Freeman, 146 Ga. 118, 90 S. E. 965.
The levying of an assessment
by the comptroller is a condition
precedent to the institution of a
suit by the receiver. Casey v.
Galli, 94 U. S. 673, 24 L. Ed. 168;
Germania Nat. Bank v. Case, 99
U. S. 628, 25 L. Ed. 448; Kennedy
v. Gibson, 75 U. S. (8 Wall.) 498,
19 L. Ed. 476; Richmond v. Irons,
121 U. S. 27, 30 L. Ed. 864, 7 Sup.
Ct. 788; Strong v. Southworth, 8
Ben. 331, Fed. Cas. No. 13,545.
A letter from the comptroller to
the receiver directing suit to be
brought against the stockholders
is sufficient evidence of his author-
ity. Adams v. Johnson ("Bowden
V. Johnson"), 107 U. S. 251, 27
L. Ed. 386, 2 Sup. Ct. 246; Gatch v.
Fitch, 34 Fed. 566.
In Keyser v. Hitz, 133 U. S. 138,
33 L. Ed. 531, 10 Sup. Ct. 290, a
certificate signed by the deputy
comptroller of the currency as
"acting comptroller of the cur-
rency," is held to be a sufficient
certificate within the requirements
of U. S. Rev. Stat. § 5154.
3 In Weitzel v. Brown, 224 Mass.
190, 112 N. E. 945, the court said:
"It is urged that the trial court
was without jurisdiction. But be-
ing domiciled in this common-
wealth and the plaintiff as re-
ceiver being clothed with all the
rights which the bank as a citizen
possessed to bring suit on any de-
mand it might have held against
him, the defendant can be im-
pleaded in our own courts, and the
plaintiff is not obliged to resort to
the federal tribunals. Act Cong.
March 3, 1887, ch. 373, § 3, 24 Stat.
554 (U. S. Comp. St. 1913, § 1048) ;
Leather Mfrs.' Nat. Bank v. Cooper,
120 U. S. 778, 30 L. Ed. 816, 7 Sup.
Ct. 777; Petri v. Commercial Nat.
Bank of Chicago, 142 U. S. 644,
35 L. Ed. 1144, 12 Sup. Ct. 325; Ex
parte Jones, 164 U. S. 693, 41 L. Ed.
601, 17 Sup. Ct. 222; Cragie v. Had-
ley, 99 N. Y. 131, 52 Am. Rep. 9,
1 N. E. 537; Davis v. Watkins, 56
Neb. i288, 76 N. W. 575. The lia-
bility is contractual and not stat-
utory. Richmond v. Irons, 121
U. S. 27, 30 L. Ed. 864, 7 Sup. Ct.
788; Converse v. Ayer, 197 Mass.
443, 454, 84 N. E. 98."
A receiver of a national bank
may sue in the federal courts to
enforce the personal liability of
a stockholder imder the act of
June 3, 1864, without regard to the
locality of their personal citizen-
ship. Kennedy v. Gibson, 8 Wall.
(75 U. S.) 498, 19 L. Ed. 476. See,
1402
LAW OP RECEIVERS.
stockholder,* and likewise where stock is held by a person
in a representative capacity snch as executor or trustee,
he is not personally liable, although the estate which he
represents is liable.^ The general rule in this respect is
also, Wilson County v. Third Nat.
Bank, 103 U. S. 770, 776, 26 L. Ed.
488, 490.
A suit by a receiver may be
maintained in the United States
circuit court without reference to
citizenship of the parties (Arm-
strong V. Trautman, 36 Fed. 275),
or in a state court, Brinckerhoff v,
Bostwick, 88 N. Y. 52.
4 Pauly V. State Loan & Trust
Co., 56 Fed. 430.
5 In Wickham v. Hull, 60 Fed.
326, it is held that the estate of
a deceased owner of national bank
stock is liable to an assessment
levied against his executors where
the bank fails after the death of
the stockholder. In this case an
action was brought against the ex-
ecutors of an estate to establish
its liability for an assessment, the
estate at the time being in the
possession of an Iowa probate
court for purposes of administra-
tion. The defendant set up the
limitation of the Iowa Code, § 2421,
in regard to the settlement of es-
tates, and it was held that the
proper practice in such cases was\
to present the claim established
in the federal court for allowance
in the probate proceedings.
