This action by the plaintiffs as depositors of the Planters' Bank, an insolvent banking corporation, with its principal place of business at Orangeburg, S.C. on behalf of themselves and all other depositors of the said bank, against the defendants, as stockholders of the said bank, was commenced in the Court of Common Pleas for Orangeburg County, November 27, 1929, for the purpose of recovering the constitutional and statutory liability of the said stockholders, amounting to $100,000.00. Following the usual practice the plaintiffs procured an order from the Court requiring all depositors to prove their claims in this action, so as to avoid a multiplicity of suits, and enjoining all depositors from instituting separate actions, which order was issued November 27, 1929, by Hon. C.C. Featherstone, Judge presiding in the first judicial circuit. The defendants demurred to the complaint, upon grounds we shall hereinafter refer to. The case came before Judge M.M. Mann on a hearing of the demurrers December 17, 1929, who issued an order sustaining the same. From the order of his Honor, Judge Mann, sustaining the demurrers, pursuant to due notice, the plaintiffs have appealed to this Court.
The transcript of record discloses that two demurrers were served, No. 1 by one set of the defendants, and No. 2 by another set of the defendants, reading as follows:
DEMURRER No. 1 "The defendants served in this action with summons and complaint therein, reserving the right to file and answer *Page 102 herein if so advised at a later time, demur to the complaint herein upon the following ground or grounds, to wit:
"The plaintiffs have no legal right or capacity to bring or maintain this suit, because only the receiver of the Planters Bank within such limitations is authorized to bring such action or actions under the statutes in such case made and provided, which statutes regulate the procedure relative to such actions.
"Wherefore, said defendants demand judgment that the complaint be dismissed with costs.
"December 4th, 1929."
DEMURRER No. 2 "The defendants, Joseph McNamara, Thomas R. Smith and Mrs. Annie L. Etheredge, together with other defendants represented by us who have been served in this action, reserving the right to answer herein at a later time with permission of the Court, demur to the complaint herein upon the following grounds:
"1. That the above-entitled action has been prematurely brought in that at the time of its commencement the bank had just gone into the hands of the State Bank Examiner under the provisions of the laws of this State and the condition of the bank had not yet been determined, and until such insolvency had been determined no action would lie against the stockholders on account of their liability as such.
"2. That under the Act of the General Assembly of the State of South Carolina, approved March 16th, 1929, it was provided that a receiver should be appointed to liquidate the assets of any closed bank and that such receiver should notify the stockholders of their liability and demand that the same be paid to him, and that no receiver has been appointed for said bank and no demand has been made, as required by law.
"3. That under the said Act of the General Assembly the receiver alone is authorized to bring suit against the stockholders, *Page 103 as provided therein, and that plaintiffs have no right nor authority thereunder to maintain this action.
"December 14th, 1929."
The order appealed from is as follows:
ORDER OF JUDGE MANN "This matter comes before me upon a demurrer to the complaint in this action. The complaint was brought by the plaintiffs against the stockholders of the Planters Bank of Orangeburg, S.C. on their liability as stockholders in the said bank. It appears that the directors of the Planters Bank closed the doors of that institution and placed it in the hands of the State Bank Examiner for the period of thirty days, under Section 3981 of the Code. This was done on November 26th, 1929. On the next day the plaintiffs brought this action against the stockholders of the bank asking for judgment against each stockholder on his statutory liability. A number of the defendants now come forward and demur to this complaint under the Act of the General Assembly approved the 16th day of March, 1929, the same being Act No. 175, and found in the Acts of South Carolina for 1929, on page 199. Two separate demurrers were filed to the complaint, one by certain defendants represented by Brantley Zeigler, attorneys, and the other by certain defendants represented by Lide Felder, attorneys.
