statute in New York, where the statutory liability arises upon a failure to pay in the whole capital,' and another exception is that if the stockholder's claim is of such a nature that he is entitled to payment before the creditors, his claim may be set off. The nature of the action provides for a contribution among the stockholders, since all must be sued. The decree in equity must be several as against the different stockholders, unless, of course, the liability is made joint, when a decree against all for the whole amount would be good. Such a case is impossible where the liability is in proportion to the amount of stock held by each stockholder.9 In an equitable proceeding it is a matter of some doubt whether the corporation ought to be made a party or not, either through itself or its receiver or assignee. Where the right to sue belongs to the creditors and is against the stockholders, it would seem to be reasonably plain that the corporation is not concerned.10 But owing to statutes which give the receiver the right to sue, and other statutes or rulings which require the assets of the corporation to be exhausted, it is rarely safe to omit making the corporation or its representative a party to a suit in equity. The judgment against the corporation being conclusive," such a course can work no injury; and where no execution has been issued on the judgment, or where no judgment has been obtained, the presence of the corporation as a party is as necessary to complete justice as the presence of its representative is necessary where the right of action is given to him. 7 Wheeler v. Millar, 90 N. Y. 353. The reasoning of this case is exceed ingly attenuated. Compare Boyd v. Hall, 56 Ga. 563. 8 Wells v. Stout, 38 Fed. R. 807. This case seems right wherever the assets of the corporation must first be exhausted. 9 See cases cited in note 9 to § 65, supra. But at law several stockholders might be sued where the liability of none exceeded the debt. 10 See § 65, supra. But it seems to be permissible to join in this action causes of action against officers of the bank. Where this is done, it is needless to say the corporation and its receiver should both be made parties, because the right of action is in the bank. See Gager v. Marsden, 77 N. W. R. 920. 11 Marsh v. Burroughs, 1 Woods, 463. See 3 Am. St. R. 858, in note. $70. National banks.- We have already noticed to some extent the remedy applied in the case of national banks. The procedure as to those banks is somewhat simplified by the fact that when the bank is in difficulties it is taken possession of by an examiner or by a receiver appointed by the comptroller of the currency, who determines the assessment to be levied upon each stockholder. But congress, not satisfied with a plain and intelligent system, out of a desire, perhaps, to provide against the comptroller's failure of duty, has given to creditors the right to institute an action which attains the same result as the comptroller's action. As a necessary condition to this suit it must appear that the bank is insolvent. The bank, of course, must be made a party; the court establishes the liability of stockholders and provides for the same by its judgment. This judgment must be several as against the various.stockholders, since the liability is several. The proceeding is for the benefit of all creditors, and should be against all stockholders subject to the jurisdiction." The same rules as to set-off would apply in such a suit as are mentioned in the last section. The method to be followed in ascertaining the amounts to be awarded by the decree would require, first, the ascertainment of the whole par value of the stock; next, the fixing of the amount of the deficit necessary to pay debts over and above the assets; next, the ascertaining whether the total liability amounted to or exceeded the total deficit. If the 1 Kennedy v. Gibson, 8 Wall. 498. 2 Statute of June 30, 1876. See Harvey v. Lord, 11 Biss. 144; Peters v. Foster, 56 Hun, 607; Irons v. Manuf. Nat. Bank, 17 Fed. R. 308. There seems to be no necessity for this statute, and in its working it must be plain that an assessment laboriously made by a court cannot be as expeditious as an assessment made by the comptroller. It ought not to be assumed in any case that the comptroller would not properly perform his duties. But the conduct of the receiver in Ex parte Chetwood, 165 U. S. 443, is a full justification of the statute. 3 Kennedy v. Gibson, 8 Wall. 498; United States v. Knox, 102 U. S. 422. 4 Irons v. Manuf. Nat. Bank, 27 Fed. R. 591. 5 Kennedy v. Gibson, 8 Wall. 498. This seems fairly deducible in principle from that decision. It would be the general rule. liability should not equal the deficit, the various claims must be scaled down to the total liability. Then each stockholder should be adjudged to pay his proportionate amount of the deficit, where it does not reach the total liability, or of the deficit as scaled down where it exceeds the total liability. The distribution among the creditors would be a mere matter of computation. But the stockholders would be liable for the bank's own stock which it held; provided, of course, the total liability, as divided among the stockholders, did not exceed, for any single stockholder, his statutory liability of an amount equal to his stock. The insolvency of any stockholder could not increase in any way another stockholder's liability, since stockholders are not held one for the other. But a suit like the foregoing might also be brought by the receiver appointed by a court at the instance of a creditor. The result would not be different from that attained by a suit instituted by creditors, where the whole relief was obtained in one action, even to the appointing of a receiver. In practice a suit by creditors would never be instituted without asking for the appointment of a receiver, since it is not conceivable that a bank could go on doing business while such a suit was in progress. A national bank might make an assignment to an assignee or trustee, but such a course would be impracticable, since the comptroller might at once take possession. The better method would be to follow that of the railroads and have a receiver appointed at the suit of some creditor, with the concurrence of the corporation. Such a course would prevent the comptroller taking possession by his receiver,” and 6 United States v. Knox, 102 U. S. for keeping the railroad in opera422. 