President of the Consolidated Ass'n of the Planters v. Lord

On Rehearing.

Manning, J.

The corporate existence of the Consolidated Associa^ *435tion was terminated by tbe judicial decree of forfeiture in November, 1842, made at the instance of the State. Doubtless in anticipation of this decree, the State had already provided by the Act of that year,' that the management of the property Banks, when their charters were adjudged to have been forfeited, should be confided to persons appointed by the State. Immediately after tbe decree of forfeiture the State by legislative expression declared that the assets of this Bank are and shall remain in the possession and under the exclusive management of the State until final payment of all the State bonds issued in its favor. Acts 1843, p. 56. The Governor accordingly appointed managers who took charge of the affairs of the Bank.

This exclusive management by the State ceased in 1847, when the State proposed by a legislative act that the stockholders should participate . in the management, and should elect three of the managers, the State continuing to appoint the others. This Board, thus composed, was authorized to extend the bonds of the State issued for this Bank to periods ranging from six to eighteen years, and enacted that the liquidation of the Bank “maybe continued until the maturity and payment of the bonds thus extended.” This was a permissive continuation until 1865. It was not imperative that it should be thus prolonged.

This important Act further laid upon the managers and directors the duty of requiring of the stockholders such annual payments as would accumulate a fund sufficient to meet the obligations of the State, restricting them only in this, that the equal instalments should run from one to seventeen years. Acts 1847, p. 76.

The managers thereupon, by resolutions determined that under the above Act a contribution of six dollars per share shall be paid by each stockholder of this Association on June 1st, 1849, and on same day of each succeeding sixteen years; and that the sum due on the stock loans by the stockholders shall be divided into eighteen equal annual instalments to be paid on June 1, 1848, and every succeeding June for seventeen years.

The stockholders then met, accepted this legislative Act tendered by the State, and voted to abide by the arrangement and settlement therein provided. The managers and directors had ascertained by careful calculation that an assessment of $102 per share would accumulate a fund sufficient to meet the obligations of the State in behalf •of this Bank. It would produce $612,000, and all of this sum has been paid except thirteen thousand dollars.

The limit of the time thus fixed for the liquidation of this Bank was June 30,1865. That time expired and the liquidation was not ended; nor was it continued and extended before its expiration,. The legislature *436however assumed in 1866 to prolong this liquidation ten years “ and no more,” but the stockholders were not consenting parties to this extension, and appeared to have stood on their rights acquired under the Act of 1847. The State assumed more than this, viz., that this Bank was at that moment fully organized, whereas it had been over twenty years in liquidation, and the last Section of the Act of 1847 specially provided that nothing therein should be so “ construed as to revive the charter, or permit any forfeited privileges ” to be exercised.

The ten years’extension of this Act expired in 1876 and the Bank was as far from being liquidated as when it began. The legislature appear to have abandoned it, and to have adhered to the emphatic “no-more” extension contained in the Act of 1866. Then one of the courts appointed a receiver of the defunct corporation, who took possession of its assets, and shortly afterwards some of the holders of the State bonds issued for it brought suit in the U. S. Circuit Court to have it liquidated there, and three receivers supplanted the single one who had been appointed by the State court. This lasted until May, 1879, when a receiver pro tempore was appointed, who retained possession of the assets until June, 1880, when they were turned over to the State.

Meanwhile the Act of 1878 was passed, under which the plaintiffs claim the right to demand the contributions which this defendant resists. But the State is the real plaintiff. The Attorney General appeared in her behalf. She has intervened and joined the nominal plaintiffs, and it is therefore the State that is seeking to enforce payment of the contributions under both Acts of 1847 and 1878.

It is against law and right, and yet more against equity and good conscience, that she should be upheld in it. It is against law because she tendered and proposed a settlement to the stockholders in the Act of 1847, which upon their acceptance of it became a contract with them, which she not only bound herself to perform, but took and held control of the affairs of the dead Association in order that she might perform it. It is against equity because she has received what she at the outset of her bargain, by herself proposed, estimated as sufficient to protect her from her liability upon her bonds issued for the Association, and instead of applying it to the purposes for which she had exacted it, squandered it in riotous living.

■ The horde of officers—president, vice-president, cashier, receivers, directors—pass before ns in this record in lengthened procession, laden with salaries and plethoric with stipends, and the lean and slippered’ stockholder, gaunt from forty years’ exhaustion, at last holds up his hands in eager, passionate suppliance for relief from this insatiate, ever-recurring hunger for more contributions. For only five and a half years of the forty-one that has elapsed since the decree of 1842 *437terminated the corporate existence of the Association the expenses are thus summarized:

B. F. Flanders, receiver..........................$ 7,988 03

A. Eustis, receiver........................... 4,165 33

L. A. Wiltz, receiver.................;........;. 2,165 31

J. Calhoun, secretary, cashier, receiver.......... 16,508 20

Lawyers......................................... 19,546 08

Employees..............................•.........' 3,907 86

W. Steven, president....................... '3,239 93

Master in Chancery.............................. 1,110 00

$58,630 74

That is the domestic expenditure from June, 1876, to January, 1882. Had it been used for the purchase of bonds, it would have bought them to the amount of $100,000. After the most liberal allowance for necessary expenses in conducting tile-liquidation since 1847, when the State proposed her mode of protecting herself, it is fair to assume that had the funds which the stockholders contributed not been wasted, the full number and amount of the State bonds could have been paid. It is not only fair to assume it, for if these figures are a sample of the forty-one years’ expenditures, it can be arithmetically proved to have been sufficient.

The contribution of forty dollars per share now demanded, when six was deemed ample thirty-six years ago, of itself shews the waste of resources. The exaction of this ruinous contribution by the State, the party who has had control of the resources and committed or permitted the waste, is not justifiable in any aspect.

One of the causes of this large exaction is that many of the stockholders have become insolvent, and those who are solvent are assessed for the whole. Even if the assessment of 1847 had not been made for the purpose of protecting the State, and been ample for it, the State cannot increase the burden of each stockholder by holding him not only individually responsible, but each for the other. U. S. vs. Knox, 12 Otto, 423; N. O. Gas Light Co. vs. Bennett, 6 Ann. 457.

The defendant has paid the instalments or contributions under the Act of 1847—actually paid thirteen of them and is protected by prescription from the others. In law he owes nothing on them, and has therefore discharged all liability for them. Whose laches and inaction permitted him to plead prescription successfully ? But if he had not paid them, does that non-payment of contributions he owed justify the exaction of contributions he does not owe 1 If a stockholder has not- paid those contributions, let him be compelled to pay them, but it *438cannot be legally demanded of bim that he shall make good the fund which the State has wasted..

It is therefore ordered and decreed that our former decree is set aside, the judgment .of the lower court is reversed, and that there be now judgment in favor, of the defendant .rejecting the demand of the plaintiff, and for costs..

Bermudez, C. J. I adhere, to the previous.opinion.