Opinion
No. 4189.
December 29, 1932. Rehearing Denied January 19, 1933.
Appeal from District Court, Lamar County; Newman Phillips, Judge.
Suit by James Shaw, Banking Commissioner of Texas, as successor of Charles O. Austin, against R. L. Lewis. From a judgment in favor of the defendant, the plaintiff appeals.
Affirmed.
This suit was brought by James Shaw, banking commissioner of Texas, as successor of Charles O. Austin, against R. L. Lewis for $600, the amount of a second assessment against him as stockholder in a state bank; this assessment being against six shares of stock, and the six shares representing the difference in stock held by him before and after an alleged reduction in the capital stock of the bank. The trial court's findings of fact is supported by the evidence, and is here adopted as a fair statement of the case. It reads as follows:
"Several years prior to the year 1926 the First State Bank of Paris, Texas, was organized as a State Bank with a capital stock of $100,000.00, which was thereafter increased to $150,000.00, in which the defendant owned eighteen shares of the par value of $100.00 a share.
"The First State Bank of Paris prior to and up to April ______, 1926, was operating under the Guaranty Fund plan of securing its depositors.
"About the last of March, 1926, the then Banking Commissioner of the State of Texas suggested to the proper officers of the said Bank the wisdom of changing from the Guaranty Fund plan of securing its depositors to the Bond Plan, and to effect economy in that respect recommended that the capital stock of the Bank be reduced to $100,000.00 and that the charter of the Bank be amended in respect to the name of the Bank, changing the name from The First State Bank of Paris to the First State Bank — Paris.
"The officers and stockholders of the Bank accepted the suggestion and proceeded to make the change, and I find that the Banking Commissioner directed them how to proceed; that is, he told them that if they would get each of the stockholders in the Bank to sign an instrument in writing waiving the publication in a newspaper of a notice of the intention of the Bank to change from the Guaranty Fund plan to the Bond Plan of securing its depositors and of the intention to reduce the capital stock it would be legal and take the place of publishing a notice of such intention. And I find that the Stockholders, including the defendant, acting upon the advice of the Commissioner, signed said waiver of publication and that in further carrying out of the plan suggested by the Commissioner, they did on the ______ day of April, 1926, in session for the purpose, pass a resolution, properly spread upon the minutes, reducing the capital stock of the Bank from $150,000.00 to $100,000.00 and declaring their desire and purpose to change from the Guaranty Plan to the Bond Plan of securing its depositors.
"I further find that in connection with the proceedings referred to above, and in carrying out the suggestions of the Commissioner of Banking, application was made in proper form to change the name of the Bank from the First State Bank of Paris to The First State Bank — Paris, and I find that in all of these proceedings the Banking Commissioner furnished the blank forms to be used in the matters referred to above and that they were used for the purposes intended.
"Copies of the resolution to reduce the capital stock and to change the manner of securing deposits, as well as the application to change the name of the Bank were sent to the Commissioner of Banking all of which were approved by him and he forwarded to the Bank proper certificate to that effect and, at his suggestion, the Bank purchased $100,000.00 of acceptable bonds and placed them with the Commissioner of Banking, instead of making bond in the sum of $100,000.00 to secure depositors, and the Commissioner accepted the bonds as such and for that purpose.
"That after reducing the capital stock referred to above, or in connection therewith, new certificates of stock were issued to all the stockholders for two-thirds of the number of shares of stock owned by each before the proceedings looking to the reduction of the capital stock, and twelve shares of said stock were issued and delivered to defendant, R. L. Lewis and accepted by him in lieu of the eighteen shares formerly owned by him in The First State Bank of Paris. The new stock delivered to defendant followed the name as changed and recited ownership of twelve shares of the capital stock of the First State Bank — Paris. All the old or original stock was surrendered and cancelled and the new stock issued in lieu thereof.
"There was no publication in any newspaper of notice of intention to reduce the capital stock and to change the manner of securing deposits.
"The Bank, under the name as changed, closed its doors to business on May 26th, 1926, and was placed in the hands of the Commissioner of Banking and the affairs and business of the Bank was liquidated by the Commissioner as a Bond Bank and in all respects treated by him as a bank of $100,000.00 capital. He converted the $100,000.00 bonds placed with him instead of bond, and made distribution of their proceeds as assets of the First State Bank — Paris.
"After taking over the Bank the Commissioner deemed it necessary to make an assessment of one hundred per cent against all stockholders, and did so, treating the stockholders as owning the number of shares according to the reduction above referred to. He assessed R L. Lewis, the defendant, as owner of twelve shares and R. L. Lewis responded to the notice and assessment by paying to the Commissioner the full face value of the twelve shares held by him, $1200.00. The notice of the assessment sent to the defendant recited the ownership of twelve shares in the First State Bank-Paris.
