Court Opinion

ID: 7970217
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:54:27.532392+00
Date Added: 2024-06-11T16:34:45.221120
License: Public Domain

CANTY, J.
Sumner W. Matteson died intestate July 22, 1895, and at the time of his death he was the owner of ten shares of the capital stock of the First National Bank of Decorah, Iowa. He was a resident of this state, and letters of administration on his estate were issued by the probate court August 5. Thereafter on September 3, *5221895, the time to file claims was limited to six months from that date. The time expired, and thereafter on April 27, 1896, the probate court made its final decree distributing all of the estate, including these ten shares of stock, to the widow and children of the deceased, who are the defendants herein, — an undivided one-third to the widow, and- an undivided one-ninth to each of the six children, — and the estate so distributed was of the value of $100,000. Thereafter on November 10, 1896, the bank became insolvent, and was closed by the comptroller of the currency. On November 24 the plaintiff was appointed receiver by the comptroller, who thereafter on January 11, 1897, made an assessment and requisition on each of the stockholders of the bank who was such November 10, 1896, to pay, on or before February 11, 1897, the face value of his stock, and authorized and directed the receiver to collect and receive the amounts due on such assessment. The face value of each share of the stock is $100, and the ten shares so held by the deceased at the time of his death have always been registered in his name on the books of the bank and have never been transferred on those books to these defendants. This action is brought to- recover one-third of the amount of the assessment on these ten shares from the widow and one-ninth of said amount from each of the other defendants. To the complaint, which alleges all of the foregoing facts, the defendants demurred on the ground that it does not state a cause of action, and appeal from an order overruling the demurrer.
It will be observed that the bank did not fail until nearly sixteen months after the death of the deceased, eight months after the time to file claims against his estate had expired and six months after the estate was distributed. The claim here in question was a contingent claim, which did not become absolute until after the time to file claims had expired, and the estate was distributed to the widow, heirs, and next of kin. Under these circumstances the plaintiff may maintain an action under G-. S. 1894, c. 77, against the distributees, to recover of them the amount of the liability, not exceeding the amount of the distributive share received by each. Hantzch v. Massolt, 61 Minn. 361, 63 N. W. 1069; Lake Phelan v. Lindeke, 66 Minn. 209, 68 N. W. 174.
*523Appellant contends that the comptroller’s assessment must he against those who were shareholders at the time the bank failed; that the deceased was not then a shareholder, because he had been dead sixteen months; that the administrator was not a shareholder, because the estate had been distributed and the administrator discharged; that the suit is not against these defendants as shareholders, but as distributees under chapter 77; and that, even if the suit was against them as shareholders, it could not be maintained, because it does not appear that at the time of the failure of the bank they still owned the stock. If the law is as appellant contends, it is very easy to evade all liability after the stockholder’s death by simply administering the rest of his estate, distributing all the assets arising from the same, discharging the executor or administrator and neglecting to make any disposition whatever of the stock. In the meantime the estate may have received dividends on the stock; so that, according to counsel’s theory, it may receive all the benefits and escape all the burdens connected with the stock.
We cannot hold that such is the law. Section 5151, R. S. (U. S.) provides:
“The shareholders of every national banking association shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts and engagements of such association, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares.”
Section 5152 provides:
“Persons holding stock as executors, administrators, guardians or trustees shall not be personally subject to any liabilities as stockholders; but the estates and funds in their hands shall be liable in like manner and to the same extent as the testator, intestate, ward or person interested in such trust-funds would be, if living and competent to act and hold the stock in his own name.”
In Parker v. Robinson, 18 C. C. A. 36, 71 Fed. 256, it was held that judgment may be taken on the comptroller’s assessment against the executor who had inventoried the stock in the probate court; that by virtue of said section 5151 such an executor becomes the stockholder, but that by virtue of section 5152 the judgment can only be enforced against the assets of the estate in his hands. It seems to *524us that section 5152 is merely declaratory of what the courts would have held without the aid of that section, except that in the federal courts it may in some cases have an effect in determining whether an action at law or a bill in equity should be brought against the executor. See Witters v. Sowles, 32 Fed. 130. But that question of practice will not arise under our procedure. Then we cannot hold that the liability of the administrator and the distributees in such a case as the one at bar would be any different if section 5152 had never existed. Of course, the result must be worked out in the state courts by a procedure differing materially from that in use in the federal courts.
We are clearly of the opinion that, as a general rule, the statutory or constitutional double liability of a stockholder survives his death, whether the corporate indebtedness was incurred before or after his death, and whether the corporation becomes insolvent before or after his death. One of the very objects of organizing corporations is to prevent the death of any of its members from interfering with the business or affairs of the concern. The stockholder’s contract does not contemplate a hiatus in liability resulting from his death. Whether he is living or dead, there may be no assets out of which the liability can be satisfied. But the liability contracted for by the stockholder does not terminate with his death. His is a continuing contract. He contracts for a liability which is to continue, at least, until his stock is transferred to another on the books of the company, or until such a transfer is rightfully demanded.
We are also of the opinion that section 5152 has not changed these rules as applied to the stockholders of national banks. So far as what is here said is inconsistent with certain dicta in Witters v. Sowles, supra, we are not disposed to follow that case, and do not believe that the federal court or courts of last resort will do so.
The order appealed from is therefore affirmed.