Opinion
No. 3955.
February 7, 1931. Rehearing Denied February 12, 1931.
Appeal from District Court, Hunt County; Grover Sellers, Judge.
Suit by the First State Bank, Wolf City, Tex., against M. Strong, wherein James Shaw, Banking Commissioner, was substituted as party plaintiff. Judgment for defendant, and plaintiff appeals.
Affirmed.
As commenced by a petition filed July 24, 1929, this suit was by the First State Bank, Wolf City, Tex., as plaintiff, against appellee M. Strong as defendant. By an order made by the court below July 21, 1930, appellant, as banking commissioner, was granted "the privilege and right (quoting) to be substituted in the place and stead of said First State Bank, Wolf City, as plaintiff in this cause, but only with such rights and authority as could be asserted by First State Bank, Wolf City, Texas." In an amended petition filed by said banking commissioner July 21, 1930, it was alleged that on December 23, 1929, the First State Bank of Wolf City, Tex., "because of its insolvent and failing condition," was closed by its board of directors and placed in the hands of the banking commissioner for the purpose of liquidation; that said banking commissioner, having determined it was necessary to do so, on December 30, 1027, "levied an assessment of 100% upon each and all of the stockholders" of said First State Bank of Wolf City, Tex.; "that said assessment became due and payable immediately after the levy of the same"; that on said December 23, 1927, appellee Strong was the owner of five shares of the capital stock of said First State Bank of Wolf City, Tex., of the value of $100 each; that on January 11, 1928, said banking commissioner, for a valuable consideration, "transferred, assigned and delivered (quoting) to First State Bank, Wolf City, Tex., all of the assets of the First State Bank of Wolf City, Tex., which included the assessments which had previously been levied by the Banking Commissioner"; "which said sale and transfer (quoting further) was in all things approved and confirmed by the district court of Hunt county, Tex., on the 28d day of December, 1927, in cause No. 16001 entitled `Ex parte the First State Bank of Wolf City, Texas, in liquidation' "; that by reason of his ownership of ten shares of stock and said "levy and assessment thereon (quoting) by the banking commissioner, and the sale of the assets, including the assessment to First State Bank, Wolf City, Tex., the defendant M. Strong (appellee) became liable and bound to pay to First State Bank, Wolf City, Tex., the sum of $1,000"; that on January 15, 1930, the First State Bank, Wolf City, Tex., "because of its insolvent and failing condition (quoting) was by order of its board of directors closed and placed in the hands of said Banking Commissioner" for the purpose of liquidation, and (quoting) "same is now being liquidated by him under the laws of this state"; that by reason of the failure of said First State Bank, Wolf City, Tex., all of the assets belonging to said bank are now in the hands "of said Banking Commissioner" for the purpose of collection and liquidation, and "the stock assessment (quoting) levied against the stock owned by the defendant constitutes an asset of First State Bank, Wolf City, Tex.; that substitute plaintiff herein (said banking commissioner) has made demand upon the defendant (M. Strong) for the payment of such liability, but that defendant has refused to pay the same." The prayer was for judgment for the $1,000 sued for. The court below sustained demurrers, general and special, questioning the sufficiency of said amended petition, and, appellant refusing to amend same, rendered judgment denying appellant a recovery of anything and in appellee's favor for costs.
Clark, Harrell Clark, of Greenville, for appellant.
Bowman Bowman, of Greenville, for appellee.
By force of section 16 of article 16 of the Constitution and article 535 of the Revised Civil Statutes of 1925, each stockholder in a banking corporation is liable for its debts "to an amount double the par value" of the shares he owns. By article 453 of said statutes the banking commissioner is authorized to collect debts due to an insolvent state bank in his hands for liquidation. By article 455 (as amended by Acts 40th Leg. [1927] c. 205, § 1, Vernon's Ann.Civ.St. art. 455) said commissioner is authorized, if necessary to pay the debts of such a bank, to "enforce the individual liability of the stockholders." And by force of article 454, said commissioner may, upon the order of the district court, or the judge thereof, of the county in which the bank is located, "sell or compound all bad or doubtful debts, and may sell the real or personal property" of such bank.
The question, and only question, presented for determination on this appeal may be stated as follows: Can the liability of a stockholder arising by force of the provisions in the Constitution and statutes above referred to be sold and assigned by the banking commissioner?
We think the answer should be in the negative.
Combatting that view of the matter, appellant insists the levy by the banking commissioner of an assessment against a stockholder on account of the liability imposed by the Constitution and statutes creates a "debt" and argues that a debt is "property" and assignable. The answer to the argument is, we think, that if the liability is a "debt," it is not to the bank, but to its creditors, and the power to sell which can be conferred upon the banking commissioner is to sell only property of the bank. The power of the banking commissioner as to the stockholders' liability is only to enforce same and apply money derived from such enforcement to satisfying obligations of the bank to its creditors. State ex rel. Mothersead v. Kelly, 141 Okla. 36, 284 P. 65; American Exch. Bank v. Rowsey, 144 Okla. 172, 289 P. 726; Johnson v. Adams' Estate, 138 S.C. 409, 136 S.E. 885; Bennett v. Wilkes County, 164 Ga. 790, 139 S.E. 566; Houston Nat. Exch. Bank v. Chapman (Tex.Civ.App.) 263 S.W. 929; Runner v. Dwiggins, 147 Ind. 238, 46 N.E. 580, 30 L.R.A. 645; Ford v. Sauls, 138 S.C. 426, 136 S.E. 888; Conway v. Bank Trust Co. (C. C.) 165 F. 822; Alsop v. Conway (C.C.A.) 188 F. 568; Tiger Shoe Mfg. Co's, Trustee v. Shanklin, 125 Ky. 715, 102 S.W. 295, 31 L.R.A. (N.S.) 365. The case first cited above is like this one in many, if not all, of its aspects. Every ground of appellant's contention here seems to have been urged in that case as a reason why it should be held that the sale and assignment of a stockholders' liability should be upheld, and it was held, properly we think, that the contention was not tenable on any of the grounds.
The Judgment is affirmed.