April 19, 1937.
1. BANKS AND BANKING.
Potential inchoate liability of stockholders in bank was transformed into an enforceable liability when chancery court took over bank for liquidation when it became insolvent.
2. LIMITATION OF ACTIONS.
Six-year period of limitations applicable to all actions for which no other period is prescribed held applicable to action against stockholders of insolvent bank for their double liability, and not three-year period applicable to actions on unwritten contracts, since double liability of a stockholder is provable by writing, and therefore is not an implied contract, but written contract with an implied promise to pay (Code 1930, sections 2292, 2299, 3803, 3815).
3. LIMITATION OF ACTIONS.
Three-year statute of limitations would not be applicable to action against stockholders of insolvent state bank for their double liability, even if such liability is statutory, since liability is not a "penalty," and hence six-year statute would apply (Code 1930, sections 2292, 2299, 3803, 3815).
4. BANKS AND BANKING.
Actions against stockholders of insolvent state bank for their double liability held maintainable, notwithstanding all the stockholders were not joined in one action, where plea raising question did not name any necessary stockholders omitted from bill (Code 1930, sections 515, 3815).
5. BANKS AND BANKING.
Receiver of insolvent bank would not be required to join in suit against stockholders for their double liability those stockholders who had recognized and paid their obligations, and insolvent stockholders, irrespective of whether all stockholders liable should be joined in one suit (Code 1930, sections 515, 3815).
6. BANKS AND BANKING.
Statute which repealed provision of former statute with respect to double liability of stockholders of insolvent state bank and re-enacted it verbatim with certain stated exceptions held to have continued double liability theretofore existing in force, where it was clear from terms of statute that it was intended to include within the terms of double liability all those classes which were not excluded by its terms (Code 1930, section 3815; Laws 1934, chapter 146, sections 115, 119).
APPEAL from the chancery court of Quitman county. HON. R.E. JACKSON, Chancellor.
J.M. Stevens, Jr., J. Morgan Stevens, and W.E. Gore, all of Jackson, M.S. McNeil and John Armstrong, both of Hazlehurst, and T.N. Gore and W.A. Cox, both of Marks, for appellants.
Obligation and liability imposed on stockholders of state bank constitutes an implied contract.
Board of Bank Examiners v. Grenada Bank, 135 Miss. 242, 99 So. 902; Carothers v. Love, 168 Miss. 250, 152 So. 483; Gift v. Love, 164 Miss. 422, 144 So. 562; Gray v. Love, 173 Miss. 390, 161 So. 679; Mellott v. Love, 152 Miss. 860, 119 So. 913.
Implied contract of stockholders is an unwritten contract barred in three years.
Anson on Contracts; Beck v. Tucker, 147 Miss. 401, 113 So. 209; Buntyn v. Building Loan Assn., 86 Miss. 454, 38 So. 345; Blount v. Miller, 172 Miss. 492, 160 So. 598; Carrol v. Green, 92 U.S. 509, 23 L.Ed. 738; City of Hattiesburg v. Cobb Bros. Construction Co., 174 Miss. 20, 163 So. 676; Dunbar v. Mayes, 43 Miss. 579; Federal Land Bank v. Collins, 156 Miss. 893, 127 So. 579, 69 A.L.R. 1068; Foote v. Farmer, 71 Miss. 148, 14 So. 445; Keener on Quasi Contracts; Mellott v. Love, 152 Miss. 860, 119 So. 913; Musgrove v. City of Jackson, 59 Miss. 390; McClain v. Rankin, 197 U.S. 154, 49 L.Ed. 742; McDonald v. Thompson, 184 U.S. 71, 46 L.Ed. 437; Pate Lbr. Co. v. Southern Ry. Co., 115 Miss. 402, 76 So. 481; Warren Godwin Lbr. Co. v. Lumber Minerals Co., 120 Miss. 346, 82 So. 257.
Liability and cause of action accrue on insolvency of bank.
Anderson v. Love, 169 Miss. 219, 151 So. 366; Board of Bank Examiners v. Grenada Bank, 135 Miss. 242, 99 So. 903; Carrol v. Green, 92 U.S. 509, 23 L.Ed. 738; Cowden v. Williams, 259 P. 570, 55 A.L.R. 1059; Gift v. Love, 164 Miss. 442, 144 So. 562; Gray v. Love, 173 Miss. 390, 161 So. 679; McClaine v. Rankin, 197 U.S. 154, 49 L.Ed. 702; Pate v. Bank of Newton, 116 Miss. 666, 77 So. 60.
Statute of limitations may be pleaded by special demurrer in equity.
P.H. Lowrey, of Marks, for appellants.
The court below held that the six year, and not the three year, statute applied, which holding was certainly excusable if it was error, as only that side was presented. We sincerely contend and believe that the court erred in this particular.
We think there is no ground for the contention that statutes of limitations do not apply in suits by bank receivers, and we do not suppose this point will be pressed.
Board of Bank Examiners v. Grenada Bank, 99 So. 903; Warren County v. Lamkin, 46 So. 511.
Inasmuch as all statutes creating an additional liability on the part of stockholders are in derogation of the common law, they are to be strictly construed. They are a wide departure of the established rule, and, though supposed to be founded on considerations of public policy and general convenience, are not to be extended beyond the plain intent of the words of the statute.
The case of Aldrich v. McClaine, 106 Fed. 791, is the strongest and best considered case I have found and it holds that a statute similar to our three year statute of limitations applies.
The liability under our statutes being direct, immediate and primary, the principles announced in the McClaine case, 106 Fed. 791, are controlling here.
Pate v. Bank of Newton, 77 So. 601.
The term of liability created by statute, or an equivalent phrase, which is of frequent occurrence in statutes of limitations, is intended to embrace liabilities arising out of and existing purely by virtue of some positive obligation imposed by statute. It does not embrace a liability which, though declared by statute and not enforceable in the absence of the statute, arises out of some voluntary act or agreement of the party. It, therefore, does not embrace an action to enforce the liability of a stockholder in a national bank for debts of the bank, nor an action to enforce the liability of a corporation under a charter granted by the Legislature imposing the obligations upon which the liability is founded.
