Court Opinion

ID: 6951221
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:32:04.334163+00
Date Added: 2024-06-11T16:08:05.155400
License: Public Domain

Mr. Justice Breese delivered the opinion of the Court: The plaintiffs in error contend that the general banking law of 1851 cannot be altered except by a vote of the people, and by section 38 of that law the assets of the bank must first be exhausted before a stockholder can be made liable. We do not think, when this subject is considered, that this grave constitutional question can properly arise. What does th’e constitution provide, and what are the provisions of the act in question ? Section five of article ten of the constitution of this State contains the following provision: “ Uo act of the general assembly authorizing corporations or associations with banking powers, shall go into effect, or in any manner be in force, unless the same shall be submitted to the people at the general election next succeeding the passage of the same, and be approved by a majority of all the votes cast at such election for or against such law.” Scates’ Comp. 71. The fourth section provides that “ the stockholders in every corporation or joint stock association for banking purposes, issuing bank notes or any kind of paper credits to circulate as money, shall be individually responsible, to the amount of their respective share or shares of stock in such corporation or association, for all its debts and liabilities of every kind.” Ibid.. On the 15th of February, 1851, the general assembly enacted what is known as “ the general banking law,” which, on being submitted to the popular vote in the mode and at the time prescribed, received a majority of all the votes cast at the election, and thenceforth the law took effect and was in force. By section 38 of this act, it is provided, after reciting the 4th section of article 10 of the constitution, as above, “ when the property, rights, credits, assets and effects of any' corporation or association, put into liquidation under the provisions of this act, shall have been exhausted in the redemption of the notes and payment of liabilities, and there shall remain unpaid any indebtedness or liability of any kind, any person having a right or cause of action upon or on account of such remaining indebtedness or liability, shall have remedy in any court of record having jurisdiction, against the stockholders, for the amount due upon such indebtedness or liability, and to enforce this remedy may institute actions, or suits in equity, &c. Scates’ Comp. 119. On the 14th of February, 1861, the general assembly passed an act entitled “An act to amend the general banking law in such manner as to afford greater security to the public.” By the 1st section of article 4, of this act, it is provided that “ in all suits at law or in equity against banking incorporations, a service upon any stockholder, shall be deemed good service upon the corporation, where officers of the bank cannot be found, and such fact shall appear by the sheriff’s return upon the summons. In every such suit against the bank, and in any suit against one or moré of the stockholders, a summons may be served upon any stockholder not a defendant, who shall be entered as a defendant from the date of such summons; and the judgment or decree rendered in such suit shall be a lien &c. upon the real estate of said bank and every stockholder so served with summons, from the day of rendition and execution issued thereon shall be a lien on the personalty, &c. The entry of judgment shall contain the names of all stockholders served. The property, both real and personal, rights, credits and effects, legal and equitable, of such bank, shall be liable first to be seized and sold, or applied in payment of judgments against stockholders, on their liability under the constitution; and the property of stockholders shall not be taken or applied until the assets of the bank are first exhausted. Sess. Laws 1861, pp. 49, 50. It is further provided, by section 4 of the same article, that “ Whenever any judgment shall be rendered against any such bank or association, it shall be lawful, without waiting for execution against such bank or corporation, to sue out a garnishee process against the stockholders thereof, to show cause why judgment should not be rendered against them; and upon the service of such process, the court shall direct issue or issues to be made in the case; and such proceedings may be had thereon as are authorized in section 38 of the act to establish a general system of banking, approved February 15, 1851. Judgment may be rendered against any one or more stockholders who may be served with process. Id. 50, 51. The constitution, by the fourth section of article ten, which we have quoted, declares the general principle that stockholders in banking associations shall be individually liable for the debts of the corporation to the amount of their stock. The law adopted by the people, by the thirty-eighth section, provided the means by which this liability could be enforced. It gave to a creditor a remedy against a stockholder on the exhaustion of the assets of the bank. Experience proved that this remedy, so provided, was not adequate to the security of the public; hence the act of 1861, with its peculiar title. This act does nothing more than to provide a more speedy remedy to a bank creditor, by which the liability of stockholders can be sooner reached than by the general law. He can proceed against them to judgment, without waiting for an execution against the bank. That the remedy in all cases for the redress of grievances of every nature, is entirely within the control of the legislature, cannot .now be questioned. It has been too often so held, to be longer an open question. Williams v. Waldo et al., 3 Scam. 264; Reapers' Bank v. Willard, 24 Ill. 437; Wood v. Child, 20 id. 211; Bronson v. Kinzie et al., 1 How. 311. This case, so far as the doctrine of remedy is concerned, is in harmony with the case in Scammon. The point of difference is, that this court did not hold that the contract was impaired by a change of the remedy. In this case we cannot perceive in what manner any right growing out of contracts a stockholder in one of these corporations may be supposed to possess, which have been encroached upon or taken away from him by this law. It simply provides, when a judgment is obtained against a bank, a stockholder may be made a party to it before execution issues against the bank; but it does not declare or provide that execution shall issue against them before the property of the bank is exhausted. That is fully provided for by the first section of article six, which we have quoted. The liability of the stockholder is in no manner or degree increased; the only change made by the act of 1861, being that which allows them to be made parties to a judgment against the bank before an execution shall have issued against the bank. But that the legislature has the power to amend the general banking law, is settled by the case of The Bank of the Republic v. The County of Hamilton, 21 Ill. 53. The amendment, then, was of a most important character, affecting, in a very serious degree, the interests of the corporation. We then held, that, like natural persons, in the exercise of their rights of organization and existence, they are subject to the control of the legislature by general laws, and that those rights which are not designed to be secured to it as property, are subject to legislative control in the same manner as the general rights of an individual. Every individual in the State is subject to such changes in the remedy provided for a redress of grievances as the legislature may prescribe, and they will be enforced, if they do not impair the obligations of the contract on which the suit is brought. We fail to perceive, in this case, in what way the contract of these stockholders has been impaired, or its obligation increased or affected in any manner, by the act in question. The judgment must be affirmed. Judgment affirmed.