In Richmond v. Irons, 121 U. S.
27, 30 L. Ed. 864, 7 Sup. Ct. 788, it
is held that the statutory liability
of a shareholder in a national
bank for the debts of the corpora-
tion survives against his personal
representatives. And that the
stockholder's liability continues
under the statute until his stock
is actually transferred upon the
books of the bank, or until the cer-
tificate has been delivered to the
bank with power of attorney au-
thorizing the transfer and a re-
quest made at the time of the
transaction to have the transfer
made.
See, also. Mills v. Butler, 118
U. S. 655, 30 L. Ed. 266, 7 Sup. Ct.
47.
In Davis v. Weed, 44 Conn. 569,
Fed. Cas. No. 3,658, it was held
that by the act of congress all
stockholders of national banks are
liable to assessment in case of
insolvency of such bank to the ex-
tent of the par value of their
stock in addition to the amount
invested in such stock, but per-
sons holding stock as executors,
administrators, and trustees, are
not to be personally subject to
liability.
But in Germania Nat. Bank v.
Case, 99 U. S. 628, 25 L. Ed. 448, a
party, by way of pledge or col-
lateral security for a loan of
money, accepted the stock of a
national bank, which he caused to
be transferred to himself on its
books, and it was held that by
so doing he immediately became
liable as a stockholder and could
not relieve himself from such lia-
bility by making a colorable trans-
fer of such stock. The order of
the comptroller prescribing to
what extent the individual liability
of stockholders shall be enforced
is conclusive. .
BANKS AND BANKING MATTERS.
1403
that the person in whose name stock stands on the books
of the national bank remains liable as long as it is
tillowed to stand in his name and although the registered
owner may have made a transfer to another person un-
less it is accompanied by a transfer on the books of reg-
istry, the registered owner remains liable.^ A question
sometimes arises whether the person in whose name stock
was registerd on the books had knowledge of the fact.
In such cases, it becomes a question of evidence as to
whether the person had such knowledge as to show an
approval, satisfaction or acquiescence in the transfer to
his name, or whether he accepted such benefits from the
stock ownership as to assume the responsibility which
the law imposes upon the shareholders of national banks.'^
6 Matteson v. Dent, 176 U. S.
521, 44 L. Ed. 571, 20 Sup. Ct. 419;
Williams v. Vreeland, 244 Fed.
346, 156 C. C. A. 632.
A stockholder in a national
bank who transfers his stock to
avoid his statutory liability may
nevertheless be sued by the re-
ceiver. Stuart V. Hayden, 72 Fed.
802, 18 C. C. A. 618, affirmed in
169 U. S. 1, 42 L. Ed. 639, 18 Sup.
Ct. 274.
7 Where a husband unknown to
his wife places stock in her name,
intending to make a gift of the
stock to her, but before informing
her of the proposed gift changes
his mind and asks her to sign the
transfer of the stock to himself,
merely stating that he had made
a mistake, and she, having con-
fidence that he would not ask her
to do what was not right, signs
without asking any questions, and
he thereafter omits to have the
transfer to himself changed on the
books of the bank, the fact that
he had turned over to her a divi-
dend check payable to himself and
indorsed, would not charge her
with knowledge that she was a
registered stockholder, where she
did no other acts showing knowl-
edge or ratification. Williams v.
Vreeland, 244 Fed. 346, 156 C. C.
A. 632.
In Keyser v. Hitz, 133 U. S. 138,
33 L. Ed, 531, 10 Sup. Ct 290,
stock had been placed in the name
of the defendant without her
knowledge, but knowledge there-
after was imputed to her by her
acts in joining in an application
to convert the savings bank into
a national bank, and by accepting
cheques for dividends on the stock
drawn to her order and by her
indorsed.
In Finn v. Brown, 142 U. S. 56,
57, 35 L. Ed. 936, 12 Sup. Ct. 136,
the person in whose name stock
was entered on the books was a
director of the bank and acting
cashier. To become the former he
had to be a stockholder, and had
to make an affidavit that he was a
1404
LAW OF RECEIVERS.
But proof that defendant is a registered stockholder and
did nothing to remove his name from the registry, estab-
lishes a prima facie case of liability to assessment as a
stockholder, but the stockholder may show that he did
everything necessary to effect a transfer.* One need not
stockholder; while as a part of
his duties in the latter position,
he kept the stock ledger. He was
therefore conclusively presumed
to have known that he was a
stockholder.
