred that the suit was instituted ‘ ‘ on behalf of all the creditors” of the bank. That, however, adds nothing to the matter. It would be for the benefit of creditors just the same if the superintendent of banks had sued *180Jones on Ms note given to the bank for borrowed* money. In short, Ralston’s liability involved in that case was for a debt to the corporation contracted with it after it became a going concern. Waterbury’s liability here is upon his promise to contribute directly to the capital stock. The former is absolute for the amount he agreed to pay. The latter is provisional, measured by what may be reqMred to make up the deficiency of other assets for payment of debts.
8. As clearly pointed out by Mr. Justice Benson, it is a rule that in a proceeding to wind up a corporation, subscriptions to the capital stock must be enforced pro rata and only so far as may be necessary to liquidate the indebtedness after an account has been taken and the balance is settled. In liquidation the plaintiff bank examiner may realize in full for a debt owing by any individual to the bank; while upon subscriptions to the capital stock he may recover only from all delinquents pro rata and no more than enough to piece out the other assets of the institution to pay its debts. If Ralston “bought” stock from the bank as distinguished from “subscribing” originally for it, he must pay the price. He might have purchased fully paid-up stock or some upon which there was an unpaid balance or subscription. In the latter instance, no matter what price he paid, he took it cum onere and he would have to respond pro rata like any other stockholder in a liquidation suit if he was yet holding it at the commencement of that litigation. It is easy to conceive a case where an individual purchasing on credit from a corporation* and still holding a block of its partly paid-up stock would be a proper party defendant to an action against him alone by the liquidation officer to recover the full purchase price as well as a defendant in a suit against all stockholders to recover *181from them proportionately enough to discharge the corporate debts and wind up the concern, but no more.
9. Much stress is laid in the petition for rehearing on the presumption “that a thing once proved to exist continues as long as is usual with- things of that nature”: L. O. L., § 799, subd. 33. The plaintiff’s argument is that it having been alleged that the defendants were stockholders once upon a time, that is, when the stock was -issued to them, it follows that they are stockholders even to the beginning of the suit in the absence of any contrary showing. This would be true if it were inherent in a share of stock, as a law of its nature, that once private ownership attached thereto, that relation would continue for any definite time, as do the four seasons, the period of gestation and the like. Duration, however, is not an invariable attribute of ownership in shares of stock.
10. Moreover, the presumption named is a rule of evidence and not of pleading. In a proper case it may be used as a means of proving a well-stated allegation, but it cannot usurp the place of averment. Templeton v. Bockler, 73 Or. 494 (144 Pac. 405), cited by. plaintiff on this point, was a case where a chattel mortgagor sued his mortgagee for an accounting of the proceeds of the sales of the personalty involved and charged, among other things, that the latter had converted a portion to his own use. Present ownership of the property was not directly involved. The presumption was used in the opinion solely as a rule of evidence and not of pleading. Again in Casto v. Murray, 47 Or. 57 (81 Pac. 883), the substance of the complaint was that the defendant, being at the time the owner of a stallion, contracted with the plaintiff on August 26, 1903, that the latter was to keep the horse until August 15, 1904, and that on January 26, 1904, *182prior to the expiration of the stipulated period the defendant wrongfully took the animai from plaintiff’s possession in Marion County and still wrongfully detained him there. All the court held in that case was in substance that enough was alleged to show that the plaintiff’s possessory right to the property had been violated. That precedent might be applicable here if in the present instance it appeared that when the defendants took the stock for which they subscribed they covenanted to keep it until the corporation should be dissolved or until a date subsequent to the commencement of this suit; but there is no such pretension.
11-13. It is against those who hold stock at the time that the plaintiff is entitled to proceed under Section 4586, L. O. L., as amended by Chapter 171, Laws of 1911, p. 244, empowering bim “if necessary to pay the debts of such bank to enforce the individual liability, if any, of the stockholders.” The fund thus to be acquired is in the nature of a reserve to be called in and applied when the other assets of the bank are exhausted and a balance of indebtedness remains unpaid. In such a case all the stockholders should be made parties and the court should ascertain and decree the proportional amount each one should pay toward liquidation of the balance of the bank’s liabilities already ascertained. It is in this sense that we must read and understand the language of the former opinion about levying’ an assessment. All that is stated in the complaint might have happened as there averred and still the defendants legitimately might not be stockholders when the bank went into liquidation under the supeiintendent of banks.
14. It matters not for the purposes of this case that the law requires one half the capital to be paid in be*183fore a bank begins business and tbe remainder within six months thereafter. This, indeed, constitutes an assessment by operation of law, but none the less, while unpaid, the liability thereon is a chose in action from which is to be derived the reserve fund already mentioned applicable only to make up a deficiency after the exhaustion of other assets. This is a suit calling for contributions to the reserve fund of the moribund corporation. The Ralston case was in reality a proceeding to recover a debt due the bank. The recovery in the Ralston case will do much to lessen the wholly different liability which the plaintiff would enforce in this suit. This, however, must be brought against those who hold stock upon which there is an unpaid balance of the par value subscribed.
The petition for rehearing is denied.
Dismissed. Rehearing Denied.
Mr. Justice Moore, Mr. Justice Benson and-Mr. Justice Harris concur.