"Under the Act of 1929 these defendants contend that this suit is prematurely brought, and that a suit of this kind can be brought only under the provisions of this Act, and only by the permanent receiver of the bank appointed in the manner specified in the said Act, and that a suit of this character cannot be brought by the depositors. Against these contentions of the defendants the plaintiffs urge that the Act does not give the receiver appointed under its provisions the exclusive right to sue the stockholders, but that the right thus given to the receiver in this Act is merely cumulative and additional and does not take away the remedy which the depositors *Page 104 had before the passage of the Act. In other words, the other by the receiver appointed under the Act. the plaintiffs contend that since the passage of this Act there are two methods by which suit may be brought against the stockholders on their liability: one by the depositors themselves, just as could be done before the Act was passed; and
"I believe that the Court should take notice of the fact that the General Assembly, by the passage of the Act of 1929, intended to reform, simplify and economize the procedure to be followed in the liquidation of insolvent banks. And with that aim in view, it sought to place the entire process of liquidation in the hands of one person. The Act provides that this person, the receiver, shall be appointed under conditions that tend to safeguard the interests of the depositors and the creditors of the bank. It may be that under some of the circumstances suggested by counsel for the plaintiffs in his argument, that a depositor might still have the right to bring a suit as this, or to force an action on the part of the receiver in bringing such a suit, should the receiver be derelict in his duties in that regard to the manifest injury of the depositors. But none of these conditions appear in this case at this time and it should not be assumed that such will occur. The permanent receiver has not yet been appointed. This must be done at a meeting to be called by the Bank Examiner for that purpose after ten days' notice to the depositors and creditors. It must be taken for granted at this stage of the case that the receiver who is appointed will fully and faithfully discharge his duties in the interest of the depositors, creditors and all other interested parties. And hence, in my judgment there is no occasion for this suit at this time and the same has been prematurely brought.
"It is therefore ordered that the demurrers to the complaint in this case be and the same are hereby sustained.
"Dated: December 17th, 1929."
The main question presented by the appeal may be stated thus: Since the passage and approval of the Act of the Legislature, *Page 105 known as Act No. 175 of the Acts of South Carolina, for 1929, page 199, have the depositors of insolvent banks the right to institute and maintain in their name actions against the stockholders of such banks to recover the constitutional and statutory liability of said stockholders? His Honor, Judge Mann, by his order issued in the cause, in passing upon the demurrers, held, in effect, that by the Act of 1929, in question here, the right of action against the stockholders of an insolvent bank for the recovery of the constitutional and statutory liability for the benefit of the depositors was placed exclusively in the receiver of such bank, and that the depositors cannot maintain an action for such purpose, unless the duly appointed receiver has refused to institute such action or should be "derelict in his duties in that regard to the manifest injury of the depositors." His Honor further stated that such condition did not exist in the case at bar; that there was no occasion for the suit; and that the action was prematurely brought.
The directors of the bank in question closed its doors and placed it in the hands of the State Bank Examiner, under Section 3981 of the Civil Code, 1922. Soon thereafter this suit was commenced. The plaintiffs, depositors of the bank, allege in their complaint that the bank refused to pay their checks drawn on the bank for the amount of their deposits, and, further, allege the insolvency of the bank. For the purpose of the consideration of the demurrers, the allegations are presumed to be true, and the insolvency of the bank admitted. Therefore, according to the general practice governing such matters, as recognized by the Court, the depositors had the right to commence this action immediately for the purpose stated, unless prevented from doing so by the 1929 Act.
The liability of the stockholders to depositors in a bank is not a common-law liability, but is a liability fixed by the Constitution of 1895, Art. 9, § 18 in the following language: "The stockholders of all insolvent corporations shall be individually *Page 106 liable to the creditors thereof only to the extent of the amount remaining due to the corporation upon the stock owned by them: Provided, That stockholders in banks or banking institutions shall be liable to depositors therein in a sum equal in amount to their stock over and above the face value of the same."
This provision of the Constitution was later formulated as a statutory enactment (see Section 3998, Vol. 3, Code 1922), but the statutory enactment did not fix any greater or additional liability against the stockholders of a bank, nor did it provide any remedy or procedure for the depositors to pursue in order to collect for such liability against the stockholders. The liability of the stockholders of a bank to depositors was fixed by the provision in the Constitution to which reference has been made, and the remedy pursued by the depositors against the stockholders to collect for such liability is a remedy afforded by the common law of force in this state, and such remedy or right of action, which the Courts of this state have recognized as existing in favor of the depositors against the stockholders of an insolvent bank, since the adoption of the Constitution of 1895, is of force at this time, unless destroyed by the provisions of the Act of 1929 in question here. In my opinion, the Act of 1929 does not destroy such remedy and right of action, but that the depositors still have the right to institute and maintain an action against the stockholders of an insolvent bank for said liability; that the remedy provided in the said Act of 1929 for collecting this liability, by clothing the receiver with authority to institute an action against the stockholders, under certain conditions, is cumulative and not exclusive. The part of the said Act of 1929 pertinent here reads as follows:
"Stockholders' Liability. — That any receiver appointed to liquidate the assets of any closed State bank shall, under the authority of this Act, when it is necessary to collect the liability of stockholders, have full power and authority to demand of such stockholders the statutory liability, provided *Page 107 for in Section 3998, Code of Laws of South Carolina, 1922, and upon failure of any stockholder to pay into his hands such liability, he is hereby invested with full power and authority to bring suit, either individually or collectively, against such stockholder, or stockholders, for the collection of such liability, and all funds received from said assessment by payment with or without suit shall be kept as a separate fund to be paid to the depositors solely. Said receiver shall receive as compensation for the collection of the stockholders' liability, two and one-half (21/2) per cent. and in case same is placed in the hands of the attorney for collection by suit, or otherwise, an additional five per cent. may be paid to the attorney for his services, or so much as the Court may decide the attorney is entitled to." (Section 6.)
