Gatch v. Fitch

34 F. 566, 1888 U.S. App. LEXIS 2336

• Court: U.S. Circuit Court for the District of Indiana
• Decided: February 2, 1888
• Status: Published

Opinion

Woods, J.

Alter some hesitation, I liave come to the conclusion that the demurrer to tho cross-hill should be overruled, there being, as there has been in argument, no dispute that the cross-complainant, as assignee of the judgment against Fitch, has the same right to attack tho mortgage in question which the receiver hud before the assignment was made. Fitch was not liable directly as surety or otherwise for the indebtedness of the bank to Gatch. In tho execution of the mortgage, therefore, he was not exercising the common-law right of preference among creditors who had demands directly against him; and the mortgage was made without consideration, unless the fact that he was a holder of stock of the bank involved such a liability as to afford a binding consideration lor the execution of the instrument, and at the same time to warrant the preference given to Gatch over other creditors of the bank. Was this so? The individual and ratable liability of stockholders in national banking associations for all contracts, debts, and engagements of such association, to the extent of the amount of their stock therein, is definitely declared in section 5151 of the law; but in section 2 of the act of June 30, 1876, it is provided that this liability “may be enforced by any creditor of such association by bill in equity, in the nature of a creditors’ bill, brought by such creditor on behalf of himself and of all other creditors,” etc. The liability being enforceable only in behalf of all creditors, it seems necessarily to follow that any voluntary discharge or security given for the payment thereof should likewise be for the equal benefit of all creditors, and that any effort to give a preference should be deemed illegal. This conclusion is in.harmony with the general and well-established doctrine that the liability of corporate stockholders is a fund, or source of a fund, for the ratable payment of all creditors. If the mortgage in question is valid because of Fitch’s liability as stockholder, — and, unless valid for this reason, it was clearly without consideration, — and if such a preference as was here given is valid, then, in the suit by the receiver against Fitch upon his liability as stockholder, he might, it would seem, have pleaded in bar payment of the amount due or payable upon this mortgage, if payment had been made; and, upon the facts as they are shown to be, might have insisted that he should be required to pay nothing to the receiver until the amount of his liability upon this mortgage should be determined and deducted from the amount demanded.

The demurrer is therefore overruled.