Paw Paw Depositors Corp. v. C. G. Albert, Inc.

Potter, J. Plaintiff: filed a bill against defendant to enforce its statutory stockholder’s liability in the amount of $14,500 growing out of defendant being a stockholder in the Paw Paw Savings Bank. The Paw Paw Savings Bank was closed by order of the governor February 14, 1933, in pursuance of a telegram from the banking commissioner enforcing a bank holiday. February 22,1933, it was authorized to resume a limited banking business. The bank reopened February 23, 1933, and continued until' March 6,1933, when it was again closed by proclamation of the President of the United States. It con- *413 tinned closed under the order of the President until August 4, 1934, when it was reopened. It reopened March 10, 1933, to carry on a trust business. A conservator was appointed March 30, 1933. January 3, 1934, an assessment on stockholders was made by the banking commissioner, Avith the approval of the governor. The banking commissioner had the poAver, with the consent of the governor, to take over as conservator the custody and management of the bank in question. Act No. 32, Pub. Acts 1933, as amended. The banking commissioner upon the taking over of the bank as conservator succeeded' to all of the legal rights of the bank. 3 Comp. Laws 1929, § 11945. The banking commissioner, Avith the consent of the governor, ordered a 100 per cent, assessment on the stock of the bank. The stock in question was held by a corporation Avhicli Avas individually liable, equally and ratably, to assessment to satisfy the obligations of the bank to the full amount of the stock held b}^ it. 3 Comp.' Laws 1929, § 11945. It is claimed defendant is not liable because the notice of assessment did not specify it was individually liable under section 48 of the general banking act (3 Comp. Laws 1929, § 11945). The State banking commissioner, by and with the approval of the governor, ordered the assessment levied on the stockholders of the bank of the statutory liability, equally and ratably, and not one for another, to satisfy the debts of the bank. The order making the assessment specified: “Said assessment is a personal liability of each stockholder equal to the par value of the stock he owns.” After this assessment was made and on January 10,1934, defendant Avas given notice by the conserva *414 tor of the levying of the assessment above mentioned by order of the commissioner of banking, and approval by the governor, and stated: “You are ordered to appear at the Paw Paw Savings Bank and pay your assessment amounting to $14,500 on 145 shares of stock.” Up to this time there was no question of defendant’s liability. A petition for reorganization of the bank was filed in the circuit court of Van Burén county by Patrick H. O’Brien, attorney general for the State of Michigan, on February 28, 1934; notices were given; and on March 20, 1934, the order for reopening the bank was filed and entered. This order apparently was made on March 20, 1934, by Honorable Fred T. Miles, circuit judge of the 20th judicial circuit,' sitting in the circuit court for Van Burén county. This order provided for the turning over of the assets; that the bank could continue to receive trust deposits ; it was directed to proceed forthwith with the collection of the statutory assessment against all stockholders who had failed and neglected to pay their assessment; and that the bank upon reopening should be subrogated to all the rights and privileges conferred upon the conservator in carrying on and transacting the business. The Paw Paw Depositors Corporation had been organized and the bank was directed to fulfill, carry out and complete the agreement and to transfer to the Paw Paw Depositors Corporation all of its unacceptable and charged-off assets. It recites that the plan of reorganization provides the commissioner of banking proceed to collect the 100 per cent, stock assessment against all stockholders pursuant to the statute, that such assessment had been levied and approved and ratified the assessment as levied. *415 It provided for the cancellation of the stock of any stockholder on which the assessment remained unpaid at the expiration of 10 days from the entry of the order, hut that such cancellation of stock should not relieve the owner of the stock or any other person or persons legally liable for the payment of assessments from the statutory liability and responsibility to pay such assessment which should be enforced in a suit at law or in equity, and that payment of the assessment levied, after the stock was can-celled, would not entitle the person paying the assessment to the return of the stock. It provided that upon the expiration of the 10 days from the entry of the order the shareholders who had paid their assessment and the subscribers for stock in the reorganized bank should meet and elect officers, and for the turning over of the business by the conservator to the reorganized bank. Defendant claims it is essential to the enforcement of a liability of an owner of bank stock that notice of the personal liability involved in the assessment be given to the stockholder. There is no question in this case that the stockholder was charged with notice of such statutory liability which was a part of the contract by which it acquired the stock. The order of the commissioner of the banking department directing the assessment of the 100 per cent, statutory liability recites that such assessment “is a personal liability of each stockholder. ” The banking commissioner had no right to levy any other assessment. The mere levying of the assessment was sufficient to give the defendant notice that the banking commissioner was attempting to enforce the statutory liability of the stockholder. Actual notice was given to the defendant. It was directed to appear and pay the amount of such assessment. *416 It is contended that, inasmuch as the stock in the bank in question after its reorganization was sold to another State bank and the Paw Paw Savings Bank ceased to exist, defendant’s liability may not be enforced because the plaintiff may not act as a liquidating agent of a nonexistent corporation. We think there is no question the instrument transferring the statutory liability to the plaintiff conveyed the legal title of the interest covered by the power and that plaintiff has a right to sue. Baker v. Baird, 79 Mich. 255; Weaver v. Richards, 144 Mich. 395 (6 L. R. A. [N. S.] 855). Nor do we think there is any question that the right to enforce the statutory liability of the stockholders in the bank in question passed to the plaintiff under the facts in this case. Defendant also claims the failure to publish and post notice of plan of reorganization as required by Act No. 32, § 7, Pub. Acts 1933, as amended by Act No. 95, Pub. Acts 1933, invalidates the proceedings. The answer to this is, the record shows the affidavit of posting and order to show cause, to which is attached a printed copy of that order, all of which is in the chancery file relating to the reorganization of the bank. The record shows such notice was posted on the door of the bank and it was also published in the newspaper printed and published in Paw Paw. All of the stockholders in the bank whose right had not been forfeited by the cancellation of their stock in pursuance of the order of the court participated in the plan of reorganization. Regardless of whether defendant’s stock was legally cancelled for failure to pay the assessment levied against it or not, a question it is not necessary to decide, defendant’s statutory liability to pay the assessment has not been discharged and by mesne conveyances the right *417 to enforce such liability has become vested in plaintiff. Decree of the trial court affirmed, with costs. North, Btjtzel, Btjshnell, and Sharpe, JJ., concurred with Potter, J.