7 Such an act would be one of insolvency, and conclusive evidence thereof. 8 This method, which is so popular among railway managers, ought not to be permitted to them as a monopoly, although it might be urged that there was a necessity tion. See 30 Am. Law Rev. 801, an article by Moorfield Storey. Since a state court cannot issue an injunction against a national bank, it is difficult to see how it can act as well as the United States court, which can enjoin the bank. See § 352, post. 9 Harvey v. Lord, 11 Biss. 144, would answer the same purpose as an assignment. It should not be overlooked that United States courts, under the statute of 1887, corrected in 1888, have jurisdiction of these winding-up suits, regardless of the citizenship of the bank or of the parties. When the comptroller takes possession by his receiver, whenever such a step is permitted by law, the comptroller, as soon as the deficit of assets is ascertained by him, proceeds to make an assessment upon the stockholders.10 This judgment of the comptroller is conclusive as to the necessity for, and the amount of, the assessment." It was originally held that the receiver was the only party to sue for this assessment, and that his action therefor was at law. But this ruling has now been changed by statute, and he may sue all the stockholders in equity.13 He ought to have been able to do so, in order to avoid a multiplicity of actions, under a general rule of equitable jurisprudence. The creditors are neither necessary nor proper parties to an action by the receiver." He can unite in the same action a suit for unpaid subscription and a suit for the statutory liability.15 But independent proof, it has been said, must be made of the insolvency of the corporation. The order of the comptroller, it has been wrongly held, is not binding upon the stockholders, as proof of the bank's insolvency.16 where it is held that the comptroller ought not to proceed where a court has acted and, it follows, is about to act. 10 This is a condition precedent to such a receiver's suit. Kennedy v. Gibson, 8 Wall. 498. 11 Kennedy V. Gibson, supra; Casey v. Galli, 94 U. S. 673; Strong v. Southworth, Fed. Cas. No. 13.545; O'Connor v. Witherby, 111 Cal. 523. Compare Bowden v. Johnson, 107 U. S. 251; Neale v. Wall, 70 Fed. R. 806. Fed. R. 591; Richmond v. Irons, 121 14 Kennedy v. Gibson, 8 Wall. 498. 15 Warner v. Callender, 20 Ohio St. 190. The principle applies whenever the receiver or any one else can enforce both liabilities. 16 Bowden v. Morris, 1 Hughes, 378. See Bowden v. Johnson, 107 U. S. 251; Neale v. Wall, 70 Fed. R. 806. Yet the order of the comptroller is conclusive as to the receiver's authority. Since this order of the receiver is a substitute for a judg 12 Kennedy v. Gibson, 8 Wall. 498; ment of a court, it is wrong to hold Casey v. Galli, 94 U. S. 674. 13 Irons v. Manuf. Nat. Bank, 27 that it is not conclusive upon all as to the fact of insolvency. See The payment of a voluntary assessment by the stockholder will not reduce his liability," nor can he offset the bank's debts to him,1 except when his claim is payable out of the assets of the bank before any of the creditors are payable.19 When the receiver sues in equity he ought to unite as defendants all the stockholders who can be served.20 But the state laws do not govern the receiver suing in the federal courts. A trustee of stock as a party represents his beneficiary. The receiver cannot compound this statutory liability of stockholders,23 although the court may permit him to compromise the claim; but the circumstances must be conclusive as to the propriety of such action.24 22 § 71. Other questions as to liability.-There are instances where the existence of the right to enforce the liability is made dependent upon a fact other than insolvency, such, as in the case of national banks, failure to redeem circulating notes, and in state banks dissolution. Insolvency may be proven in any of the ways permitted by law. Certain facts are conclusive proof of insolvency, such as a failure to redeem notes in specie, or failure to discharge claims upon it in the due course of business, or the fact may appear by proof that the bank is notoriously insolvent. It is needless to point out that in a suit to enforce this liability such condition to the liability must be alleged and proven. The liability is single in the sense that the stockholder can be compelled to discharge it but once. If he pays in part, the payment is a discharge pro tanto. The claim is barred § 42, supra. Washington Nat. Bank v. Eckels, 57 Fed. R. 870, is contra. 17 Delano v. Butler, 118 U. S. 634. 18 Sowles v. Witters, 39 Fed. R. 403. 19 Welles v. Stout, 38 Fed. R. 807. 20 This follows from the nature of the action. 21 Stanton v. Wilkeson, Fed. Cas. No. 13,299. 23 Price v. Yates, Fed. Cas. No. 11,418. 24 In re Stockholders' Cal. Nat. Bank, 53 Fed. R. 38. 1 See § 42, ante. 2 See Donelly v. Hodgson, 14 Mo. App. 548. 3 Lane v. Morris, 8 Ga. 468; Terry v. Culnan, 13 S. C. 220. 4 Terry v. Tubman, 92 U. S. 156; 22 Wadsworth v. Hocking, 61 Ill. Terry v. Anderson, 95 U. S. 628. App. 156. |