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RICHARDSON, Superintendent of Banks v. CRAIG et al.†
This is an action brought to recover upon a bank stockholder's liability. The Firestone Park State Bank closed January 7, 1932, and on that date the Superintendent of Banks took possession of its business and assets for the purpose of liquidating its affairs and has ever since carried on the liquidation of said bank. On the 28th day of January, 1932, the Superintendent of Banks determined that it was necessary to enforce the individual liability of the stockholders in order to pay its debts and called for a ratable assessment upon the stockholders of said bank amounting to $100 per share. In the order for said assessment the superintendent provided that it should become due and payable upon the 7th day of March, 1932. The assessments of the defendants were not paid when due, and thereafter on February 8, 1935, an action was filed in the superior court to recover from the defendants on said assessments. To this complaint the defendants filed their demurrer. Thereafter the court sustained the demurrer without leave to amend and entered a dismissal of the action. From this judgment of dismissal the Superintendent of Banks is appealing.
The sole question necessary for determination is this: Did the three–year statutory period of limitations provided under section 359 of the Code of Civil Procedure commence to run on the 7th day of March, 1932? If it did, the judgment should be reversed. If the statutory period began to run before that date, the judgment should be affirmed.
Said section 359 reads as follows: “This title does not affect actions against directors or stockholders of a corporation, to recover a penalty or forfeiture imposed, or to enforce liability created by law; but such actions must be brought within three years after the discovery by the aggrieved party of the facts upon which the penalty or forfeiture attached, or the liability was created.”
The provisions of the Bank Act (vol. 1, General Laws 1931, p. 314, Act 652a) are as follows:
Section 1 in part: “The stockholders of every banking corporation organized under the laws of the state of California shall be held individually liable, equally and ratably, not one for another, for all contracts, debts and engagements of such corporation, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares.”
Section 2 in part: “Whenever the super–intendent of banks shall hereafter take possession of the business and property of any bank doing business in this state, for the purpose of liquidating it affairs, as provided by law, he may at any time during the process of such liquidation, if necessary to pay the debts of such corporation, enforce the individual liability of the stockholders set forth in section 1.”
Section 2 then follows with provisions for making the call without previous judicial ascertainment, and on page 315 provides: “If any stockholder of said bank shall fail to pay said assessment in full upon the date specified in said order as the date upon which said assessment shall be due and payable, a right of action shall immediately accrue to the superintendent of banks to recover the amount of said assessment or the amount remaining unpaid thereon from the stockholder or stockholders failing to pay the assessment in full. * * * The superintendent of banks shall have power to maintain an action or actions in this state, * * * to enforce and collect any sums or amounts due and payable and remaining unpaid upon any such assessments.”
In our view the liability is for and upon the unpaid assessment and was created when and only when levied, and upon the date fixed for the payment, March 7, 1932, and therefore this action was commenced in ample time and the judgment should be reversed.
The National Bank Act is very similar to the California Bank Act with regard to stockholders' liability, and the cases arising under that act are enlightening.
In DeWeese v. Smith, 106 F. 438, 442, 66 L.R.A. 971 (C.C.A. 8th) affirmed by the Supreme Court of the United States, in 187 U.S. 637, 23 S.Ct. 845, 47 L.Ed. 344, it was stated that the National Bank Act, considering the liability of a stockholder for a deposit by a depositor, holds that no liability is imposed until the comptroller of the currency levies the assessment and demands payment. In this connection the court said:
“* * * The agreement of the shareholder with the bank and its creditors thus becomes a contract that, to an amount not exceeding the par value of his shares of stock, and not exceeding his equal and ratable proportion, he will pay, at such times and in such amounts as the comptroller of the currency shall decide to be necessary and shall demand, the debts and obligations of his bank. Rev.Stats. §§ 5151, 5234 [12 U.S.C.A. §§ 63, 192]; Kennedy v. Gibson, 8 Wall. 498, 19 L.Ed. 476.”
“The statute of limitations does not commence to run against the enforcement of the entire liability or against the enforcement of any particular portion of it until the comptroller of the currency had called the entire liability or the particular part of it in issue,” citing many federal cases. See, also, Johnson v. Greene (D.C.1936) 14 F. Supp. 945.
The New York State Bank Act (Consol. Laws, c. 2) is very similar to that of ours in this regard and the courts of New York have considered this question. Broderick, as Superintendent of Banks, etc., v. Aaron et al., 151 Misc. 516, 272 N.Y.S. 219, 231. In that case the court said:
“Under this statute the assessment becomes ‘due and payable’ after the determination by the superintendent to assess and upon the maturity of the demand for its payment, and the right or cause of action to enforce the assessment accrues at that time.
“This is the rule of the federal courts in actions to enforce the statutory liability of stockholders of national banks.” (Citing authorities.)
