Court Opinion

ID: 8823187
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:39:44.638701+00
Date Added: 2024-06-11T17:04:41.986502
License: Public Domain

Mr. Presiding Justice McSurely delivered the opinion of the court. By this appeal John A. Cervenka, appellant, seeks to have reversed an order enjoining him, until the further order of the court, from prosecuting suits against stockholders of the La Salle Street Trust & Savings Bank based on stockholders’ liability. The record in the case shows that a bill was filed in conformity with section 11 of the Banking Act (J. & A. ¶ 683) by the People of the State of Illinois on the relation of James J. Brady, Auditor, against the La Salle Street Trust & Savings Bank and its stockholders, for the purpose of securing a dissolution of the corporation, a winding up of its affairs, and a distribution of its assets among its creditors, or creditors and stockholders, and, if necessary, the enforcement of the liability of its stockholders to its creditors. Upon the filing of that bill the court appointed William C. NTblack, appellee herein, as receiver of said bank. Subsequently a hearing was had and a decree entered dissolving the corporation, providing for the conversion of its assets into money, publication of notice to creditors to present their claims, and for such other proceedings as the court might find necessary for the administration of the assets of the corporation and a complete winding up of its affairs, including the enforcement of the liabilities, if any, of stockholders to the creditors. After the entry of this decree appellant filed with the receiver his claim against the bank for $17,742.98. Prior to the entry of the decree of dissolution, appellant commenced his suit as a creditor of the bank against John F. Jelke, a stockholder at the time the bank suspended business, to enforce the latter’s stockholder’s liability; and after the entry of the decree of dissolution and after he had filed his claim with the receiver, appellant commenced actions against Edward Shears on et al., John Burnham & Company and Frederick M. Zeiler et al., to enforce their respective liabilities as stockholders on account of stock previously held by them but disposed of prior to the suspension of the bank and the appointment of the receiver. The record shows that the assets of the bank are insufficient to the extent of over $1,500,000 to satisfy its liabilities to its creditors. It also shows that the receiver will, as soon as practicable, apply to the court to ascertain that the assets of the Trust & Savings Bank are insufficient to discharge its entire liability to its creditors and to determine the amount of the deficiency, and thereupon to direct the receiver to proceed to' enforce the liabilities of the stockholders of the bank to its creditors, but that it will be impracticable for him to procure such order prior to the time when appellant will be able to prosecute his suits to judgments. It is represented that if appellant is permitted to prosecute his suits to judgments and to obtain satisfaction thereof he will thereby secure an unjust and inequitable advantage over the other creditors of the bank in the satisfaction of their claims against it. Upon the above showing, being made, the court entered its restraining order against appellant. It is said that so much of section 11 of the Banking Act (J. & A. ¶ 683) as authorizes a receiver appointed thereunder to proceed to collect stockholders’ liability is unconstitutional. Section 6, art. XI, of the Constitution of 1870 is as follows: “Every stockholder in a banking corporation or institution shall be individually responsible and liable to its creditors, over and above the amount of stock by him or her held, to an amount equal to his or her respective shares so held, for all its liabilities accruing while he or she remains such stockholder.” The Banking Act in force June 16, 1887, sec. 6, sought to make each stockholder liable only for his ratable share and no more, but in Dupee v. Swigert, 127 Ill. 494, it was held that such legislation was in conflict with the above section of the Constitution which, as stated in the opinion, made every stockholder liable for the debts of the bank to an amount equal to twice the amount of the stock held by him, leaving the question of contribution to be settled among the stockholders themselves. Section 11 of chapter 16a of the present Banking Act (J. & A. ¶ 683) contains the following provision: “When it shall be ascertained, in the course of the administration of the estate of a bank in the hands of a receiver that the assets of the bank are insufficient to discharge the entire liability of such bank to its creditors, and when the amount of such deficiency is determined, the court may, in its discretion, direct the receiver to proceed to enforce the liability of the stockholders to creditors provided in section 6 of this Act ; and when so directed, such receiver shall have the power, and it shall be his duty, to take such action, by suit or otherwise, as the court may direct, to enforce such liability for the benefit of the creditors and to disburse to creditors the amounts collected thereon, in the same manner as disbursements are made to creditors of the assets of the bank.” It is argued that as the Act of 1887 attempted to limit the liability of stockholders to a'pro rata share of the bank’s debts, so this section 11—and especially the provision that such disbursements are to be made in the same manner as the assets—undertakes to limit the right of creditors as against stockholders to. a pro rata share of the claims against the stockholders. It is a sufficient answer to say that it does not follow that under the provision for disbursements to creditors the amounts collected from stockholders shall be distributed pro rata among creditors. Both the assets of the bank and amounts collected from stockholders will be distributed among the creditors as their interests may appear. Furthermore, even should the clause of this act concerning distribution of amounts collected from stockholders be unconstitutional, the entire section would not be invalid as the remaining part is complete and can be given full force and effect. It is to be noted that section 11 provides that the receiver shall proceed “to enforce the liability of the stockholders to creditors provided in section 6 of this Act,” and section 6 (J. & A. ¶ 678) referred to is identical in its terms with section 6, art. XI of this Constitution; so that the order to the receiver in this case to proceed against stockholders is in complete accord with the constitutional provision. The petition for an injunction was not premature. The receiver’s petition avers that the assets are insufficient to satisfy the liabilities by over $1,500,000, which is $500,000 in excess of the par value of the bank’s entire capital stock. This allegation, for the purposes of this appeal, must be taken as true, and, therefore, the necessity of enforcing the liabilities of stockholders is established. There is no merit in the point that the receiver has not been duly diligent. No bond is necessary when a court having assumed jurisdiction of the entire matter restrains a creditor from receiving an undue advantage over other creditors. There is much force in the point made by appellee that when appellant filed his claim with the receiver he indicated his willingness to subnfit the entire matter of the administration of the bank’s assets and the winding up of its affairs, including the enforcement of stockholders’ liability, to the court, and, therefore, he is precluded from taking any steps which would interfere with the exercise by the court of its power to do anything necessary to accomplish this purpose. He cannot claim the benefits of a portion of the decree while at the same time adopting a course calculated to deprive other persons similarly situated of another portion of its benefits. The interlocutory order is. affirmed. !Affirmed.