The double liability imposed on stockholders of national banks
by § 23 of the Act of December 23, 1913,
held enforceable
against one who sold his shares within sixty days of the closing of
the bank while insolvent, even though the sale was made in good
faith and though the bank's closing was voluntary. P.
324 U. S.
202.
144 F.2d 665 affirmed.
Certiorari, 323 U.S. 701, to review the affirmance of a judgment
against the petitioner here in an action to enforce a national bank
stockholders' liability.
MR. JUSTICE ROBERTS delivered the opinion of the Court.
We are called upon to determine the application in the
circumstances of this case of Sec. 23 of the Act of Dec. 23, 1913,
[
Footnote 1] which imposes
liability upon stockholders of a closed national bank.
November 25, 1929, the American National Bank of Enid, Oklahoma,
pursuant to a resolution of its directors,
Page 324 U. S. 201
which recited that it contemplated "disposing of its current
business and thereafter going into voluntary liquidation," sold its
business and transferred its assets to the First National Bank of
the same city in consideration of the payment of $350,000 and the
assumption of its liabilities as disclosed by its books. The
purchasing bank retained $110,000 to guarantee the collection of
negotiable paper taken over and to cover certain real estate
temporarily retained by the seller. American closed its business
and promptly distributed the $240,000 cash received ratably amongst
its stockholders.
The respondents were parties to an agreement, made in 1922,
whereby large sums were deposited in a bank to await the settlement
of disputes relative to the ownership of the funds deposited. In
1930, settlement was reached and demand made by the respondents for
the payment of the deposit. It was then discovered that the fund
had been dissipated, and that officers of American, which was a
correspondent of the bank of deposit, had participated in the
embezzlements. The respondents thereupon brought action in a State
court against American, its officers and directors, to fasten
liability on the bank and the individuals. A judgment against
American for $249,000 was affirmed by the Supreme Court of
Oklahoma. [
Footnote 2]
The respondents brought the present suit in the District Court
for Western Oklahoma to establish a trust in the liquidating
dividend of $240,000 paid by American to its stockholders and to
recover from the stockholders to amount necessary to satisfy the
balance of the judgment remaining after restitution by stockholders
of the liquidating dividend; that is, to enforce the double
liability of stockholders. Recovery was had on each cause of
action, and also on a third against the former directors of
American. The Circuit Court of Appeals affirmed the judgment
Page 324 U. S. 202
on the first and second causes of action and ordered dismissal
of the third. [
Footnote 3]
On November 14, 1929, the petitioner sold his stock in American
in good faith and for a valuable consideration to one Oven.
December 20, 1929, the stockholders and directors of American held
the necessary meetings and took appropriate action under the
National Bank Act [
Footnote 4]
to go into voluntary liquidation, and thereafter such liquidation
went forward. It will be observed that the sale of petitioner's
stock was within in sixty days of November 25th and within sixty
days of December 20th. The petitioner was a defendant in the
present action to enforce stockholders' liability, and judgment
went against him as a stockholder. In a petition for certiorari, he
urged a number of defenses which the Circuit Court of Appeals had
overruled. We granted certiorari limited to the question whether
his sale of his stock relieved him of liability. [
Footnote 5]
Does § 23 of the Act of 1913 justify the judgment against the
petitioner? The statute reads in part:
"The stockholders in any national banking association who shall
have transferred their shares or registered the transfer thereof
within sixty days next before the date of the failure of such
association 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."
We are of opinion that the petitioner is within the plain terms
of the law. On its face, the Act grants no exemption due to the
facts that the sale was made for consideration and in good faith,
that, at the time, American was believed to be solvent, or that the
existence of the claim ultimately established by the respondents
was then not known to the respondents or to the petitioner.
Page 324 U. S. 203
Prior to the adoption of § 23 as a part of the Federal Reserve
Act of 1913, [
Footnote 6] the
liability of shareholders in a national banking association had
been imposed by R.S. § 5151. Section 23 of the Act of 1913
reenacted, with slight verbal changes, the first clause of the
first sentence of R.S. § 5151, which provided:
"The shareholders of every national banking association shall be
held individually responsible, equally and ratably, and not one for
another, for all contracts, debts, and engagements of such
association to the extent of the amount of their stock therein at
the par value thereof, in addition to the amount invested in such
shares."
R.S. § 5151 had been before this and other courts for
interpretation, and, under it, it was held that the gist of any
action to impose liability upon a stockholder who had transferred
his shares prior to the actual closing of the bank was that the
transfer was not a real one or was fraudulent -- that is, made with
the purpose to avoid the statutory liability. [
Footnote 7] It is obvious that, when Congress came
to write the Act of 1913, it intended, while leaving the right of
recovery for transfers not falling within sixty days of the bank's
closing to be adjudged according to the old standard of fraud or
intended evasion of liability, to announce a drastic new rule
denying effect to all transfers made within sixty days of the
bank's cessation of business. It is impossible to read the new
enactment of 1913 in any other sense. The only cases dealing with
the question in lower federal courts have so held. [
Footnote 8]
Page 324 U. S. 204
The petitioner insists that, as the initiation of the
liquidation of American was voluntary, no cause of action against
stockholders arose by reason of this action. But we think that,
where a bank closes its doors and ceases to transact business the
right of creditors or of a receiver to enforce stockholders'
liability matures at the time of such closing, whether as a result
of voluntary action or of adverse action by the Comptroller of the
Currency, or of the appointment of a receiver, if at that time the
bank was insolvent, as American undoubtedly was, if the
respondents' claim was taken into the reckoning. [
Footnote 9]
The judgment of the court below was right and must be
Affirmed.
[
Footnote 1]
C. 6, 38 Stat. 251, 273, 12 U.S.C. § 64.
[
Footnote 2]
American National Bank of Enid v. Crews, 191 Okl. 53,
126 P.2d
733.
[
Footnote 3]
Hoehn v. Crews, 144 F.2d 665.
[
Footnote 4]
12 U.S.C. § 181.
[
Footnote 5]
323 U.S. 701.
[
Footnote 6]
Supra, Note 1.
[
Footnote 7]
Crescent City Nat. Bank v. Case, 99 U. S.
628;
Bowden v. Johnson, 107 U.
S. 251;
Whitney v. Butler, 118 U.
S. 655;
Stuart v. Hayden, 169 U. S.
1;
Earle v. Carson, 188 U. S.
42;
McDonald v. Dewey, 202 U.
S. 510.
[
Footnote 8]
Fletcher v. Porter, 20 F.2d 23, and
Collins v.
Caldwell, 29 F.2d 329, are in accord with the decision of the
Circuit Court of Appeals in the instant case.
[
Footnote 9]
Compare Richmond v. Irons, 121 U. S.
27,
121 U. S. 48,
50.