CHICAGO TITLE & TRUST CO. et al. v. STATE BANK OF AMBIA, 121 F. 58

SEAMAN, District Judge (after stating the facts as above). The demurrer to the original complaint which was before this court on the previous writ of error raised the single question whether purchase money derived from a sale of bank stock under the provisions of the statute of Indiana above recited belongs to the bank or to the owner of the stock. Its solution depended upon the

interpretation of that statute, which was thus given in the opinion by Showalter, Circuit Judge, speaking for the court: “The directors are empowered to sell, provided the purchaser will pay as much as the value certified by the auditor, but it is nowhere stated that the price received by the directors shall go to and become the property of the-bank. Presumably, the price, less the expense of the sale, would belong to the owner of the stock sold. In such case the bank would lose nothing. The purpose of the statute is apparently to enable the bank to get rid of unwilling stockholders and go on with its business.

The extra obligation of shareholders for debts and liabilities of the corporation in default of assets is fully provided for in other portions of the statute. No obligation of that sort is involved here.

The statute does not in terms; or by necessary implication, create an obligation on stockholders to pay more than the full par value of the shares, merely to replenish or replace capital lost in the business of the corporation.” No construction appears to have been placed upon the statute by the Supreme Court of the state, and that so given by this court is not open to question in the present case, and is decisive, as well, of a prima facie right of recovery on the state of facts alleged in the amended complaint.

It was thereby established that the proceeds of a sale of stock under the statute were for the use of the stockholder, and not of the bank, and on such doctrine ownership of the stock so-sold was the sole requisite of presumptive right to the purchase money, less the expense of sale. For recovery in that view, an action-would lie as for money had and received, and thus the original complaint was sustained.

While it was further alleged therein that the plaintiffs’ stock was full-paid, the allegation was not material, for the reason that the property right in the proceeds of the statutory sale thus construed depended alone upon ownership of the stock.

The amended complaint, however, ignores this rule, and tends to confuse the issue by allegations respecting the original issue of the bank stock, and of other considerations accepted therefor by the bank in-lieu of cash, followed by allegations setting out the various transactions and legal proceedings through which the plaintiffs derive title to the stock in controversy, and were recognized by the bank as purchasers and owners.

Of these allegations, it is sufficient to remark that they are unnecessary and violate the rules of pleading at law, but nevertheless show presumptive ownership of the stock in the plaintiffs, and the complaint otherwise states a cause of action for recovery of the proceeds.

If the pleading was so framed to anticipate a legal or equitable defense arising out of the original issue of the stock, and to obtain final adjudication on demurrer of any claim or lien for nonpayment, in whole or in part, it cannot have that effect, for the sufficient reason, if not otherwise objectionable, that the necessary facts do not appear to raise that issue, and it is a mere moot question.

The allegations of the amended complaint respecting the sale of the stock are identical with the original allegations which were considered on the previous writ of error, and, the decision thereupon being conclusive that the sale under the statute operated to vest legal title to the proceeds in the owner of the stock, any equitable defense cannot be pleaded in the law action for their recovery in the federal court, and “can only be considered on the equity side of the court.” Burnes v. Scott, 117 U. S. 582, 588, 6 Sup. Ct. 865, 29 L. Ed. 991, and cases cited.

It does not appear that the original consideration for the stock was inadequate, nor that any claim or lien exists or is asserted for the statutory liability of stockholders for unpaid stock or otherwise; and no case appears of deficiency of assets of the bank to meet existing liabilities. Without facts on which to predicate a lien upon the stock or liability against the stockholders, no issue is raised in that behalf, and the inquiry is not presented whether a defense founded thereon is legal or equitable in its nature.

We are of the opinion that error is well assigned on the ruling below sustaining the demurrer, but are not to be understood as holding that an action will not lie to charge liability for a deficit against the proceeds of the sale if the 100 shares of stock were not fully paid up, even though the stock was at the time of the sale in the hands of third parties, having no knowledge of the pre-existing equities.. The judgment is reversed, and the cause remanded for further proceedings in conformity with the opinion.