McCulloch, C. J.
The plaintiff, as treasurer of Sebastian County, instituted this action against the Bank of Midland, a domestic corporation engaged in the banking business, and its stockholders, to recover the sum of $1,367.51, alleged to have been deposited by plaintiff as treasurer in said bank and which the bank failed or refused to pay over oil demand.
The case was tried before a jury, -and a verdict was returned against all of the defendants save one, and they appealed to this court. The plaintiff appealed from the judgment in favor of defendant, Johnson.
Plaintiff was elected as treasurer of Sebastian County, and served for the term of two years, ending October 31,1912. During the time for collection of taxes the tax collector deposited part of his collections in the Bank of Midland, and when he made his settlement with the county court and paid over the county funds to the treasurer he g’ave that officer a check on the Bank of Midland for the sum of $1,437.51, which the treasurer turned over for credit and deposit in that bank. This occurred on or about the 1st day of July, 1912, and the bank failed on August 7, 1912. A few days thereafter plaintiff, as treasurer, made demand for the funds, and upon failure to pay, he instituted this action before’ the expiration of his term. He made his settlement with the county, and paid over all the funds due the county, including the amount involved in this controversy, after the expiration of his term, but before the trial of this case, and when the case came on for trial the defendants sought an abatement of the action on the ground that the stockholders of the bank were liable only to the county, and not to the treasurer personally, and that since the funds had been paid over to the county all liability on the part of the stockholders ceased.
That is the first question presented for our consideration.
(1-2) Precisely the same condition existed in the case of Warren v. Nix, 97 Ark. 374, but it does not appear to have been argued as ground for reversal, and the point was not discussed in the opinion. The stockholders were held liable, however, in that case, and it can be treated as a decision of that proposition of law. We therefore hold, in conformity with that decision, that, where liability has accrued to the county by a deposit of funds and a failure or refusal to pay over on demand, and suit is brought by the proper officer to recover on behalf of the county, such action is not abated by the payment of the funds to the county by the officer who is secondarily liable. We held in Warren v. Nix, supra, that the statute makes the stockholders primarily liable, and that where action has been commenced for recovery of the money for the county it does not abate from the payment of the amount, but may be prosecuted to final judgment for the benefit of those who are secondarily liable.
The statute (Kirby’s Digest, § 1990) provides that “the said officers and the sureties on their official bonds, the bank and the stockholders of the bank, shall be liable for all funds that such bank on demand shall fail to pay to the person entitled to receive the same.”
This refers to the public funds mentioned in the preceding' clause of the statute, and, of course, only establishes a liability to the county.
(3) There can not be direct liability both to the county and to the officer and sureties on his bond, but after the liability to the county has once attached and suit instituted to recover it, such liability is not extingnashed by a payment made, by the officer in the regular course of his settlement with the county. Those who pay under those circumstances are subrogated to the rights of the county against the stockholders of the bank. Wilson v. White, 82 Ark. 407.
Learned counsel for defendants cite authorities which appear to militate against the right of subrogation under a statute enacted purely for the protection of public revenues.
We think, however, that these authorities have no controlling force in this case, for the reason that they relate merely to the remedy, and hold that there is no subrogation to the remedies given to the public by the statute. It has been held by this court in numerous oases that a tax purchaser under void tax sale is subrogated to the rights of the State for the tax lien which has been discharged, but, of course, the purchaser is not subrogated to the remedies of the State as to a summary sale of the property.
It is also urged that subrogation is an equitable remedy, which can not be invoked at law.
(4) It is, however, sufficient answer to that to say that no objection was made to a trial of this case at law, and if the correct result has been worked out the judgment will not be reversed because the case was tried in the wrong forum. Wilson v. White, supra.
The defendants who have appealed defended on the ground that they were not stockholders, some of them that they never owned stock in the corporation, and others that they parted with their stock before the liability attached. The defense of each of them presents somewhat different questions and must be discussed separately.
