Court Opinion

ID: 9825926
Source: CourtListenerOpinion
Date Created: 2023-09-01 14:21:11.13387+00
Date Added: 2024-06-11T07:41:29.773063
License: Public Domain

Mehafey, J., (on rehearing). The facts are stated in the original opinion, which was handed down February 20, 1928. A majority of the court has reached the conclusion that a rehearing should be granted and that the decree of the chancellor should be affirmed. The appellant, Mr. Thane, was president of the Farmers’ & Merchants’ Bank of Dama®, and the Bank Commissioner, after an appraisal of the assets, determined that the hank had losses considerably in excess of their surplus and undivided profits account and a large number of slow and doubtful papers. And on the 6th day of March the directors of the bank stated to the Bank Commissioner that they were unable or unwilling to finance the bank. Mr. Thane, the appellant, owned a large amount of stock, $17,000. A number of directors and other witnesses stated that, if Mr. Thane’would turn over his stock to them, they would pay par for it and place the proceeds of the sale of the stock in the bank to the profit and loss account. Or, if Mr. Thane did not wish to do this, that they would turn over their stock to him if he would finance the bank. They were endeavoring to make some arrangements to finance the bank because, as they stated, they did not want another bank failure in Dumas. And if Mr. Thane would turn over his stock to them they would finance the bank, or, if he would finance- it, they would turn over their stock to him. It is true, as stated in the original opinion, that the appellant was not indebted to the bank, but, if the bank were insolvent and some arrangements were not made, according to the testimony of some of the witnesses, the condition of the bank was such that it would not pay more than 25 per cent, of its debts, and the stockholders would not only have nothing of value in their stock, but would be called upon to pay an assessment of 100 per cent. No one, of course, regarded the stock as having value. Mr. Thane himself testified that he attended a meeting of the board of directors, and learned the condition of the bank from the statement submitted by Mr. Byrne, and stated that the directors could get whatever money they wanted on a joint note of all the directors, which he proposed to sign with them. This proposition was submitted to each of them individually and personally, and all of them declined to sign the note with him. They then said if appellant would give them his stock they could get all the money they needed, and he declined to do this. He further testified with reference to the board of directors: “They wanted me to give them my stock. They said if I would give them my stock they could raise the money that they needed — that the 'bank would need — ■ and I declined to give them my stock. ’ ’ Mr. Thane testified'that he afterwards had -a meeting at Little Rock, first with Mr. McKee, and he told Mr. McKee he would not give up his stock. He said that the directors were demanding either money or his stock, and Mr. McKee-told him, ,so he testified, that he was satisfied the directors meant what they said; that, if Mr. Thane would not find them some money or give them his stock, they would close the bank, and Mr. McKee was very anxious to avoid anything like that. Also Mr. McKee told appellant that he was satisfied that there was a feeling at Dumas among the directors that appellant should disconnect, himself or sever himself from the bank. Appellant then testified as follows: “.So, after discussing — talking the matter over in a general way, I concluded that I would let them have the stock, because, if I found the money, which I think I could have done, the only — the question at once occurred to me, if I help them out with money this time, when will the next demand — when will a similar demand be made upon me? So I made up my mind to let them have the stock and sever .my connection with the bank.” After the conference between Mr. McKee and appellant, according to appellant’s testimony, they went out and met the other parties, and Mr. McKee told them that he had got the stock, and some one insisted that it be reduced to writing, and the. following is a copy of the writing. “Little Rook, Ark., 2/15/1922. “I hereby turn over to Chas, McKee, Bank Commissioner, 660 .shares of stock of the Merchants’ & Farmers’ Bank of Dumas, to be delivered to new and old stockholders, on the payment by them of the par value of said stock into the Merchants’ & Farmers’ Bank of I)umas- “H. Thane.” It is true, as stated in the original opinion, that appellant stated he never had any intention of making a gift or donation of his stock or its proceeds, either to the bank or to the directors, but the undisputed proof is, ■when they held their meeting at Dermott, that they demanded his stock, and Mr. McKee told him the directors meant what they said, and, unless he gave them his stock, the bank Avould close. Of course he knew that if it did his stock was not only worthless, but he would probably have to pay an assessment on his stock. The directors were demanding this, or that they would turn over their stock, give it to Mr. Thane, if he would finance it. There had never been any offer or suggestion that, whether Mr. Thane gave up his stock or the directors gave up theirs, there would be any amount paid. Mr. Thane says that one of the directors told him at one time that, if he would give his stock, they might be able some time thereafter to work it Out and pay him 50 per cent. But, at the meeting of the board of directors and at all other times, it was understood by all that the directors were proposing to give their stock, not sell it, but give it to Mr. Thane if he would finance the bank, or, if he did not do that but would give his stock to them, not to the bank, they would finance it. This stock, after being turned over to Mr. McKee, was sold, most of it to persons who were not stockholders at the time, and they paid par for it, and this money was put into the bank to the profit and loss account. The undisputed proof shows that, unless one or the other of these methods had been adopted, the bank would have failed, and the delivery of his stock with the understanding that he was to get par for it would have left the bank in as bad condition as it was. The stock would have been a liability. And certainly no one could believe from the testimony in this case that the stock was worth par at that time. In fact, according to the testimony, it was worthless unless the bank received assistance immediately, or, as Mr. McKee told Mr. Thane, unless he either took the directors ’ stock and financed the bank or turned Ms stock over to them and 'let them finance it, the bank would have to close, and if it closed it would have been able to pay 'but 25 per cent, on its debts, and every stockholder would have been assessed 100 per cent, on the stock he owned. These persons that purchased approximately $14,000 or $15,000 of the stock turned-over to the Bank Commis-si oner paid par for it. They purchased it with the understanding that $17,000 went into the bank as a part of its assets, to the profit and loss account. If they take that out, these persons who paid par for stock that was worthless if the bank failed would now lose all they paid after putting up the money, and Mr. Thane would get par for his stock. Certainly no one understood that Mr. Thane was to get any pay for his stock except Mr. Thane, and, even if he understood it, he would, as the chancellor held, be estopped. When we consider the testimony of Mr. Thane when he said, “They wanted me to give them my stock. They said if I would give them my stock they could raise the money that they needed, that the bank would need, and I declined to give them my stock,” it appears that, at the first meeting, the directors wanted Mr. Thane to give the bank his stock. Nothing was said about paying for it; and then when he came to Little Rock and had a private conversation with Mr. McKee, the Bank Commissioner, and Mr. McKee and Mr. Thane came out together, where the other directors and other persons interested were, and Mr. McKee stated to them that he had got Mr. Thane’s stock, and it must be remembered that this was after he had told Mr. Thane that the directors meant what they said — he would either have to give his stock or take the other directors ’ stock and finance the bank or it would be closed — we are forced to the conclusion that the directors and other persons who purchased the stock understood that there was to be no payment for the stock, but it was to g’O into the bank to the profit and loss account, and the persons who purchased it did it with that understanding. So, whether- Mr. Thane intended it or not, we think he is estopped, as held by the Chancellor, and cannot now claim pay for his stock, the proceeds of which went into the bank. The decision of the chancellor should be upheld, unless it is against the preponderance of the evidence. We think the decree is supported by the preponderance of the evidence, and the petition for rehearing* is granted and the decree of the chancellor is affirmed. Hart, C.J., and Kirby, J., dissent.