Steinke v. Loofbourow

ZANE, C. J.: This is an appeal from a final judgment dismissing plaintiff’s action. It appears that the Cass County Bank was incorporated under the laws of the state of Iowa, where it afterwards did a banking business; that on December 27, 1893, one Isaac Dickerson, a stockholder, obtained an order of the district court of the district in which the bank was situated appointing the plaintiff, Theodore G. Steinke, receiver of its assets, with authority to take possession of all its property, and convert the same into money; to collect all indebtedness due the bank, and bring such suits as might be necessary in so doing, and pay its indebtedness, so far as its assets would go. It also appears that the defendant was the owner of six shares of its stock, of the *par value of $3,000, when the indebtedness of the bank was incurred for which this suit was brought; that the indebtedness of the bank largely exceeds its assets. This suit was brought by the receiver upon the individual liability of the defendant over and above the amount of the stock held by him. The liability which the .plaintiff, as receiver, seeks to enforce, was created by the following statute of the state of Iowa: “Section 1. That all stockholders and shareholders in associations or corporations organized under chapter one aforesaid, for the purpose of transacting a banking business, buying or selling exchange, receiving deposits of [255] money, or discounting notes, shall be individually liable to the creditors of such association or corporation of which they are stockholders or shareholders, over and above the amount of stock by them held therein, to an amount equal to their respective shares so held for all its' liabilities accruing while they remain such stockholders; and should any such association or corporation become insolvent, and its assets be found insufficient to pay its debts and liabilities, its stockholders may be compelled to pay such deficiency in proportion to the amount of stock owned by each, not to exceed the extent of the additional liability hereby created. “Sec. 2. Should the whole amount for which the stockholders are made individually responsible as provided by section one of this act, be found in any case to be inadequate to the payment of all the debts of any such association or corporation, after the application of its assets to the payment of such debts, then the amount due from such stockholders on account of their individual liability created by this act, as such, shall be distributed equally among all the creditors of such corporation in proportion to the amount due to each.” Secs. 1 and 2, Chapter 208, Acts 18th Gen. Assem. Iowa. The first section declares the stockholders shall be individually liable to the creditors of the corporation, over and above the amount of their stock, in a sum equal to their respective shares. And in case .the amount of such liability be insufficient after the application of the assets of the corporation, the second section provides the amount of the individual liability of the stockholders shall be distributed equally among all the creditors in proportion to their respective amounts. The first section fixes the liability of the stockholders to pay, and declares it to be due to the creditors, and.not to the bank. That being so, the [256] bank can have no authority to act as the trustee or agent of the creditors. As the liability created by the statute is direct to the creditors, and not to the corporation, the latter can have no authority to act for them. • The statute declares the liability of the stockholders to be an individual one, and an action at law might be an appropriate remedy, under some circumstances, by a creditor. But the equitable remedy being more flexible and better adapted to distributive justice, it would appear to be more appropriate when there are several creditors to sue or stockholders to be sued. When the entire amount of the individual liability above the stock may not be required, by that remedy a just proportion may be collected from each; or, when such entire amount may not be sufficient to pay all, a distribution may be made in proportion to the amount due each. There appears to be no necessity for thrusting the bank, or its receiver, between the creditors and the stockholders. 1 Cook, Stock, Stockh. & Corp. Law (3d Ed) § 218; 3 Thomp. Corp, § 3098; Jacobson v. Allen, 12 Fed. 454; Terry v. Little, 101 U. S. 216; 2 Mor. Priv. Corp. (2d Ed.) § 869; Wincock v. Turpin, 96 Ill. 135; Umstead v. Buskirk, 17 Ohio St. 113; Farnsworth v. Wood, 92 N. Y. 308. When it becomes necessary to resort to the individual liability of the stockholders above the amount of their stock, under a statute similar to the one quoted, the decided weight of authority is to the effect that the suit should be brought by the creditors, though there is a substantial conflict which cannot be reconciled; but we think the more reasonable and better rule is as we have stated it. This disposes of this appeal, and we do not deem it necessary to decide other questions raised and discussed by counsel. The judgment is affirmed, with costs to respondent. Baetch and MINER. JJ. concur.