See, also, Germania National
Bank v. Case, 99 U. S. 628, 632, 25
L. Ed. 448; Pauly v. State Loan
& Trust Co., 165 U. S. 606, 612, 41
L. Ed. 844, 17 Sup. Ct. 465.
In Kenyon v. Fowler, 155 Fed.
107, 83 C. C. A. 567, affirmed 215
U. S. 593, 54 L. Ed. 341, 30 Sup. Ct.
409; Glenn v. Grath, 133 N. Y. 38,
31 N. E. 344.
8 Williams v. Vreeland, 244 Fed.
346, 156 C. C. A. 632.
In Mills V. Butler, 118 U. S. 655,
30 L. Ed. 266, 7 Sup. Ct. 47, shares
of the capital stock of a national
bank were sold by an auctioneer
at public auction and were bid off
by B, who paid the auctioneer for
them and received a certificate of
stock with power of attorney for
transfer executed blank. The auc-
tioneer paid the money to the for-
mer owner of the stock. No for-
mal transfer was made upon the
books of the bank. Shortly after
the transaction the bank became
insolvent and went into the hands
of the receiver, who made assess-
ments against the stockholders
under the provisions of U. S. Rev.
Stat. § 5205, to pay the deficiency
of the capital. A suit was insti-
tuted by the receiver against the
former owner of the stock, and it
was held that his responsibility
ceased upon the surrender of the
certificate to the bank and the de-
livery to its president of a power
of attorney sufficient to effect and
intended to effect, as the presi-
dent knew, a transfer of the stock
on the books.
In Hayes v. Shoemaker, 39 Fed.
319, it was held that where a
shareholder makes a bona fide sale
of his stock and goes with the
purchaser to the bank, indorses
his certificate and delivers it to
the cashier of the bank with di-
rections to make the transfer on
the books, he is thereby dis-
charged from liability and is not
liable, though the cashier fail to
make the transfer, upon the sub-
sequent suspension of the bank
for an assessment made by the
comptroller. Suit was brought in
this case by the receiver.
In Johnson v. Laflin, 5 Dill. 65,
Fed. Cas. No. 7393; Johnson v.
Laflin, 103 U. S. 800, 26 L. Ed. 532,
it was held that a shareholder had
a right to make an actual, bona
fide sale and transfer of his shares
to any person capable in law of
taking and holding the same and
of assuming the assignor's liabil-
ity in respect thereto; and that,
in the absence of fraud, this right
is not subject to veto by the di-
rectors or other shareholders.
When such a transfer is made and
entered on the books the assignor
BANKS AND BANKING MATTERS. 1405
hold a certificate for his stock subscriptions in order to
be held liable as a stockholder.^ But one who subscribes
and pays for a specified number of shares of a proposed
increase of the capital stock of a national bank, which
increase in fact is never issued, and to whom the bank
officials transfer instead the old stock of the bank with-
out the knowledge of the purchaser, or without his con-
sent, is not a shareholder within the meaning of the stat-
ute imposing individual liability on shareholders for the
debts of the bank. The fact of such subscriber receiv-
ing dividends on the old shares does not estop him from
denying his liability.^'^
But it is held where one, who in order to conceal his
ownership and thereby avoid his stockholder's liability,
causes the stock to be transferred to one who is pecuni-
arily irresponsible, he may be nevertheless held liable.^ ^
In a suit by a receiver of a national bank to enforce sub-
scriptions to proposed increase of its capital stock, where
he alleged that the bank represented such subscriptions
by means of circulars but not that the public gave credit
ceases to be a shareholder and Thayer v. Butler, 141 U. S. 234, 35
is free from all liability thereon. ^- ^^- '^H' H Sup. Ct. 987.
As between the seller and pur- i^ Stephens v. Follett, 43 Fed.
842.
11 Davis V. Stevens, 17 Blatchf.
259, Fed. Cas. No. 3653; Ger-
mania Nat. Bank v. Case, 99 U. S.
power to transfer the same on the ggS, 25 L. Ed. 448. See, also,
books of the bank and payment Adams v. Johnson ("Bowden v.
therefor is received by the seller. Johnson"), 107 U. S. 251, 27 L. Ed.
