Court Opinion

ID: 3380758
Source: CourtListenerOpinion
Date Created: 2016-07-05 18:28:10.390407+00
Date Added: 2024-06-11T12:45:51.258210
License: Public Domain

In this case petition for rehearing has been filed in which it is contended that the Court in rendering the opinion herein failed to consider the fact that the defendant in the court below acquired the stock of the Bank of Bay Biscayne involved in this case prior to the enactment of Chapter 13,576, Acts of 1929, and it is contended that because of this fact the provisions of Section 3 of Chapter 13,576, Acts of 1929, cannot be held legally applicable to defendant's transfer of his stock, although the transfer was made several months after the passage of that Act.
Chapter 13,576, Acts of 1929, was approved on May 31st, 1929. Section 3 of that Act amended Section 4128 R.G.S., of Florida, to read as follows: *Page 208 
"LIABILITY OF STOCKHOLDERS. Stockholders of every banking, savings and trust company, shall be held individually responsible equally and ratably and not for one another for all contracts, debts and engagements of such company to the extent of the amount of their stock therein at the par value thereof in addition to the amount invested in such shares. Persons holding stock as executors, administrators, guardians or trustees shall not be personally subject to any liability 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 trust funds would be if living and competent to hold the stock in his own name. Stockholders who shall have transferred their shares or registered the transfer thereof within six months next before the date of the failure of such company to meet its obligations, or with knowledge of such impending failure, shall be liable to the same extent as if they had made no such transfer, to the extent that the subsequent transferee fails to meet such liability; but this provision shall not be construed to affect in any way any recourse which such share holders might otherwise have against those in whose names such shares are registered at the time of such failure. Provided the seller shall have notified the bank in writing by registered mail or takes receipt from bank therefor."
The amendatory language of that section was that part of the section now reading as follows:
"Stockholders who shall have transferred their shares or registered the transfer thereof within six months next before the date of the failure of such company to meet its obligations or with knowledge of such impending failure, shall be liable to the same extent as if they had made no such transfer, to the extent that the subsequent transferee *Page 209 
fails to meet such liability; but this provision shall not be construed to affect in any way any recourse which such share holders might otherwise have against those in whose names such shares are registered at the time of such failure. Provided the seller shall have notified the bank in writing by registered mail or taken receipt from bank therefor."
It will, therefore, be observed that the liability of stockholders under Section 4128 R.G.S. was never increased or diminished by the provisions of Section 3 of Chapter 13,576, Acts of 1929. The effect of the amendment was not to impair the obligation of the contract, nor should it be construed to place any additional burden on the stockholder of a banking institution. The effect of the amendment was to prevent or preclude the stockholder upon whom rested the obligation created by his contract in connection with Section 4128 R.G.S., from divesting himself of that liability to the detriment of other stockholders and creditors of the bank. The amendatory part of the section controlled the force and effect of future contracts which the stockholder might make in the effort to transfer his stock and avoiding his liability as a stockholder.
There might be some doubt as to the application of the statute in a case where a transfer of stock was made after the passage of the Act and where the failure of the Bank occurred within six months after the passage of the Act because in such case the stockholder would be in practically the same condition as he would have been in had he transferred the stock before the passage of the Act. But, in this case the record shows that the transfer of stock occurred on January 31, 1930, which was more than six months after the Act was approved, and the failure of the Bank occurred on June 11, 1930, which was more than a year after the approval of the Act. *Page 210 
The force and effect of the Act here under consideration is analogous to the force and effect of the Act which we had under consideration in the case of McConville v. Fort Pierce Bank 
Trust Co., 101 Fla. 727, 135 So. 392. In that case we said:
"It is well established that all contracts are inherently subject to the paramount powers of the sovereign and the exercise of such power is never understood to involve their violation. The statute here involved is not within the provisions of the Constitution forbidding a State to pass laws impairing the obligation of contracts. See Osborn v. Nicholson, 13 Wall. 654, 20 Law Ed. 689, and cases cited.
"It was, therefore, not essential that the plea of defendant allege that the money sued for was deposited in the bank subsequent to the enactment of said Chapter 11,849, Acts of 1927. As a matter of record, the freezing order was made March 22, 1928, over ten months after said Act of 1927 became a law and it must be presumed that complainant's deposit was either made before the Act became a law and was allowed to remain, or that it was made after it became a law, and in either event the deposit would be subject to its provisions. (262 U.S. 649, 67 L. Ed. 1157.)
"Banks have become indispensable agencies through which industry, trade and commerce are carried on, and while they exist mainly for private profit, it cannot be denied that they are pre-eminently of a public nature and therefore universally recognized as a corporation of a quasi-public nature and subject to statutory regulation for the protection of the public. See 3 R.C.L. 379, 5; Noble, State Bank v. Haskell, 219 U.S. 104, 575, 31 S. Ct. 186, 299, 55 L. Ed. 112, 341, Ann. Cas. 1912A 487, 32 L.R.A. (N.S.) 1062; Bryan v. Bullock, 84 Fla. 179, 93 So. 182."
The purpose of the Act here under consideration, as heretofore *Page 211 
stated, was to protect stockholders and creditors of banking institutions in this State. It was a proper exercise of the police power.
While banks exist mainly for private profit, they are necessarily institutions of a public nature and are universally recognized as being subject to statutory regulation for the protection of the public. McConville v. Ft. Pierce Bank  Trust Co., supra, and cases there cited. This being true, it must be understood that contracts with such institutions are made subject to the possible exercise of legal governmental authority in the enactment of laws touching the same and no obligation of contract can extend to defeat the exercise of legitimate police power. See Kingston v. Old National Bank of Centralia, 359 Ill. 192, 194 N.E. 211; Tampa Northern Ry. Co. v. City of Tampa, 91 Fla. 241,107 So. 364; Southern Utilities Co. v. City of Palatka, 86 Fla. 583, 99 So. 236; New York  England Ry. Co. v. Town of Bristol,151 U.S. 256, 38 L. Ed. 269.
And so we hold that the provisions of Chapter 13576, Acts of 1929, insofar as the same are involved here are constitutional and valid and the provisions hereinbefore quoted are applicable in the instant case.
Petition for rehearing denied.
WHITFIELD, C.J., and TERRELL and DAVIS, J.J., concur.