19 Encyc. of Law, page 281.
The right of action by a corporation, or by its trustees in bankruptcy, or by its receiver, or by its creditors, on a subscription to its stock, or by stockholders against directors for losses caused by defendants' negligence, or by creditors against the stockholders, or against stockholders and directors, of an insolvent corporation, is barred within the same period that an action of debt founded on a contract not under seal, or an action of assumpsit or on the case founded on contract, is barred.
37 C.J. 749.
It seems to me that it is clear that the action in this case bars as in other cases as between individuals and that the statute of limitations begins to run as soon as an action might be begun to recover the debt and the question for solution here is whether the three year statute, section 2299, Code of 1930, governs. Under this statute, all actions bar in three years on "any unwritten contract, express or implied." It seems to me to be established by the foregoing authorities, and all other authorities, so far as I have been able to find, the double liability of the stockholder is a contract implied from his subscription to or purchase of the stock. It is clearly an unwritten contract, that is, the stockholder does not, in any writing, contract to pay this double liability, but as said by the authorities, the contract is implied from its purchase.
It seems to me superfluous to argue that an implied contract cannot be a written contract, and this is strictly in accord with the decisions of our court.
Buntin v. National Building Loan Assn., 86 Miss. 454.
L.A. Smith, Sr., of Holly Springs, for appellants.
Inasmuch as statutes imposing double liability on stockholders of banks are in derogation of the common law, they are to be strictly construed against the imposition thereof.
Mellott v. Love, 119 So. 913.
To take a case out of the statute there must be a writing evidencing an acknowledgment of indebtedness, or promising to pay, in such terms as to render any supplemental evidence unnecessary.
Foote v. Farmer, 71 Miss. 148, 14 So. 445; 1 Cook on Corporations, 644.
Our court refers to the liability of a stockholder as a "contract." (Pate v. Bank of Newton, 116 Miss. 666, 77 So. 601.) And lays down the rule in that case as to its accrual in the following language: "We think the liability of the stockholder, as to deposits, accrues with the making of the deposit." Certainly this is an implied contract, and not one to which the statute is inapplicable, because the liability is not created in the way described in Foote v. Farmer, supra, i.e., there is "no writing evidencing an acknowledgment of indebtedness or promising to pay, in such terms as to render any supplemental evidence unnecessary." It seems to me clear, therefore, that the cause was barred when filed.
As to the grounds of the special demurrer, to the effect that the suit cannot be maintained, because the act on which it was predicated and its amendments were repealed, without a saving clause, I respectfully submit that this demurrer also should have been sustained.
I take this position that this law was repealed in its entirety, and that no penalty or recovery from stockholders of the bank can now be had in the suit at bar because of the repeal of the law, and its amendments, which repeal, in my judgment, carried with it the right to recover from the stockholders of the failed bank in this suit.
The court, in construing a statute, will presume that the Legislature was familiar with prior statutes.
State v. Traylor, 100 Miss. 544, 56 So. 521; Ascher v. Moyse, 101 Miss. 36, 57 So. 299.
The Laws of 1934 for the first time since the original enactment of depository guaranty into the jurisprudence of this State substituted a completely and entirely new scheme for the original scheme of deposit guarantee. Chapter 146 of the Laws of 1934 was approved April 2, 1934, while this suit was not filed until December 24, 1934.
It has been argued that the double liability of stockholders is not a part of the state bank guarantee law, but we think a casual consideration of the act will demonstrate the fallacy of that view. In fact, our court has held specifically that it is a part thereof.
Anderson v. Baskin, 74 So. 682; U.S.F. G. Co. v. Commerce Bank, 125 So. 839.
Therefore, we take it that when the Legislature passed a law, without a savings clause, and providing in the law that the State Bank Guarantee Law is in every particular repealed, and the court has held that the double liability of stockholders is one of the particulars of that law, then the double liability of stockholders had been repealed when this law suit was filed.
Pate v. Bank of Newton, 77 So. 601, 116 Miss. 666.
It is argued that section 3815 of the Code of 1930 is replaced by section 115 of chapter 146 of the Laws of 1934, and that, therefore, the Laws of 1934 would justify the bringing of this law suit. In answer to that I say there are two reasons why the argument is unsound.
In the first place, the original bill is brought under chapter 124 of the Laws of 1914, which has been entirely repealed. In the second place, the original bill shows on its face that on the date of the adoption of chapter 146 of the Laws of 1934, to-wit, April 2, 1934, the Riverside Bank was already insolvent and in liquidation, and had lost its character and identity and legal status as a banking institution, so that the very langauge of section 115 of chapter 146 of the Laws of 1934 would exempt the defendants in this case, when it limits the liability in this case.
There was no Riverside Bank on that date, and hence no stockholders. It could not refer to past banks, or past stockholders, because in Pate v. Bank of Newton, supra, the Supreme Court held that the constitutionality of such a section depends upon its providing liability only as to future contracts, and states: "But this liability does not extend to deposits which were actually made before the passage of the act." In the case here, the bank was then in liquidation and the original bill itself shows that all deposits had been made before the passage of this section 115 of the Laws of 1934, chapter 146 thereof, and therefore the act is not pertinent to this case.
The stockholder's liability accrues for action when the bank is put into liquidation, in this case January 17, 1931.
Examiners v. Grenada Bank, 136 Miss. 242, 99 So. 903.
With the rule laid down in this state that these laws must be strictly construed in favor of the stockholders and against the liability sought to be recovered in this suit, I am further fortified in my position by several decisions of the Supreme Court of the State of Mississippi sustaining me in my position that because chapter 146 of the Laws of 1934 presents one complete new scheme governing the banking business in Mississippi, chapter 85 of the Code of 1930, is superseded thereby, in addition to the express provisions of repeal in the new law, and aside from the new law's omission of a savings clause therein, because where a later act covers the whole subject matter of earlier acts, embraces new provisions, and plainly shows that it was intended not only as a substitute for the earlier acts but to cover the whole subject then considered by the Legislature and to prescribe the only rules in respect thereto, it operates as a repeal of all former statutes relating to such subject matter.