9 In Pacific Nat. Bank v. Eaton, 386, 2 Sup. Ct. 246.
141 U. S. 227, 35 L. Ed. 702, 11 Sup. A receiver of an insolvent na-
Ct. 984, it is held that a subscrip- tional bank is the only party who
tion to the stock in a national can maintain a suit in behalf of
bank and payment in full of the the creditors to set aside a fraud-
subscription and the entry of the ulent transfer of stock to an irre-
subscriber's name on the books as sponsible person, and enforce the
a stockholder constitutes the sub- individual liability of the trans-
ecriber a shareholder without tak- ferrer. Stuart v. Hayden, 72 Fed.
Ing out the certificate. See, also, 402.
chaser of shares the sale is com-
plete when the certificate of
shares is duly assigned with
1406 LAW OF RECEIVERS.
to the bank on the faith thereof or that they held them-
selves out as stockholders, it was held that the defendants
were not estopped to plead the failure of the bank to com-
ply with the statutory requirements in perfecting such
increase.^2
Likewise a purchaser of stock in a national bank may
sue the receiver to rescind his purchase upon the ground
that he was induced to purchase the stock by false repre-
sentations of the bank's officers. ^^ A stockholder when
sued on his subscription is estopped from denying the
validity or existence of the corporation.^^ And in a suit
by the receiver in a federal court to recover the amount
of an unpaid subscription the stockholder may set up a
judgment in the state court on the same issue decided in
his favor as an estoppel. ^^ Likewise in a suit upon the
stockholder's statutory liability, he may set up payments
which have been made for that purpose even though not
made in a strictly technical manner. ^^ In the earlier
cases, questions sometimes arose as to whether a married
woman could be held liable for stockholder's assessments,
but recoveries were allowed in such cases.^^
12 Winters v. Armstrong, 37 Fed. 131; Miller v. White, 50 N. Y. 137;
508. McMahon v. Macy, 51 N. Y. 155;
13 Ryan v, Mt. Vernon Nat. Trippe v. Huncheon, 82 Ind. 307.
Bank, 206 Fed. 452, 124 C. C. A. 15 Butler v. Eaton, 141 U. S. 240,
358. 35 L. Ed. 713, 11 Sup. Ct. 985.
In this connection see § 469 16 Korbly v. Springfield Inst, for
where the general question as to Savings, 245 U. S. 330, 62 L. Ed.
the right of a stockholder to re- 326, 38 Sup. Ct. 88.
scind a stock purchase after re- But see Delano v. Butler, 118
ceivership is discussed. U. S. 634, 30 L. Ed. 260, 7 Sup. Ct.
14 Casey v. Galli, 94 U. S. 673, 39, which involved a mistake of
24 L. Ed. 168. law respecting a payment.
Rights of stockholders can not 17 In Bundy v. Cocke, 128 U. S.
be affected by the acts of the pres- 185, 32 L. Ed. 396, 9 Sup. Ct. 242,
ident of a bank after it has gone a bill in equity was filed in Ken-
into liquidation. Schrader v. Man- tucky by the receiver of a na-
ufacturers' Nat. Bank, 133 TJ. S. tional bank located in Arkansas
67, 33 L. Ed. 564, 10 Sup. Ct. 238; against a married woman and her
Moss V. McCuUough, 5 Hill (N. Y.) husband, who were alleged to be
BANKS AND BANKING MATTERS.
1407
It has been held that the expenses of a receivership of
a national bank appointed in a creditor's suit contesting
a voluntary liquidation of the bank can not be charged
upon the stockholders as part of their statutory liability,
but must be paid by the creditors who instituted the
proceeding. ^^
But a stockholder, who is liable for the debts of the
bank, is liable for interest on them to the extent to which
the bank would have been liable, not in excess, however,
of the maximum liability fixed by the statute.^^
If the receiver seeks to recover the whole liability he
may bring the suit at law, or in equity if he seeks to
recover only a portion of the liability.^^ Statutes of lim-
citizens of Kentucky, to enforce
against the separate property of
the wife an assessment of the
comptroller of 50 per cent on the
par value of the stock as an in-
dividual liability, it appearing that
the shares of the stock still re-
mained in the name of the wife
upon the books of the bank and
that she possessed enough prop-
erty in her own right to pay the
assessment, and it was held that
the bill was sustainable as a bill
in equity.
