Receivers of Stonington Bank v. Baptist Society of Groton

Seymour, J. The Stonington Bank being in process of liquidation under the provisions of the act of 1867, chapter 94, the receivers made application to the Superior Court for direction as to the proper distribution of the funds. The Superior Court has made a finding of the facts and passed a decree, and the case comes to this court by motion in error filed by the receivers. The facts appear concisely and clearly in the finding, and need not he recited here. The decree treats the ecclesiastical societies as creditors of the bank, and entitled as such to participate in the funds. The receivers complain of this, and say that the societies are stockholders, and ought to he treated as such, and to share with the other [580] stockholders the losses and misfortunes-which have befallen the bank. This question must depend upon the construction of the 817th section of the Act Concerning Communities and Corporations, in connection with the charter of the bank. The provision in the charter in relation to subscriptions by the school fund and by ecclesiastical societies is similar to that commonly found in the bank charters of (he state. The societies may within certain limits subscribe and become owners of stock, with the privilege of' withdrawing the shares so subscribed upon six months’ notice. In the case under consideration notice was given before the bank went into liquidation, bul the six months expired after the receivers had been appointed. The question is to what were the societies entitled at the end of the six months. Their privilege by the terms of the charter is to withdraw the shares by them subscribed. It seems to us that by subscribing for the stock the societies become stockholders, and that when a stockholder withdraws his shares, ho takes the proportionate part of the assets pertaining to those shares, and such we understand to be the construction which has been given to these charters in all cases where the bank has become insolvent, or has-gone into liquidation. Where however shares have' beep withdrawn while the bank is continuing its business, the practice has been, we suppose, to treat the shares as being of par value, neither more nor less; the theory being that banks divide all their earnings, and nothing more than their earnings, and while a bank is carrying on its business it would be impracticable to ascertain the value of its assets, except in the somewhat arbitrary manner above indicated. But in the case of insolvency, it was early held in the Eagle Bank cases, reported 7 Conn., that the privileged stockholders (as they are called) withdrawing -their shares take their proportionate share of the property after all debts are paid, and no more. In those cases the assets were insufficient to pay the debts, and the question was between creditors and these quasi stockholders. In the case before us the assets are sufficient to pay the debts, and something remains to be divided among the stockholders. The question here therefore is between different classes of [581] stockholders, and the equitable considerations are not precisely the same as in the Eagle Bank cases. But the question turns, not upon equitable considerations, but mainly on the fair construction to be given to the phrase, “ withdrawing of shares,” and it is so treated by the court in the cases in 7 Cpnn., and also in the recent case of State v. Phœnix Bank, 34 Conn., 238. In conformity with the decisions in those cases, we regard a stockholder’s share as his proportion of the assets after debts paid and liabilities satisfied, and think that ecclesiastical societies who have subscribed for stock under the provisions of the charter of the bank are stockholders, and that no distinction can or ought to be made in their favor in the distribution of the funds by the receivers. It was urged in argument that the 317th section of the Act Concerning Communities and Corporations does provide for stock subscribed by the state and school fund, and gives to such stock, whether withdrawn or not withdrawn, a preference over all creditors of the bank except depositers- and bill-holders, and the claim is that, by parity of reason, the stock subscribed by the societies should have the same privilege. All that we can say on this subject is, that the state by its sovereign authority gives itself by this act a somewhat extraordinary priority, and we cannot extend that priority by construction beyond the precise extent fixed by the legislature. We must therefore render judgment that there is error in the decree complained of. In. this opinion the other judges concurred.