Opinion
No. 30797.
November 20, 1933.
1. DESCENT AND DISTRIBUTION.
To justify application of personal deposit of heirs in discharge of deceased's bank stock liability, superintendent of banks must show heirs were personally liable therefor (Code 1930, sections 3803, 3815).
2. DESCENT AND DISTRIBUTION. Evidence did not show heirs were personally liable for deceased's bank stock liability so that court properly refused to permit superintendent of banks to apply their personal deposit in discharge of deceased's liability ( Code 1930, sections 3803, 3815).
Evidence disclosed date of death of ancestor of petitioners who were seeking guaranty certificate for full amount of their personal deposit, but evidence did not show date when bank was taken over for liquidation or facts necessary to relieve deceased's estate of liability on stock, since it failed to show that estate was insolvent, or that any assets of estate had passed into hands of heirs, or that any examination of bank showing its solvency was made following death of stockholder and before closing of bank.
APPEAL from Chancery Court of Humphreys County.
Cooper Thomas, of Indianola, for appellant.
A bank in liquidation can off-set its deposit liability where the deposit is owned by a stockholder against the liability which the stockholder owes to the bank under the double liability statute.
Section 537, Mississippi Code of 1930.
The position of the appellant is that the balance in said deposit account was not insurance funds because the depositors had theretofore drawn from said account all of said insurance funds and had left nothing in said account except the money they had received from other sources. We arrive at this conclusion on the familiar principle that the first money in said account is the first money drawn out of said account.
Branham v. Drew Grocery Co., 111 So. 155; Old National Bank v. Gibson, 105 Wn. 578, 179 P. 117, 6 A.L.R. 247, at page 262; 48 C.J., p. 657, section 111; J.R. Watkins Co. v. Buchanan, 115 So. 773; Travis v. Mosley, 114 So. 628, 19 A.S.R., p. 126.
The lower court was in error in holding that the right of set-off did not exist and in ordering that the appellant issue to the appellees a guaranty certificate in the full amount of said deposit balance without giving the right of set-off.
Oscar B. Townsend, of Indianola, for appellees.
Appellees maintain that in view of the circumstances here, the evidence produced on the part of appellees, and the lack of evidence on the part of appellant, the lower court was correct in holding that no off-set should have been allowed under the proof offered.
Appellees contend that the statute with reference to the stockholders' liability is highly penal, in derogation of common law, and should, therefore, be strictly construed. The court below knew nothing about whether deceased left an estate; whether it was solvent or insolvent; nor whether there were assets belonging to said estate unadministered. Persons holding stock as executors, administrators, guardians, or trustees shall not be personally liable as stockholders, but the assets and funds in their hands constituting the trust shall be liable to the same extent as the testator, intestate, ward or person interested in such trust fund would be, if living or competent to act.
Section 3815, Mississippi Code of 1930; Mellott v. Love (Miss.), 119 So. 913.
There is nothing in this record to show that the Isola State Bank was ever solvent after the date of the death of R.H. Hooker, deceased. The date of the placing of the bank in liquidation was not shown the court below.
Mellott v. Love, 152 Miss. 860, 119 So. 913, 64 A.L.R. 968.
Appellants, in the court below, failed to make any record with reference to the estate of R.H. Hooker, deceased.
Heirs should not be joined in action to enforce liability of deceased bank director, unless estate in executor's hands is insufficient, and heirs have participated in distribution thereof.
Code of 1930, section 3812; Little v. Newhouse, 145 So. 608.
This is an appeal from a decree of the chancery court of Humphreys county, rendered in the matter of the liquidation of the Isola State Bank, and directing the superintendent of banks to issue to the appellees a guaranty certificate for the full amount of their deposit in said bank.