One of the defendants, McEachin, was the principal stockholder and cashier of the bank, and had active management of it up to the time he sold his stock on May 14, 1912. He sold his stock to one I. H. Cunningham by written assignment and executed a power of attorney authorizing the transfer of the stock on the books of the bank. Cunningham paid for the' stock and McEachin immediately ceased all connection with the bank as stockholder. He testified that the bank was solvent at that time, and that it became insolvent solely on account of money of the bank which was taken out by Cunningham after the latter took charge. The transfer was never recorded on the books of the corporation, nor was certificate thereof filed in the office of the county clerk as ■provided by the statute. I. H. Cunningham and W. R. Cunningham (presumed to be kinsmen, but this is not definitely shown in the evidence), took charge of the bank and managed it up to the time of the failure. I. H. Cunningham was president and W. R. Cunningham cashier. The Cunninghams assumed active management of the bank at the time of the purchase of McEachin’s stock, and continued until the bank failed and was placed in the hands of a receiver in August, 1912.
The court, over the objection of the defendants, gave the following instruction:
“3. If you find from the evidence that R. A. Mc-Eachin, W. T. Quinley, Amos Johnson, or either or all' of them, were stockholders in said Bank of Midland on the dates when said T. A. Harris, as such sheriff and collector, deposited said public funds in said bank, and that they, or either of them, thereafter and before said 7th day of August, 1912, sold or transferred their stock in said bank, notwithstanding said sale, you should find for the plaintiff, if you find that they, or either of them, from their relation with or to said bank, or from knowledge or information with reference, to its financial condition knew, or could’have known, of its solvency from knowledge or information sufficient to put them on notice that same was solvent at time of the sale of their said’ stock, if you find a sale was made, and that the bank was insolvent.”
(5-6) The law applicable to this case is stated in Warren v. Nix, supra, and this instruction is clearly in conflict with it. The instruction proceeds upon the theory that if, before the deposit was made, the stockholders knew that the hank was insolvent, or had such connection with the hank as to pnt them upon notice of that fact, they conld not dispose of the stock so as to escape liability for future deposits. Now, the deposit was made by .the treasurer on or about July 1, 1912, which was nearly two months after McEachin had sold his stock to Cunningham. The liability of the county does not relate back to the time that the money was placed in the bank by the colléctor, for he gave a check to the treasurer on the bank, and there is nothing in this case to show that the cheek would not have been paid if demanded. In fact, the treasurer himself testified that he placed the check in the bank as a deposit to his credit as treasurer. Therefore, the deposit dates from the time that the treasurer put the check in the bank for credit. If McEachin as a stockholder assigned his stock before that time, and did all that the law required him to do in making the assignment, he was not liable for future deposits made, even though the bank was insolvent at the time he assigned his stock and he knew it. The liability of a stockholder for public funds attaches at the time of the failure or refusal to pay over on demand. In Warren v. Nix, supra, we said:
“Section 1990 of Kirby’s Digest provides'that the stockholders of the bank shall be liable for the public funds therein deposited when the bank shall fail to make payment upon demand, and this in effect fixes the time when such liability arises, and that is when default in payment is made; this also determines that such liability is against only those who are stockholders at the time of such default.”
(7) Notwithstanding the fact that the legal liability only attaches to those who are stockholders at the time of the default, yet if, after the deposit is made in the bank and the inchoate statutory obligation is thus incurred, if a stockholder transfers his stock, not in good faith but for the purpose of escaping liability and with knowledge of insolvency on the part of the bank, he will be treated as a stockholder at the time of the default, and accordingly held liable. In other words, the law treats a sale of the stock under those circumstances as fraudulent, and it does not relieve from liability. That, however, is far from holding that a stockholder in a bank can not escape future liability by transferring his stock, regardless of the condition of the bank and his intentions with respect thereto. A stockholder can not, by fraudulent transfer, escape liability for funds already deposited; but he can escape liability for future deposits by transfer of his stock, regardless of the good faith of the transaction, provided there is an actual assignment consummated according to the terms of the statute.
The court was, therefore, in error in giving the third instruction, which made the liability of the stockholders turn upon their knowledge or information of the financial condition of the bank at the time they transferred the stock, even though that occurred before the money was deposited. The fact is uncontradicted that McEachin transferred his stock to Cunningham before the money was deposited; but the transfer was not recorded upon the books of the corporation.
