Mister v. Thomas

Burke, J., delivered the opinion of the Court. The Farmers’ Trust, Banking and Deposit Company was incorporated by the Act of 1902, Chapter 141. Its home office or place of business was located in Baltimore City. The act of incorporation provided that the capital stock of the corporation should consist of five thousand shares of the par value of $50 each, and that when the amount of $50,000 should have been subscribed and fully paid in, the corporation should be entitled to begin the prosecution of business ⁴⁴⁷ under its charter.

The second section of the act declared that “when the par value of any share shall have been full paid, the same shall thereupon become non-assessable and non-liable for or on account of any purpose whatever.” Broad and varied powers were conferred upon the company. It was empowered to purchase and hold, bargain and sell, grant and assign lands, or any interest or estate therein, chattels, choses in action, checks, notes, bills receivable, bills payable, bills of exchange1, due bills, certificates of deposit, warehouse receipts, stocks, bonds, mortgages on real estate, leasehold, and chattel property. It was empowered to guarantee the security, integrity, and income of investments in mortgages upon real or leasehold property, or chattel interest in ground rent annuities, in stocks and bonds of any State, city, county, municipality or corporation, or stock company or co-partnership, to guarantee the validity of title to real estate, leasehold or chattel property, and to guarantee the payment of credit or of any part thereof, given or extended by or to any person or persons, firm or firms. It was given the right to invest, upon such terms as may be agreed upon or established by said corporation, any sum or sums of money in any mercantile, manufacturing, commercial or other business, or in any lawful enterprises transacted or carried on, or to be transacted or carried on, in the State of Maryland, or elsewhere, in connection with any person or persons, firm or firms, or co-partnerships, corporation or joint stock companies.

By the sixth section of the charter, the corporation was given the right “to receive money on deposit, evidence of debt for collection, for discount or otherwise, chattels,, stocks, bonds, and all proper writing on storage or as collateral security, upon such terms as may be agreed upon or established by said company, and shall have the right to guarantee, endorse and secure the payment, punctual performance and collection of notes, debts, due bills, bills of exchange, contracts, bonds, accounts; claims, rents, securities, mortgages and interest thereon, titles to property, indebtedness of individuals, or of co-partnerships, firms, corporations, or of ⁴⁴⁸ joint stock companies, loans of Stales, cities, counties and municipalities, upon such terms as may be agreed upon or established by said company.” It was granted the power to act as a fiscal or transfer agent of any State, municipality, body politic, or corporate and in such capacity to receive and disburse money, h> accept and execute trusts of any and every description, to act as executor or administrator, receiver, guardian, committee, etc. Section 11 of the charter reads as follows: “Be it enacted, That said corporation be subject at all times to the provisions of the Act of eighteen hundred and ninety-two, Chapters one hundred and nine and two hundred and seventy-nine, so long as said chapters shall respectively remain in force; provided, that said corporation shall be subject at all times to the provisions of the Act of eighteen lmnrded and ninety-two, Chapters one hundred and nine and two hundred and seventy-nine, or amendments or sixpplements thereto.” The amount of $50,000.00 of the par value of its stock was subscribed and fully paid for, and thereupon the company established an office in Baltimore City, effected an organization, and' began the prosecution of the business authorized by its charter. It sold other shares of stock at par and received the money therefor, conducted a large business and received large sums of money on deposit, paying the same to its depositors on checks, and also exercised other rights vested in it by its charter. It established branch offices within the State for the conduct of its business — one at Galena, called the Galena Bank : another at Darlington, called the Darlington Bank; another at Keedysville, called the Keedysville Bank; another at Mount Airy, called the Mount Airy Bank, and another at Hancock, called the Washington County Bank. These several branch offices conducted banking business in the name of the corporation and by virtue of the powers conferred by its charter, ⁴⁴⁹ The corporation became insolvent, and a bill was bled against it in the Circuit Court Ho. 2 of Baltimore City by Alexander H. Robertson, a creditor of the company, alleging that it was unable to meet its obligations,, and that it was utterly insolvent, and praying that a receiver he appointed to take charge of all the assets of every kind and description, properties, hooks, papers and accounts goods and effects of the said company, and that the corporation he declared insolvent, and that it he dissolved and its affairs wound np, and that an account of its business assets and liabilities he taken under the direction.of the Court and applied to the payment of its debts and obligations, and the residue thereof, if any, distributed among the stockholders of the company.