59 C.J. 919; Swift v. Sones, 107 So. 881, 142 Miss. 660; State v. Wyoming Mfg. Co., 103 So. 11, 138 Miss. 349; Clay County v. Chickasaw County, 1 So. 753, 64 Miss. 534; Swan v. Luck, 40 Miss. 268; Grant v. Baltimore, etc., R.R. Co., 66 S.E. 709, 66 W. Va. 175.
The rule is laid down in section 511, 59 C.J. 938, to be well settled, that where a statute prohibits a particular act and imposes a penalty for doing it and a subsequent statute imposes this penalty for the same or practically the same offense, the latter statute repeals the former, and that is true whether the offense be decreased or diminished.
After the expiration or repeal of a law, no liability or penalty can be enforced, or punishment inflicted, for a violation of it, committed while it was in operation, unless some special provisions be made for that purpose by the repeal statute.
Teague v. State, 39 Miss. 51, 62 Morris St. Cas. 1364.
As I have already pointed out, there is no special provision in the Laws of 1934 for the purpose of retaining rights accrued under the former laws, and certainly the new law could not confer such rights retroactively.
Certainly the appellants were not stockholders in any corporation doing a general banking business on April 2, 1934, when chapter 146 of the Laws of 1934, went into effect, and that law applied only to stockholders of banks after its passage, from its plain intendment. A bank ceases to be a bank when it goes into receivership and no liability against stockholders accrues during the operation of the receivership. On liquidation of a bank its franchise to do a banking business terminates, it ceases to be a bank.
The immediate abrogation of said laws without guarding against the legal requirements sanctioned by all courts as often regarded in this state, leaves no alternative but the defeat of all actions depending for support on repealed laws.
State v. Lodge, BPOE, 13 So. 265; Kendruck v. Kyle, 78 Miss. 278, 28 So. 951; Crowe v. Cartledge, 54 So. 47; French v. State, 53 Miss. 651; Jenning v. Hammond, 1 S. M. 174; Postal Tel. Co. v. Shannon, 44 So. 809, 91 Miss. 476.
Lester G. Fant, Sr., and Jr., of Holly Springs, for appellants.
The question of non-joinder of parties was properly raised by the answer.
The parties not joined were necessary parties to this suit.
In the case at bar, the receiver has access to other assets of the bank, to-wit, the liability of the owners of $22,200.00 worth of the capital stock. He has proceeded against the appellants here, and refused to join the owners of this other stock. This is, in effect, to make the appellants liable for the owners of the rest of the stock, who go scot-free, in plain violation of the provisions of the statute as well as of principles of equity.
The appellants have no access to the other stockholders, they have no right of reimbursement or contribution against them. The appellee does have access to these assets, a right to sue the owners of the rest of the stock in this same suit now pending. Principles of equity, the doctrine of marshalling assets requires that he proceed against all equally, according to the terms of the statute.
W.S. Henley, of Hazlehurst, for appellee.
Limitation applying to stockholders' liability is prescribed by section 3815, Mississippi Code of 1930. Under the present statute, it is certainly not necessary to look beyond the statute creating the liability.
Pate v. Bank of Newton, 116 Miss. 666.
The Legislature evidently thought that the actions on a stockholder's liability was not even limited to six years prior to the passage of the 1936 amendment, because they added a clause to the effect that where the liability grew out of insolvency more than six years prior to the passage of the act that the suit could be brought within one year after it was passed.
The statute itself as interpreted by the court provides for the bringing of the suit "while the bank is in the process of liquidation." This is an affirmative grant of a right to bring the cause of action at any time while the bank is in the process of liquidation. Until the Act of 1936 was passed, it appears that there was no other limitation on such right. It was undoubtedly in the legislative mind that the necessity of bringing a stockholders' suit could be determined much earlier in some liquidations than in others, depending upon the progress of the liquidation, which would vary with many circumstances. The lawmakers, therefore, authorized this character of suit to be filed at any time within the progress of the liquidation, but not thereafter.
Although liability of stockholder may be contractual in its nature, suit to enforce such liability is an action on a liability created by statute.
We submit that the mere statement that stockholder's liability is contractual in its nature or quasi-contractual, does not solve the problem of whether the statute of limitation applicable to (a) liabilities created by statute, or (b) unwritten contracts, expressed or implied, or (c) written contracts, expressed or implied, applies to a suit on such liabilities. This proposition was clearly stated by Chief Justice Fuller, of the Supreme Court of United States, in the case of McClaine v. Rankin, 49 L.Ed. 702.
Quite a few states have a distinct section of their statute of limitation expressly dealing with "liabilities created by statute." While Mississippi does not have an expressed statute on this subject, liabilities created by statute fall within the residuary clause of our statute of limitation, being section 2292.
An analysis of this cause of action demonstrates, beyond doubt, that it is an action based on a liability created by statute as distinguished from a contractual action or an action based upon a contract. The ownership of the stock is only one element on which the statutory liability is based. Ordinarily, the ownership of the stock would result from a contract, but this is not necessarily true. In the case of Kent v. Love, 106 So. 772, the court placed this liability not upon the basis of the contract, but under the circumstances in this case, it was based upon estoppel.
We respectfully submit that the relation of owner of stock which may or may not be brought about as a result of a contract is only one of the elements fixing this liability, and that although such liability may be contractual in its nature, it is, nevertheless, a liability created by statute, and that the statute of limitation applicable thereto should apply.
Six year statute of limitation applies to liabilities created by statute.
37 C.J. 783, 787; McDonald v. Thompson, 46 L.Ed. 437; McClaine v. Rankin, 49 L.Ed. 702; Platt, Recr. v. Wilmont, 48 L.Ed. 809.
The great weight of authority sustains the position of the Supreme Court of the United States to the effect that even though a suit to enforce a stockholder's liability may be contractual in its nature, that it is governed by the statute of limitation applying to liabilities created by statute and not contractual liability, either written or unwritten.
