Terry v. Little - 101 U.S. 216 (1879)
U.S. Supreme Court
Terry v. Little, 101 U.S. 216 (1879)
Terry v. Little
101 U.S. 216
1. Where a bank charter provides that on the failure of the bank, "each stockholder shall be liable and held bound . . . for any sum not exceeding twice the amount of . . . his . . . shares," held, 1. that a suit in equity by or for all creditors is the appropriate mode of enforcing the liability incurred on such failure; 2. that were an action at law maintainable by one creditor, the stockholders must be separately sued, as their liability is several.
2. Pollard v. Bailey, 20 Wall. 520, cited and approved.
By sec. 4 of the charter of the Merchants' Bank of South Carolina, at Cheraw, it was provided that, in case of the failure of the bank,
"each stockholder, copartnership, or body politic having a share or shares in the said bank at the time of such failure, or who shall have been interested therein at any time within twelve months previous to such failure, shall be liable and held bound individually for any sum not exceeding twice the amount of his, her, or their share or shares."
It is alleged in the declaration that the bank failed March 1, 1865. The general assets have since been collected and applied to the payment of debts under the provisions of an Act of the Legislature of South Carolina, passed March 13, 1869, placing the bank in liquidation. Debts to the amount of several hundred thousand dollars are still unpaid. The capital stock was $400,000, divided into shares of $100 each. Of these shares, the defendant Benjamin F. Little owned at the time of the failure one hundred and ten, and John P. Little one hundred and fifty-eight. On the 21st of August, 1875, Terry, the plaintiff, commenced an action at law in the court below, against the defendants jointly, to recover from them, on account of their individual liability as stockholders, $5,440, the amount due him from the bank on its bills which he held. The defendants demurred to the declaration, and among others assigned for cause, in substance -- 1, that the individual liability of the stockholders as created and defined by this charter could not be enforced in an action at law by one creditor for his sole use to the exclusion of others, and 2, that even if it could, the
defendants cannot be joined in one such action because their liability is not joint but several. The circuit court sustained the demurrer and gave judgment for the defendants. This writ of error has been brought to reverse that judgment.