The company appeared to the suit and bled an answer admitting its insolvency and consenting to the appointment of receivei’s, and on October 9, 1907, receivers were appointed as prayed. On the twenty-third of March, 1910, the receivers — the appellants on this record, bled a petition under oath in the Circuit Court Ho. 2 of Baltimore City, wherein the insolvent estate was being administered, in which they recited: “Eirst: That three divide,nds have been declared and paid by them to the creditors of the defunct trust company, aggregating eighty-eight (88) per cent, upon the gross amount, of their claims, aggregating two hundred and twenty-two thousand, seven hundred and sixty-three dollars and two cents ($222,763.02), leaving a remnant of assets in the hands of your receivers. “Second: That this remnant of assets is very uncertain in value and its reduction to money most difficult, and your petitioners would not like to say, therefore, just what will he realized thereon; hut because your petitioners do not believe that it will yield sufficient to pay the creditors dollar for dollar upon their claims, they have attempted to value the said remnant of assets, and do report the result of their attempt as follows: “Third.: Real property carried on the hooks of the company at nineteen thousand, four hundred and thir ⁴⁵⁰ ty-five dollars ($19,435.00), which, in the opinion of your petitioners, will not yield more than ten thousand, three hundred and seventy-five dollars ($10,375.00); two partially perfonned contracts of sale of real estate not yet matured, one of which is payable in installments, together carried on the books of the company at one thousand, six hundred and ninety dollars ($1,-690.00), but which your petitioners believe, if sold, will not yield more than one thousand, four hundred and fifty dollars ($1,450.00) : ten uncollected mortgages carried on the books of the company at four thousand, two hundred and sixty-six dollars and eighty cents ($4,266.80), but which your petitioners believe, if sold, will not yield more than three thousand, one hundred and fifty-six dollars and eighty cents ($3,-156.80); thirteen loans of collateral security carried upon the books at eight thousand, three hundred and seventeen dollars and twenty-five cents ($8,317.25), but of which your petitioners believe they will be able to collect not more than five hundred and twenty-five dollars ($525.00) ; and sixty-t-wo notes and overdrafts carried on the books at fifteen thousand, five hundred and thirty-five dollars and sixty-five cents ($15,-535.65), but of which your petitioners believe they will not be able to collect more than five thousand dollars ($5,000.00). “Fourth: That in addition to the aforementioned assets, there is pending against the estate of John W. Woodland, deceased, formerly the president of the defunct company, a suit for losses sustained by reason of this alleged mismanagement of the said company, and there may be a further liability on the part of one or more of the officers and the directors, but the uncertainty attending the same precluded a present valuation thereon, “Fifth: That your petitioners would have the court to understand that, while they hope to realize twenty thousand five hundred and six dollars and eighty cents ($20,506.80), from the unconverted assets as afore ⁴⁵¹ said, yet it is by no means certain that they will be able to realize so large a sum, though, to the best of their belief, as at present informed, said sum does represent the real value of the said assets. “Sixth: That it is apparent from the foregoing recitals, that even if the said sum of twenty thousand, five hundred and six dollars and eighty cents ($20,-506.80), is realized, it will not be sufficient to pay the- creditors dollar for dollar upon their claims, let alone the interest to the depositors upon their respective deposits, in which event there may be a stockholder’s statutory liability. “Seventh: That after deducting the amount obtained in the three distribution accounts filed by the receivers, there is still a balance due of the principal of about thirty-six thousand, seven hundred and twenty-one dollars and fifty-seven cents ($36,721.57), to which should be added the interest on the whole indebtedness from October 9, 1907, subject to abatement by credits from the date of final ratification of each auditor’s account. After allowing these credits, there is a large balance due on the interest account, that is-to say, about twenty thousand dollars ($20,000.00), as the auditor allowed no interest from October 9, 1907, on any claim, which sum, added to the principal still due, will make the indebtedness about fifty-six thousand dollars ($56,000.00), and after deducting therefrom the amount of assets reducible to cash, less the cost of distributing the same, will still leave a large deficit. “Sec. 104, of Art. 23, of the Code of 1904, amended by the Act of 1908, Chap. 153, Sec. 85-L, subjects the stockholders of all companies like the defendant to the payment of its debts to the extent of their stock-holdings, and the same becomes an asset of the corporation enforceable by a receiver, assignee or trustee of such corporation acting under an order of the court. Wherefore they pray the court to pass an order authorizing and directing your petitioners ás receivers to ⁴⁵² bring suit by appropriate proceedings for tbe purpose of enforcing the above statutory liability against tbe stockholders of tbe defendant company.” Hpon the filing of this petition the Court ordered -that the receivers “Be and they are hereby directed to institute suits against the stockholders of the Farmers’ Trust, Banking and Deposit Company, of Baltimore, Maryland, who would in any way be liable for the debts of the said company.

The suits so to be instituted to be for twenty-five per cent, of the full amount of the stockholders’ liability under the law. Such suits to be instituted at law or in equity as the receivers are advised by counsel is appropriate, etc.” J. Fenton Thomas, the appellee, was the holder of twenty shares of the capital stock of the company, and demand was made upon him for the payment of $350.00 — being twenty-five per cent, of its par value' — which amount he refused to pay. The receivers instituted suit against him in the Circuit Court for Frederick County to recover that sum. The declaration set out in full the- act of incorporation of the insolvent company; that it had duly organized and began the prosecution of its business under its charter; that the plaintiffs were the receivers of the company appointed by orders passed in the case instituted by Mr. Robertson against the company on the ninth of October, 1907. referred to above; that “on tbe twenty-third of March, 1910, in tbe proceedings in tbe above-mentioned case of Robertson v. the Farmers’ Trust, Banking and Deposit Company, tbe Circuit Court Ho. 2 of Baltimore City ordered and directed that Beverly W. Mister, John Phelps, E. Allen Sauerwein, Jr., and John J. BTurst, receivers of tbe Farmers’ Trust, Banking and Deposit Company, should by appropriate proceedings enforce the statutory liability of tbe stockholders of-the said Farmers’ Trust, Banking and Deposit Company to pay an amount to said receivers equal to twentyffive per cent. ⁴⁵³ of the par value of the stock of said company held by them respectively — the same being by said order adjudged necessary to pay the debts of said Farmers’ Trust, Banking and Deposit Company.” The declaration further alleged that the defendant, being the owner or holder of twenty shares of the stock of the Farmers’ Trust, Banking and Deposit Company, there was due by him to the plaintiffs the sum of $250.00, with interest thereon from the twentyffhird of March, 1910.

The defendant appeared and filed the general issue pleas and. a plea of limitation. These pleas were withdrawn by leave of the ■Court and a demurrer to the narr. was filed. The demurrer was overruled. The defendant re-filed the pleas which he had withdrawn, together with a plea of payment.

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