Smith v. Barnett Bank, 156 So. 478; Harris v. Taylor, 98 S.E. 86; Richards v. Schwab, 167 N.Y.S. 535; Wright v. Russell, 280 N YS. 614; Butler v. Mobley, 152 S.E. 229; Denny v. Kennedy, 16 S.W.2d 1030; Mitchell v. Banking Corp., 273 P. 1055; Cowden v. Williams, 259 P. 670; Brown v. Roberts, 254 P. 419; In re Newton's Estate, 46 Pa. Super. 40; O'Neill v. Quarnstrom, 92 P. 391; Royal Trust Co. v. Macbean, 144 P. 139; Miller v. Lane, 116 P. 58; Jones v. Goldtree, 77 P. 939.
If liability be regarded as purely contractual, it is evidenced by the written statute, section 3815, and the six year statute of limitation applies.
DeSoto County v. Wood, 116 So. 738; Blodgett v. Pearl River County, 98 So. 227; City of Hattiesburg v. Cobb Bros. Construction Co., 163 So. 676; Madison County v. Collier, 30 So. 610; Milam v. Paxton, 134 So. 171; Little v. Kohn, 185 Fed. 298.
The acceptance of the stock certificate binds the stockholder to everything written therein as well as the obligations implied by law in respect thereto.
Fawlkes v. Lea, 36 So. 1036; Washington v. Soria, 73 Miss. 665.
We submit that the stockholder is in the same position as if he had signed a guaranty that he would pay any and all losses which might be incurred by depositors upon the failure of the bank, and in identically the same position as the guarantors were in the case of Raleigh v. Fortenberry, 103 So. 227, which case was decided by the court en banc.
We, therefore, submit that the guaranty agreement signed by the stockholders with the bank, but for the benefit of the depositors, is an obligation of the same nature and in the same class and for the same purpose as the statutory liability and that regardless of whether the statute itself be regarded as creating the liability or whether the statute is to be regarded as written into or implied upon the stock certificate, in either event, the obligation to pay arises out of a writing and is subject to the six-year statute of limitation.
Suit cannot be filed under the present procedure until authorized by chancery court.
Section 88, chapter 146, Laws of 1934.
Partee L. Denton, of Marks, for appellee.
It is generally accepted by bench and bar that in order to take a contract out of the three-year period of limitation, it is not necessary that the parties prepare and formally execute a written contract. To remove it from the three-year period, it is not necessary that it be a "specialty" or a contract acknowledged and sealed. Any writing is sufficient which, by its statements, renders any supplemental evidence unnecessary.
City of Hattiesburg v. Cobb Bros. Constr. Co., 174 Miss. 20, 163 So. 676; Washington v. Soria, 73 Miss. 665, 19 So. 485, 55 A.S.R. 555; Cock v. Abernathy, 77 Miss. 872, 28 So. 18; Fowlkes v. Lee, 84 Miss. 509, 36 So. 1036, 68 A.L.R. 925, 2 Ann. Cas. 466; Masonic Benefit Assn. v. First State Bank of Columbus, 99 Miss. 610, 55 So. 408; I.C.R. Co. v. Jackson Oil Refining Co., 111 Miss. 320, 71 So. 568; Blodgett v. Pearl River County, 134 Miss. 816, 98 So. 227; DeSoto County v. Wood, 150 Miss. 432, 116 So. 738; Milam v. Paxton, 160 Miss. 562, 134 So. 171.
If in the present case there be some written evidence of the contract whereby the amount and nature of the liability of the defendants can be determined without the necessity of oral proof, we take it that the liability of the defendants is a liability founded upon a writing and is not a liability founded upon an unwritten contract, and that regardless of whether it be termed express or implied.
I think that the case of Howarth v. Lombard (Mass.), 56 N.E. 888, is perhaps the most complete discussion of the nature of the liability that I have found. This case is quoted with approval in Aldrich v. McClaine. It will also be noted that this case, though being before the Massachusetts Court, is founded upon the statutes of the State of Washington. The court says: "Although the liability is founded on a statute there is a contractual element entering into it. The undertaking is as if one subscribing for stock expressly agreed to take and hold it under a previously prepared contract in writing, and that all who should become holders of the stock should pay the amount of their subscriptions to the corporation when needed and should pay the additional sum to create a fund for creditors if the corporation should become insolvent and a receiver should be appointed to collect it."
Washington v. Soria, 73 Miss. 665; DeSoto County v. Wood, 116 So. 738.
Chapter 146 of the Laws of 1934 cannot be construed to repeal the double liability statute theretofore existing, or to do so would be to place a construction upon chapter 146 of the Laws of 1934 which would render it unconstitutional and void on account of being in violation of Article 1, section 10, of the Constitution of the United States, and section 16 of the Constitution of Mississippi, prohibiting enactment of laws impairing the obligations of contracts.
We have not admitted, except for the sake of argument, that the double liability statute as it existed at the time of the closing of the Riverside Bank was repealed by the new banking law. We do say that under the law, as it existed at the time the bank closed for liquidation, certain vested rights had accrued to the depositors of the bank against the stockholders of the bank. We believe that it is universally held that these rights are contractual rights and arose by virtue of a contract voluntarily entered into by the stockholders. If the Legislature, by the enactment of the new banking laws, took away these rights, then the Legislature passed a law which took away the property of the depositors of the bank without due process of law and impaired the obligation of the contract; and, if the court attempts the construction of the new law as is propounded by counsel for defendants, then the new banking law is unconstitutional insofar as it affects the rights of the complainant in this suit. We do not ask the court to hold the act unconstitutional, but, if we should be mistaken in our position on these questions, we respectfully submit that the complainant is still entitled to recover, because vested rights had accrued which could not be defeated by legislative enactment.
The plea in abatement is not well taken because all necessary parties are before the court. E.C. Black, of Marks, for appellee.
The statute of limitations cannot be raised by demurrer unless it is apparent on the face of the bill that the cause of action has become barred.
The double liability statute was first enacted in 1914 as section 59 of chapter 124 and is brought forward in the Code of 1930 as section 3815 and in chapter 146 of the Laws of 1934 as section 115.