Married women are held liable
as stockholders for assessments,
in Winters v. Sowles, 38 Fed. 700;
Keyser v. Hitz, 133 U. S. 138, 33
L. Ed. 531, 10 Sup. Ct. 290; Re
First Nat. Bank, 49 Fed. 120; Roh
inson v. Turrentine, 59 Fed. 554
18 Richmond v. Irons, 121 U. S
27, 30 L. Ed. 864, 7 Sup. Ct. 788
19 Richmond v. Irons, 121 U. S
27, 30 L. Ed. 864, 7 Sup. Ct. 788
In Casey v. Galli, 94 U. S. 673
24 L. Ed. 168. The amount as
sessed was held to bear interest
from the date of the order. See,
also, Adams v. Johnson ("Bowden
V. Johnson"), 107 U. S. 251, 27
L. Ed. 386, 2 Sup. Ct. 246.
20 Casey v. Galli, 94 U. S. 673,
24 L. Ed. 168; Adams v. Johnson
("Bowden v. Johnson"), 107 U. S.
251, 27 L. Ed. 386, 2 Sup. Ct. 246.
A suit may be brought under the
National Bank Act by the receiver
in law or equity to recover from
stockholders their stock liability
by the receiver. Kennedy v. Gib-
son, 75 U. S. (8 Wall.) 498, 19
L. Ed. 476.
In Harvey v. Lord, 10 Fed. 236,
11 Biss. 144, it is held that where
a bill in the nature of a creditor's
bill has been filed under the pro-
visions of the national banking
law against the shareholders of
a bank to enforce their liability,
a suit at law by a receiver ap-
pointed by the comptroller can not
be maintained against an individ-
ual shareholder to enforce the
same liability, while the former
suit is pending. In this case the
power of the comptroller to ap-
point a receiver to wind up a na-
1408 LAW OF RECEIVERS.
itation apply to suits to enforce tlie liability of tlie stock-
holder as in other cases. -^ It is necessary to obtain the
leave of the court in order to compromise or compound
such suits. 2-
§475. Suits Against Stockholders of National Banks for
Illegal Preferences and Dividends.
Everything becomes an asset in the hands of a receiver
of a national bank which would be an asset to the bank or
to its creditors. An order of the comptroller is not neces-
sary to empower the receiver to enforce such liabilities.
A suit in equity is frequently appropriate, especially
where the numerous common law actions would not fur-
nish as efficient, practical, and prompt a remedy. This
kind of an action does not generally rest upon any statute
or act of Congress, but upon the fundamental principles
of equity.^
The United States Revised Statutes renders invalid as
preferential all transfers of notes, bonds, bills of ex-
change, or other evidence of debt, deposits to its credit,
mortgages, sureties on real estate, judgments or decrees
in its favor, deposits of money, bullion, or other valuable
thing for its use, or for the use of any of its shareholders
or creditors, all payments of money to either after the
commission of an act of insolvency, or in contemplation
thereof, made with a view to prevent the application of
its assets in the manner prescribed by the act, or made
with a view to the preference of one creditor to another,
except in the payment of its circulating notes.- The
tional bank where a receiver has 22 Case v. Small, 10 Fed. 722, 4
been appointed by the court in a Woods 78.
creditor's proceeding and steps 1 Hayden v. Thompson, 71 Fed.
taken to enforce shareholders' lia- 60, 17 C. C. A. 592.
bility, is discussed. See, also, 2 An insolvent national bank
Case V. Marchand, 23 La. Ann. 60. after insolvency has no right to
21 King V. Armstrong, 9 Cal. prefer a creditor in violation of
App. 368, 99 Pac. 527; Butler v. U. S. Rev. Stat. §5242, if such
Poole, 44 Fed. 586. preference is in contemplation of
BANKS AND BANKING MATTERS.
1409
insolvency. And in such case
want of knowledge on the part of
the corporation receiving such
preference is immaterial. Na-
tional Security Bank v. Butler, 129
U. S. 223, 32 L. Ed, 682, 9 Sup. Ct.
281.
In National Security Bank v.