(8) We held in Warren v. Nix, supra, that a transfer, without the same being recorded on the books of the corporation, was efficacious for the purpose of severing the relations between a stockholder and the bank if a sale of stock has been made honestly and in good faith, and the vendor “has done all that can be required of a careful and prudent business man in order to make such transfer.”
There is a very wide conflict in the authorities on this question, but we must treat it as settled by the decisions referred to, and the only question in this case is whether or not the evidence concerning McEachin’s transfer of his stock to Cunningham brings it within that rule.
The evidence shows that McEachin had control of the bank when he assigned his stock, he being cashier at the time, and that when he severed his relations by transferring his stock there was no one legally in charge to record the transfer. However, he delivered the transfer to I. H. Cunningham, who, together with the other, W. R. Cunningham, immediately took charge of the bank, and the transferree became president. While it is true that he did not deliver the transfer into the “hands of the proper official to enter same upon the books,” for the reason that there w.as no such official, but he did deliver it to one who was. to become such official and who did become such official, and served as such for a period of nearly two months before the deposit was made. This was done openly, and the business of the bank was openly conducted by the Cunninghams with the implied, if not the express, approval of the other stockholders.
We are of the opinion, therefore, that this evidence shows beyond dispute that McEachin did all that a careful and prudent business man would ordinarily do to consummate the transfer and that he escaped liability for future deposits.
W. T. Quinley, another one of the defendants, sold and transferred his stock to I. H. Cunningham on May 14, 1912, and delivered him a power of attorney containing authority to make the transfer on the books. Quinley was originally one of the directors, but several years before he sold his stock he had severed his official relations with the bank and had no connection with it except as stockholder and depositor. He had nothing to do with the management of the bank. His case is, therefore, a stronger one than that of McEachin, and for the reasons already stated he was, according to the undisputed evidence, not a stockholder within the meaning of the statute at the time the liability of the stockholders attached.
Dyke Bros., a partnership, composed of two brothers of that name, were recorded as being the owners of eleven shares of stock. Their contention is that certificates had never been issued to them, and that they were not, in fact, stockholders.
We are of the opinion, however, that there is enough evidence to establish the fact that they were stockholders, and that being true, there is no effort to show that that relation was severed prior to the default of the bank in regard to the public funds.
(9) The list of stockholders, certified by the president .and secretary of the corporation, on file in the clerk’s office, is competent evidence for the purpose of showing who were the stockholders, and is prima facie evidence of that fact.
This list recorded the names of Dyke Bros, as holders of eleven shares of the. stock.
A witness, who was formerly connected with the bank at the time of its organization, testified that the stock book of the bank was lost, but 'that the corporation had purchased a lot of furniture from Dyke Bros, and paid them in shares of stock of the bank.
One of those defendants testified that they were not stockholders and had never been notified of the issuance of any stock to them; but all of that testimony made a question for the jury, and we think it is sufficient 'to sustain the finding that those defendants were, in fact, stockholders.
H. B. Weir is another one of the defendants who has appealed, and it is contended for him that the evidence does not show thart he was a stockholder.
Mr. Weir was certified, on the list heretofore referred to, as the holder of three shares of stock. He testified that he subscribed for shares of stock and gave a check in payment of the amount but that the shares were never actually delivered to him. The evidence was, we think, sufficient to establish the fact that he was, in fact, a stockholder of the bank.
The jury found in favor of defendant, A. S. Johnson. He owned thirteen shares of stock of the bank, which he assigned to McEachin, and the transfer was duly recorded, those shares being part of the stock which was assigned by McEachin to Cunningham.
The registered list shows that defendant Johnson owned another share. He testified that he knew nothing about that, except that Mr. Denman, one of the organizers of the bank, told him that he had given him a share of the stock, bnt that he never received it or paid for it.
We think there is enough testimony to warrant the jury in finding’ that defendant Johnson was not a stockholder.
The judgment in Johnson’s favor is affirmed, and the judgments in favor of plaintiff against defendants Dyke Bros, and Weir are also affirmed. The judgments against defendants MeEachin and Quinley are reversed and the cause as to them is dismissed.
Kirby, J., dissents as to MeEachin and Quinley.
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