Court Opinion

ID: 6236395
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:33:31.367896+00
Date Added: 2024-06-11T08:58:03.819557
License: Public Domain

Mr. Justice Gordon
delivered the opinion of the court, January 26th 1880.
When Keim & Miller purchased the claims in controversy, they were neither agents nor trustees of the bank, neither did they occupy the position of sureties or partners, hence the authorities quoted by the counsel for the appellant do not apply to the case. They had, indeed, been officers of the bank, but their powers and duties as such ceased when the assignment was made: In fact, the
corporate powers of the bank itself then ceased, saving and excepting such of those powers as might be necessary to give effect to the provisions of the 27th section of the Act of the 16th of April 1850. There is, therefore, no doubt about the right of the appellees to buy up outstanding claims against the corporation if, in so doing, they acted fairly and with an honest intent.
The case of Hill v. Frazier, 10 Harris 320, was very different from the case in hand. Not only when the claims were bought, but also at the time of the bringing of the suit and at its trial, Eldred, the equitable plaintiff, was the treasurer of the company, and it was we'll said that, as he was the confidential agent and trustee of the company, he could not create other relations which would put him in an attitude of hostility to his principal or cestui que trust. But had that relation been dissolved, either by operation of law or the act of the parties before the purchase of the claim, this rule would not have applied, since the reason for it would rhen have had no existence. Just so in the case in hand; by the act of the bank and the operation of law, the trust relation of the appellees had ceased to exist when the claims in controversy were purchased, and their relation to the corporation was that of stockholders and nothing else. Such being the case, they were as free to buy up outstanding claims against the corporation as any outside parties.
Then as to the other question: it is urged that the appellees should have been postponed to other creditors, because they are made liable by the act of incorporation for an amount equal to *400their stock subscriptions; that in consequence, they occupy the position of sureties, and, therefore, they ought not to have been permitted to participate in a fund which was not sufficient to meet in full the claims against the bank. If, indeed, the assumption of their suretyship were correct, this would be true. But they are not sureties ; their liability is special and sub modo only. It is limited to an amount equal to their subscriptions, and it accrues only when the assets of the bank have been exhausted, neither can it be enforced except by a judicial decree first had and obtained : Means’s Appeal, 4 Norris 75. The effort here, however, is to compel contribution from the appellees before such decree, and hence, before there is any legal liability. This cannot be done.
Certain it is, these men can be compelled to pay no mpre than a ratable share of the debts of the bank proportioned to the amount of their stock; but in this case that share has not yet been ascertained. It may be more or less than the amount of their claims, or it may be nothing at all, depending upon the amount and final disposition of the property of the bank.
It is asked: how is this contributory share to be ascertained, apportioned or enforced? We answer either by process analogous to that prescribed for the benefit of note-holders in the 32d and 33d sections of the Banking Act of 1850, or by a bill in equity; but however this may be, one thing is certain, that is, that an auditor has no such power. It is not his business to estimate the value of the property of the bank and apportion the deficit among stockholders; that power is by law committed to the assignee. If, however, the claims of these appellees may be pushed aside by other creditors, it is, in effect, imposing upon them an advance contribution which may far exceed that which the statute would compel them to pay. This, however, would be neither lawful nor just, and the court below did right in refusing its sanction to an attempt of this kind.
The decree is affirmed; the appeal is dismissed, costs to be paid by appellant.