In Re Carolina Bank & Trust Co.

Connor, J. In 1911 the petitioner, John F. McLean, purchased five shares of the capital stock of the Carolina Bank and Trust Company, a corporation organized and engaged in the banking business, at Red Springs, N. C., under the laws of this State. The certificate issued to the petitioner for these shares of stock was endorsed by him and assigned to said company as collateral security for his note given for the purchase price of said shares of stock. This note was endorsed by J. D. McLean. Annual dividends declared by said company on said shares of stock were paid from time to time to the petitioner, until 1921. During that year the petitioner notified the cashier of said company that he was insolvent and unable to pay his note, then held by said company; he requested the said cashier to sell the said shares of stock, and to apply the proceeds of said sale to the payment of said note. The said cashier attempted to sell the shares of stock, but was unable to do so. Dividends declared on the stock which stood in the name of the petitioner on the books of the corporation were not paid to him, after 1&21, but were applied as payments on his note. At the date of the insolvency of the corporation, when the Corporation Commission of North Carolina took possession of its assets, under the provisions of chapter 113, Public Laws of North Carolina, 1921, five shares of its capital stock stood on its books in the name of the petitioner. The said shares of stock had not been sold by the petitioner or by the cashier of the corporation at his request. Upon the foregoing facts there was no error in the finding by the court that the petitioner, John F. McLean, was a stockholder of the Carolina Bank and Trust Company at the date of its insolvency, and that as such he was liable to an assessment for an amount equal to the par value of said shares of stock. Trust Co. v. Jenkins, 193 N. C., 761, 138 S. E., 139. The facts in this case are easily distinguishable from the facts in Darden v. Coward, ante, 35, 147 S. E., 671. In that case the plaintiff, whose name appeared on the books of the insolvent bank as the owner of ten shares of its capital stock, had sold said shares of stock to the cashier of the bank prior to its insolvency, and at the date of such sale had transferred the certificate for same to said cashier, with directions that such cashier as transfer agent of the bank, cancel the certificate in the name of the plaintiff, and issue a new certificate to the purchaser. The failure of the cashier to make such transfer was due to his neglect and not to the fault of the plaintiff. In the instaqt case, no sale had been made; petitioner’s certificate was in the possession of the bank as col *616 lateral security. Tbe certificate bad not been delivered by tbe petitioner to tbe casbier as tbe transfer agent of tbe corporation, witb direction to transfer the same to a' purchaser. Tbe petitioner bad done nothing to divest himself of bis rights, or to relieve himself of bis liabilities as a stockholder of tbe Carolina Bank and Trust Company prior to its insolvency. Tbe statutory liability of the petitioner as a stockholder of the Carolina Bank and Trust Company was not affected by the provisions of chapter 113, Public Laws of North Carolina, 1927. Such liability was not altered in its nature or enlarged in its extent. Only the procedure for its enforcement was affected by section 13 of said statute. In Corporation Commission v. Murphey, ante, 42, 147 S. E., 667, we held that the statute is valid, and that its only effect is to remedy defects which under the procedure formerly prescribed by statutes as construed by our decisions, bad prevented an effective enforcement of the statutory liability of stockholders in banking corporations, organized under the laws of this State. Petitioner’s contention that the statute is not applicable to him because it was enacted after be purchased bis stock cannot be sustained. Tbe statutory liability of stockholders of banks organized under the laws of this State has been held to be contractual in its nature. For this reason it is held in Smathers v. Bank, 135 N. C., 410, 47 S. E., 893, that the statute enacted in 1897 should be construed to operate prospectively only. This principle does not apply to section 13 of chapter 113, Public Laws of North Carolina, 1927, for the reason that this statute does not impose any new liability, or enlarge the liability theretofore imposed by statute. It affects only the procedure by which the liability incurred by jDetitioner when be bought bis stock may be determined and the sum for which be is liable may be assessed. The identical question here presented was decided in Lamar v. Taylor, 141 Ga., 227, 80 S. E., 1085, contrary to the contention of the petitioner. Tbe liability of the petitioner as a stockholder of the Carolina Bank and Trust Company, by reason of the statute, was for all “contracts, debts and engagements of the corporation,” to the extent of the par value of bis stock. He was liable equally and ratably with the other stockholders. This liability did not arise when the corporation became insolvent or when its assets were taken over by the Corporation Commission; nor did it arise when the assessment was made by the said Commission. It arose when the petitioner became a stockholder by the purchase of five shares of the capital stock of the corporation in 1917. Tbe amount for which be is liable was determined by the assessment. He is now a debtor in said amount to the liquidating agent of the insolvent corporation, as the representative of its depositors and other creditors, and of its stockholders. "When his assessment has been collected, its amount will *617 be part of tbe general assets of tbe corporation and will be immediately available for distribution as provided by tbe statute. When tbe expenses of tbe liquidation have been paid, and all of tbe liabilities to creditors have been discharged, tbe assets then in tbe bands of tbe liquidating agent, if any, will be distributed pro rata to tbe stockholders. Section 13, chapter 113, Public Laws 1927. Dividends upon the claims of petitioner as a depositor of the insolvent banking corporation, in the bands of the liquidating agent, are due by such agent and are payable by him to the petitioner. The petitioner is a creditor of the liquidating agent to the extent of the dividends apportioned to him out of the general assets of the corporation. These dividends were properly applied by the liquidating agent as payments on the amount due him by the petitioner, on account of the assessment. Equity and justice require that the liquidating agent, when be comes to settle with the petitioner, shall deduct the amounts of dividends due to him as a depositor, from the amount due by him to the liquidating agent on account of bis assessment by reason of bis statutory liability. Davis v. Mfg. Co., 114 N. C., 321, 19 S. E., 371. It does not follow that a depositor who is also a stockholder of an insolvent banking corporation is entitled to have the total amount of bis deposit applied as a payment on bis assessment. Only the dividends apportioned to him as a. depositor may be so applied. To bold otherwise, would be unjust and inequitable both to creditors and to other stockholders. Wo find no error in the judgment. It is Affirmed.