I do not agree with the Circuit Judge in the construction his Honor placed upon this Act. In the course of his discussion of the question, his Honor used this language: "I believe that the Court should take notice of the fact, that the General Assembly, by the passage of the Act of 1929, intended to reform, simplify and economize the procedure to be followed in the liquidation of insolvent banks. And with that aim in view, it sought to place the entire process of liquidation in the hands of one person."
I am unable to agree with this conclusion. In my opinion, if the Legislature had intended to take away from the depositors the common-law right to institute and maintain in their name an action against the stockholders of an insolvent bank to recover for their constitutional and statutory liability, the Legislature would have said so in clear language, and, according to my view, the Act contains no language which is susceptible of that construction. In this connection I call attention to the well-recognized rule that, unless the statute enacted expressly so states, or contains negative or exclusive terms, it will not be presumed that the Legislature intended to abrogate or change a recognized common-law right of action to enforce a fixed and recognized liability, such for instance *Page 108 as the liability involved in the case at bar, named and fixed, not only by statutory enactment, but also by constitutional provision; and the following statements of the salutary rule apply with no more force to the question of liability, whether it arises by reason of the common law, constitutional provision, or statutory enactment, than to the remedy and right to institute and maintain an action against stockholders of an insolvent bank to recover on a recognized liability, fixed by constitutional provision, a fact with which we are dealing in this case.
"It is not to be presumed that the Legislature intended to abrogate or modify a rule of the common law by the enactment of a statute upon the same subject; it is rather to be presumed that no change in the common law was intended, unless the language employed clearly indicates such an intention. It has been said that statutes are not presumed to make any alterations in the common law further than is expressly declared, and that a statute, made in the affirmative without any negative expressed or implied, does not take away the common law." 25 R.C.L., 1054.
"Statutes are to be construed with reference to the principles of the common law in force at the time of their passage. * * * It naturally follows also that statutes are not to be understood as affecting any change in the common law beyond that which is expressed, or is necessarily implied from the language used." 36 Cyc., 1145.
"Every statute is to be construed with reference to the general system of laws of which it forms a part, and must therefore be interpreted in the light of the customary or unwritten law of other statutes on the same subject, and of the decisions of the Courts." 36 Cyc., 1144.
"When a statute which is evidently intended to make an innovation upon the common law is susceptible of more than one construction, it is not to be construed as altering the common law further than the language of the statute clearly and necessarily required. The general rule, as usually expressed, *Page 109 is that statutes in derogation to the common law are to be strictly construed." 25 R.C.L., 1056.
"Unless the purpose of a statute to change the common law appears by express language, or by necessary implication, * * * the common law will be held to remain unchanged."Keister's Adm'r v. Keister's Ex'rs, 123 Va., 157,96 S.E., 315, 1 A.L.R., 439.
"Statutes, however, are not presumed to make any alteration in the common law, further or otherwise than the Act does expressly declare. Therefore, in all general matters, the law presumes the Act did not intend to make any alteration, for, if Parliament had had that design, they would have expressed it in the Act." Broom's L.M. (7th Ed.), 32, 33, cited with approval in Millhiser Mfg. Co. v. Gallego MillsCo., 101 Va., 579, 44 S.E., 760, 1766.
"A statute in modification or derogation of the common law will not be presumed to alter it further than is expressly declared." Kidd v. Bates, 120 Ala., 79, 23 So., 735, 736, 41 L.R.A., 154, 74 Am. St. Rep., 17.
In this connection, I also call attention to the following cases: Sims v. Brown, 10 Kan. App. 261, 62 P., 713; MoslerSafe Co. v. Guardian Trust Co., 208 N.Y., 524,101 N.E., 786. The reasoning of the Court in construing the Acts involved in each of these cases, if applied to the Act involved in the case at bar, leads to the conclusion that the provisions of the 1929 Act, clothing the receiver with the authority to maintain, under certain conditions, an action to recover against stockholders of an insolvent bank their liability to the depositors, make the remedy provided for in the 1929 Act cumulative and not exclusive.