"I find that the defendant in paying said assessment relied upon the reduction of the capital stock as being legal and that if the Commissioner had made an assessment against him as owner of eighteen shares as previously owned, he would have refused to pay the assessment.
"I find that in other litigation in this court in the case of A. Collier v. First State Bank et al., which case has been before the Court of Civil Appeals and the Supreme Court, that the Commissioner of Banking claimed and pleaded as against Collier and others represented by him, that the reduction of the capital stock (referred to above) was legal and that the other proceedings were legal.
"I find that before this suit was filed the Banking Commissioner gave notice to the defendant as required by law, that an assessment had been made against him of 100% on the stock involved in this cause and that the defendant refused payment."
The trial court approved the statement of facts in this record, "with the qualification that counsel for plaintiff (appellant here) agreed at the beginning of the trial that no evidence would be offered on the question of insolvency." No such evidence was introduced, and the trial court made no finding of fact on the solvency or insolvency of the bank at the time the capital stock was reduced, and appellant did not complain or except to his failure to make such finding.
Judgment was entered for defendant, and the banking commissioner appeals.
Jno. W. Goodwin, of Austin, and Dohoney, Beauchamp Lawrence, of Paris, for appellant.
Edgar Wright and Moore Moore, all of Paris, for appellee.
The principal questions raised are: (1) Could the First State Bank of Paris legally reduce its capital stock without publication of notice as required by article 500, R.S., and, if not, (2) Can the validity of the charter amendment reducing the capital be collaterally attacked, and (3) Is appellant estopped to deny the validity of said reduction, and (4) Does insolvency of the bank at the time of the reduction of its capital stock appear from the pleadings in the case, and, if so, should the cause be reversed for that reason?
We have concluded that the doctrine of estoppel applies, and it is therefore unnecessary to answer the first two questions. No publication of intention to reduce the capital stock was made as directed by article 500, but nevertheless the banking commissioner issued his certificate of approval as provided in article 505 of the statutes, thus evidencing his intention to treat the bank as having a reduced capital of $100,000. Appellee then received twelve shares of stock for the eighteen he had formerly held; six of his shares being surrendered and canceled by the bank. There is no evidence or contention of fraud or bad faith on the part of anybody connected with the transaction. Shortly thereafter when the bank was surrendered to the banking commissioner for liquidation, and while acting in the capacity of liquidating agent for the benefit of the creditors, he did not choose to attack the validity of the charter amendment reducing the capital stock and converting the bank to the bond system, but, on the contrary, elected to uphold and assert the validity of the amendment. He converted into cash the bonds placed on deposit when the bank changed to the bond plan, and distributed the proceeds to the creditors, he assessed appellee $1,200, par value of twelve shares of stock (his holding after the reduction) and called it a 100 per cent. assessment, and generally recognized and treated the institution as a $100,000 bank, thus asserting the validity of the capital stock reduction. Appellee testified that he would not have paid the assessment had it been made on eighteen shares. In accepting the $1,200 assessment and making payment, he has been caused to forego whatever legal defense he would have made against it if he had not been led to believe that his payment represented the first and last assessment. Weatherly v. Jackson (Tex.Civ.App.) 46 S.W.2d 1030, 1031, and cases therein cited; Spence v. State Nat'l Bank (Tex.Com.App.) 5 S.W.2d 754; Shaw v. Etheridge (Tex.Civ.App.) 15 S.W.2d 722; Shaw v. Holderman (Tex.Civ.App.) 17 S.W.2d 190; State v. Davisson (Tex.Civ.App.) 280 S.W. 292; Cawthorn v. City of Houston (Tex.Com.App.) 231 S.W. 701.
Another case arising out of the liquidation of this same bank resulted in an opinion by the Commission of Appeals adopted by the Supreme Court, First State Bank v. Collier, 119 Tex. 33, 23 S.W.2d 716. The general facts were the same. In that case it was held that a depositor who had accepted preferred payment from the proceeds of the sale of the bonds of this bank had elected to treat this same charter amendment as valid, and is therefore estopped to claim participation in the guaranty fund. By the same token, would not the banking commissioner, acting for the benefit of the same depositors in the same bank, be estopped to collect from appellee an assessment on eighteen shares of stock after treating and dealing with him as the holder of twelve shares, and leading him to believe he was settling his obligation in full?
At the outset of the trial it was agreed that no evidence would be offered on the question of insolvency. Appellant now insists that insolvency of the bank at the time of reduction of capital appears from the pleadings and records of the banking department. Insolvency cannot be presumed from allegations in appellant's pleadings, and the records introduced may not be looked to for such purpose, in view of the agreement recited.
The judgment of the trial court will be affirmed, and costs taxed against appellant.