It will be observed from a reading of this statute that the double liability is for the benefit of all the depositors and not for the general creditors of an insolvent bank and it is provided in the original statute and all subsequent statutes on the subject that this liability may be enforced in a suit at law or in equity by the party who may be in charge of the liquidation of the insolvent bank.
My position is that this liability created by statute is an asset of the bank for the benefit of the depositors whenever the condition arises, which makes the statute effective and that it is a trust fund in the hands of the stockholder for the benefit of the depositors and that the statute of limitation cannot be interposed as a defense to a bill seeking to enforce such liability.
Payne v. Bullard, 23 Miss. 88.
All of the courts hold that the liability of the stockholder under the statute is an added liability created by statute and is a primary liability contractual in its nature and is created by the act of the stockholder subscribing for stock. Therefore, the additional liability created by statute is not different from the liability created by subscribing for the stock and the balance owing on the stock and the additional liability created by statute are liabilities accruing at the same time and are of the same nature.
The court has said clearly and positively as could be said that the suit might be brought at any time after the bank goes into liquidation and before the liquidation is closed.
Pate v. Bank of Newton, 116 Miss. 666, 77 So. 601; Board of Bank Examiners v. Grenada Bank, 135 Miss. 242, 99 So. 902; Kent v. Love, 106 So. 772; 14 C.J. 1102, par. 1725.
Our statute does not fix the time, but the court has said that the action may be brought at any time after the bank goes into liquidation and before the liquidation is closed.
Where the bank is in voluntary liquidation in a court of equity, the liability of its stockholders does not accrue until the court decides that it is necessary to assess the stockholders, and determines the amount and fixes the time of payment.
7 C.J., page 778, par. 626, and page 515, par. 97.
I submit that the statute of limitation cannot be interposed as the defense to a bill seeking to enforce the double liability against stockholders.
Payne v. Ballard, 23 Miss. 88; Pate v. Bank of Newton, 116 Miss. 666, 77 So. 601; Board of Bank Examiners v. Grenada Bank, 135 Miss. 242, 99 So. 902; Section 3815, Code of 1930; Section 115, chapter 146, Laws of 1934; Section 1, chapter 166, Laws of 1936.
If I should be mistaken and this action is controlled by any statute of limitations, it is section 2292 of the Code of 1930 instead of section 2299.
Washington v. Soria, 73 Miss. 665, 19 So. 485; Madison County v. Collier, 87 Miss. 204; Blodgett v. Pearl River County, 134 Miss. 816, 98 So. 227; De Soto County v. Wood, 116 So. 738; Tucker Printing Co. v. Board of Sup'rs, Attala County, 158 So. 336; City of Hattiesburg v. Cobb Bros. Construction Co., 174 Miss. 20, 163 So. 676.
It will be noted that nowhere is the stock liability statute or the funds derived from the stock liability mentioned; therefore, section 59 of the Laws of 1914, as amended, is no part of the state guaranty law.
U.S.F. G. Co. v. Commercial Bank of Clarksdale, 125 So. 839.
The repeal and simultaneous reenactment of substantially the same statutory provisions is to be construed, not as an implied repeal of the original statute, but as an affirmance and continuance thereof.
59 C.J. 927, par. 929.
Even where an amending statute purports to repeal the amended statute and reenacts a portion thereof, that portion is not strictly repealed, but is continued in uninterrupted operation.
59 C.J., 928, par. 30, and 897, par. 495; White Sewing Machine Co. v. Harris, 252 Ill. 361, Ann. Cas. 1912d 536; Haspel v. O'Brien, 218 Pa. St. 146, 11 Ann. Cas. 470; Heath v. State, 172 Ind. 296, 21 Ann. Cas. 1056; Anding v. Levy, 57 Miss. 51; State v. Hill, 70 Miss. 106, 11 So. 789; Abbey v. Levee Com'rs, 83 Miss. 201, 35 So. 426; Tucker v. McLendon, 98 So. 797; McDonald v. State Tax Commission, 158 Miss. 331, 130 So. 473; State Tax Commission v. Miss. Power Light Co., 160 So. 907.
Some of the states hold that the repeal and reenactment of a former statute by the same act is not held to be a continuation of the former statute, but the contrary view is held in a larger number of states, which view is held by Mississippi.
My position is that the double liability statute was not a part of the scheme devised by the Legislature in 1914 to guarantee deposits, but was an independent statute fixing the double liability against stockholders as most other states had done, some of which did not have a guaranty banking law, and that the liability under this statute is a primary liability and for a contractual obligation rather than a penalty and that such liability accrues at the time the deposit is made and the right of action accrues as soon after the bank goes into liquidation as it is ascertained that the assets of the bank will not be sufficient to pay the depositors in full and that the giving of the notice to stockholders fixes the time when it is ascertained that the assets are insufficient and the right of action then accrues.
If this double liability is founded on contract, then the law in force at the time of the contract is a part of it and is written into the contract and an act undertaking to repeal this law would be unconstitutional.
In an action on contract, the non-joinder of defendants must be raised by a plea in abatement and the defendants alleged to have been omitted must be named in the plea.
Section 515, Code of 1930; Section 147, Griffith's Chancery Practice; Campbell v. Farmers Bank, 127 Miss. 671, 90 So. 636; Aven v. Singleton, 132 Miss. 256, 96 So. 165.
Pleas in abatement are not favored by the courts and if allowed, must be clear, certain and definite in stating the matter to which it objects.
Griffith's Chancery Practice, page 336.
As to pleas in abatement in equity, the same strictness is applicable to such pleas as at common law.
Beck v. Beck, 36 Miss. 74; Burroughs v. Murphy, 131 Miss. 544, 95 So. 518; Perry v. Ellis, 62 Miss. 711.
F.W. Bradshaw, Flowers, Brown Hester, and Robert Burns, all of Jackson, for appellee.
Section 3815 was not repealed, but to the contrary, same was reenacted as section 115 of chapter 146 of the Laws of 1934.
There was no repeal or holding for naught of double liability of stockholders in banks that failed prior to the passage of chapter 146 of the Laws of 1934, as was recognized by the subsequent Legislature when chapter 166 of the Laws of 1936, amending section 115 of the Laws of 1934, was passed.
