Davis v. Essex Baptist Society.

less three hundred dollars, given to the same persons and their successors forever in trust to be invested as aforesaid, and the use of which is to be applied from time to time to the cause of missions. The defendants will prove that when said stock was purchased the defendants were and now are the successors of said Second Baptist Church and Society in Saybrook in said trust, and that on or about the 27th day of January, 1867, a committee of the defendants invested in the purchase of said thirty-six shares, the sum of about $1,900, the same being wholly derived from said. bequest of William Williams, and being the whole of the funds derived from said Williams, viz. two-nineteenths of his estate, less three hundred dollars, and held by the defendants only under said trust."

The defendants further offered to prove "that by the failure of said Ocean National Bank, the defendants, trustees as aforesaid, have wholly lost all of the trust fund received under said will, and have not now in their hands or possession any property or estate, except such as was given and granted to them by other grantors and donors in trust for charitable and pious uses, and none which is liable to be taken to pay the assessment set forth in the plaintiff's declaration."

This evidence was excluded. The defendants duly excepted to the ruling of the court excluding said evidence.

The foregoing constituted all the facts which were proved, and which were offered to be proved, upon the trial.

The evidence was excluded upon the ground that the facts which were offered to be proved constituted no defense against the action.

Section 5150 of the Revised Statutes, the personal liability section of the act authorizing the establishment of National banking associations, is a part of the charter of each National bank. It "pledges the liability or guarantee of the stockholders, to the extent of their stock, to the creditors of the company, and to which pledge or guarantee the stockholders, by subscribing for stock and becoming members of it, have assented." Hawthorne v. Calef, 2 Wall. 22.

A stockholder of record is liable to an assessment although he

Davis v. Essex Baptist Society.

has sold his stock, if such transfer has not been made upon the books of the bank. Pledgees of stock who hold the legal title and are stockholders of record are liable, although the pledgor may be the actual owner of the stock. So long as stockholders permit themselves to appear upon the record as stockholders, their personal liability continues. The creditors have a right to rely upon the guarantee of those who continue to hold themselves out as stockholders. In ordering an assessment, the stock certificates and the stock ledger are the basis upon which the comptroller of the currency, in the absence of fraud or mistake, must rely. It is impossible for him to ascertain the equities of each stockholder, and if any stockholder could relieve himself from the consequence of his laches by showing that another unknown person was the owner of the stock, creditors might have payment of their debts indefinitely postponed, and an unjust burden might be imposed upon the acknowledged stockholders. Some definite and conclusive means of information as to the ownership of stock for the purposes of assessment ought to be furnished to creditors, to the receiver, and to the comptroller. This information should be found, in the absence of fraud or mistake, in the certificates of stock, and in the stock books of the bank.

But the defendants insist that inasmuch as section 5151 frees from personal liability persons who hold stock as trustees, extrinsic evidence can be resorted to for the purpose of proving the trust, although the certificates and the stock ledger do not disclose trusteeship.

Creditors have a right to know who have pledged their individual liability. If the trusteeship does not appear upon the books of the bank, they have a right to infer that the stockholder is personally liable. If a trustee wishes to disclose his trusteeship, there is no difficulty in giving notice upon the books of the 'bank. If he does not disclose his trusteeship, he is guilty of laches, for which others should not suffer. The settlement of the affairs of an insolvent bank would be rendered a matter of great labor, expense and delay, if persons who appeared upon the books of the bank as individual stockholders were permitted to relieve themselves by proving that they held the stock as executors, or VOL. II- 15

Davis v. Essex Baptist Society.

guardians, or trustees. If A is permitted to prove that he holds his stock as trustee for B, and B is permitted to show he is trustee for A, litigation would be protracted, individual stockholders would suffer, and the strength of the personal liability section might be seriously impaired. Existence of the trust should appear upon the evidence of ownership. Adderly v. Storm, 6 Hill, 628. If it does not appear, and no fraud or mistake is imputed to the bank, the trustee is in fault, and not the bank, nor the creditors. As between two persons otherwise equally innocent, the one who is guilty of laches whereby the other was misled should suffer. Adderly v. Storm, 6 Hill, 628; Stover v. Flach, 30 N. Y. 64; Creese v. Babcock, 10 Metc. 525; Hale v. Walker, 31 Iowa, 344.