Butler, supra, suit was brought by
the receiver of a national bank
against another national bank to
recover from the latter certain
moneys alleged to have been paid
to the latter and held by it as a
preferred creditor in violation of
U. S. Rev. Stat. § 5242. It was
held that the transfer of the se-
curities, if made in contemplation
of insolvency, was fraudulent un-
der the statute, although there
was no such intention on the part
of the security bank in receiving
the transfer, and although there
was no knowledge or suspicion at
that time on the part of the secur-
ity bank that the Pacific Bank
was insolvent, or contemplated in-
solvency, or was not doing busi-
ness, or that its directors had
voted to close it, or that applica-
tion was to be made for a receiver.
Insolvency is such a condition
of affairs that the bank is unable
to meet its obligations as they ma-
ture in the usual course of busi-
ness. An act of insolvency takes
place when a bank has actually
failed to meet some of its obliga-
tions. Roberts v. Hill, 24 Fed.
571, 23 Blatchf. 312; Market Nat.
Bank v. Pacific Nat. Bank, 30 Hun
(N. Y.) 50.
It is in contemplation of insol-
vency when it becomes reason-
ably apparent to its officers that
it will presently be unable to meet
its obligations, and will be obliged
to suspend its ordinary opera-
II Rec— 89
tions. Id. If the bank is in con-
templation of insolvency it is not
necessary that the party to whom
the transfer is made should be
aware of it. Case v. Citizens'
Bank, 2 Woods 23, Fed. Cas. No.
2489; Iron v. Manufacturers' Nat.
Bank, 6 Biss. 301, Fed. Cas. No.
7068.
An execution returned nulla
bona is evidence of insolvency.
Wheelock v. Kost, 77 III. 296.
Cf. Roberts v. Hill, 24 Fed. 571, 23
Blatchf. 312; Armstrong v. Chemi-
cal Nat. Bank, 41 Fed. 234, 6
L. R. A. 226; Wager v. Hall, 83
U. S. (16 Wall.) 584, 21 L. Ed. 504;
Casey v. La Societe de Credit
Mobilier, 2 Woods 77, Fed. Cas.
No. 2496.
The intent to give a preference
is presumed when the bank offi-
cers know of its insolvency, and,
therefore, know it can not pay all
its creditors in full. Roberts v.
Hill, 24 Fed. 571, 23 Blatchf. 312,
overruling Roberts v. Hill, 23 Fed.
311, 23 Blatchf. 191. See, also,
National Security Bank v. Price,
22 Fed. 697; Case v. Citizens'
Bank, 2 Woods 23, Fed. Cas. No.
2489, 100 U. S. 446, 25 L. Ed. 695;
Sawyer v. Turpin, 2 Lowell 29,
Fed. Cas. No. 12,410.
In Davis v. Elmira Sav. Bank,
161 U. S. 275, 40 L. Ed. 700, 16
Sup. Ct. 502, it is held that sec-
tion 130 of chapter 689 of the laws
of the state of New York of 1892,
providing for the payment by the
receiver of an insolvent bank, in
the first place, of the deposits in
its bank by savings banks whan
applied to an insolvent national
bank, is in conflict with § 5236 of
the Revised Statutes of the United
States, directing the comptroller
of the currency to make ratable
1410
LAW OF RECEIVERS.
transfer in contemplation of the act wliicli is rendered
void must be with a view of giving a preference, and not
the giving of security for an actual loan, made in good
faith.3
dividends of the money paid over
to him by such receiver on all
claims proved to his satisfaction
or adjudicated in a court of com-
petent jurisdiction, and is there-
foi'e void when applied to a na-
tional bank, and is a preference
prohibited by the National Bank-
ing Act. This case reverses the
case of Elmira Sav. Bank v. Davis,
142 N. Y. 590, 25 L. R. A. 546, 37
N. E. 646, and also same case in
73 Hun 357, 26 N. Y. Supp. 200.
See, also, Venango Nat. Bank v.
Taylor, 56 Pa. 14.
3 Where a national bank, after
or in contemplation of an act -of
insolvency, makes such a transfer
of notes to a creditor as a prefer-
ence, which was void under Rev.
St. 5242 (U. S. Comp. St. 1901, p.
3517), the receiver may at his
election maintain an action at law
against the creditor for their con-
version. Ball V. German Bank of
Carroll County, 187 Fed. 750, 109
C. C. A. 498.
In Hayes v. Beardsley, 136 N. Y.
299, 32 N. E. 855, an action was