The Legislature did not intend to repeal the double liability statute as to banks that failed prior to the passage of chapter 146 of the Laws of 1934.
It is contended that section 3815 of the 1930 Code is repealed by section 116 of chapter 146 of the Laws of 1934. There is nothing to this contention because section 3815 was never a part of what is termed "The State Bank Guaranty Law."
The double liability statute simply imposes a double liability on the stockholders for the benefit of depositors, which was in addition to the assets of the bank and was a liability which followed the ownership of stock and which the stockholders assumed when they purchased stock in a bank, because the double liability statute was considered a part of the stockholders contract which followed the ownership of the stock and was always attendant upon the ownership while the bank was in operation.
Anderson v. Baskin, 114 Miss. 181, 74 So. 682; U.S.F. G. v. Bank, 125 So. 839; Perkins v. State, 130 Miss. 512, 94 So. 460.
It has been definitely settled by our court that where a statute is repealed by a subsequent act, but the provisions of the statute repealed are carried forward in the repealing act, the latter provisions will be considered as a continuance of the old law and not as a new or original enactment.
State Tax Commission v. Miss. Power Co., 160 So. 907.
That the liability of a stockholder under the statute for the benefit of the depositors of a failed bank is contractual is settled in the case of Gift v. Love, 144 So. 562.
Ettor v. Tacoma, 228 U.S. 148, 57 L.Ed. 773; Coombes v. Getz, 285 U.S. 434, 76 L.Ed. 866; Matteson v. Dent, 176 U.S. 521, 44 L.Ed. 571; Forsdick v. Levee Comrs., 76 Miss. 859, 26 So. 637; Stone v. Yazoo R. Co., 62 Miss. 607; Stone v. Natchez R. Co., 62 Miss. 646; Railroad Com. v. G. R. Co., 78 Miss. 750, 29 So. 789.
Our position is that the cause of action is not barred. We contend that the six-year statute of limitation applies and not the three-year statute. The liability of stockholders is declared by section 3815 of the 1930 Code, and the liability as declared by the statute is part and parcel of the stockholders contract when he purchases the stock. The situation is the same to all intents and purposes as if the statute were written out in the stock certificate issued to the stockholder evidencing his stock ownership.
It is clear to us that the six-year statute of limitation is the one applicable to suits under section 3815 of the 1930 Code, but we do not see how this question can arise on demurrer as the same is sought to be urged in this case because our court has definitely stated that the cause of action does not accrue until it reasonably appears that it is necessary to collect the double liability of stockholders in order to pay depositors, and there is nothing in the bill of complaint to show that this situation existed more than three years prior to the filing of the suit.
Pate v. Bank of Newton, 116 Miss. 666, 77 So. 601.
Any suit for the collection of the double liability in this case before it became reasonably apparent that it was necessary to collect the liability would have been premature, and the defendant stockholders could have raised this objection, and if it had been well taken, the court would not have proceeded with the suit. This being the case, the period of limitation would run only from the time when the liquidator could have properly instituted the suit, and there is nothing in the bill of complaint to show that this suit could have been instituted properly more than three years prior to the date on which the suit was filed.
Appellee, Moore, as receiver of the Riverside Bank of Marks, filed his bill against L.A. Rather and many others in the chancery court of Quitman county on March 11, 1935, seeking to recover from them, as stockholders, for their double liability, which was necessary to pay the depositors.
All the appellants, who were respondents in the court below, filed a special demurrer setting up the three-year statute of limitation, which the court below overruled, but granted an appeal to the Supreme Court to settle all the controlling principles of the case.
Finley and L.A. and H.H. Rather, executors, also filed a plea to the effect that the bill sought to recover double liability from them as stockholders, and joined with them certain stockholders who were residents of Quitman county, Miss., but that Finley and the Rathers were residents of Marshall county, Miss.; that the bill in one aspect sought an accounting between the stockholders, and a discovery from all the defendants named in the bill as to their ownership of stock in the insolvent bank. The plea further set forth that the bill, on its face, showed that all the stockholders had not been made parties defendant to the bill, and that those named in the bill as not having been sued were necessary and proper parties, and that the suit should be abated until all stockholders not sued were brought into court. Finley and the Rathers also filed a special demurrer to the bill which set up that the double liability law had been repealed by section 119, chapter 146, Laws 1934.
The bill alleged that the Riverside Bank became hopelessly insolvent in the year 1930; that on January 7, 1931, the directors of said bank met and by resolution requested the State Banking Department to take charge of said bank as an insolvent institution, and to put it in course of liquidation, which was done by order of the chancery court on the 17th day of January, 1931. The bill further alleged that the appellant stockholders owned shares of stock in the bank at the time it closed its doors and prior thereto in various amounts, as shown by the stock book of the insolvent bank; that demand had been made on them for the payment of the liability which was imposed by section 59 of chapter 124, Laws of 1914. The bill further alleged that certain stockholders had either discharged their double liability by payment or had arranged to pay it, or were insolvent. The bill also charged that on January 17th the insolvent bank went into liquidation and was placed in charge of J.S. Love, superintendent of banks, who was succeeded by various liquidating agents, and finally by a receiver appointed pursuant to chapter 146, Laws of 1934. The bill contained this allegation: "Complainant further shows that it has been clear since the 1st of May, 1934, that the losses would be far in excess of the full amount of the capital stock of said bank, which was $50,000.00 and that it would be necessary to call upon the stockholders for their double liability under the statute."
It will be noted that the bill in this case, seeking recovery for double liability, was filed against the stockholders more than three years and less than six years from the date the cause of action accrued. The double liability of stockholders in insolvent banks was first imposed by the Legislature in the Laws of 1914 — chapter 124, section 59 — was continued in force by chapter 207, Laws of 1916, and again in section 3815, Code of 1930.
1. The battle was waged in the court below by the appellants and the appellee chiefly upon whether the three-year or the six-year statute of limitation applied. The two statutes involved are as follows:
"2299. Actions to be brought in three years. — Actions on an open account or stated account not acknowledged in writing, signed by the debtor, and on any unwritten contract, express or implied, shall be commenced within three years next after the cause of such action accrued, and not after."
