Wigton v. Kenney

Goodrich, P. J.:

All the facts essential to the decision of this appeal are stated in the opinion of Mr. Justice Jeñks, hereunto appended, in which we concur. Since his decision the Court of Appeals, in 162 New York, 179, has affirmed the case of Howarth v. Angle, which he cites. That action was brought by the receiver of a bank ii> Tacoma, "Wash., to enforce the liability of a stockholder, resident in this State, for the debts of the bank, under a statute of Washington which provided that the stockholders, “should be held individually responsible, equally and ratably, - * * * for all the contracts, debts and engagements of. the bank accruing while they remain such stockholders, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares.” There had been an action in Washington, in which *216it was determined that all of the stockholders were liable, but the New .York stockholder was not a party thereto. The Court of Appeals, Judge Yaw writing, held that the action in this State would lie, but added: The stockholders, however, may controvert in our courts all the essential facts, such as insolvency, the amount • of the deficiency and the like, whether they are established' by the judgment appointing the receiver or not. They may require strict common Jaw .proof as to all the facts upon which the deficiency is based, and may contest any unreasonable expenditure in the conversion of assets and- the collection of accounts. * * * Upon all these questions the defendant has had his day in the courts of this state.” '

It is evident, therefore, that no harm can result to the defendant from compelling him to plead' in his answer the facts upon which he relies to escape liability by denial of the allegations of the complaint, either as- to the insolvency of the bank or. as to the amount of its debts, so that,, as in the Howarth case, he shall have his day in the courts- of this State. .. , • .

The allegations of the complaint, however, are sufficiént-to establish jprwnct, facie a cause of action, and the judgment should, be, affirmed.

All concurred, except Jews, J., not sitting.

Interlocutory judgment affirmed, with costs.

The following is the opinion of Mr. Justice Jews :. .

Jews; J. r

The plaintiff, as receiver of the Iowa Savings Bank,, a corporation of the State of Iowa, sues the defendant as a stockholder to enforce., his liability for the debts of the. bank. The defendant demurs, tlyt there is a defect of. parties defendant-in ..that .the other stockholders ¿re not made" parties defendant and' that the complaint, 'does not-state facts sufficient' to 'constitute a cagse of action.

. I am of the opinión' "that the demurrer' should be -overruled;. Such abaction lies against a single stockholder. (Bank of Poughkeepsie v. Ibbotson, 24 Wend. 473 ; Garrison v. Howe, 17 N. Y. 458 ; Weeks v. Love, 50 id. 568.)

The counsel for the defendant, in his leárned and exhaustive brief,, submits that a certain statute, of .Iowa, was passed on July 1, 1897,, *217in effect October 1, 1897, which provides that this action must be in equity against all of the stockholders, and calls attention to the doctrine of Stoddard v. Lum (32 App. Div. 565), and Barnes v. Wheaton (80 Hun, 8), though he states, “ While, strictly speaking, the court cannot look to the statute code of Iowa, because not pleaded, yet it may assist in construing the matter set up in the complaint.” The defendant thus seems to be mindful of the principle that a demurrer to a complaint can be interposed only for objections appearing on its face. (Mitchell v. Thorne, 134 N. Y. 536, and cases cited.)

The complaint avers that “ the statute of the State of Iowa under which the said Iowa Savings Bank was organized, and under which it continued to do business, provided, among other things, that shareholders in banks organized under the provisions of the said statute should be individually and severally liable to the creditors of the corporation; * * * and it was further provided by the said statute that should any such bank become insolvent and its assets be found insufficient to pay its debts and liabilities, its shareholders might be compelled' to pay such deficiency up to the amount of stock at its par value, held by them respectively and in proportion to the amount of stock owned by the respective shareholders,” and “ the said District Court of Iowa was a court of competent jurisdiction and had jurisdiction of the subject-matter aforesaid and of the parties in the said action.” And this plaintiff has been duly authorized by the said District Court of the State of Iowa, the court which appointed him as receiver as aforesaid, to bring suits to enforce the payment of the assessment made upon the shareholders of the said Iowa Savings Bank as aforesaid, and “ that he was and.is thereby authorized to maintain and bring this action.” These allegations must be taken as true upon the disposal of the demurrer. (Savings Assn. of St. Louis v. O’Brien, 51 Hun, 45, 51.)

In State v. Union Stock Yards State Bank (103 Iowa, 549) it was decided that the receiver was the proper plaintiff in such actions. Howarth v. Angle (39 App. Div. 151; 57 N. Y. Supp. 187) is an authority directly in point upon the merits.

Judgment for the plaintiff upon the demurrer with leave to the defendant to answer.