The appellees filed a petition alleging that, at the time the Isola State Bank was taken over by the state banking department for liquidation, they had on deposit in said bank the sum of two hundred sixty-one dollars and ninety-three cents; that the superintendent of banks and the liquidating agent thereof had refused, after demand, to issue to them a guaranty certificate for said sum, and praying for an order directing them to issue to the petitioners the proper certificate. The superintendent of banks, in answer to this petition, denied that appellees were entitled to a guaranty certificate for the amount of their deposit, and averred that R.H. Hooker, who died prior to the closing of said bank, owned at the time of his death two shares of stock of said bank, of the par value of one hundred dollars each; that the petitioners as the sole heirs at law of said R.H. Hooker, deceased, became the owners of said stock by inheritance; that by virtue of their ownership of said stock the appellees were liable for the statutory superadded liability of the amount of their stock at the par value thereof; that the appellees' deposit in said bank at the time it closed had been offset against their stock liability; and that a guaranty certificate for the balance of said deposit remaining after thus discharging their statutory liability had been offered to appellees and had been refused by them.
On the trial of the cause it was admitted that R.H. Hooker, during his lifetime, owned two shares of stock in the Isola State Bank, and that the appellees were the sole heirs at law of the said R.H. Hooker, deceased, but the appellees offered evidence intended to prove that the deposit standing in their name at the time the bank closed represented insurance money that was exempt from all liability for the debts of the insured. The appellee Mrs. R.H. Hooker testified that as the beneficiary in an insurance policy on the life of her deceased husband she received the sum of six thousand dollars, and that of this sum she deposited about one thousand dollars in the Isola State Bank to the joint credit of herself and the appellee C.L. Hooker, and that the balance of two hundred sixty-one dollars and ninety-three cents represented insurance money which was exempt from all liability for the debts of her deceased husband, the insured. She admitted, however, that after she deposited this insurance money in said bank she subsequently made numerous small deposits of other money, which amounted to more than the balance on deposit at the time of the closing of said bank.
The argument of counsel for the appellees seems to proceed upon the theory that the stock liability on the two shares of stock owned by R.H. Hooker, deceased, is that of his estate, and that the money on deposit in the defunct bank was the proceeds of an insurance policy on the life of the deceased stockholder, which was exempt from liability for his debts. The proof fails to sustain the contention that the deposit in question was exempt insurance money, but rather establishes the fact that it was money of the depositors derived from other sources, but under our view of this case that fact is wholly immaterial.
It seems to be practically the universal rule that where a statute imposes double liability upon stockholders in insolvent corporations, enforceable for the benefit of corporate creditors, a stockholder, when sued by the receiver to enforce such liability, cannot set off against his liability as stockholder an indebtedness owing him from the corporation. Reimers, Receiver, v. Larson et al., 52 N.D. 297, 202 N.W. 653, 40 A.L.R. 1177, and note appended to the report of this case in 40 A.L.R. beginning on page 1183. The ground upon which this rule seems to be based is that to allow such offset to a stockholder of an insolvent corporation, who is a creditor of such corporation, would in effect grant a preference to such stockholder over other creditors. As to whether or not this rule would, under the authority conferred by section 3815, Code 1930, to collect the superadded stock liability, prevent the state banking department from applying any part of a stockholder's deposit in an insolvent bank, other than such dividends as were properly payable to depositors, to the discharge of such statutory stock liability, it will be unnecessary to here decide, for the reason that the decree of the court below must be affirmed on account of the failure of the evidence to establish any personal liability of the appellees for this statutory stock liability. In any event, in order to justify the application of the personal deposit of the appellees in discharge of this stock liability, it was necessary for the superintendent of banks to show that they were personally liable therefor, and this the evidence fails to do. Section 3803, Code 1930, provides that "the liability of any stockholder in a bank upon transferring his stock in such bank to another shall not cease until the next regular or special examination of said bank following the date of transfer of said stock and not then unless such examination shows the bank to be solvent; but the purchaser's liability shall begin after the next ensuing examination showing the bank to be solvent." The record shows the date of the death of R.H. Hooker, but it wholly fails to show the date that the bank was taken over for liquidation, or facts necessary to relieve the estate of the deceased stockholder of liability on this stock, or to charge the appellees with such liability. It wholly fails to show that the estate of the deceased was insolvent, or that any assets of said estate had passed into the hands of the appellees, or that any examination of said bank showing it to be solvent was made following the death of the stockholder and before the closing of the bank. The decree of the court below will, therefore, be affirmed.
Affirmed.