"2292. Actions to be brought in six years. — All actions for which no other period of limitation is prescribed shall be commenced within six years next after the cause of such action accrued, and not after."
As stated in the bill, the bank was hopelessly insolvent before it closed its doors, the directors of the bank represented to the chancery court that it was insolvent, and the court took over the liquidation of said bank by order on its minutes on January 17, 1931. When the chancery court took over the insolvent bank for liquidation a potential inchoate liability was transformed into an enforceable one. Pate v. Bank of Newton, 116 Miss. 666, 77 So. 601; Board of Bank Examiners v. Grenada Bank, 135 Miss. 242, 99 So. 903; Gift v. Love, 164 Miss. 442, 144 So. 562, 567, 86 A.L.R. 63; Gray v. Love, 173 Miss. 390, 161 So. 679. It was unnecessary for the superintendent of banks to declare this bank insolvent, or state that it was necessary to enforce the liability. Anderson v. Love, 169 Miss. 219, 151 So. 366, 153 So. 369.
It is insisted by appellants that the liability imposed on stockholders of a state bank, and their obligation to pay, constitutes an implied contract, and they cite in support thereof, Mellott v. Love, 152 Miss. 860, 119 So. 913, 64 A.L.R. 968; Gift v. Love, supra; Carothers v. Love, 169 Miss. 250, 152 So. 483, 153 So. 389. In the Gift Case the court said: "It is true that when Gift died his stock double liability had not matured; it was inchoate until the bank became insolvent, nevertheless it originated during his lifetime. It was rooted into and was a part of his contract of subscription to the stock. When the bank became insolvent and closed, the liability became fixed and ascertainable and was just as much a debt of his estate as any other debt he owed, originating during his lifetime." We are of the opinion that these decisions of our court only tend to establish that the liability created by our statute against the stockholders in favor of the depositors is one which originates in the statute, but is contractual in its nature; they do not establish that the contract is an implied one not provable by writing.
Appellants also rely upon the cases of Buntyn v. Building Loan Association, 86 Miss. 454, 38 So. 345; Pate Lumber Co. v. Southern Ry. Co., 115 Miss. 402, 76 So. 481, as absolute declarations by the court that the double liability imposed by the statute arises from an implied contract. We do not think this view is sound, or that these cases are in conflict with others by this court to which we shall presently refer. The Buntyn Case was a suit in equity to recover usurious interest alleged to have been paid by Buntyn to the building and loan association; the three-year statute of limitation was pleaded, and the court said that the liability "arises not from any express contract, either written or verbal, but from the fact that the appellee coerced the payment of money which it had no right to exact, in which case, because of its obligation to repay such money, the law implies a contract on its part to do so. The distinction sought to be drawn between contracts implied in fact and contracts implied in law cannot be maintained under our statute (section 2739). All implied contracts in this state are subject to the bar of three years, as provided in this section 2739 of the Code of 1892. But whether this be true or not, this contract is certainly one implied in law, and so clearly within the bar of this statute." In that case it is clear that the action could not have been based upon a statute. The recovery had to be upon the evidence offered by Buntyn as to the sum of money paid by him as usury. Because of the statute there was an obligation on the part of the building and loan association to repay this usury, and that contract was implied and the statute did not prove its existence.
In the case of Pate Lumber Company v. Railway Company, supra, it was clear from the statement of facts that the contract arose from an obligation on the part of the lumber company to repay to the railway company an overpayment made by the railway company because of certain refunds. The whole contract was implied, and the court demonstrated that it was not provable by writing.
Section 3815, Code 1930, imposes a direct liability on each and every stockholder in a bank to pay again, when and if the bank becomes insolvent and it is necessary to pay depositors, an amount equal to the par value of the stock. When the stockholder receives a share of stock it is as if he receives it with that statute incorporated therein. The statute is in writing; the stock is in writing, and the stockholder cannot take the stock of a bank in this state without the liability imposed upon it by the written statute. It is further shown in this case that the bank kept a stock book with the names and numbers of shares of stock held by each stockholder. This stock book was presumably kept in pursuance of the requirement of section 3803, Code 1930, and is prima facie evidence of the facts therein stated. The book was certainly in writing. If it be said that it is necessary to show when the liability accrued in this case, an order was entered by the chancery court putting this insolvent bank in liquidation on January 17, 1931. Orders of the court are required to be in writing, so that, each and every material requisite of the contract assumed by the stockholder when he bought the stock and had it delivered to him is in writing, and provable by writings.
In Washington v. Soria, 73 Miss. 665, 19 So. 485, 55 Am. St. Rep. 555, this court held that when a vendee of land has taken possession under a conveyance reciting a consideration of a certain amount paid in cash and a balance to be paid in installments at specified dates, to secure which a lien is reserved in the deed, the statute of frauds does not prevent a recovery of the unpaid purchase money, although the vendee may have signed no written promise to pay; and the vendor, under the liberal provisions of section 671, Code 1892, for the simplification of pleadings, can maintain therefor his action on the case; and that whether the vendor in such a transaction elects to proceed on the promise contained in the deed or that implied by law from the vendee's acceptance of the deed, his right of action rests upon a contract provable, not by parol but by a writing, and the statute of limitations applicable to the case is not that of three years, provided by section 2739, Code 1892, in respect to unwritten contracts, but that of six years, provided by section 2737, Code 1892, in respect to all actions for which no other time is fixed. The above case was followed in Blodgett v. Pearl River County, 134 Miss. 816, 98 So. 227, 228, wherein the court held that the six-year statute of limitation applied and not the three-year statute where the action was based upon a claim, which had been audited, for excess payment of taxes. The court said: "In order for a cause of action to come within the six-year statute of limitation it is not required that it shall be evidenced by writing and signed by the party sought to be charged. It is only necessary that the cause of action shall be provable by writing, and an obligation to pay the same shall arise either expressly or by law. Here we have the entire claim, from beginning to end, provable by writing, namely, appellant's tax receipt and said reclamation proceedings, and then, in addition to that, the mandate of the statute that, when the claim is so audited, allowed, and presented, the board of supervisors are authorized to order it paid, and the treasurer of the county to pay it. Under the authority of the cases following, we hold that the contract of the county to repay said taxes to appellant was provable entirely by writing, applying thereto the requirements of the statute. Washington v. Soria, 73 Miss. 665, 19 So. 485, 55 Am. St. Rep. 555; Cock v. Abernathy, 77 Miss. 872, 28 So. 18; Fowlkes v. Lea, 84 Miss. 509, 36 So. 1036, 68 L.R.A. 925, 2 Ann. Cas. 466; Masonic Benefit Ass'n v. Bank, 99 Miss. 610, 55 So. 408; Illinois Cent. Railroad Co. v. Oil Co., 111 Miss. 320, 71 So. 568."
