Court Opinion

ID: 8861588
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:50:18.734994+00
Date Added: 2024-06-11T17:05:50.477447
License: Public Domain

COXE, District Judge.
It is not disputed that the defendants were stockholders of the Traders’ Bank, that the bank became insolvent, that the plaintiff was appointed receiver, that a large deficiency was ascertained, that an assessment was levied by the receiver upon *55the defendants and that all this was done under and pursuant to the constitution and laws of Washington and in conformity to the orders and decrees of the superior court of that state.
The first proposition argued by the defendants is that the plaintiff, as receiver, is not entitled to maintain the action. The constitution and statutes of Washington (Const, art. 12, § 11) provide:
“That each stockholder of any hanking * * * association shall he individually and personally liable, equally and ratably, and not one for another, for all the contracts, debts and engagements of such corporation or association accruing while they remain stockholders to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares.”
The courts of Washington have decided that this liability can only be enforced by a receiver under the direction of the court. Cole v. Railroad Co., 9 Wash. 487, 37 Pac. 700; Wilson v. Book, 13 Wash. 676, 43 Pac. 939; Hardin v. Sweeney, 14 Wash. 129, 44 Pac. 138; Watterson v. Masterson, 15 Wash. 511, 46 Pac. 1041. The practical effect of a ruling that a receiver cannot maintain the suit would be to render the law' nugatory as to all but resident stockholders. The Washington courts having ruled that a receiver only can bring the suit, it is manifest, should the federal courts and other state courts hold that he cannot maintain the action, that the defendants not only but all stockholders beyond the jurisdiction of the Washington courts will escape a liability intended to be uniform and for. the benefit of all the creditors. The precise question was involved in Sheafe v. Larimer, 79 Fed. 921, and was answered adversely to the defendants'' contention. The case arose under the same law, and, upon the facts, was almost identical with the case in hand. See, also, Schultz v. Insurance Co., 77 Fed. 375, 387; Avery v. Trust Co., 72 Fed. 700; Failey v. Talbee, 55 Fed. 892.
Again it is argued that the orders and decrees'of the Washington court were not binding upon the defendants, and in support of this view various alleged delects in the proceedings are pointed out. The defendants Kent aud Ellwanger were parties to the Washington action and are therefore in no position to attack the judgment of the court in a collateral proceeding. The defendant; Woodworth was not a party. But whether parties or not the law seems clear that the stockholders are bound by the order making the assessment. Hawkins v. Glenn, 131 U. S. 319, 9 Sup. Ct. 739. In Sheafe v. Larimer, supra, the court, says:
“In this case it must be bold that it is not open to the defendant to question the validity of the assessment-order, on the ground that the stockholders were not personally notified of the application for the order, or for the reason that the stockholders should not hayo been assessed until the other assets of the corporation had been wholly exhausted.”
The actions are not barred by the statute of limitations for the reason that the cause of action did not accrue to the receiver prior to the assessment and that was not made until March 17,1897. The actions were commenced two months thereafter.
It follows that the plaintiff is entitled to judgment as demanded in the complaints, respectively, with interest at the rate of 6 per cent, per annum from May 18, 1897, and costs.