Continental Casualty Co. v. Hein

13 N.E.2d 984, 368 Ill. 289, 1938 Ill. LEXIS 661
CourtIllinois Supreme Court
DecidedFebruary 16, 1938
DocketNo. 24321. Cause transferred.
StatusPublished
Cited by1 cases

This text of 13 N.E.2d 984 (Continental Casualty Co. v. Hein) is published on Counsel Stack Legal Research, covering Illinois Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Continental Casualty Co. v. Hein, 13 N.E.2d 984, 368 Ill. 289, 1938 Ill. LEXIS 661 (Ill. 1938).

Opinion

Mr. Justice Stone

delivered the opinion of the court:

Appellant filed its complaint in the superior court of Cook county against numerous persons named as the stockholders of the American Bank and Trust Company, formerly the Milwaukee Western State Bank, to collect a judgment against that bank amounting, with interest and costs, to $12,943.95. On motion of certain of the named defendants the complaint was dismissed. Appellant brings the cause directly to this court on the ground, as its counsel say, that a constitutional question is involved.

The facts, as shown by the complaint and admitted by the motion to dismiss, are, in substance, as follows: On July 21, 1927, appellant became surety on an appeal bond for the Milwaukee Western State Bank, which appellant, on July 12, 1928, paid. On June 14, 1928, the Milwaukee Western State Bank changed its name to the American Bank and Trust Company. Appellant secured judgment against the American Bank and Trust Company on March 27, 1931, for the sum of $12,943.95. Prior thereto, on August 1, 1930, the American Bank and Trust Company and the Armitage State Bank entered into an agreement for consolidation by which both banks transferred all assets to a new bank to be called the Armitage State Bank, and a new charter was issued to the consolidated bank showing an increase of capital stock from $200,000 to $250,000. By their articles of consolidation the assets of both banks were assigned to the consolidated bank and the agreement recites that the consolidated bank assumed all the liabilities of the Armitage State Bank and the deposit liabilities of the American Bank and Trust Company. On June 9, 1931, this consolidated bank was closed by the Auditor of Public Accounts. A receiver was appointed who was authorized to sue and defend in his own name with respect to the affairs of the Armitage State Bank, that bank then being insolvent. On February 19, 1932, a representative creditors’ suit against the Armitage State Bank and its stockholders was filed in the superior court. This cause proceeded to a decree fixing liability of various stockholders and retaining jurisdiction to further hear the proceeding by bringing in other stockholders not served.

While the abstract does not show when the original bill of complaint in the cause before us was filed, it appears that the second amended complaint was filed on June 4, 1936. On February 26, 1937, the complaint, on the demurrer of defendants and motion to strike, was stricken and the appellant was given ten days in which to file another amended complaint. It appears by affidavit filed in support of defendants’ motion to dismiss the second amended complaint that on November 17, 1931, the appellant had filed its petition in the receivership matter to establish its claim against the Armitage State Bank, which petition, using the following quoted language, prayed that its judgment against the American Bank be decreed “to be an equitable lien upon the assets of the Armitage State Bank and to have preference over claims of the general creditors of the Armitage State Bank.” The receiver filed a general demurrer to that petition, which was sustained, and the petition dismissed for want of equity. These facts are not denied. No appeal was taken from that decree.

A third amended complaint was filed March 31, 1937, to which a motion to dismiss was filed on April 10, following. The grounds of that motion were: (1) That plaintiff lacks the capacity to sue as its suit was not a representative action but one brought solely and only for its benefit; (2) that there was and is pending in the superior court the representative creditors’ suit to determine the liabilities of the defendants and other parties by reason of their being stockholders in the American Bank and Trust Company and the Armitage State Bank, as consolidated, and (3) the issues raised in the bill of complaint have been previously determined by the dismissal of appellant’s petition in the receivership proceedings.

In this third amended complaint of appellant the allegation is made that the complainant is the only creditor of the stockholders of the American Bank and Trust Company. The affidavit of defendants sets out the proceedings in which appellant sought to have its claim allowed as a preferred claim against the assets of the American Bank and Trust Company held by the Armitage State Bank. This affidavit also states that the complainant is not the only creditor against the stockholders of the American Bank and Trust Company, but that there are many creditors who appear in the representative suit filed in the superior court against such stockholders. The order entered dismissing the third amended complaint sets out no ground upon which it is based but directs “the motion of the said defendants to dismiss the third amended complaint be and the same is hereby sustained and the third amended complaint of the plaintiffs be and the same is hereby dismissed for want of equity at the cost of the plaintiff.” It was from this order that this appeal has been taken.

A question arises at the threshold of this case whether there is here presented a constitutional question giving this court jurisdiction on direct appeal. Appellant says that there is such a question and that it arises because “the announced basis of the trial court’s decision which he treated as arising under point 2 of the motion to dismiss, was that, by the consolidation of the American Bank and Trust Company with the Armitage State Bank, the liability of the stockholders of the American Bank and Trust Company (formerly the Milwaukee Western State Bank) had been obliterated. This presents an interpretation of section 6 of article 11 of the constitution of 1870, the banking provision, in connection with a situation that has never been passed upon by this court and is the basis for the direct appeal to the Supreme Court.” Counsel for appellees challenge this statement and an examination of the abstract discloses no such ruling on the part of the chancellor. The motion having been based upon the three grounds hereinbefore referred to, it follows, from this record, that the court’s decision allowing the motion was based on those grounds. None of them discloses a constitutional question. The objections to the complaint are, lack of capacity to sue because the action brought was not a representative suit, a prior pending suit to determine the liability of stockholders of the American State Bank, and that the issues raised in this proceeding were determined in the proceeding on appellant’s intervening petition from which decision it did not appeal.

The lack of capacity of a creditor to sue in his own behalf in a case of this kind has been so well settled in this State that there is no longer a question existing as to this point. Zimmerman v. Zeimer, 363 Ill. 220, and Golden v. Cervenka, 278 id. 409, definitely held that an individual creditor may not file or carry on a separate suit when there is pending a representative suit on behalf of all creditors. Likewise the liability of bank stockholders has been definitely settled by numerous decisions. Golden v. Cervenka, supra; Sanders v. Merchants State Bank, 349 Ill. 547; Heine v. Degen, 362 id. 357; Zimmerman v. Zeimer, supra.

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Bluebook (online)
13 N.E.2d 984, 368 Ill. 289, 1938 Ill. LEXIS 661, Counsel Stack Legal Research, https://law.counselstack.com/opinion/continental-casualty-co-v-hein-ill-1938.