The most that can be said in the case at bar is that the promise to pay the double liability was implied. The contract was provable by writings.
The case of De Soto County v. Wood, 150 Miss. 432, 116 So. 738, seems to put the question here at issue beyond logical debate. There Wood, the circuit clerk of the county, filed a suit more than three years and less than six years after the cause of action accrued. The only evidence was the statute fixing the fees and salaries allowed to officers. The court there held that "the claim or action therefor is not upon an implied contract provable by parol, but is one provable by a writing. The promise to pay is implied by law after the services have been rendered by a public officer, but it is a promise the terms of which are provable by a writing embodied in the statute fixing the compensation which will be paid upon the performance of the services by officer." Also, see, Madison County v. Collier, 87 Miss. 204, 30 So. 610.
In these two lines of cases this court has studiously tried to announce the distinction between a contract implied by law and a contract provable by a writing in which the promise to pay or perform is implied. Under all the authorities in Mississippi the double liability of a stockholder in a state bank is provable by writings, therefore, it is not an implied contract but is a written contract with an implied promise to pay or perform.
If we were to say that the liability is statutory that would not avail the appellants here, for the reason that not being a penalty, the liability therein imposed would not fall within the three-year statute but would be covered by the general language of the six-year statute quoted supra.
We have not overlooked the decision of the Supreme Court of the United States cited by both sides, but feeling content to rest the solution of the case at bar on our own construction of our statute, we forego a discussion thereof.
2. We think the chancellor correctly overruled the plea of certain stockholders that all the stockholders were not joined in one action. The plea did not conform to section 515, Code 1930; it did not name any necessary stockholders omitted therefrom. The argument that certain stockholders had been named in the bill as having paid or otherwise discharged their liability does not conform to the statute as to the nonjoinder of parties. Certainly, the receiver would not be required to do the foolish thing of suing people who had already recognized and paid their obligation. Certainly, the receiver is not called upon to sue an insolvent person. This is patently true, regardless of whether or not we shall finally announce the rule to be that all the stockholders liable shall be joined in one suit, as contended by appellants, citing the case of Abbey v. Delta Bank Trust Co., 139 Miss. 36, 103 So. 801.
3. By demurrer certain appellants alleged that section 119, chapter 146, Laws 1934, repealed the double liability theretofore existing. That section is as follows: "That chapter 85 of the Mississippi Code of 1930 and all of the powers and duties therein imposed upon the superintendent of banks and the state banking department as therein constituted, be and the same are hereby repealed except to the extent herein provided; that chapter 22 of the laws of 1930; chapter 251 of the laws of 1932; chapter 282 of the laws of 1932; chapter 314 of the laws of 1932 be and the same are hereby repealed. Chapter 336 of the laws of 1932 is hereby repealed on and after 90 days from the effective date of this act." The double liability section (section 3815, Code 1930) is a part of chapter 85; however, by section 115 of chapter 146, Laws of 1934, the Legislature re-enacted verbatim the liability of stockholders as it appeared in section 3815, Code of 1930, and added thereto certain exceptions in the following language "Such double liability shall not apply, however, to stock in any bank which may be organized, after this act shall take effect, nor to stock in any bank open for business at the time this act shall take effect, provided such bank is a member of the federal deposit insurance corporation, or any other similar agency created by the laws of the United States." It is clear from the language of the act itself that the Legislature intended to include within the terms of double liability all those classes of stockholders which were not excluded therefrom by its terms. Therefore, the statute as to double liability was continued in force, and it was not the intention of the Legislature to repeal it. Section 115 of chapter 146, Laws of 1934, is sufficient proof that it did not so intend.
In Anding v. Levy, 57 Miss. 51, 34 Am. Rep. 435, Chief Justice George said: "When a statute expressly repeals another, yet contains in it a provision of the former statute identical in language, — as is the case now before us, — or even identical in substance, it cannot be said that as to that provision there has been any repeal." Further in the opinion the language of the court there aptly fits the case at bar where it is said that: "There has never been a single instance since its first enactment when it was not in full force and operation as the law of the State. . . . There can be no revivor unless there has been a previous death; and there has not been for a single instant a cessation or suspension of the life and vigor of this provision since its first enactment, for the repealing statute went into operation the very instant of the repeal of the other; and until such operation there could be no repeal of the former, for that repeal is only effected by the vigor and operation of the latter. . . . The effect of such action is properly an uninterrupted continuation of the provision, — a translation of it in all its vigor and force, — not a destruction of it, and then a resurrection." That case was approved in State Tax Commission v. Mississippi Power Company, 172 Miss. 659, 160 So. 907, wherein the authorities in this state to the same effect are cited.
We find no error in the action of the court below.
Affirmed and remanded.
I am in no disagreement with my brethren that if the fiction of an implied promise is to be here applied, the six-year statute of limitation (Code 1930, section 2292), not the three-year (section 2299), controls. The fiction of an implied promise, resulting not in a true contract, but in a quasi or constructive contract, is convenient and necessary some time for procedural and jurisdictional purposes. But when applied to statutory obligations, the liability, in the last analysis, rests not on a contract, but on the obligation imposed by the statute itself; and the limitation on the time within which an action on this obligation can be brought is that prescribed by section 2292, Code 1930, i.e., six years. 37 C.J. 749, and authorities cited in note 38 thereto.