Von Glahn v. . Harris

PeaesoN, C. J. Several interesting questions were discussed on the argument.. We will confine ourselves to one of them, because a decision of that disposes of the ease, and we prefer to let the others stand over for further consideration. We put our decision on the ground that by a proper construction of the clause of the charter of the bank, making the stockholders liable to the creditors of the bank, one creditor cannot maintain an action ; but may sue in the name of himself and all of the other creditors, who will become parties to the action and prove their debts, so as to entitle themselves to a part of the fund, in analogy to a bill in equity, by one creditor in behalf of himself and the other creditors, to have an account of the distribution of the assets of the estate; and in analogy to the proceedings in bankruptcy, where all of the creditors are required to prove their debts and have a dividend of the fund; and in analogy to the proceeding of a creditor of a deceased debtor, to have the account taken and payment of debts as provided in the act, “'Estates and Administrators,” chap. 45, Battle’s Revisal. Otherwise to be excluded from all claim on the fund. The clause is in these words: “ In case of insolvency or ultimate inability of the bank to pay, the individual stockholders shall be liable to creditors in sums double the amount of the stock by them respectively held.” Whether the stockholders are sureties for each other, so that the solvent stockholders must answer for the insolvent stockholders within the limits of double the amount of stock held by .them, or aro only bound for a ratio part of the debts of the bank, is a question into which wrn will not enter. It is adverted to, only to show the distinction between our case and the numerous cases cited on the argument, all of which turn upon the wording of the several charters; and to have it understood that our decision is *330 upon tbe meaning of' the words used in the charter under consideration. Assuming the insolvency of the bank, a liability is imposed upon the stockholders, to the creditors of the bank, in sums double the amount of the stock held by them respectively, in order to raise a fund in aid of the assets of the bank, which are supposed to be exhausted for the satisfaction of the creditors of the bank. Double the amount of his stock is the limit of the liability of a stockholder. Whether he is liable to the full amount of double the value of his stock, or will be discharged of his liability by the payment of a less sum, depends upon the amount for which the bank is in default. Eor instance, if the amount due to depositors and bill holders and other creditors exceeds or equals the sum of double the whole amount of stock, after exhausting the assets of the bank, then the stockholders are liable for the full sum of double the amount of their stock. But if the amount for which the bank is in default to its creditors is short of double the amount of the stock, then the stockholders are not put under obligation to pay double the amount of their stock, but will be discharged on payment of a less sum. For illustration, suppose the default of the bank reaches only the amount of the stock, or only-one half of the amount of the stock, then a stockholder, by payment of the amount of his stock, or one half thereof, is discharged of the liability imposed on him by the charter. This is the necessary construction, for a stockholder is not to pay double when one half will pay the debts of the bank. How can it be fixed with judicial certainty whether the bank is in default, in a sum double the amount of the shares held by its stockholders, or in a sum of equal amount, or of one half thereof, so as to enable the Court to enter judgment against any one stockholder? In order to do this, there must be an account taken of the condition of the bank, and the amount of debts left unpaid by its failure, and thus fix the amount for ■ which the stockholders are liable; whether a sum double the *331 amount of his stock, or its single amount or half, or other less sum. An account of this kind, taken in an action by one creditor of the Bank against one stockholder, would not be binding upon the other creditors or the other stockholders ; and it is absurd to suppose that the meaning of the charter is, that an account should be taken in the action of every bill holder or depositor against any one stockholder that he may choose to single out. If these innumerable single actions could be maintained at law under the old mode, the stockholders could have invoked the aid of the chancellor to prevent multiplicity of actions, vexation and an unnecessary accumulation of costs, by a bill in equity. Under C. C. P., he is entitled to this relief as a defence to the action. There is another view of the question ; in an action by one creditor against one stockholder, it is impracticable to state an account showing the amount of the debts of the Bank. The amount of deposits may possibly be arrived at by the books of the Bank, so the books may show the amount of notes put in circulation ; but how can it be ascertained what amount of the notes have been lost or destroyed, and for one cause, or another, will never be presented for payment? So it would be impossible to state the account without resorting to the enlarged powers conferred by act of Congress in cases of bankruptcy, and settling the estates of deceased persons conferred by statute, and the enlarged power exercised by the chancellor’s “ in creditors’ bills,” by which, after due notice, all creditors who fail to prove their debts, are counted out in the division of the fund. This would fix the amount of the debts of the Bank and the amount of the liability of the stockholders, but the chancellor has no such jurisdiction at the suit of a single creditor, and only exercises it when necessary to avoid multiplicity of actions, costs, &c., at the instance of one who sees for himself and all others of the same class who will come in and make themselves parties. vThere is still another view of the question. An action against one of two or more joint obligors, might be defeated *332 at common law by plea in abatement. This is allowed by statute, making joint obligors “joint or several.” An action by one of two or more joint obligors was fatally defective, and could be defeated by demurrer, if the error appeared on the face of the declaration, or by plea of the general issue and notice to non-suit for the variance. ' The charter of the Bank imposes upon the stockholders an obligation to fay to the creditors of the JBanh double the amount of their stock, if the default of the Bank makes so large a fund necessary. So the creditors of the Bank are joint obligees and they must all be parties plaintiff in an action at law, there being no statute which enables them to sue separately, and no provision of the charter to that effect, as in some charters, set out in the authorities cited. The only mode of avoiding this rule is to proceed in equity, in the name of one or more of the creditors, in behalf of all. This mode of proceeding is without a precedent in our Courts; but under the time-honored maxim, “where there is a right there is a remedy,” by force of which the equity jurisdiction of the chancellors in England has grown up, to its vast proportions, the Superior Courts, under the present system may well, upon the analogies referred to, allow an action in the name of one or more of the creditors in behalf of themselves and such other creditors, &c. This clause was put in the charter for the purpose of adding to the credit of the Bank. The stockholders have had the benefit of it. The creditors have now in turn a right to hold the stockholders liable to raise a fund out of their individual means in aid of the default of the Bank. The idea that one creditor can “ nibble at the fund ” and take judgment against one solvent stockholder and then another until his debt is satisfied, leaving the other-creditors to shift for themselves after tiie fund is frittered away, would seem to be out of the question, on any reasonable construction of the clause in the charter, and contrary- to all principles of fairness and equity, the purpose being to raise a fund in aid of the assets of the Bank for the benefit of all the creditors. *333 In reply to the last view, the counsel of plaintiff calls the attention of the Court to Rev. Code, chap. 108, sec. 2. Most of the provisions of that chapter are merely in affirmance of the common law. Section 2, which is relied on, was intended to avoid the very awkward expressions, “ such person or persons,” “he, she, or they” — himself or themselves” — to be met with in some badly drawn statutes. No error. PeR Cukiam. Judgment affirmed.