Kennedy v. Gibson

Court Documents

United States Supreme Court

75 U.S. 498

Kennedy  v.  Gibson

APPEAL from the Circuit Court for the District of Maryland; the case being thus:

The act of June 3d, 1864, [1] 'to provide a National currency, &c.,' and which establishes those associations for carrying on the business of banking, now known as our 'National Banks,' provides, by its 12th section, that the shareholders

'Shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such association, to the extent of their stock therein, at the par value thereof, in addition to the amount invested in such shares, except, &c.'Subsequent sections provide for the comptroller of the currency making examination into the truth of an allegation, that a banking association has made default in paying its circulating notes, and authorize him, upon being satisfied that the association has refused, and is in default, to sell its securities pledged to the United States, and to pay the notes from the proceeds.

The 50th section enacts:

'That on becoming satisfied, as specified in the act, that any association has refused to pay its circulating notes, and is in default, the comptroller of the currency may, forthwith, appoint a receiver, who, under direction of the comptroller, shall take possession of the books, records, and assets of every description of the association, collect all debts, dues, and claims belonging to such association, and upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts, and, on like order, sell the real and personal property of such association, on such terms as the court may direct, and may, if necessary to pay the debts of such association, enforce the individual liability provided for by the 12th section of this act, and such receiver shall pay over all money so made to the treasurer of the United States, subject to the order of the comptroller of the currency, and also make report to the comptroller of all his proceedings.'

The same section proceeds:

'The comptroller shall, thereupon, cause notice to be given by advertisement, in such newspapers as he may direct, for three consecutive months, calling on all persons who may have claims against such association, to present the same, and to make legal proof thereof. And, from time to time, the comptroller, after full provision shall have been first made for refunding to the United States any such deficiency, in redeeming the notes of such association, as is mentioned in this act, shall make a ratable dividend of the money so paid over to him by such receiver, on all such claims as may have been proved to his satisfaction, or adjudicated in a court of competent jurisdiction; and from time to time, as the proceeds of the assets of such association shall be paid over to him, he shall make further dividends as aforesaid, on all claims previously proved or adjudicated; and the remainder of such proceeds, if any, shall be paid over to the shareholders of such association, or their legal representatives, in proportion to the stock by them respectively held.'

The 56th and 57th sections enact:

'That all suits and proceedings, arising out of the provisions of this act, in which the United States, or its officers or agents, shall be parties, shall be conducted by the district attorneys of the severed districts, under the direction and supervision of the solicitor of the treasury.

'That suits, actions, and proceedings AGAINST any association under this act, may be had in any Circuit District, or Territorial court of the United States, held within the district in which such association may be established; or in any State, county, or municipal court, in the county or city in which said association is located, having jurisdiction in similar cases.'

The 59th section of a previous act of February 25th, 1863, on the same general subject, had provided, that

'All suits, actions, and proceedings BY OR AGAINST any association, under the act, may be had in any Circuit District, or Territorial court of the United States, held within the district where such association was established.'

With these different enactments upon the statute-book, Kennedy, of New York, filed a bill in the Circuit Court for Maryland, against Gibson, Barry, and several other persons, all citizens of Maryland, setting forth: That he, Kennedy, was receiver of the Merchants' National Bank of Washington (having a capital of $200,000), duly appointed and qualified under the already-quoted act of Congress of 1864; that the bank had failed to redeem its circulating notes; that the comptroller of the currency thereupon appointed him the said receiver, who then took possession of the books, papers, and assets of said bank, and was, at the time of filing the bill, engaged in collecting the debts due the bank, and in discharging the other duties devolved on him by law. The bill then stated that the receiver had already ascertained that the assets and credits of the said bank were wholly in sufficient to pay its debts and liabilities, and that it would be necessary, to the complete and entire administration of his trust, that recourse should be had to the personal liability imposed on the stockholders by the already-mentioned acts of 1863 and 1864.

The bill further stated that 2000 shares of stock were duly issued by said bank, and the complainant averred his belief, and on it charged, that it would be necessary for the payment of the liabilities of this bank, to obtain from its stockholders, an amount of money equal to the full amount of the stock so issued, according to its par value, that is, $200,000. He therefore insisted that he was entitled to have an account taken, as against the said stockholders, of the liabilities and available assets and credits of said bank, and to recover from each of them, individually, a proportionate contribution, for the purpose of making good any deficiency which might remain, after applying all the said assets and credits to the discharge of its liabilities; which deficiency, he charged, would largely exceed the said sum of $200,000, the par value of the whole capital stock.

The bill, after charging that at the failure of the bank, certain defendants, named in an exhibit to the bill, were shareholders of its stock to the amount stated in the exhibit, but, that other stockholders named in the exhibit, were citizens, some of New York, and some of the District of Columbia, and could not be made parties, because, being out of the jurisdiction of the court, being joined as defendants would oust the jurisdiction of the court, and it prayed that the cause might proceed without making them parties.

Then followed a prayer for an account, and for a decree, directing each of the defendants to pay their pro rata of such balance of debt of the bank as might remain, after the application of its assets, and for further relief.

The bill, it will be observed by the reader, while sufficiently setting forth the facts necessary to warrant the appointment of a receiver, contained no averment of any action by the comptroller, touching the personal liability of the stockholders.

In addition, was the independent fact, that the suit had not been conducted by the district attorney for Maryland, as the already quoted 56th section of the act of 1864 directs that suits like it should be; nor was the bill even signed by him. But with the approval of the Treasury Department, after the matter had been submitted to the solicitor, and 'under particular circumstances in the case,' Messrs. Brent and Merrick, private counsel, had been employed, and by one or both of these gentlemen, the suit had been brought and conducted.

The defendants demurred; and the demurrer being sustained and the case coming here, the following questions arose:

1. Whether the provision in the 56th section of the act of 1864, about suits being conducted by district attorneys of the United States, was of essential obligation in all cases, or whether it was directory rather.

2. Whether the omission of the bill, to aver action by the comptroller, touching the personal liability of the stockholders, precedently to suit being brought by the receiver, was fatal to the bill? This being the principal question in the case, and the affirmative resolution of which by the court below was apparently the chief ground on which the demurrer there was sustained.

3. Whether the stockholders, named in the bill, and therein alleged to be non-residents of the State of Maryland, were necessary parties to any suit brought against the other stockholders, touching the matters of equity charged in the bill?

4. Whether the alleged creditors of the bank were necessary parties to any suit brought against the stockholders, touching those matters last mentioned?

5. Whether, in view of the omission in the 57th section of the act of 1864 (literally read), of the word 'BY,' the bill could be sustained in the court where brought?

Messrs. Brent and Merrick, for the appellant; Mr. Steele, contra.

Mr. Justice SWAYNE delivered the opinion of the court.


^1  13 Stat. at Large, 99.

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).