Court Opinion

ID: 6961573
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:46:28.923474+00
Date Added: 2024-06-11T16:08:27.554135
License: Public Domain

Mr. Justice Sheldon delivered the opinion of the Court: The bank, here, by its charter, was empowered to transact ordinary commercial and other business, as well as to receive saving deposits and trust funds. As regards its commercial and other like business, no stock liability was created to guard against losses and deficiencies. The liability is confined to losses and deficiencies “as to the trust funds and saving funds deposited.” This court has frequently held that an action at law by a single creditor will lie against any stockholder of an insolvent corporation, to enforce an individual liability created by its charter. Culver v. Third National Bank, 64 Ill. 528; Corwith v. Culver, 69 id. 502; Tibballs v. Libby, 87 id. 142; Fuller v. Ledden, 87 id. 310; Arenz v. Weir, 89 id. 25; McCarthy v. Lavasche, 89 id. 270. But the court never has held that there might not be-resort to a court of equity to enforce the liability, or that one creditor might not, at the instance of the whole body of the other creditors, be restrained from the prosecution of his individual suit, where its prosecution would be to the prejudice of the equal interest of all the creditors. Wincock v. Turpin, 96 Ill. 135, is the only case in this court where there has been a contest like the present, between the receiver and creditors suing as a whole, in equity, for the common benefit of all, upon the one hand, and upon the other a single creditor suing for himself. And although in that case the depositor was left free to prosecute his individual suit at law, it was under the circumstances and with the implication appearing, in the following language there used by the court: “It may be a state of facts might exist which would authorize a court of equity to bring before it all the stockholders and depositors, and determine their rights and adjust equities, marshal the fund, and distribute it pro rata; but no such case is made by this bill, and until such a case shall be made we must leave the depositors to pursue their remedies under the law.” We think the state of facts thus suggested as authorizing the interposition of a court of equity is here presented. The liability under section 9 is created for all losses and deficiencies as to the trust funds and saving funds deposited, that is, as to the depositors of trust funds and saving funds. The liability constitutes a fund for the benefit of. all of these two classes of creditors, and they are entitled to share in it in proportion to the amount of their debts. The debts here largely exceed the assets and this liability combined, so that the fund will be insufficient to discharge all of the claims upon it. If individuals of these two classes of savings and trust depositors be allowed to prosecute their separate suits, they may recover payment of their demands in full, while others of the classes having claims equally equitable, may be enabled to obtain no payment whatever, or but a partial one. Hence the propriety, in the case of such a deficiency in a common fund for the common benefit of creditors, of a proceeding in equity b/ one or more in behalf of all the creditors, in order that the equitable princijile that equality is equity, may be applied,—that single creditors, by individual suits, may be prevented from an appropriation to themselves of the entire or unequal benefit of the security, to the exclusion of others equally entitled, and that there may be a collection, and pro rata distribution of the whole fund among all the creditors. The cases are numerous which recognize a liability of such a character as that created by section 9, as a common fund for the benefit of all the creditors who are entitled to share in it, and that the securing of a ratable distribution of it-among all such creditors is a proper ground for the jurisdiction of a court of equity. See Merchants’ Bank v. Stevenson, 5 Allen, 401; Crease v. Babcock, 10 Metc. 532; Briggs v. Penniman, 8 Cow. 387; Hornor v. Henning, 93 U. S. 228; Low v. Buchanan, 94 Ill. 81; Harper v. Union Manufactwing Co. 100 id. 225. The avoiding of a multiplicity of suits is a further ground of equitable jurisdiction. As before intimated, former. decisions in similar eases, that the creditor may sue the stockholder at law on such a liability, are not to be taken as in denial of the right to seek relief in a court of equity when there are equitable grounds therefor. The remedy at law is not adequate in such a case as this. As recognized by some courts, the creditors, in the case of such a personal statute liability of stockholders, have a concurrent remedy by a suit at law, or by a bill in equity for the enforcement of the liability. Bank of Poughkeepsie v. Ibbotson, 24 Wend. 473; Van Hook v. Whitlock, 3 Paige, 409; Norris v. Johnson, 34 Md. 485; Perry v. Turner, 55 Mo. 418; Dozier v. Thornton, 19 Ga. 325. The authorities sufficiently show that the right to sue at law does not necessarily exclude the jurisdiction of a court of equity. As to the question which has been discussed, whether this liability is an asset of the corporation, and the receiver has the right to sue for its enforcement, we do not stop to consider it, as we do not deem it material. The petition of the receiver is with the concurrence of the complainants, and is cooperative with their bill to the same end of obtaining the relief of a pro rata distribution of the fund among all these creditors, and is but a part of their proceeding, and hence we do not regard it as of any practical importance that such petition should be passed upon separately. The question is, whether upon the face of the whole proceeding there appears an equitable right to the relief demanded. We think there does, and 'that the circuit court erred in sustaining the demurrer. The order of affirmance of the Appellate Court will be reversed, and the cause remanded for further proceedings consistent with this opinion. Decree reversed. Mr. Justice Walker : I concur in the conclusion reached in this case, on the ground that it is properly distinguished from Wincock v. Turpin, supra.