I am unable to agree with the contention that the statute in question is mandatory, and that the receiver is specifically directed and required to collect the liability in question. The language of the Act is not that he shall collect, but the language is that he shall have full power to do so, under certain conditions. Under the Act it is clear that the Legislature *Page 110 intended to give to the receiver full power and authority to institute suit, but the language of the Act certainly does not compel him to do so. In my opinion the statute is not mandatory, but is merely directory. In the language of the Act may be found affirmative words, but no negative or exclusive words.
"Whether a particular statute is mandatory or directory does not depend upon its form, but upon the intention of the Legislature, to be ascertained from a consideration of the entire Act, its nature, its object, and the consequences that would result from construing it one way or the other. In the application of subsidiary rules for the determination of the legislative intent in this respect there is no small confusion in the decisions, but the following rules have been recognized as established. A provision of course is mandatory which is declared by the statute itself to be so. When a particular provision of a statute relates to some immaterial matter, as to which compliance with the statute is a matter of convenience rather than substance, or where the directions of a statute are given merely with a view to the proper, orderly and prompt conduct of business, the provision may generally be regarded as directory." 36 Cyc., 1157.
"Affirmative words make a statute directory, and negative, or exclusive words, make it imperative." Attorney Generalv. Baker, 9 Rich. Eq., 521.
"In general, statutory provisions directing the mode of proceeding by public officers and intended to secure order, system and dispatch in proceedings, and by a disregard of which the rights of parties cannot be injuriously affected, are not regarded as mandatory, unless accompanied by negative words importing that the acts required shall not be done in any other manner or time than that designated. Where the words are affirmative and relate to the manner or time in which power or jurisdiction vested in a public officer or body is to be exercised, and not to the limits of the *Page 111 power or jurisdiction itself, they may be and often have been construed to be directory." 25 R.C.L., 769.
The liability of stockholders in an insolvent bank to the depositors is not a common law right, but is based on a provision of the Constitution of 1895; the statute enacted thereafter simply adopted the language of the constitution. The remedy for enforcing this right, as recognized by our Courts since the adoption of the Constitution, is a common law remedy, which right, in my opinion, cannot be taken away, except by specific act with clear intent. The 1929 Act created no new right, but simply undertook to give a new remedy for enforcing a pre-existing right, and the new remedy must be regarded as cumulative or additional for enforcing the pre-existing right. This is especially true in the absence of language showing an intent to the contrary.
"Where there is an existing right, and the statute gives only a new remedy, the new and former remedies are cumulative, and either remedy may be resorted to." Barnett v.Vanmeter, 7 Ind. App. 45, 33 N.E. 666, 669.
"A statute, instituting a new remedy for an existing right, does not take away a pre-existing remedy without express words or necessary implication." Bergman v. Gay,79 Vt., 262, 265, 64 A., 1106, 1107.
"Repeals by implication are not favored in the law, especially with regard to previously existing remedies, whether by statute or common law as to which it is held that they will not be taken away without a negative expressed or clearly implied." Goodrich v. Milwaukee, 24 Wis. 422, 438.
"The rule is that if the statute gives a remedy in the affirmative, without containing any express or implied negative, for a matter which was actionable at common law, this does not take away the common-law remedy, but the party may still sue at common law as well as upon the statute. In such cases the statute remedy will be regarded as merely cumulative." Hickman v. Kansas City, 120 Mo., 110, 117,25 S.W. 225, 226, 23 L.R.A., 658, 41 Am. St. Rep., 684. *Page 112
"A new equitable remedy given by statute is, unless the statute provides otherwise, merely cumulative, and does not prevent a resort to other pre-existing equitable remedies."Atchison Board of Education v. Scoville, 13 Kan., 17.
"Where a statute providing a remedy does not create a new right, but merely provides a new remedy for a pre-existingright, it is ordinarily held that such remedy is notexclusive but merely cumulative, whether the right is onepreviously enforceable at common law, or by virtue of someother statute, or constitutional provision, and whether it was previously enforceable at law or in equity, and notwithstanding the new remedy may be preferable to or more efficient than the old." (Italics added.) 1 C.J., 990.
For the reasons herein stated, I think the exceptions should be sustained, the order appealed from reversed, and the demurrers overruled.