Again the liability of the stockholder arises from his virtual contract, evidenced by his subscription to the stock, or by his becoming a stockholder. He thereby assents to become security to the creditors for the payment of the debts of the bank. It is not in form a contract, but is an agreement resulting from the assent of the parties to the statutory liability. "It does not exist solely as a liability imposed by statute. It is not enforced simply as a statutory obligation, but is regarded as voluntarily assumed by the act of becoming a stockholder. By such act he consents to be bound, or that his property shall be charged with debts of the corporation, to the extent and in the manner prescribed by the act of incorporation." Loury v. Inman, 46 N. Y. 125; Hawthorne v. Calef, 2 Wall. 22; Corning v. McCullough, 1 Comst. 47. The defendants, by becoming stockholders, and by the acceptance of a certificate which shows that they hold the stock in their own right, have entered into this contract of personal liability. The contract is a completed one, and cannot now be changed against the will of one of the parties into a contract of different character.

Let judgment be entered for the plaintiffs for the sum of $720, with interest on $360 thereof from February 26, 1877, and upon $360 thereof from April 26, 1877, at six per cent

Davis, Receiver, v. Weed.

DAVIS, Receiver, v. WEED.

(44 Conn. 569.)

Administrator of shareholder — assessment.

A stockholder in a National bank died intestate, and his estate was settled and distributed. Intermediate his death and the distribution the bank failed, and after the distribution an assessment was made on those who were stockholders at the time of the failure, for the payment of the bank debts. In a suit by the receiver against the administrator, held, that the administrator was not a shareholder, at the time of the failure, within the meaning of the National Banking Act, but that the estate was liable.

(Circuit Court, District of Connecticut.)

A

CTION by the receiver of a National bank, against the administrator of a stockholder, to recover an assessment for the payment of the debts of the bank. The case is fully stated in the opinion. The plaintiff had judgment below.

T. M. Davis and W. Howe, for plaintiff.

H. C. Robinson and S. Fessenden, for defendant.

SHIPMAN, J. This is an action at law brought by the receiver of the Ocean National Bank of the city of New York, to recover an assessment which is claimed, under the facts hereinafter stated, to be due from the defendant as administrator de bonis non of the estate of Nathaniel Weed. The parties agreed by stipulation in writing, waiving a jury, that the case should be tried by the court. The pleadings subsequently terminated in a demurrer to the special plea of the defendant.

The declaration alleges the organization of the Ocean National Bank of the city of New York, as a National banking association; its failure on December 12, 1871, to pay and redeem its circulating notes; the protest of said notes; the appointment of the plaintiff as receiver by the comptroller of the currency; the plaintiff's acceptance of said office; the ascertainment by the comptroller that the assets of the bank are insufficient to pay its

Davis, Receiver, v. Weed.

liabilities, and that it is necessary to enforce the individual liability of the stockholders; the order of the comptroller, dated January 19, 1877, making an assessment of forty per cent of the par value of the shares held by each shareholder, payable in two installments, to wit: $10 per share on February 26, 1877, and $10 per share on April 26, 1877, and the order of the comptroller to institute suits for the enforcement of said liability.

The declaration further alleges as follows: About the time of the failure of said bank Nathaniel Weed died intestate, leaving a large real and personal estate; at the time of said failure he was the owner of 514 shares of said bank; on or about September 9, 1872, Harvey A. Weed was duly appointed administrator of said estate; subsequently Harvey A. Weed died, and on or about December 3, 1872, the defendant, Harvey H. Weed, was duly appointed administrator de bonis non upon the estate of Nathaniel Weed, who accepted said trust, and is now said administrator; demand was made on March 22, 1877, and on June 12, 1877, for payment of said respective installments, and by reason of the premises the defendant is liable to pay said assessment.

The defendant pleaded specially the following facts: "The said Nathaniel Weed died in January, A. D. 1871, intestate; afterward, on the ninth day of September, A. D. 1872, one Harvey A. Weed was duly appointed and qualified as administrator of his, said Nathaniel's estate; six months from the date of appointment was by the court of probate for the district of said Stamford, which was the domicile of said intestate, limited as the time for creditors to present their claims against said estate; no claim in behalf of this plaintiff was presented by said administrator; all claims theretofore presented against said estate were paid and settled, and said estate was settled and according to law; afterward, said Harvey A. Weed died, on the 3d day of December, A. D. 1872, the defendant was appointed administrator of the estate of said Nathaniel, which had not been already administered; the defendant hath fully administered all and singular the goods, chattels and estate, which were of the said Nathaniel Weed, deceased, at the time of his death, and which have ever come to the hands of the said defendant, administrator, etc., to