The defendants advance the theory that the liability in question should be treated as though it were a stockholder's liability under the former corporation law of California and that the statute should commence to run from either of several occasions, the earliest of which was the incurring of the indebtedness of the bank, and the latest, the date upon which the Superintendent of Banks made the order levying the assessment. Johnson v. Greene (C.C.A.) 88 F. (2d) 683. In order to distinguish between the former stockholder's liability law and the present bank stockholder's liability law, we point out several differences between the rights and remedies of creditors under the old law and the new law.
Under the old law, the stockholder's liability had its inception in the creation of the original liability of the corporation. Son on Corporations in California, 329 et seq.; Realty & Rebuilding Co. v. Rea, 184 Cal. 565, 194 P. 1024. The stockholders became directly liable to the corporation's creditors, solely as an original debtor and not in any way as a surety or guarantor for the corporation. Ellsworth v. Bradford, 186 Cal. 316, 199 P. 335. The liability was direct, immediate, and enforceable, independent of proceedings against the corporation. It was primary or original, and not secondary. Aronson & Co. v. Pearson, 199 Cal. 286, 249 P. 188, 51 A.L.R. 1380. The creditor had the sole power to control the prosecution of the action against the stockholder, and this right could not be exercised by the Superintendent of Banks. Williams v. Carver, 171 Cal. 658, 662, 154 P. 472.
Under the new law, the California Banking Act, the obligation of the stockholder is not a direct or primary one, but merely a contingent obligation. Rankin v. Barton, 199 U.S. 228, 26 S.Ct. 29, 50 L.Ed. 163. The stockholder is not obligated to the creditor as surety for the debts of bank, but merely on a secondary liability to pay debts, which debts remain distinct, and to which the stockholder is not a party. McClaine v. Rankin, 197 U.S. 154, 162, 25 S.Ct. 410, 49 L.Ed. 702, 706, 3 Ann.Cas. 500. No liability is fixed in the Constitution as it provides that the Legislature shall have the power to prescribe the rights, duties and liabilities of the stockholders. Section 1, art. 12, California Constitution. The creditor has no right to sue the stockholder, as a creditor's sole remedy as fixed by the Legislature is to present his claim to the Superintendent of Banks. Section 136, California Bank Act (Gen.Laws 1931, Act 652). The creditor has no control over the enforcement of his remedy, as the Superintendent of Banks under section 2 (Gen.Laws 1931, Act 652a) has sole power to determine the necessity for the assessment on the stockholders to pay the debts of the bank, to call for a ratable assessment, to fix the amount of the assessment, to fix the date on which the assessment shall be due and payable, to modify or annul the assessment, to sue in the event the assessment is not paid when due, to pay all sums collected on the liquidation of claims filed against the bank in the same manner as the assets of the bank are used. The liability cannot be asserted against the stockholder while the bank is a going concern, as the Superintendent of Banks can only levy the assessment and enforce the liability during liquidation. It must be remembered also that our statute contains a special provision vesting in the Superintendent of Banks a cause of action upon and a property right in the assessment itself, which attaches upon default in payment of the assessment. “A sum payable upon a contingency is not a debt, nor does it become a debt until the contingency happens.” Doland v. Clark, 143 Cal. 176, 181, 76 P. 958, 960.
The liability of the defendants is to pay an assessment. This liability becomes a present, enforceable demand on the date fixed for its payment by the Superintendent of Banks. He then for the first time has a right to begin and prosecute an action upon it.
Judgment reversed.
I concur in the judgment of reversal. In the election of November, 1930, the proportional liability of stockholders of corporations was eliminated by constitutional amendment. The Legislature in 1931 eliminated the liability provided by statute and enacted Act 652a, Gen.Laws 1931, entitled, “An act the define the liability of stockholders in California state banks and to provide for the enforcement and collection of that liability by the superintendent of banks of the state of California.” Upon the taking effect of the constitutional amendment that part of section 359 of the Code of Civil Procedure fixing the period for the commencement of actions to enforce stockholders' liability of necessity became inoperative. Act 652a makes plenary provisions for establishing and enforcing the liability of holders of bank stock and supersedes all statutory provisions not in harmony with it. Mack v. Jastro, 126 Cal. 130, 58 P. 372; San Francisco, etc., Land Co. v. Hartung, 138 Cal. 223, 71 P. 337; In re Weymann, 92 Cal.App. 646, 268 P. 971. The present action was commenced within the time allowed by the act.
I concur in the conclusions reached by Mr. Presiding Justice CRAIL, and Mr. Justice WOOD. In my opinion regardless of whether section 359 of the Code of Civil Procedure is still in force the liability which is the basis of the present litigation did not arise until the due date, as fixed by the Superintendent of Banks, of the assessment.
CRAIL, Presiding Justice.
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Docket No: Civ. 11478.
Decided: August 17, 1937
Court: District Court of Appeal, Second District, Division 2, California.
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